The Supreme Court on Monday agreed to hear a case that could impact how the Federal Trade Commission, the Federal Communications Commission, the Food and Drug Administration and other federal agencies regulate professional and amateur sports.
And it’s a case about fishing.
In Loper Bright Enterprises v. Raimondo, herring fishing companies are challenging a National Marine Fisheries Service (NMFS) regulation that requires boats to allow a person onboard to collect conservation data and pay that person about $710 a day, around 20% of the fishermen’s revenues. The core issue is whether NFMS correctly interpreted a federal law, the Magnuson–Stevens Fishery Conservation and Management Act, in adopting the regulation.
NMFS has thus far prevailed in the litigation, with judges stressing they owe the agency “Chevron deference,” which means courts should defer to agency interpretation of federal laws so long as it is not unreasonable.
That is a low bar for agencies to meet in court. Even if a judge disagrees with an agency’s interpretation, the judge is obligated to side with the agency unless the interpretation was unreasonable. Chevron deference has been criticized as empowering unelected agency staff with too much discretion in interpreting laws passed by elected officials, including in ways Congress might not have intended.
Because of this case, the Supreme Court could decide to overturn Chevron or modify it so that agencies are entitled to less deference. Should either happen, leagues, teams, athletes, agents and other figures in sports whose work interacts with agencies would stand a better chance to take on an agency in court.
There is no shortage of ways federal agencies impact important business decisions in sports.
The FTC, for example, seeks rules that would curb automatic renewals used by gyms for memberships and ban noncompetes, including those used in sports executives’ contracts and those that could be used if college athletes are recognized as employees.
If Congress passes a federal bill to regulate NIL, there’s a good chance the FTC would be tapped to oversee NIL and sports agents who negotiate NIL deals. Or take the FDA, which regulates medications and, to a lesser degree, dietary supplements used by athletes to treat injuries and enhance performance. The Department of Agriculture, meanwhile, regulates the production of meat products, including those that might cause an athlete to fail a drug test because of contaminated substances.
Don’t forget about the FCC, which regulates TV broadcasts. The FCC ultimately lost a lawsuit challenging a fine over Janet Jackson and Justin Timberlake’s infamous “wardrobe malfunction” during Super Bowl XXXVIII in 2004. The Securities and Exchange Commission, which recently fined Basketball Hall of Famer Paul Pierce $1.4 million for his promotion of crypto assets on social media and plays an instrumental role in securities litigation involving sports NFTs and blockchain, also warrants mention.
The Supreme Court is expected to hear oral arguments this fall and rule sometime in 2024.
The path to court for individuals and businesses that seek to challenge agencies is now faster, too. Last month, the Supreme Court ruled 9-0 in two interrelated cases, Axon Enterprise, Inc. v. FTC and SEC v. Cochran, that say litigants challenging an agency can pursue lawsuits in federal court before the agency has completed its (often lengthy) administrative process.
