Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 13
On June 28, 2024, the United States Supreme Court added to its track record of gutting prior established precedent in service to the interests of big business. The court issued rulings in two parallel cases -- Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce -- that both argued that a regulation involving the presence of federal inspectors aboard herring boats that required boat owners to PAY for the inspector's presence overstepped the authority of the agency involved, the National Marine Fisheries Service.
A 1976 law established a requirement that boats allow federal inspectors to ride to monitor compliance with limits on fisheries. In 2020, a regulatory ruling stated that boat owners would also have to pay $700 to the agency to cover the cost of the inspector's presence. That ruling triggered these lawsuits, leading to this ruling. These suits were reviewed in TWO different federal court districts and upheld by two different appeals courts, citing a 1984 ruling in Chevron v National Resources Defense Council that stated courts should defer to regulatory authorities to settle ambiguities in language involving regulatory enforcement.
Given the facts of this SPECIFIC case, it seems arguable that an agency imposing a $700 fee on boat owners to cover the cost of a mandatory on-board inspector IS an "arguable" dispute. One worthy of being heard in a court. It's not even clear who is "right" in this situation. Is charging a fisherman $700 for a ride-along reasonable? If a day's fishing haul is only worth $3000, maybe that's too high. If a day's fishing haul is worth $30,000 and one day of over-fishing can wipe out a fishery? Then the charge would seem perfectly viable. Is this over-stepping on the part of the regulatory agency? THAT'S WHY WE HAVE COURTS.
The USSC has been signaling through written opinions for years that it had members eager to reverse the precedent set in the 1984 Chevron case and wrestle administrative power from federal agencies. These prior written opinions were providing a roadmap for litigants to find the "right case" with the "right set of facts" they could use to rationalize a complete rejection of a prior precedent. This is an established modus operandi for the Roberts-led USSC.
It's worth noting the motivation for this reversal, as stated directly by Chief Justice Roberts. Said Roberts: "(A)gencies have no special competence in resolving statutory ambiguities. Courts do."
So says the Chief Justice of a Supreme Court that simply makes up history when seeking to rationalize its "originalist" conclusions regarding matters of law.
In a highly complex, industrialized society, it is likely that any federal statute or regulatory ruling might have a bullet or clause that says something like this:
===============================
Businesses in industry W are required to submit quarterly paperwork X reflecting emission levels of chemical Y to agency Z within 30 days of the end of each calendar quarter or face penalties of 1% of annual revenue per day after each filing cut-off date.
===============================
Given that language, if someone wants to argue that the regulatory agency choosing the penalty level of 1% is beyond its power and that such decisions require legislative clarity, that concern makes perfect sense. However, if an affected business is attempting to argue that the regulatory agency has no authority to define acceptable emissions levels or the exact nature of the test used to measure emissions, those are NOT topics more suited for a JUDGE to decide. A trial judge or appeals court judge assigned at random to a lawsuit filed by a business is NOT likely to be expert in the subject matter. It can be argued that by the agency being managed by an elected President, an administrator in that agency has more accountability to the public's current preferred interpretation of any ambiguities than a judge.
As further proof of the hypocrisy of this new reversal from the USSC, it's worth noting the original USSC ruling from 1984 being gutted was seen at the time as a conservative win. The case originated from an attempt by an environmental group (National Defense Resource Council) suing to force the EPA to use an extremely literal interpretation of a law requiring chemical plant operators to obtain permits and conduct environmental impact reviews on ANY change to equipment within a plant. The EPA had devised a "bubble" concept in which as long as NET emissions from a plant weren't expected to change, plant operators could ALTER existing equipment without permits / review. The Chevron ruling DEFERRED authority on what types of changes required review TO the EPA because in that original case, the EPA was being LENIENT to Chevron and providing greater flexibility than desired by environmental groups.
How influential is this prior precedent and how impactful is the Court's gutting of the precedent? The New York Times reports that Chevron has been cited in SEVENTY United States Supreme Court decisions since 1984 and has been cited in SEVENTEEN THOUSAND lower court cases.
POOF. Gone.
To be clear, the intent of the Supreme Court in gutting this ruling wasn't only to resolve this "fishy" issue regarding herring boats. Their intent wasn't only to wrestle decision making power away from administrators within federal agencies and swing that power to the courts. Their intent was to trigger a WAVE of new litigation in which any prior lawsuit by big businesses throughout the country that was "lost" in "deference" to a regulatory agency gets re-litigated and potentially tossed after landing in a friendly court.
But that's not all. By rejecting the principle that "details" can be delegated to regulators in highly complex matters, this ruling will PARALYZE nearly any future attempt at passing new laws regulating business due to the difficulty in writing language clear enough to allow enforcement without allowing special interests to kill the proposal before exiting a Senate or House sub-committee. And even if such a miracle law survives that gauntlet to be enacted, if the underlying technology used to provide a sample is improved or a better criteria for measuring compliance is devised, this ruling will be used to reject any change in interpretation and instead require NEW laws to be passed, through the same gauntlet corrupted by big business lobbyists. This will tie the hands of regulators and allow multi-billion dollar corporations to continue existing operations knowing tighter rules will take years or decades to impose.
