In the latest Weekly Wright Report:

Loper Bright, the End of Chevron, and What It Might Mean to You

By: Thomas J. Moran

Constitutional precedent often comes from the most unexpected places, and this has never been more true than in the Supreme Court’s Loper Bright decision, which will fundamentally change the interplay between the three branches of American government – particularly the executive and judicial – for the lifetimes of most, if not all who will read this article.

Loper Bright, a family-run fishing business in the North Atlantic, was required by the National Marine Fisheries Service (“NMFS”) to pay the fees – as much as $710 per day – to have federal observers aboard its vessels to ensure compliance with the various laws and limits placed on the fishing industry.  The applicable statute doesn’t explicitly require businesses such as Loper Bright to pay these fees; only foreign vessels, limited access vessels, and vessels in the North Pacific are mentioned in the statute.  But the NMFS had applied the requirements of the statute to include vessels in the North Atlantic as well.

For the last 40 years, this would have been enough to conclude the case under the decision in Chevron U.S.A., Inc. v. Nat’l Resources Defense Council, which established the concept of “deference.”  Under the deference principle, when a federal agency interprets a statute that is silent or ambiguous as to a particular issue in a way that is “permissible,” the courts must defer to the agency on that issue rather than interpret the statute for themselves.  This isn’t a high bar for a federal agency to clear, and indeed, Loper Bright ran into the deference wall at both the trial court and circuit court of appeal levels, with those courts refusing to second-guess the NMFS.  But the Supreme Court, in a 6-3 majority decision penned by Chief Justice Roberts, applied a 1946 law, the Administrative Procedure Act, to find that the courts are required to interpret statutory provisions and determine the meaning or applicability of an administrative action.  Rather than defer to the agency, courts are now required to use their own independent judgment to decide whether the agency has acted within its statutory authority.

But you may be reading this and thinking, “I don’t run a commercial fishing business in the North Atlantic, or anywhere for that matter.  Why do I care?”  The implications of Loper Bright reach far beyond the fishing industry.  Regardless of what you may think of the decision overall, it is hard to disagree with dissenting Justice Kagan’s conclusion that Loper Bright will be a “jolt to the legal system.”  Any matter within the reach of the many tentacles of federal regulation is potentially impacted.  One particular realm of life where federal regulations play a big role is in employment.  Anyone involved in running a small business or involved in human resources at a larger company will – or should be – intimately familiar with regulations promulgated by the Department of Labor, the Equal Employment Opportunity Commission, the National Labor Relations Board, and the Federal Trade Commission.

As one notable and recent example – and one that is of particular interest to me as someone who assists medical professionals – the FTC recently banned noncompetition agreements for the vast majority of American workers under the authority granted in Section 5 of the FTC Act, which simply prohibits “unfair methods of competition.”  Enforcement of the ban has been enjoined for now by a federal court, but this will surely be one of the first federal regulations to face judicial scrutiny in a post-Chevron world.  Instead of deferring to the FTC’s judgment that a noncompetition agreement is inherently unfair, the courts will need to decide whether the statutory authority is sufficient to allow the FTC to make such a sweeping pronouncement.

If you have questions regarding a noncompetition agreement or how the overruling of Chevron might impact your business, please contact Tom Moran at (804) 362-9434 or anyone in Wright Constable & Skeen’s Corporate & Business Law or Employment & Labor Law teams.