The Supreme Court said Monday that it would hear a case — Loper Bright Enterprises v. Raimondo — that could limit or end the so-called Chevron Deference, the long-standing deference of courts to a federal agency’s interpretation of an ambiguous statute. Conservatives on the court have previously raised concerns about the precedent and how it has been used to expand the reach of agencies’ authority.
The court last addressed the issue in June 2022 in its landmark West Virginia v. EPA decision. As we wrote about in Limbo Rock, the court scaled back the powers of the EPA to implement regulations that extend beyond what Congress specifically directed in its authorizing legislation, in this case the Clean Air Act. The ruling didn’t go as far as to throw out the Chevron Deference, but it set guidelines for its use, based on the Major Question doctrine.
The Chevron Deference, established in 1984, basically says that if the law empowering an agency doesn’t explicitly say not to do something to meet the goals of the statute, the agency can do it. The Major Question doctrine, established 10 years later in 1994, says that if the issue has a lot of economic or social impact, the agency cannot act unless it is explicitly authorized under the empowering legislation. The way the Supreme Court sees it, the Major Question doctrine comes first — in essence, if something isn’t seen as a big deal, then the Chevron Deference takes over. (An explanation of why and when a court will defer to an agency's interpretation of the law is shown in the graphic below.)
There are three elements of the Chevron Deference that proponents commonly support:
- Lasting and predictable regulatory rules are important even if they’re sometimes problematic, since companies can usually plan and act according to any set of rules as long as they know what they are.
- In establishing statutory law, Congress seems to do best when it does not try to address too many details — as facts and issues change over time. Congress historically has had a difficult time changing the statutory law to respond, whereas regulators given the responsibility of implementing a statute can respond much more quickly.
- Regulatory agencies will always have a lot more detailed subject-matter expertise than congressional staff, as well as much more current, ongoing relationships with industry players and stakeholders.
While much of the energy industry welcomes regulatory restraint, especially when it comes to the EPA, a decision by the court to limit or end the Chevron Deference could make it more difficult for industries that rely on a predictable regulatory environment for making long-term plans. The case will be heard in the court’s next term, with a ruling likely in 2024.
