US Supreme Court curbs federal agency powers, overturning 1984 precedent

By John Kruzel and Andrew Chung

WASHINGTON (Reuters) -The U.S. Supreme Court dealt a major blow to federal regulatory power on Friday by overturning a 1984 precedent that had given deference to government agencies in interpreting laws they administer, handing a defeat to President Joe Biden's administration.

The justices ruled 6-3 to set aside lower court decisions against fishing companies that challenged a government-run program partly funded by industry that monitored overfishing of herring off New England's coast. It marked the latest decision in recent years powered by the Supreme Court's conservative majority that hemmed in the authority of federal agencies.

The precedent the court overturned arose from a ruling involving oil company Chevron that had called for judges to defer to reasonable federal agency interpretations of U.S. laws deemed to be ambiguous. This doctrine, long opposed by conservatives and business interests, was called "Chevron deference."

"Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority," Chief Justice John Roberts wrote in the decision.

The court's conservative justices were in the majority, with the liberal justices dissenting. The ruling will make it easier for judges to second-guess actions by regulators, empowering challengers to regulations across federal agencies.

Business, conservative and libertarian groups cheered the decision, saying it eliminates a rule that requires courts to favor the government in all manner of challenges to regulation. The litigation was part of what has been termed the "war on the administrative state," an effort to weaken the federal agency bureaucracy that interprets laws, crafts federal rules and implements executive action.

The decreasing productivity of Congress - thanks to its gaping partisan divide - has led to a growing reliance, especially by Democratic presidents, on rules issued by U.S. agencies to realize regulatory goals.

Biden's administration had defended the National Marine Fisheries Service regulation at issue and the Chevron doctrine. The fish conservation program was started in 2020 under Republican former President Donald Trump.

Liberal Justice Elena Kagan, in dissent, said the ruling elevates the Supreme Court's power over other branches of the U.S. government.

"A rule of judicial humility gives way to a rule of judicial hubris. In recent years, this court has too often taken for itself decision-making authority Congress assigned to agencies," Kagan wrote.

Democrats and groups favoring regulation, including environmental groups, said the ruling will undermine agencies, whose officials use scientific and other expertise to ensure safe food and drugs, clean air and water, stable financial markets and fair working conditions.

White House Press Secretary Karine Jean-Pierre called the ruling "another deeply troubling decision that takes our country backwards."

"Republican-backed special interests have repeatedly turned to the Supreme Court to block commonsense rules that keep us safe, protect our health and environment, safeguard our financial system and support American consumers and workers. And once again, the Supreme Court has decided in the favor of special interests," Jean-Pierre said.

'UNLAWFUL AGENCY OVERREACH'

The challenge by the fishing companies was supported by various conservative and corporate interest groups including billionaire Charles Koch's network.

Roman Martinez, an attorney for one of the companies, Rhode Island-based Relentless Inc, called Friday's ruling a win for individual liberty that vindicates the rule of law.

"By ending Chevron deference, the court has taken a major step to preserve the separation of powers and shut down unlawful agency overreach," Martinez said.

The regulation at issue called for certain commercial fishermen to carry aboard their vessels U.S. government contractors and pay for their at-sea services while they monitored the catch.

Beth Lowell of conservation group Oceana said monitors help prevent overfishing, and without them limits become irrelevant.

"Some fishers want to operate in the dark, unmonitored, and return to a Wild West of fishing in U.S. waters, but these companies are fishing on a public resource and making profits," Lowell added.

Kagan wrote: "Who should give content to a statute when Congress's instructions have run out? Should it be a court? Or should it be the agency Congress has charged with administering the statute? The answer Chevron gives is that it should usually be the agency, within the bounds of reasonableness."

"That rule has formed the backdrop against which Congress, courts and agencies - as well as regulated parties and the public - all have operated for decades. It has been applied in thousands of judicial decisions. It has become part of the warp and woof of modern government, supporting regulatory efforts of all kinds - to name a few, keeping air and water clean, food and drugs safe and financial markets honest," Kagan added.

The companies - led by New Jersey-based Loper Bright Enterprises and Relentless - in 2020 sued the fisheries service, claiming the monitoring program exceeded the Commerce Department agency's authority.

The conservation program aimed to monitor 50 percent of declared herring fishing trips in the regulated area, with program costs split between the federal government and the fishing industry. The cost to commercial fishermen of paying for the monitoring was an estimated $710 per day for 19 days a year, which could reduce a vessel's income by up to 20 percent, according to government figures.

The Biden administration said the program was authorized under a 1976 federal law called the Magnuson-Stevens Act to protect against overfishing in U.S. coastal waters.

The Washington-based U.S. Court of Appeals for the District of Columbia Circuit and the Boston-based 1st U.S. Circuit Court of Appeals both ruled in favor of the government.

The Supreme Court has signaled skepticism toward expansive regulatory power, issuing rulings in recent years to rein in what its conservative justices have viewed as overreach by various agencies.

For example, the court on Thursday rejected the Securities and Exchange Commission's in-house enforcement of laws protecting investors against securities fraud and blocked an Environmental Protection Agency regulation aimed at reducing ozone emissions that may worsen air pollution in neighboring states.

(Reporting by Andrew Chung; Editing by Will Dunham)