The US Supreme Court’s opinion in the Loper Bright v. Raimondo and Relentless v. Commerce cases overruling the rule of deference to agency interpretations of federal statutes established by its decision 40 years ago in Chevron USA Inc. v. NRDC will have far reaching consequences for the interpretation, administration, and promulgation of US environmental laws.
Although not recognized as such at the time, the Court’s 1984 Chevron decision proved to be a seminal decision guiding the interpretation of agency regulations by lower courts under virtually every major federal statutory program. Indeed, Chevron has been described as the most cited case in legal history.
While the Court’s decision in Chevron was adverse to the environmental groups challenging the US Environmental Protection Agency (EPA) regulation at issue, over time, the decision and the deference it required courts to afford agency interpretations of ambiguous statutes, came to be viewed as supporting the broad exercise of power by the EPA (and other federal agencies), an outcome generally favored by environmental groups. Conversely, the regulated community has long viewed Chevron as an anathema, precisely because it requires courts to defer to an agency’s construction of a statute it administers.
The events leading up to the Court’s decision in Chevron began in 1980, when the EPA promulgated a regulation under the Clean Air Act addressing the installation or modification of a major “stationary source” of air pollution. The EPA’s regulation provided that, for stationary sources in nonattainment areas (areas not meeting National Ambient Air Quality Standards), a permit was required “whenever a change in either the entire plant, or one of its components, would result in a significant increase in emissions even if the increase was completely offset by reductions elsewhere in the plant.”
The following year, after a change in presidential administrations, the EPA reevaluated its definition of what constitutes a “source” under the Clean Air Act, concluding that a plantwide definition should apply in all areas, including nonattainment areas. Under the EPA’s revised definition, an existing plant with several pollution-emitting components could install or modify a piece of equipment without a permit if the alteration did not increase the total emissions from the plant.
Environmental groups, including the National Resource Defense Council, filed a petition for review of the EPA’s revised definition in the US Court of Appeals for the DC Circuit, arguing that the EPA’s action was contrary to law. The DC Circuit agreed and set aside the 1981 regulation. Chevron, which had intervened in the proceedings, filed a petition for certiorari in the US Supreme Court, which the Court granted. In a unanimous decision, the Supreme Court reversed the DC Circuit, reasoning
If . . . the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
Finding the Clean Air Act ambiguous with respect to what constitutes a “stationary source” and that the EPA’s plantwide definition was a permissible construction of the term “stationary source,” the Court concluded that the EPA’s interpretation of the statute was entitled to deference.
The Supreme Court’s June 28, 2024 decision in the Loper Bright v. Raimondo and Relentless v. Commerce cases expressly overrules “Chevron deference” (albeit not the Clean Air Act holding of Chevron). Writing for a six-justice majority, Chief Justice Roberts opines that “Chevron gravely erred” in determining that statutory construction “is fundamentally different just because an administrative interpretation is in play.”
The majority reasons that the Administrative Procedure Act (APA), which Congress enacted as a check on administrative zeal (and on judicial deference to administrative zeal), provides that courts, not agencies, decide “‘all relevant questions of law’ . . . even those involving ambiguous laws.” Accordingly, courts “must exercise independent judgment in determining the meaning of statutory provisions.”
The majority acknowledges that courts “may seek aid from the interpretations of those responsible for implementing particular statutes” because “[s]uch interpretations ‘constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance,’” but states that “courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”
While the majority describes Chevron as a “watershed decision,” whether the Court’s decision to end Chevron deference likewise will prove to be of comparable import is uncertain for at least two reasons. First, the Court states that its decision to overrule Chevron “do[es] not call into question prior cases that relied on the Chevron framework.” Reliance on Chevron is “‘just an argument that the precedent was wrongly decided,’” which is not enough to overrule such precedent.
Second, as the majority discusses at length, the Court has “spent the better part of four decades imposing one limitation on Chevron after another.” Indeed, the Supreme Court has not itself applied Chevron in deciding a challenge to agency regulations in nearly a decade (although lower courts have continued to apply Chevron, albeit inconsistently).
Ultimately, whether the end of Chevron deference proves to be a breakpoint in the interpretation, administration, and promulgation of the United States’ environmental laws (as some predict), it undoubtedly will have a significant impact, both in the near term and in the future, in each of these areas.
The immediate impact of the Court’s decision to overrule Chevron will be to render recently enacted regulations more vulnerable to a broader range of challenges—eliminating the ability of the executive branch to argue that a court should defer to the agency’s construction of an ambiguous statute.
In the environmental context, this includes a number of important laws and programs such as the recently adopted amendments to National Environmental Policy Act regulations; the EPA’s fossil fuel regulations for power plants as well as its tailpipe emissions and Corporate Average Fuel Economy standards; the Bureau of Ocean Energy Management’s offshore wind regulations; Toxic Substances Control Act (TSCA) risk evaluations; numerous regulations interpreting the climate change provisions in the Inflation Reduction Act; and regulations related to per- and polyfluoroalkyl substances under the Safe Drinking Water Act, Comprehensive Environmental Response Compensation and Liability Act, Resource Conservation Recovery Act, and the TSCA.
For challenges to such regulations brought under the APA, a six-year statute of limitations (SOL) should apply, although this timeline may be expanded even further in light of the Supreme Court’s July 1 decision in Corner Post Inc. v. Board of Governors of the Federal Reserve System (which holds that the APA SOL period may be tolled until the plaintiff is injured by a final agency action).
Other statutory programs, such as the Clean Air Act, have a more limited SOL, so it will be critical to consider the authorizing legislation to determine which regulations are subject to challenge.
The elimination of Chevron deference also raises questions about the “respect” courts should (and will) accord challenged agency decisions on issues unrelated to the interpretation of ambiguous statutes. For example, while the Court recognizes in overruling Chevron deference that fact-finding remains the job of the agency, it also acknowledges that there will be complex issues involving mixed questions of law and fact, requiring courts to parse questions of statutory interpretation from agency factual determinations.
Similarly, the Court acknowledges that courts “must respect” express congressional delegations of authority to an agency but observes that it is the role of the courts to ensure that the agency acts within the authority delegated to it. Both questions present the potential for a further erosion of agency authority and are likely to engender significant legal challenges and potentially conflicting decisions from lower courts. In the environmental regulatory context, this could prove significant, particularly for the regulated community, which often faces compliance requirements in multiple jurisdictions.
For agencies tasked with implementing US environmental laws, the impact will extend beyond defending existing regulations to the promulgation of new regulations. Agencies likely will devote significant additional effort to creating an administrative record for new regulations to support the reasonableness of decisions made, to support the correctness of those decisions, and to confirm that the agency is acting within the scope of the authority Congress delegated to it. This is likely to be particularly true for regulations addressing issues of significant public interest, such as climate change.
The Court’s decision ending Chevron deference is likely to affect the enactment of new environmental laws as well. Congress likely will seek to be more explicit in the future when and in how it grants agencies authority to promulgate regulations under new laws—something that also is necessary to address the major questions doctrine articulated in West Virginia v. EPA.
Congress also may seek to amend existing laws to effectuate congressional intent on issues where current laws are silent or ambiguous.
If you have any questions or would like more information on the issues discussed in this LawFlash, please reach out to any of the contacts below or any member of our Chevron Task Force.