Chevron Ruling Roils Permitting System Biden Sought to Steady

Permitting consultants and lawyers say they’re hearing from developers anxious to know the effects on their projects of the US Supreme Court’s recent decision restricting courts’ deference to agency actions.

“Post-Chevron, there’s a collective holding of breath” in the permitting world, said Karen Hanley, a former official at the White House Council on Environmental Quality. “Regulators and developers alike are bracing for a seismic shift in how we approach environmental assessments. We’re seeing extraordinary concern.”

More litigation could hurt not only the private sector but also the White House’s ambition to get renewable energy, electric vehicle charging stations, and other favored projects built quickly.

It’s not yet clear how decisions made under the National Environmental Policy Act will be affected by the high court’s decision in Loper Bright Enters. v. Raimondo, which overturned the Chevron doctrine shielding federal agencies’ interpretations of their rulemaking authority. And that uncertainty is harmful, given how sensitive financiers can be when the outcome of a project is up for grabs, and how hard the Biden administration has worked to create reliable processes that make permitting more predictable.

“Developers are processing the reality of this uncertainty,” said Alex Herrgott, who led the Federal Permitting Improvement Steering Council under former President Donald Trump. “The concern as they attempt to predict risk over a seven- to 10-year permitting lifecycle is approaching a muted level of panic.”

“Instead of developers having a clear understanding of how an agency might interpret a particular statute or regulation, we find ourselves navigating a more ambiguous situation, which adds complexity to the already intricate process of federal infrastructure permitting,” agreed Ross Pilotte, strategic growth manager at SWCA Environmental Consultants.

Avenues for Challenges

One possible outcome is that courts will start scrutinizing whether the cutting-edge environmental science agencies use in their NEPA reviews are strictly required by the statute, said Hanley, now a managing consultant at Trinity Consultants.

That kind of judicial scrutiny could create a gulf between what agencies consider scientifically necessary and what courts deem legally sufficient for NEPA compliance, especially in rapidly evolving areas like climate change impact assessments, Hanley said.

Another possibility is that the Biden administration’s two final rules amending the NEPA regulations will be scrutinized by the courts.

In Hanley’s view, those rules, which now explicitly require agencies to consider climate change impacts, go beyond NEPA’s original statutory language and could be vulnerable to legal challenges in the post-Chevron landscape.

“Project proponents will be able to challenge the objective determination of an agency that they do not believe is legally sufficient,” agreed Herrgott, now president of the Permitting Institute.

“They can argue the agency was too restrictive. Or an opponent of the project can argue they weren’t restrictive enough,” Herrgott said. “The court is going to have to evaluate all perspectives from all parties on what they believe the prevailing science is.”

Permitting experts also broadly agreed that projects with limited case law precedent, such as carbon capture, may be more exposed to litigation because they’re novel and may present more complex climate implications.

Legal Impact Questioned

But it’s also possible the Loper Bright decision won’t have a meaningful impact on permitting, said Peter Whitfield, a partner at Sidley Austin LLP who specializes in NEPA.

Whitfield said he doesn’t envision a sharp uptick in litigation, because the language in the NEPA statute doesn’t leave agencies with much room to craft their own interpretations.

Moreover, the Administrative Procedure Act still gives deference to agencies on fact-finding and policy judgments, “so challenging certain agency actions can still be an uphill battle,” Whitfield said.

The court’s decision also doesn’t dismiss agency expertise altogether. Rather, it specifies that courts, when using independent judgment to interpret what statutes mean, can continue to look for guidance from “those responsible for implementing particular statutes.”

And even without Chevron deference, agencies still have wide latitude under the Administrative Procedure Act’s “arbitrary and capricious” standard, which requires only that agency actions must be reasonably explained and rationally connected to the facts found, according to Whitfield.

The uncertainty caused by the ruling may also create an opportunity for the Federal Permitting Improvement Steering Council to help project sponsors and agencies button up their work as early in the process as possible.

Permitting Council staffers are reviewing the Chevron decision to understand how it may affect their work, and “will continue to serve as a coordinating body to help project sponsors navigate the federal environmental review and authorization process, in addition to working with our federal partners to clearly communicate expectations to those sponsors,” said Brittney Gordon, an agency spokeswoman.