Home\Advocacy\U.S. Supreme Court Overturns Chevron Deference and Issues Two Additional Decisions that Could Reshape Federal Environmental Enforcement and Litigation

U.S. Supreme Court Overturns Chevron Deference and Issues Two Additional Decisions that Could Reshape Federal Environmental Enforcement and Litigation

Date: July 02, 2024

The following analysis of the Supreme Court’s decision to overturn the Chevron doctrine is provided by the National Association of Clean Water Agencies (NACWA) and pursuant to a Memorandum of Understanding between the WateReuse Association and NACWA which establishes a working partnership between the organizations to ensure our respective membership is served effectively in federal policy and advocacy matters related to clean water issues.

Eliminating Judicial Deference to Agency Decision Making

Love it or hate it, if you are regulated under a federal statute, you have probably heard the term “Chevron deference.” Coined for the case in which the standard was articulated – Chevron U.S.A. v. Natural Resources Defense Council – that phrase refers to the principle that a court should defer to reasonable federal agency interpretations of a statute they administer where the statute is either silent or ambiguous, even if the court does not believe the agency’s interpretation is necessarily the best interpretation.

From 1984 until last Friday, Chevron deference had been employed by federal courts around the country to assess the legality of myriad regulations issued by federal agencies including EPA (although, it should be noted, rather tellingly the Supreme Court itself had not referenced the decision since 2016).

In a decision split along ideological lines, the Court last week in Loper Bright Enterprises v. Raimondo (and the related case of Relentless, Inc. v. Department of Commerce) overruled Chevron and instead held that the Administrative Procedure Act (APA) requires courts reviewing agency actions to exercise their independent judgment and decide all relevant questions of law.

Under the new ruling, while courts can be informed by agency interpretations which they find persuasive (often referred to as “Skidmore deference”), those interpretations are not entitled to any actual or binding deference from the courts. Rather, going forward, courts must determine what statutes mean by employing traditional tools of statutory construction. The Court did note, however, that it did not intend to call into question all prior cases that relied upon the Chevron framework to uphold previous agency actions.

It will take time to assess the full impact of the Court’s decision to overturn 40 years of established administrative law precedent. But NACWA members should be aware of a few key things going forward.

The question of whether the decision will lead to more regulatory certainty is not as straightforward as it might seem. Some of the Justices have noted that the decision will help put an end to the whiplash regulated entities can feel when new administrations interpret statutes differently from prior administrations. The multitude of definitions of “waters of the United States” (WOTUS) proffered by various administrations over the years provides one helpful example of this concern.

However, the decision will also undoubtedly lead to courts across the country reaching different conclusions about how to interpret the same statutory language. The Supreme Court will step in to resolve some of these disputes – like WOTUS – but the vast majority of conflicts will not reach the high Court. This means that NACWA members may well face situations where the same Clean Water Act (CWA) provision requires something different of their utility than it does for utilities in other, even nearby, judicial circuits.

The line between what is a “question of law” and what is a “question of policy” will also likely not be clear in all cases. As such, the decision may increasingly allow – or even require – courts to take on the role of policymakers. This issue is likely to become more acute as Congressional gridlock continues to push agencies to try to address new challenges using old statutes. Conversely, the decision may help apply additional pressure to Congress to productively work together to clarify ambiguous legislative language, though whether this happens and to what extent it may be successful remains to be seen.

While the decision will likewise place arguably long-overdue judicial scrutiny on agency decisions that have huge impacts on local communities, it also opens up the possibility that agency expertise may be overshadowed by outside interests, many of which may not have a community’s best interests at heart. For NACWA members, this may prove to be a double-edged sword, especially in light of the Court’s other two influential recently-issued decisions discussed below.

Reopening Longstanding Regulations to New Judicial Challenges

In Corner Post Inc. v. Federal Reserve, the Court held 6-3 that the 6-year statute of limitations to bring an APA challenge against a federal regulation does not begin to run until a party is injured by the regulation. In other words, parties can now challenge the underlying lawfulness of any decades-old regulation if they can show they were recently harmed by it.

As with the Loper Bright decision, the impacts of this decision remain to be seen, but there are likely to be both positive and negative repercussions for the clean water community. For example, the decision will likely provide new opportunities for utilities wishing to obtain judicial review of longstanding regulations that are now being used to impose increasingly burdensome and unwarranted regulatory requirements. At the same time, however, it also paves the way for litigious third-party groups on both ends of the political spectrum to attempt to continuously shift the rules of the game with respect to environmental compliance and statutory obligations.

Limiting the Authority of Administrative Law Judges

In Securities and Exchange Commission v. Jarkesy, the Court considered when defendants in federal civil enforcement actions have a right to demand a jury trial in lieu of a trip to an agency’s internal administrative law judges. The Court held that, where a federal agency seeks civil penalties in cases akin to common law claims – in the case of Jarkesy, common law fraud – the 7th Amendment of the U.S. Constitution guarantees the defendant a right to a jury trial.

While Jarkesy dealt with federal securities fraud regulations and the SEC’s administrative tribunals, it will likely apply with equal force to certain proceedings EPA has until now brought before its Environmental Appeals Board (EAB). In particular, when taken in conjunction with the decades-old decision from the Court in Tull v. United States, it is likely that, where EPA brings an action for civil penalties under the CWA, a defendant will be able to bypass the EAB in favor of a jury trial.

Importantly, however, given the fact-specific – and, dare we say, esoteric – nature of determining whether a particular agency enforcement action resembles a “common law” cause of action, the Jarkesy decision leaves open a number of questions, and may not ultimately have as big an impact on the environmental landscape as Loper Bright and Corner Post.

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