Supreme Court will consider federal agency regulatory discretion

Imagine if an OSHA compliance officer showed up at your workplace, and your company had to pay the officer’s salary during the inspection. While OSHA does not require this, another federal agency does require it.

The National Marine Fisheries Service requires that certain fishing boats allow an observer to monitor compliance. Under a federal regulation, the fishing company must pay the observer’s salary during that time, even though the observer is a federal employee.

Several fishing companies sued the government, arguing that the underlying statute does not say anything about making private companies pay the observer’s salary. They argued that the regulation is therefore invalid.

The case went before the United States Court of Appeals for the District of Columbia (DC Circuit), which ruled for the government. The DC Circuit applied the concept of Chevron deference, named for a 1984 Supreme Court case. Under Chevron, if a party challenges an agency regulation, courts should give deference to the agency. The DC Circuit held that the regulation forcing private employers pay the salaries of federal employees was acceptable, even though the statute did not specifically authorize the agency to create such a rule.

The plaintiff employers appealed that decision to the United States Supreme Court, which agreed to hear the case of Loper Bright Enterprises v. Raimondo.

The Supreme Court

The Supreme Court should hear arguments this fall when the term opens in October. The high court’s decision would likely get released in 2024 by the end of June.

The plaintiffs are asking the Supreme Court to overturn the Chevron decision. If that happens, lower courts would no longer need to presume that a federal regulation is reasonable. The Biden administration filed a brief claiming that this case “would be an unsuitable vehicle” for reconsidering the Chevron decision.

Several justices, including Alito, Gorsuch, and Thomas, have raised questions about the Chevron doctrine. Justice Ketanji Brown Jackson recused herself because she heard arguments as a member of the DC Circuit, although she moved to the Supreme Court before the lower court issued the decision. A Supreme Court ruling requires at least a 5-4 majority, but an eight-justice panel still requires a 5-3 ruling. A ruling with a 4-4 split carries no weight and would not overturn the DC Circuit court’s decision.

The Supreme Court could follow a number of paths. First, it could overturn Chevron, which has been applied to uphold thousands of federal regulations over the last four decades. Such an outcome could result in a flood of cases to revisit previous regulations from the Environmental Protection Agency and many other federal agencies.

Alternatively, the Supreme Court might issue a narrow ruling that addresses only the specific regulation and agency involved, perhaps ordering the DC Circuit to reconsider. Or, the high court might choose to limit Chevron deference without fully overturning that decision.

The outcome won’t be known until the court actually releases a public decision in 2024.