Supreme Court dumps 40-year precedent in major blow to federal regulators

A small group of New Jersey herring fishermen landed a huge catch at the Supreme Court.

Chief Justice John Roberts on Friday, writing for a 6-3 majority, significantly reeled in the power of federal regulators, tossing out a 40-year precedent on agency authority and a Commerce Department rule that the fishermen said could drive them out of business.

The opinion -- officially overturning a 1984 decision known as "Chevron" -- creates a big splash, making it much easier for businesses and other interests to challenge rules touching every aspect of American life from food inspections, workplace safety, tax collection, environmental regulation and more.

The case involved a regulation by the National Marine Fisheries Service ordering some commercial herring fishermen to pay the salaries of government observers federal law requires they carry aboard their vessels.

The law -- the Magnuson-Stevens Act -- does not spell out how the observers, who collect scientific data on the nation's fisheries, should be funded. The agency had argued the law's ambiguity supported its interpretation that the boat operators must pay in some instances.

Lower courts upheld the regulation citing the Supreme Court's decision in Chevron v. National Resources Defense Council, which held, in part, that courts should defer to the scientific and health experts at agencies when a law isn't clear, so long as their regulations are reasonable.

Roberts said that holding was an error and that judges, not bureaucrats, should interpret what an ambiguous law does or does not allow.

"Chevron is overruled," he wrote. "Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedures Act] requires."

"Careful attention to the judgement of the Executive Branch [agency] may inform that inquiring. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it," Roberts continued. "But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous."

The ruling deals the biggest blow to the administrative state in a generation and hands a long-sought victory to conservative legal groups and business lobbyists who have spent years pushing for the court to strike down what is known as "Chevron deference" and rein in agency power.

In dissent, Justice Elena Kagan said the decision would cause a "massive shock to the legal system," since more than 17,000 disputes over federal regulations over the past 40 years have relied on the Chevron doctrine -- most decided in the government's favor.

The discarding of precedent, Kagan wrote, would supplant the expertise of subject-matter specialists at all levels of government.

"It gives courts the power to make all manner of scientific and technical judgments. It gives courts the power to make all manner of policy calls, including about how to weigh competing goods and values. It puts courts at the apex of the administrative process as to every conceivable subject," she wrote.

Public interest groups said tens of thousands of government rules could be called into question, touching everything from the environment to workplace safety to technology and health care.

"How far-reaching the decision is remains to be seen," said Gordon Todd, a Supreme Court litigator with Sidley and federal regulatory law expert. "The Court sought to minimize the retroactive impact of its decision by noting that prior decisions that relied on Chevron deference are themselves entitled to 'statutory stare decisis,' but it remains to be seen the extent to which such decisions remain valid."

"In the short-run we expect a significant increase in regulatory litigation, including challenges to existing regulations, ongoing rulemakings, and existing precedents," Todd said.

Jerry Masoudi, former chief counsel of the Food and Drug Administration, said the ruling was a dramatic shift in the balance of power between agencies and courts.

"These decisions will not affect FDA's case-by-case decisions on scientific issues, like product approvals," Masoudi said in a statement, "but rules underlying these processes may be open to broader challenge."

Environmental groups were particularly alarmed by the Supreme Court's decision, warning that scientific experts could now be overridden by judges with little familiarity with the subjects they are addressing.

"The American people really rely on our public institutions to put protections in place for clean air and water, for, our health and our children's health, for safe and secure homes and businesses. And what this really means is that our ability to rely on expertise and science to make those decisions and put those protections in place is really in jeopardy now," said Meredith Moore, the director of the Fish Conservation Program at the Ocean Conservancy, in an interview with ABC News.

"What we're going to see is lots and lots of lawsuits, taking on everything that the government does from health and safety to the environment to tech issues like AI and our cybersecurity," Moore added.

As for the herring fishermen, one practical impact of the ruling means they will be spared a potential fee of up to $700 a day.

"Today's restoration of the separation of powers is a victory for small, family-run businesses like ours, whether they're involved in fishing, farming, or retail," said Bill Bright, a third generation herring fisherman in Cape May, New Jersey, and plaintiff in the case.

"Congress never authorized industry-funded monitoring in the herring fishery. And agency efforts to impose such funding hurts our ability to make an honest living. Nothing is more important than protecting the livelihoods of our families and crews."