Regulation

Supreme Court ‘Chevron’ Case Will Shape Cryptocurrencies and Climate Rules (1)

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The <-bsp-bb-link state="{"bbHref":"bbg://securities/1000L%20US%20Equity","_id":"0000018d-137c-de1f-adbf-17fede040000","_type": "0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">The U.S. Supreme Court’s biggest opportunity in its bid to rein in federal regulators comes as justices weigh a major legal change that would reduce the agency’s power over working conditions, drug safety and on emerging issues such as climate change and cryptocurrency.

On Wednesday, the justices will hear two appeals that seek to reduce regulatory leeway when Congress has not given clear direction. The appeals ask the court to strike down a decades-old legal doctrine that often requires judges to defer to agencies on the scope of their authority, a step that could challenge long-standing regulations.

The Supreme Court of the United States.

Photographer: Al Drago/Bloomberg

The implications could be especially profound for efforts to regulate new industries and issues at a time when partisan polarization has hampered the legislative process in Congress. Any decision to limit court referrals would “constrain agencies across the country,” touching established sectors including nuclear power, airlines, banking and health care, said Temple University law professor Craig Green.

“The idea of ​​deference is a critical mechanism for all agencies to do their jobs,” Green said during a discussion hosted by the Center for American Progress and Democracy Forward. “Agencies have more expertise, are more specialized and more flexible, so they can address new problems and crises that inevitably arise over time and that Congress cannot predict.”

The potential consequences are radical enough to galvanize liberal activists who plan to demonstrate outside the Supreme Court ahead of Wednesday’s arguments.

At issue is a legal principle known as the Chevron doctrine, which for 40 years has given federal agencies latitude when implementing unclear congressional mandates. Under Chevron, if a law is ambiguous, courts should defer to the agency’s “reasonable” interpretation of the statute.

The doctrine, <-bsp-bb-link state="{"bbDocId":"RU1HH5T0AFB4","_id":"0000018d-137c-de1f-adbf-17fede070000","_type":"0000016b-944a-dc2b-ab6b -d57ba1cc0000"}">supported by conservatives-bsp-bb-link> when it was founded in 1984 but now vilified by them, it has become a mainstay of administrative law, cited in more than 15,000 court cases.

Filippo Hamburger, founder of the conservative New Civil Liberties Union, said the Supreme Court should sweep away a fundamentally flawed doctrine that unfairly skews legal proceedings. Chevron imposes “systematic favoring of the most powerful party” in regulatory disputes – the same agencies that wrote the rules – said Hamburger, whose group represents fishing industry clients in one of the High Court cases.

The two nearly identical clashes involve a National Marine Fisheries Service requirement that some herring fishing boats cover the cost of government-approved observers aboard their vessels. Fishing companies based in New England and New Jersey are contesting the estimated $710 daily fee, even though it is not in effect.

The fishing vessel Eva Marie, one of several vessels named in the Supreme Court case Loper Bright Enterprises v. Raimondo, docked at Lund’s Fisheries Inc. in New Jersey in 2023.

Photographer: Rachel Wisniewski/Bloomberg

Read more: <-bsp-bb-link state="{"bbDocId":"S3E9GGDWX2PS","_id":"0000018d-137c-de1f-adbf-17fede090001","_type":"0000016b-944a-dc2b-ab6b -d57ba1cc0000"}">Fight over fishing taxes at the Supreme Court supported by enemies of big government-bsp-bb-link>

Challengers say that while federal law allows the Fisheries Service to request observers, Congress has not authorized the agency to ask boat owners to pay the cost.

In any case, a federal appeals court appealed to Chevron and held that the payment requirement was based on a reasonable interpretation of the Magnuson-Stevens Act of 1976, a law that regulates the management of marine fisheries in federal waters . The Biden administration defends that requirement and urges the court to leave the Chevron doctrine intact.

The Supreme Court’s conservative majority has shown deep skepticism about what it sees as agency overreach. In a <-bsp-bb-link state="{"bbDocId":"REAYH0T0AFBK","_id":"0000018d-137c-de1f-adbf-17fede0a0000","_type":"0000016b-944a-dc2b-ab6b- d57ba1cc0000"}">case 2022-bsp-bb-link> involving efforts to stifle greenhouse gas emissions from power plants, a sharply divided court said regulators must have clear congressional authorization before acting on “important matters.” That ruling undermined the practical force of the Chevron doctrine but did not completely overturn it.

A ruling excluding Chevron would task judges with arbitrating even smaller issues, including arcane and deeply technical questions that Congress has not explored but which come from government experts and specialists, said James Goodwin, a senior policy analyst at the University of Washington. -bsp-bb-link state=”{“bbHref”:”bbg://securities/0746353D%20US%20Equity”,”_id”:”0000018d-137c-de1f-adbf-17fede0a0001″,”_type”:”0000016b -944a-dc2b-ab6b-d57ba1cc0000″}”>Center for Progressive Reform-bsp-bb-link>.

“Agencies don’t just do big things, they also do a lot of little things, and that’s where Chevron is important,” Goodwin said. “These are the things that agencies do to keep the trains running all the time, but they require a lot of technical expertise.”

The problem looms large for financial regulators who may want to oversee cryptocurrency and artificial intelligence but rely on decades-old statutes that predate both technologies. It’s also a concern for environmental regulation – with federal agencies increasingly leaning on historic statutes like the Clean Air and Clean Water Acts that were established in the 1960s and 1970s to address new chemicals, combat new pollution threats and respond to changing scientific knowledge.

Business advocates say courts have enforced Chevron so expansively that agencies now make sweeping policy decisions that should be left to Congress — and that may change with each new presidential administration.

“Companies cannot effectively plan for the future when agencies are free to unilaterally change ground rules at any time,” he says <-bsp-bb-link state="{"bbHref":"bbg://securities/0392381D%20US% 20Equity","_id":"0000018d-137c-de1f-adbf-17fede0b0000","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">U.S. Chamber of Commerce-bsp-bb-link> argued in court documents.

Partisan gridlock means Congress is passing fewer laws and, even when it does, leaving many blanks for federal agencies to fill. For example, <-bsp-bb-link state="{"bbHref":"bbg://securities/ 3061059Z%20US%20Equity","_id":"0000018d-137c-de1f-adbf-17fede0b0001","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">Treasury Department-bsp-bb-link> officials are dictating the specifics of which companies will benefit from hundreds of billions of dollars in tax credits created or expanded by the Inflation Reduction Act of 2022.

A sweeping decision to turn around Chevron would have a “tectonic” effect, making many long-standing regulations legally vulnerable. Cary Coglianesedirector of the Penn Program on Regulators at the University of Pennsylvania Law School.

But fishing companies have also suggested a more restrictive approach, saying the court can strike down the tax without directly overturning Chevron. And even a ruling that nullifies the doctrine should not call into question the regulations of the past.

“If they just reverse the situation prospectively, that’s a different story, and obviously there’s also a lot of middle ground they could take,” Coglianese said. “It may not have a dramatic effect on what agencies do.”

(Updates with rally plan in fifth paragraph.)

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Peter Blumberg

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