Reeling in Government Overreach – How a fishing company might overturn 40 years of bad precedent.

In what could be a landmark decision, the SCOTUS may well be on the verge of overturning 40 years of misplaced deference to the executive branch. On Wednesday Jan 17th 2024 they heard 3.5 hours of oral testimony in the case of Loper Bright Enterprises v. Raimondo. In short, a Trump era rule mandated that fishing boats accommodate government inspectors at their own expense on trips to sea. It can eat up to 20% of the profit of these vessels.

What is “the Chevron Defense?”
In the 1984 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. case, Chevron argued that the Environmental Protection Agency’s (EPA) interpretation of the Clean Air Act was reasonable and entitled to deference from the courts. The specific issue at hand was the EPA’s interpretation of a provision in the Clean Air Act that addressed the regulation of stationary sources of air pollution. Chevron contended that the statute was ambiguous, and as a result, the EPA’s interpretation should be deferred to if it was found to be reasonable.

Why was Chevron siding with the EPA? Because regulatory capture in the 70’s and 80’s had worked its magic to ensure that the EPA would consider the word “source” from the 1963 Clean Air Act in Chevron’s favor. Instead of having to comply with the standards set forth by congress, Chevron could make a few updates within their plants and offset the amount of new pollution by limiting the effects of some older sources.

Chevron ultimately won the case. The Supreme Court, in its 1984 decision, established the Chevron defense, a legal doctrine that outlined a two-step process for reviewing agency interpretations of statutes. The Court held that if a statute is clear and unambiguous, the court should follow the plain meaning of the statute. However, if the statute is unclear or ambiguous, the court should defer to the agency’s reasonable interpretation. In this case, the Court found that the Clean Air Act was ambiguous, and therefore, it deferred to the EPA’s interpretation. This decision had a significant impact on administrative law and set a precedent for courts to give deference to agency interpretations of statutes when faced with ambiguity.

What are the ramifications?
There are five areas in which Chevron has upset the intended machinations of government:

• Delegation of Legislative Authority: For instance, Dodd-Frank created the Consumer Financial Protection Bureau (CFPB) in 2010. In the absence of explicit statutory guidance on certain issues, the CFPB has the authority to interpret and implement rules “to protect consumers”. In practice the CFPB has gone far an above the Dodd-Frank act and placed undue burdens on smaller lenders and small business loan applicants.
• Judicial Deference to Executive Branch: In the case of FCC v. Fox Television Stations (2009), the Supreme Court applied Chevron deference to uphold the FCC’s indecency policy. The Court deferred to the FCC’s interpretation of ambiguous terms related to broadcast indecency, demonstrating the deference given to regulatory agencies.
• Checks and Balances: The Affordable Care Act (ACA) involves complex healthcare regulations. Courts have had to navigate Chevron principles when considering challenges to how agencies like the Department of Health and Human Services interpret and implement provisions of the ACA.
• Potential for Executive Overreach: In cases involving immigration law, agencies like the U.S. Citizenship and Immigration Services (USCIS) may rely on Chevron to defend their interpretation of statutes. This empowers agencies to influence immigration policies without sufficient congressional oversight.
• Legal Uncertainty: All of this amounts to the fact that changes in administration can lead to shifts in regulatory priorities and interpretations. For instance, the interpretation of environmental regulations by the EPA may vary under different administrations, creating uncertainty for businesses and stakeholders.

Effects of removing the Chevron Defense

Clarity and Predictability: Overturning Chevron could lead to a more straightforward and predictable legal landscape. With less deference to agency interpretations, businesses may have clearer guidance on how statutes are interpreted, reducing uncertainty about regulatory compliance and enforcement.

Reduced Regulatory Burden: The Chevron deference enables agencies to create regulations with less oversight, leading to a heavier regulatory burden on businesses. Without Chevron, the leash is tightened, potentially resulting in less burdensome regulations.

Increased Litigation Risk: While businesses may appreciate clearer legal standards, the absence of Chevron deference could increase the risk of litigation. With courts playing a more active role in interpreting statutes, businesses might face more legal challenges to regulatory actions, potentially leading to increased litigation costs.

Potential for Regulatory Inefficiency: Overturning Chevron might limit agencies’ ability to adapt quickly to changing circumstances or address emerging issues. This could slow down the regulatory process, making it harder for agencies to implement timely and effective regulations that respond to evolving business and market conditions. (Editor’s note: Oh no! The market will have to decide what’s okay and the government can’t just arbitrarily regulate to death the little guys like vape manufacturers when big tobacco asks them to?)

Wednesday’s Proceedings

Justice Ketanji Brown Jackson posited that the Chevron doctrine serves an important purpose. Under Chevron, she suggested, Congress gives federal agencies the power to make policy choices – such as filling gaps or defining terms in the statute. But if Chevron is overturned and agencies no longer have that power, she predicted, then courts will have to make those kinds of policy decisions.

According to Justice Brett Kavanaugh, Chevron “ushers in shocks to the system every four or eight years when a new administration comes in” and implements “massive change” in areas like securities law, communications law, and environmental law.

Gorsuch pointed to less powerful individuals who may be affected by the actions of federal agencies, such as immigrants, veterans seeking benefits, and Social Security claimants. In those cases, Gorsuch stressed, Chevron virtually always works for the agencies and against the “little guy.”

Roman Martinez, representing one group of fishing vessels, rejected any suggestion that the Chevron doctrine should be limited but not overruled. The justices, he said, should “recognize that the fundamental problem is Chevron itself.” By the time the session drew to a close, it seemed – but was not completely clear – that a majority of the justices agreed with him.