Time to Throw Chevron Overboard: Loper Bright Enterprises v. Raimondo

Suppose that you owned a manufacturing business for which the government prescribed certain production regulations, and suppose, further, that the government demanded that you provide office space for a federal observer to monitor your operation. Finally, suppose that the government now claimed that you had to pay that observer’s salary. This is essentially what a group of commercial Atlantic herring fisheries are now facing and what led them to bring legal action asking the courts to rein in this regulatory overreach. The Supreme Court has agreed to hear their case and others that are related.

Here are the facts: In 1976, Congress passed, and President Gerald Ford signed, the Magnuson-Stevens Act (MSA), which targeted what is commonly called “overfishing.” The stated purpose was to promote recreational and commercial fishing “under sound conservation and management principles.” The Secretary of Commerce was to be the chief overseer, but he delegated the task of regulation to an administrative agency, the National Marine Fisheries Service (NMFS). In only three specific instances in the MSA did Congress expressly require the fishing industry to cover the cost of compliance observers. One was the North Pacific region, mostly fished by large enterprises. Another was on foreign vessels fishing in our waters. The last was a complex arrangement called the “limited access program” which established fishing quotas for certain fishing companies. The remainder of commercial fishing businesses could be required to have observers on board, but the government appropriated funds to pay them, not the businesses.

In summary then, the MSA did not mandate industry-funded inspectors in other fishing areas besides the three just mentioned. Nevertheless, the NMFS issued new regulations which would impose just such a plan on a major but completely different fishing local—namely, the New England area (Maine, New Hampshire, Massachusetts, Rhode Island, and Connecticut).

The plaintiffs in this case are owners of small enterprises fishing in the New England waters. They strenuously object to the additional financial burden that this will impose on what are largely family-owned and operated businesses. These fishing firms have already lived through losing some of the limited crew space on their boats in order to accommodate the compliance observers. But paying the salaries of these regulatory agents exceeds the limits of their endurance. They have said, in effect, this far and no farther. Even using the NMFS’s own estimates, these small family ventures will have to pay $710 per day to compensate the at-sea monitor, thus reducing the profit return to the owner by approximately 20%.  Failure to pay the monitoring inspector is not an option because such a refusal would mean completely losing the right to fish in the New England area.

One would expect that without new, express congressional authorization for this costly and intrusive requirement, the judicial determination of their cases would be a simple one. Silence on the part of Congress in this case means that the regulatory agency is foreclosed from acting until Congress legislates to include the New England area in the funding requirement.

Nevertheless, the lower courts ruled against the private fishing companies. Why? Both courts that heard the case—the Federal District Court and the DC. Circuit Court of Appeals—relied upon a 1984 Supreme Court case titled Chevron USA, Inc. v. Natural Resources Defense Council, Inc. The opinion created a legal doctrine called “judicial deference.”

What is judicial deference? It often surfaces when a regulatory agency proposes a new policy or action which it claims is within its administrative discretion because Congress has not spoken directly on the issue, or, if it has, it has spoken “ambiguously.” The regulated parties who stand to be harmed by the new regulation challenge the agency’s interpretation in court. The Chevron opinion, however, favors the administrative agency. It maintains that a court, hearing such a case, should defer to the agency’s interpretation if that interpretation is not unreasonable. The court should not substitute its own interpretation of what the statute says or does not say for the regulatory agency’s interpretation.

Back to the fishing case. The complaining fishing companies say that Chevron should not apply at the very least. Congress’ intention is clear. It authorized industry-funded observers in just three cases. Congress has spoken and it has spoken without ambiguity. Until it speaks otherwise, NMFS cannot override that congressional clarity.

To further buttress their case, the plaintiff fisheries rightfully point out that during the four decades since Chevron, whenever there have been legislative attempts to expand the authority for industry-funded monitors/observers, the legislation has failed. Furthermore, NMFS argues that it is required to act with new regulations because Congress has not fully funded more observers. That argument, say the fishing companies, is glaring proof of the restraint of the “power of the purse” to curb overly zealous regulatory agencies.

This case and others being heard this term have to do with what is often referred to as the growth of the administrative or regulatory sector. Chevron has been a large part of the reason for that growth. After Chevron, reliance of the courts upon this doctrine of judicial deference naturally has encouraged greater regulatory boldness. In many cases, administrative agencies have claimed power well beyond what Congress intended. At the same time, the Chevron doctrine has diminished the courts’ power to curb such expansion.

More fundamentally, as law Professor Philip Hamburger has pointed out, the Chevron decision was constitutionally wrong because it took away the rightful authority of the courts to engage in the interpretation of statutes, arguably one of their most important functions as appellate courts. Though the Supreme Court has declined to use Chevron in recent cases where litigants raised it, what is needed now is for Chevron to be overruled. Otherwise, lower courts will feel bound to apply it. The regulatory state will continue to gradually take more and more of the liberty of American citizens.

As Professor Hamburger puts it forcefully when referring to the administrative/regulatory sector, “It now has become a feral, brazenly overrunning constitutional limits and threatening our civil liberties.”