Overturned Chevron Sets up Steeper Courtroom Hurdles for EPA

The Supreme Court’s decision to kill long-standing adherence to agency interpretation will force environmental regulators to play a tougher judicial defense.

The justices June 28 stripped courts’ ability to defer to executive statutory interpretation by overruling the so-called Chevron doctrine, a key legal advantage agencies had when defending rulemaking in courts.

“In the environmental context this is pretty significant, given that many of our major environmental programs are implementing statutes which have been determined to be ambiguous in the past, so therefore afforded Chevron deference,” Ella Foley Gannon, partner at Morgan Lewis, said.

This could make regulating vast, technical issues like climate change an even greater challenge, Gannon said.

The decision, which stems from a case launched by commercial herring fishermen, may not have immediate effects, but it will lead to a sea change in coming years, according to Loren Dunn, principal at Beveridge & Diamond PC.

That includes fewer safe harbors for agencies within judicial review, Dunn said. This could spur regulators to take twice the time to craft proposals, weigh comments, and then finalize rules that are rooted in environmental authority that haven’t been updated meaningfully in decades.

From a “how we govern ourselves” standpoint, “there are very few matters that are of as great significance” than the Chevron issue, Dunn said.

Environmental advocates and some legal experts lamented the decision, which they claim will upend the rulemaking process and lead to industry uncertainty in the long run if courts feel more freedom to hand down fractured decisions across jurisdictions.

“When the court erodes this doctrine, what it’s saying is, ‘trust us, the un-elected and non-expert judges, not the agencies who are politically accountable,’” said Sam Sankar, senior vice president for programs at Earthjustice. “This is just part of the court’s ongoing war against regulatory agencies and the laws that protect all of us.”

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Increased Scrutiny

Under Chevron v. Natural Resources Defense Council, judges resolving disputes over regulations could rely on the theory that Congress leaves laws vague enough to give agencies the authority to interpret them and craft rules that fit the time and context.

“We are certainly anticipating that there will be increased scrutiny on the regulations which have recently been enacted—which are still subject to challenge—and regulations going forward,” Gannon said.

Since a lot of environmental rules stem from old laws with few modern amendments, the Chevron doctrine was a cornerstone tool used by judges to defer to agency expertise when interpreting those laws that often apply to technical issues with a lot of moving parts. The Clean Air Act, for example, was enacted in 1970 and hasn’t seen major revisions since 1990.

“Most of our major environmental laws are 50 years old, were written with broad expansive language, and envision a world in which agencies had a sweeping mandate to control pollution,” Sankar said. “This court is rewriting the rules of the road to say agencies can’t have the kind of discretion that Congress intended for them to have.”

And that rewrite will change the way that agencies go about regulating, according to Bracewell LLP partner Jeff Holmstead. Instead of starting with a program and trying to come up with a plausible legal justification for it, agencies will need to start from the statute itself and decide what is permissible, he said in an email.

“This will make it harder for the Biden Administration to pursue its ‘whole of government approach’ to addressing climate change,” Holmstead added.

Slowing Things Down

Under the specter of prolonged court challenges, rulemaking may become an even lengthier ordeal in order to make standards more ironclad, especially in conservative-leaning courts like the US Court of Appeals for the Fifth Circuit.

That means a slower regulatory process, particularly for rules that tread some kind of new ground, according to Dunn.

Power plant regulations aimed at limiting carbon pollution is an example of where the agency continues to re-craft rules based on scanty language in the Clean Air Act, which may give the EPA power to regulate, but leaves the agency with precious few details on how it can choose to do so.

That will likely “make it more challenging for agencies to start up regulatory activity in areas where they have not done much previously, even if it is an area that, at least arguably, there is authorization to pursue,” Dunn said.

The final oil and gas methane rule, which is thousands of pages long, is a good example of what post-Chevron standards could look like, according to James Goodwin, senior policy analyst at the Center for Progressive Reform.

The Bureau of Land Managment is already facing a post-Loper Bright challenge to an agency decision.

In a lawsuit filed in the US District Court for the District of Alaska June 28, Voice of the Arctic Iñupiat said the BLM’s final NPR-A Rule is “directly contrary to Congress’s stated purpose” in creating the National Petroleum Reserve in Alaska. The agency’s rule improperly bars oil and gas development in 10.6 million acres of land, and it effectively ends leasing and development on another 13.1 million acres of land, the group argues.

The Massachusetts Lobstermen’s Association separately urged the First Circuit to dismiss the National Marine Fisheries Service’s appeal in a dispute over the agency’s 2024 Permanent Wedge Closure Final Rule. The agency’s rule temporarily closed fishing grounds in Massachusetts to protect North Atlantic right whales, but a judge tossed the rule in March after determining that it violated the Consolidated Appropriations Act.

The NMFS failed to get the Solicitor General’s authorization before filing its notice of appeal, the Lobstermen’s Association told the First Circuit. Also, the agency isn’t entitled to deference following the Supreme Court’s June 28 decision in Loper Bright, the group said in a motion to dismiss filed the same day.

“Just as courts can no longer abdicate the responsibility to independently review ambiguous statutes, it logically follows that it is error to defer to agencies on those agencies’ own poorly worded regulations,” the group’s filing says.

Ultimately, litigation waves that end in multiple interpretations of the same statute in jurisdictions across the country is a recipe for industry confusion, Goodwin said.

That “basically defeats the purpose of why we had federal standards in the first place, which is to produce national uniformity and some degree of certainty for industry to organize and make long term investment planning decisions around,” Goodwin said. “That’s all gone in a world without Chevron.”

—With assistance from Pat Rizzuto and Shayna Greene.

The case is Loper Bright Enterprises v. Raimondo, U.S., No. 22-451, 6/28/24.