Chevron is Dead! Long Live… What, Exactly?

Energy and environmental policies have long been intertwined with scintillating issues of administrative law. The latest example of this came today when the Supreme Court reversed its seminal decision in Chevron v. Natural Resources Defense Council, which for the last 40 years has governed how courts are supposed to handle cases involving the interpretation of federal statutes by the executive branch.

As one might have learned in high school civics, the federal government is divided into three separate but equal branches: the legislative, which makes the law; the executive, which enforces the law; and the judicial, which interprets the law. At least that’s how it’s supposed to work. In reality, Congress often passes broad-based legislation that leaves a lot of questions unresolved and specifics that still need to be filled in. Federal agencies therefore establish their own rules and regulations “interpreting” the law so that it can be implemented. In practice, this means that the details of energy policy are often set not by Congress but by federal agencies such as the Environmental Protection Agency (EPA) or the Federal Energy Regulatory Commission (FERC).

This has put courts in a bit of a pickle. Suppose an agency comes out with an interpretation of the law that not everyone agrees with (hard as that may be to believe). Someone might sue, and courts would end up having to decide whether the agency’s interpretation of the law was correct. That could be difficult, both because of the highly technical nature of some of the issues involved and because the statutes in question are often ambiguous. To deal with these questions, the Supreme Court developed the Chevron doctrine, which involves asking two questions: 1) Is the statute in question ambiguous? 2) Is the agency’s interpretation of the statute reasonable? If the answer to both questions is yes, then courts should defer to the agency interpretation. If the answer to either question is no, the court won’t defer but will decide what the correct statutory interpretation should be with fresh eyes.

But while Chevron ruled for nearly half a century, courts were never entirely comfortable with it. For one thing, judges are supposed to be interpreting the law, not deferring to a bunch of executive branch bureaucrats who are kind of making it up as they go along. Chevron deference also meant that there could be big changes in energy policy between presidential administrations without any change in federal law. Over time, courts began to create more exceptions to Chevron, such as the “major questions” doctrine (Chevron doesn’t apply if the issue involved is, like, really important). And now with the Court’s decision in Loper Bright, the doctrine has been abandoned altogether.

But while the demise of Chevron will delight many legal nerds, we shouldn’t overestimate its practical effect, at least in the short term. The fact that the Supreme Court had previously limited the doctrine means that getting rid of the rest of it will have a smaller effect. This is particularly true when it comes to environmental regulations like the Clean Power Plan. Likewise, the Court has been telegraphing an end to Chevron for several years, so agencies have begun to craft their rules in anticipation of a post-Chevron world. FERC, for example, had already all but stopped relying on Chevron as a defense in its own rulemaking.

There is also what you might call the dirty secret of judicial deference. Under Chevron, if a judge didn’t like an agency rule, they could usually just say that the rule was unreasonable (or that the statute wasn’t ambiguous) and achieve the same result as if there had been no deference. By contrast, even with the formal Chevron doctrine gone, it’s likely that judges will tend to implicitly defer to an agency’s interpretation more than they would if they had to come up with an interpretation of the rule from scratch.

The end of Chevron will make a difference, particularly in the long term as particular interpretations of the law get locked-in and can’t be so easily changed by a new administration. But the same factors that originally gave rise to Chevron—the technical and often ambiguous nature of federal law—are still present and will still play out no matter what the official doctrine says.