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Commercial fishing regulatory spat will get high court audience

After curbing federal agency powers last term, the Supreme Court is primed to deliver the authority of the administrative state a final blow. 

WASHINGTON (CN) — The Supreme Court agreed Monday to hear a case that would upend decades of precedent around how administrative agencies assert their authority. 

Brought by a group of commercial fishing firms, one of two cases added this morning to the high court’s docket next term asks the justices to overturn the 1984 precedent in Chevron USA Inc. v. National Resources Defense Council Inc that has governed the operation of federal agencies. Last term the conservative majority limited Chevron deference in West Virginia v. EPA, but this new challenge could spell the end of the precedent for good. 

For the last 40 years, Chevron has given agencies deference in their actions unless Congress said otherwise. West Virginia clarified exceptions to Chevron that said if an action involved a “major question,” then the agency should have to get congressional authorization. The court has yet to clarify how the major questions doctrine will be interpreted. 

Commercial fishers are fighting a government effort targeted at eliminating overfishing. A new monitoring program, Loper Bright Enterprises argues, oversteps the government’s authority. 

“The Magnuson-Stevens Act (MSA) requires petitioners and other vessel owners to make room onboard for federal observers who can oversee operations to ensure compliance with a slew of federal regulations,” Paul Clement, an attorney with Clement & Murphy representing Loper Bright Enterprises, wrote in the petition. “That is an extraordinary imposition that few would tolerate on dry land.” 

The Magnuson-Stevens Fishery Conservation and Management Act aimed at catching overfishing off U.S. coasts that could threaten the food supply, economy and health of the nation. Congress authorized the secretary of commerce to create a program that would ensure the conservation of fishery resources. 

Through the act, eight regional fishery management councils were created to advise the secretary on how to meet the goals of the Magnuson-Stevens Act. In 2017, the New England Fishery Management Council released a plan for an industry-funded program to monitor the Atlantic herring fishery. 

The monitoring program required vessel owners to arrange for an observer from a monitoring service approved by the National Marine Fisheries Service to be onboard their vessels. The owners would also be responsible for paying the service providers. 

Amendments to the plan included considerations for adopting similar programs for other fisheries, but the program was only actually adopted in the Atlantic herring fishery. The amendments were approved in 2018, and the National Marine Fisheries Service issued final regulations to implement them in 2020. 

The commercial fishers challenged the government’s actions in a Washington. They claimed the agency did not have the authority to force vessel owners to pay for third-party monitoring services. 

Using Chevron, a federal judge shot down the challenge. The district court said the agency acted within its authority under the Magnuson-Stevens Act. An appeals court affirmed. 

Turning down an opportunity to decide if Chevron was applied properly in the case, the justices — apart from Justice Ketanji Brown Jackson who will not participate due to her involvement in the case prior to it reaching the high court — will now examine if Chevron should be overruled.  

The government said the court did not need to review the case since the Magnuson-Stevens Act unambiguously authorizes the agency to adopt the monitoring provision being challenged. 

“As the district court correctly concluded, the Magnuson-Stevens Act unambiguously authorizes the agency to adopt the monitoring provision at issue here; the court of appeals viewed the statute as less clear on that point but nonetheless agreed that the agency’s interpretation is at least reasonable,” U.S. Solicitor General Elizabeth Prelogar wrote in an opposition brief. “In any event, that is the best reading of the Act, and the lower courts correctly rejected petitioners’ challenge to the agency’s authority.” 

Prelogar also noted that the challenge should not be brought because the fishing firms have not experienced harm. 

“Petitioners have not identified a single fishing trip for which they have been required to pay for monitoring services under the rule,” Prelogar wrote. “NMFS also recently announced that, due to lack of federal funding to cover NMFS’s cost responsibilities, the monitoring coverage requirement established by the rule will be suspended on April 1, 2023, consistent with the provisions in the rule regarding lack of federal funding.” 

The fishing firms urged the court, however, to “rein in agency overreach.” 

“In a country that values limited government and the separation of powers, such an extraordinary power should require the clearest of congressional grants,” Clement wrote. 

Noting the tight accommodations on board fishing vessels, the firms argue they are already being forced to endure burdens by allowing regulators to monitor their work. 

“But that was not enough for NMFS,” Clement wrote. “It has added insult to injury by forcing the herring fleet to pay for the costs of federal monitoring, without any express authorization from Congress. The decision below approving that remarkable intrusion — and elimination of a critical practical constraint on regulatory overreach — cannot stand.” 

The fishing firms have elicited support from noteworthy amici like the Pacific Legal Foundation — a nonprofit firm that often advocates for conservative causes before the justices. John Eastman — whose election denial theories were central to efforts to overturn the 2020 election — also filed a brief in support of the firms from a public interest law arm of the Claremont Institute which he founded. 

The second case the court took up Monday comes from a financial expert who claims he was fired from the investment bank UBS for reporting alleged fraud on shareholders. Trevor Murray was hired in 2011 as a research strategist for commercial mortgage-backed securities business at UBS. 

Murray was required by Securities and Exchange Commission regulations to certify his research was independently produced and was not influenced by the company’s trading desk. He claims Ken Cohen, who led the trading desk and previously worked a Lehman Brothers before it collapsed during the Great Recession, pressured him to skew his reports in favor of UBS business strategies. 

Without caving to Cohen’s repeated attempts to influence his reports, Murray wrote a 2012 forecast that painted markets as risky. Murray reported the pressure campaign to his direct supervisor, Michael Schumacher, but had no luck in remedying his problem. 

A few months after his report, Murray was fired by Schumacher. Murray in turn fired off a whistleblower complaint to the Department of Labor, claiming his termination violated the Sarbanes-Oxley Act. 

The government’s inaction on his complaint led Murray to take his claim to federal court. UBS brought an unsuccessful motion to dismiss, and a jury ruled in favor of Murray, finding he had proved his whistleblower claims. 

After the Second Circuit reversed on appeal, the justices will now decide if Murray had to prove UBS acted with retaliatory intent when firing him or if that burden fell on UBS to prove. 

Follow @KelseyReichmann
Categories / Appeals, Business, Government

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