On Wednesday, January 17, the U.S. Supreme Court heard arguments in the case of Loper-Bright Enterprises, et al. v. Gina Raimondo, as well as a companion case, Relentless, Inc. v. Department of Commerce. The cases brought by fishing companies question the power of the National Marine Fisheries Service (the “Service”). While the case questions whether the Service can implement a fisheries program that imposes costs on industry, it has broad implications for the administration of federal regulations.  

Generally, when a law is enacted, it will designate a federal agency to implement regulations to carry out the law’s intent. With access to specific scientific and technical expertise, agencies are presumed to have the best grasp of the industry or market they regulate and thus best suited to interpret and carry out the law’s intent. According to precedent, the Chevron doctrine, when there is a question as to an agency’s implementation of a law the court must first consider whether the statutory language provided directly addresses the question presented and if not, then the court must uphold the agency’s interpretation if it is reasonable.   

Both cases are concerned with the implementation of the Magnuson-Stevens Act (the “Act) and its call for a marine fisheries program that “may require that one or more observers be carried on board a vessel …, for the purpose of collecting data necessary for the conservation and management of the fishery.” The Service issued a rule calling for fishing vessels to pay for the cost of observers. The fishing companies argued that it was not authorized by the Act and that it is based on a “fictional presumption that Congress deliberately delegated the power to interpret ambiguous statutes.” If the Court is unwilling to overrule Chevron, the fishing companies argue that the statute has outlined specific situations in which the Service can impose costs on industry, and because this observer rule is not a result of these explicit grants then it should be rejected. 

Chevron deference is politically contentious because, conservatives argue, it gives the power delegated by Articles I and III of the Constitution to the courts and Congress to federal agencies. The Biden administration, on the other hand, considers it a “bedrock principle of administrative law” that “only comes into play when a court determines that Congress has not itself clearly answered an interpretive question.” 

How we see it: 

The abandonment of the Chevron doctrine could lead to a significant shift in how administrative law is handled, especially concerning digital assets and blockchain businesses. Currently, under Chevron deference, courts typically support the interpretations of laws and regulations made by specialized agencies like the SEC (Securities and Exchange Commission) and CFTC (Commodities and Futures Trading Commission), which claim authority over various aspects of the digital assets market.  

However, if Chevron is set aside, this deference would no longer be automatic. Courts would no longer be obligated to follow the interpretations of these agencies regarding digital assets. Instead, they would have the authority to interpret laws independently, without leaning on the expertise of the SEC, CFTC, or similar bodies. 

The Supreme Court is expected to issue a ruling by summer, potentially arming a future Republican administration with another tool to reduce the size of government.