January 27, 2024 / VOLUME NO. 298

The Supreme Court Goes Fishing

A group of herring fishermen could soon upend the regulatory landscape for banks.  

The plaintiffs in Loper Bright Enterprises v. Raimondo, a case that will be argued before the U.S. Supreme Court this spring, aim to overturn the Chevron doctrine. The doctrine references a 40-year-old decision that defers the interpretation of relevant laws to regulatory agencies — not the courts. That can have a chilling effect on regulated businesses and citizens, some say.

“In practice, Chevron deference often gives agencies broad leeway to define the limits of their own statutory authority, making it far more difficult for businesses, organizations, and individuals to challenge agency action successfully in court,” wrote attorneys at Troutman Pepper Hamilton Sanders LLP in May 2023.

The fishing companies object to their regulator’s interpretation of the Magnuson-Stevens Fishery Conservation and Management Act. The 1970s law gives the National Oceanic and Atmospheric Administration authority to place monitors on commercial fishing boats. The fishing companies don’t object to being monitored, they say. But they don’t think the fishermen should have to pay the third-party monitor’s fee. That can amount to $710 per day, reducing their returns by roughly 20%. 

A second case before the Supreme Court, Cantero v. Bank of America, questions regulators’ interpretation of federal preemption under the National Bank Act. Passed during the Civil War, that law established the Office of the Comptroller of the Currency, which regulates banks with national charters. 

Cantero questions whether national banks like Bank of America Corp. should have to comply with a New York law that requires mortgage lenders to pay interest on homeowners’ escrow accounts. The plaintiffs say that, with the passage of the 2010 Dodd-Frank Act, a state consumer financial law — like the 1974 New York law — can only be preempted if it “prevents or significantly interferes with the exercise by the national bank of its powers.”

A weakened or overturned Chevron doctrine would have broad effects for an array of federal regulators, including those that supervise banks. And that could have unintended consequences that bankers might not like, because regulators play an important role in providing guidance and clarity to the industry. 

Chevron deference “has a huge effect in providing nationwide, clear guidance,” says Susan Seaman, a partner at the law firm Husch Blackwell LLP. Without that, the industry could not “look to the bank regulators to get any comfort from a regulatory compliance perspective.”

For now, Chevron’s future lies in the hands of the Supreme Court. 

• Emily McCormick, vice president of editorial & research for Bank Director

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“These banks have employees and customers and investors, and they’re left hanging for months on end waiting for answers. They can’t be living their lives on hold like that.”

– Warren Tryon, Capitol Counsel

• John Engen, managing editor for Bank Director

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