Supreme Court Overturns Chevron Doctrine – September 2024

In the early 1980s, just after the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or “Superfund”) was enacted, another significant statute known as “The Clean Air Act” was being put to the test. A legal question regarding HOW the law was to be implemented in cases where the statute itself left room for vagueness, or in other words, was ambiguous. In 1977, the U.S. Congress passed a bill that amended the Clean Air Act of 1963. With this new amendment, any project that created a new “stationary source” of air pollution was required to go through New-Source Review by the US EPA and an elaborate permitting process for approval. At the time, these permits were sought out by large manufacturers when making facility changes or production advancements that would ultimately also increase emissions. The question at hand was what constitutes a source? Each individual smokestack or opening from which pollutants can escape into the atmosphere, or the facility as one comprehensive unit? In the case of oil refineries, this difference can be striking on a cost-benefit ledger. When the statute was originally drafted in 1977, the US EPA interpreted the word “source” to mean virtually any significant addition or change at a facility that came in the form of small buildings, smokestacks, or boilers to name just a few. ¹

By 1981, the executive branch of the federal government had changed leadership, and correspondingly, the US EPA changed its formal definition of the word “source” as being an entire plant or factory. The US EPA’s new interpretation allowed companies, such as Chevron, to make business decisions more freely as long as the net impact to air-pollution emissions did NOT increase. The matter was taken into the legal system after the Natural Resources Defense Council (NRDC) sued Chevron on the matter of “stationary source,” which went to the U.S. Supreme Court. In 1984, the court ruled in favor of giving the executive branch agency (in this case, the US EPA) the authority to interpret the fundamental statutes that it is responsible for carrying out – and the Chevron deference, or more famously named “The Chevron Doctrine” was born.²

Prior to 1984, the federal courts exercised de novo review of agency when tasked with ruling on federal statutes, meaning they looked at the case with fresh eyes that were not encumbered by previous governmental decisions.

Fast forward to 2023, and we have a case that involves an entirely different agency: The National Marine Fisheries Service (NMFS). In this case, a New England fishing company takes the NMFS to task by claiming that the agency does not have the authority to mandate that the company maintains a government-appointed inspector onboard the vessel to monitor compliance to the Magnuson-Stevens Act (MSA). The MSA was originally written as a statute by congress to help ensure the prevention of overfishing in selected waters, and the NMFS claims that there is no other mechanism to do so without having a represented official present. After the plaintiffs appealed decisions in both the district and appeals courts, the U.S. Supreme Court ultimately overturned the Chevron Doctrine by ruling in favor of the plaintiffs Loper Bright Enterprises in the now landmark case of Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al. The decision was just published in July 2024.³

At the time of the Chevron v. NRDC ruling in 1984, many legal and political experts on both sides of the political aisle believed that judges in the lower federal courts were inappropriately creating policy by deciding for themselves what certain laws meant, effectively replacing the discernment of highly specialized agency experts with their own perspectives.^{4, 5}

In the end, it is interesting to note that the Chevron sword can cut both ways because over the flow of time, there will be federal administrations that are seeking to relax regulations (which is exactly what happened in the early 1980s when the Chevron Doctrine was adopted) and other administrations that are seeking to better enforce regulations that are already on the books.⁴

But there is one other significant problem with the overturning of the Chevron Doctrine, which may at first seem paradoxical: The incredible diversity of thought that comprises the federal court system. Though most of us absolutely condone diversity of thought in our legal system, it can get chaotic very quickly for companies trying to predict how any one of 850 lower court judges may rule on literally 1000s of statutes that, since 1984, were administered by appropriate agencies who are highly trained on the subject matter. Diverse education and backgrounds muddy the waters even further. A quote from Supreme Court Justice Breyer in oral arguments in the case of Kisor v. Wilkie highlights the potential conundrum the courts may face, “… there are hundreds of thousands, possibly millions of interpretive regulations. I mean, they give an example, one of them, where the Court deferred to the understanding of the FDA that a particular compound should be treated as a single new active moiety, which consists of a previously approved moiety, joined by a non-ester covalent bond to a lysine group. Do you know how much I know about that?”⁶ Is it reasonable to expect non-subject matter expert judges to effectively interpret highly technical aspects of regulations?  The Supreme Court has decided that it is and has placed this burden on the court system.

While not all cases involving interpretation of regulations will include highly technical questions that need to be answered, even the “simpler” questions that revolve around or word or phrase will require technical expertise to be effectively argued by both sides.

As the dust continues to settle from the decision, the short- and long-term impacts on the regulated community remain unclear. One thing that is clear and constant is the importance of generating high-quality data and building a team of experts from the scientific community who can truly understand and evaluate those data. Environmental Standards is here to help.