On June 28, 2024, the United States Supreme Court ruled that courts must "exercise their independent judgment" when interpreting federal statutes and may no longer deference to agency interpretations simply because a statute is ambiguous. This ruling will substantially reduce the power of administrative agencies to exceed the boundaries of the authority granted to them by Congress and will ultimately reduce the regulatory burden on businesses and consumers alike.
The landmark rulings of Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce overruled the Chevron doctrine that had been the law since 1984. Under Chevron, if a statute's meaning is ambiguous, a court reviewing an agency's action must defer to the agency's interpretation so long as it is reasonable, even if the Court would have chosen an alternative interpretation. But, as Chief Justice Roberts notes in his opinion in Loper Bright, Chevron is based on ambiguity, which has always evaded meaningful definition.
Loper Bright involved the Magnuson-Stevens Act, a law passed to address rampant unregulated offshore overfishing. This Act gave the National Marine Fisheries Service (NMFS) authority to require observers on board certain fishing vessels to collect data and ensure compliance with regulations. As an exercise of this authority, the NMFS enacted regulations that required some fishing operations to host and pay for such an observer. In this case, the fisheries would be required to pay the observer a salary of about $710 per day.
The petitioners in Loper Bright, four small family-operated fisheries in New England, challenged the regulation. They argued the Magnuson-Stevens Act did not authorize the NMFS to impose such excessive fees, which, in their case, took up a substantial part of already thin profit margins on herring.
The lower Court applied the Chevron doctrine and found that the statute's language was ambiguous and the NMFS's interpretation was not unreasonable. As such, the Court deferred to the interpretation that the NMFS had the authority to require fisheries to pay for their own compliance observers.
The Supreme Court, however, struck down Chevron as unworkable, incoherent, and inconsistent with the history of the Administrative Procedure Act (APA), which outlines procedures for judicial review of agency actions. The Court noted that federal agencies have no particular expertise in interpreting statutes. The Court also held that the APA articulates the "elemental proposition reflected by judicial practice dating back to [this nation's founding], that courts decide legal questions by applying their own judgment."
The overruling of Chevron will substantially reduce overreach by the administrative state and cut off its power to interpret the law in its favor. This means operating any business, small or large, will entail a reduced regulatory burden and a higher likelihood of obtaining much-needed relief from overregulation.