WTH
No. of Recommendations: 0
Given that language, if someone wants to argue that the regulatory agency choosing the penalty level of 1% is beyond its power and that such decisions require legislative clarity, that concern makes perfect sense. However, if an affected business is attempting to argue that the regulatory agency has no authority to define acceptable emissions levels or the exact nature of the test used to measure emissions, those are NOT topics more suited for a JUDGE to decide. A trial judge or appeals court judge assigned at random to a lawsuit filed by a business is NOT likely to be expert in the subject matter. It can be argued that by the agency being managed by an elected President, an administrator in that agency has more accountability to the public's current preferred interpretation of any ambiguities than a judge.
That is how it looks to me, too, though Albaby1 whose opinion I respect sees it differently. I just do not believe that courts, at least in many complex cases, have the level of expertise that experienced and knowledgable civil servants do. And, as you say, it seems this will make it very hard to effectively regulate many activities that DO NEED TO BE REGULATED.
No. of Recommendations: 2
As Wendy said over on the Macroeconomic Trends and Risks board on the old/new Fool:
The new Supreme Court decision has the potential to reverse decades of regulation in the public interest. A few special interests could benefit while the broader public suffers material harm.
Seems likely to me.
No. of Recommendations: 3
Given the facts of this SPECIFIC case, it seems arguable that an agency imposing a $700 fee on boat owners to cover the cost of a mandatory on-board inspector IS an "arguable" dispute. One worthy of being heard in a court. It's not even clear who is "right" in this situation. Is charging a fisherman $700 for a ride-along reasonable? If a day's fishing haul is only worth $3000, maybe that's too high. If a day's fishing haul is worth $30,000 and one day of over-fishing can wipe out a fishery? Then the charge would seem perfectly viable. Is this over-stepping on the part of the regulatory agency? THAT'S WHY WE HAVE COURTS.
Note that the issue wasn't even this arcane. The statute was silent as to whether the agency had the authority to impose a fee at all. If the dispute was about how much the agency could charge the owners for their inspectors should be, or whether the fee was "reasonable" or not, there might be some argument that the agency's expertise was relevant. Here, though, the dispute was solely about whether a statute that required boat owners to pay for the agency's inspectors for two enumerated fisheries, but did not have a similar provision for a third enumerated fishery, should be construed to require or prohibit the agency from putting the cost on the owners. That's a pretty run-of-the mill statutory construction case - trying to figure out what Congress' intentions were when they imposed an inspector requirement for all three fisheries, but only put in the fee imposition provisions for two of the three.
I agree that's why we have courts - but under Chevron, the courts would be required to get out of the way and defer to what the agency interpreted the statute to mean. Which in some cases can involve a complicated question of scientific or technical expertise, and in other cases (like the instant one) involves pretty non-technical basic tenets of statutory construction that courts do all the time. In this specific case, there's no reason to think that an agency is more likely to get the answer right than a court would - and given the agency's direct budgetary interest, even some reason to suspect that their construction of the statute might not be simply the application of expertise or technical knowledge.
No. of Recommendations: 3
I've about given up trying to understand what gets posted on METAR and what does not. To me, this is one of the most consequential rulings for business in 40 years since the original precedent was set. But the reasons why are obviously political so I didn't share this over there. And yet there the topic is.
WTH
No. of Recommendations: 1
I agree that's why we have courts - but under Chevron, the courts would be required to get out of the way and defer to what the agency interpreted the statute to mean.
This. For literally any other dispute with another party you would adjudicate it via the courts but in the 1980's the judicial branch with Chevron said, "Not us, bro" and the modern administrative state was able to combine elements of all three branches of government (rules instead of laws passed by Congress, in-house judgements instead of through the courts and of course their own native executive branch enforcement mechanisms) into 1 thing.
All this does is break that apart into what the system already is for 99% of disputes.
No. of Recommendations: 4
Justice Gorsuch’s opinion included 5 references to nitrous oxide (laughing gas) instead of nitrogen oxide (the air pollutant the EPA was trying to reduce).
This perfectly sums up why the SCOTUS are idiotic, power hungry fools for wading into this area.
Heck, they can’t even get legal issues right all the time.
American citizens will bear the brunt of this mistake. But good news! The JCs will be raking in billions.
No. of Recommendations: 1
Gorsuch also called the Securities and Exchange Commission, the Security and Exchange Commission.
I do not think the courts are set up to handle the complexities of rule making. OK, they are going to settle 'ambiguities', but there will be plenty of those and they are not the people with the expertise.
This will be good for polluters, large corporations and snake oil salesmen of every stripe.
As some dope said: "Boom, there goes the administrative state". Like that is a good thing.
