Chevron Deference: What Can The US Expect Now?

Trade bodies, including the Petrochemical Alliance of Oklahoma, are celebrating the Supreme Court's June decision to scrap the decades-old Chevron Deference doctrine. The doctrine obligated federal courts to defer to agency regulatory interpretation in matters of legislative ambiguity.

Alliance president Brook Simmons hailed the decision as a huge victory for Americans. It is, Simmons said, "a big win" for the US oil and natural gas industry and for Oklahoma, the nation's sixth-largest producer of crude oil and marketed natural gas.

Meanwhile, the American Bankers Association (ABA) stated that the new precedent prevents "the powers [of federal agencies being] unlimited".

As the alliance, ABA, and unsuccessful past plaintiffs begin to rake over potentially contestable federal rulings, others worry for the environment, communities, and wildlife US-wide. 

With the removal of the Chevron Deference doctrine, a central tenet of US law that allows specialist agencies rights in rule-making, is no more. And a raft of legal cases challenging earlier decisions that thwarted commercial aims may be on the horizon.

How Chevron Deference Came To Be

The Chevron Deference precedent emerged in a case brought by Chevron against the Natural Resources Defense Council (NRDC).

In an earlier court case, the NRDC successfully persuaded a court led by Ruth Bader Ginsburg that the Environmental Protection Agency (EPA) 's definition revision of "new or modified major stationary sources" of air pollution was unconstitutional.

The way the definition of a stationary source was changed effectively eliminated around 90% of new industrial projects from permit registration responsibilities. The NRDC questioned whether the EPA regulation was consistent with the term “stationary source” as used in the Clean Air Act.

The case concluded by agreeing that the agency’s plantwide definition was a permissible construction of the statutory term "stationary source," which was a win for Chevron. 

What makes the recent turnaround significant is that, according to Supreme Court news and analysis agency SCOTUSblog, the Chevron doctrine requirement has been cited in federal court rulings more than 18,000 times since it was implemented.

Fears for the future of the environment, communities, and wildlife in areas ripe for commercial and industrial development have grown since the decades-old US legal paradigm faltered in the face of industry litigation.

Fears for the Sagebrush Lizard

Will the rare Sagebrush lizards in western Texas and eastern New Mexico oil fields survive the expected scrum? The US Fish and Wildlife Service only granted the reptile endangered species status in May 2024.

That followed years of campaigning to protect the species, as miles of its habitat were said to have been destroyed in a matter of months.

And now, the lizards' landscape—within the largest oilfield in the US—has become even more contentious. Permian Basin oil production is set to demonstrate its slowest annual growth rate since 2021. The entire basin, however, is estimated by the Texas-based Bureau of Economic Geology to contain a cumulative volume of 30 billion bbl.

Source: Creative Commons Attribution-Share Alike 2.0 Generic

Redrawing the US Regulatory Landscape

However, last month's major ruling scrapped Chevron Deference by six to three votes. Justices in the consolidated cases of Loper Bright and Relentless—Loper Bright Enterprises v. Raimondo and Relentless, Inc v. Department of Commerce—voted to end the 40-year-old obligation for courts to defer to agencies' regulatory interpretations.

Loper Bright and Relentless' case pivoted on a National Marine Fisheries Service (NOAA Fisheries) interpretation of a conservation and management act. The NOAA Fisheries interpretation imposed a levy on operating vessels to fund a compliance monitoring accompanier.

NRDC senior attorney David Doniger—ironically, the very lawyer that lost NRDC's case against Chevron in 1984—branded the ruling “profound and terrible”. 

However, according to a report commissioned by advocacy groups Public Citizen and the Coalition for Sensible Safeguards, the majority of trade associations that filed court briefs on the issue wanted the doctrine scrapped.

Public Citizen's amicus brief argued that Chevron Deference was "unlikely to subvert our constitutional order, and has not done so in practice".

"Rather, [it] allows agencies to do their jobs within the scope of their statutory mandates, while preserving the roles of Congress and the courts in enacting and interpreting the law," the group's filing states. 

In its amicus brief, the national legal organization Democracy Forward warned the court of a rocky future in the event it scrapped the precedent.

"...Overturning the Chevron framework will likely create a regulatory landscape that is
prone to whiplash changes as courts overturn or
enjoin regulations more frequently.

"Such changes could turn otherwise fair and beneficial requirements into onerous burdens with which small businesses struggle—or even fail—to comply," it said.

The America First Policy Institute was among the anti-Chevron Deference amicus briefs filed. The organization said the doctrine "violates basic constitutional principles surrounding the separation of powers." 

It "forfeits the judiciary’s role as the branch that bears the solemn duty to interpret the laws in the last resort" and "holds the dishonorable distinction of authorizing the consolidation of legislative, judicial, and executive authority in the hands of administrative agencies."

The Ruling from Chief Justice John Roberts

In a 35-page ruling, presiding Chief Justice John Roberts described the Chevron Deference as a “fundamentally misguided” doctrine. It was considered to defy the Administrative Procedure Act's (APA) command that the court decide all relevant questions of law. Therefore, it was inconsistent with APA direction and gave unelected government officials too much authority. 

But Doniger believes the Supreme Court’s decision represents its concerted effort to make it harder for the government to function. “Agencies need to be able to respond to complex problems… This decision is profoundly destabilizing [leaving] policy—and public health—up to the individual preferences and political biases of unaccountable judges,” he said.

Forest Product Firm Derails Chevron Deference

Agencies like the EPA's control over territories—whether publicly or privately held—showed signs of weakening in 2018. A unanimous decision by the Supreme Court justices favored the Seattle-headquartered timberland company Weyerhaeuser over the non-profit organization US Fish and Wildlife Service.

Source: CC BY 2.0 US Department of Agriculture

The ruling quashed an earlier appeals court decision that had essentially designated Weyerhaeuser’s land “critical habitat” for the endangered dusky gopher frog.

Will Skidmore Offer More? 

However, agencies may still be able to guarantee some degree of deference under a standard established in the case Skidmore v. Swift & Co.

That case involved the owner of slaughterhouse facilities and was heard in 1944. Swift & Co's workforce of firefighters argued that onsite hours rostered into their schedules should count as contract hours. Those hours should, therefore, be paid under the Fair Labor Standards Act directly.

The trial court agreed with Swift & Co that, since this time would be largely spent engaging in social activities and resting, it did not constitute work as a matter of law.

The Office of the Wages and Hours Administrator intervened by urging the court to apply a flexible approach in which some time would be deemed working time, and other time (such as eating time) would not. The outcome was the finding that agencies contributing to legal proceedings "deserve respect," especially when their expertise and experience in the issue at hand are significant.

The court developed a test to determine the deference to be given to an administrative agency's rules based on the following:

• The thoroughness of the agency's investigation
• The validity of its reasoning
• The consistency of its interpretation over time
• Other persuasive powers of the agency

Skidmore Deference is widely seen as less powerful than Chevron Deference. However, only time can be a testament to its ability to sway judicial rulings in favor of agencies against ruthless business tactics.

And The Question Is, Where Does It End..?

The Supreme Court's ruling opens the debate about who is competent to rule on environmental matters.

Should it rest with agencies that know and understand the complex and delicate interaction between habitat and man-made disturbances to the balance of nature? Over decades of practice, that has become the accepted situation.

Or should it rest with the courts, whose role it is to interpret and apply the intentions of elected lawmakers? That has been the new ruling of the Supreme Court.

Independent onlookers may conclude that it should not be one way or the other but a resolution that takes account of all sides of the complexities of each situation, case by case.