Something You Might Need To Care About: The Chevron Doctrine Revisited By SCOTUS

A new case being taken on by the Supreme Court (SCOTUS) could have a big impact on numerous areas of our professional and personal lives, especially with the fuels we use. And it may all come down to a rule on fishing.

The Supreme Court has been making waves (no pun intended) more often in the last few years than we remember.  Or maybe it’s just that with a number of hot-button social issues up for debate (immigration, abortion), people are paying more attention.  We’ve done some blogs (and at least one Fuel Pulse Show podcast episode) about a few court decisions that affect businesses and the American public in the realm of “fuels and the things that use fuels”.  Our blog on the Inflation Reduction Act and how it gave the EPA previously unheard-of authority to regulate greenhouse gas emissions is one good example.

So the table is set for what we want to talk about here: the Supreme Court announced that it was taking the case of Loper v. Raimondo. Legal experts say this is a clear sign that the SCOTUS is going to put to bed, once and for all, the precedent known as Chevron Deference. It’s a legal principle that’s been in play for a long time - so much so that it’s sometimes referred to as a “zombie precedent” - a legal doctrine that appears to be “dead” but yet still comes back to life periodically. Famous Supreme Court Justice Antonin Scalia once described such a legal doctrine as “like some ghoul in a late-night horror movie that repeatedly sits up in its grave and shuffles abroad, after being repeatedly killed and buried, it stalks our….jurisprudence once again, frightening little children and school attorneys.”

So what’s the big deal in all of this? Chevron, as in, gas station?

This term “Chevron Deference” refers to a legal doctrine that was articulated in the Supreme Court’s decision in the 1984 case Chevron v. Natural Resources Defense Council.  The case is considered a landmark decision in that the Court set forth the legal case for determining whether to grant deference to a government agency’s interpretation of a statute that it administers.  This “Chevron deference” doctrine has been used many many times in the last forty years, as the foundation for giving the myriad of government agencies the ability to, essentially, define what the rules mean that we have to follow. 

This bothers some people on the basis that, they argue, the Chevron doctrine allows the executive branch of the government (which is what federal agencies fall under) to make law (b/c they’re making and interpreting the rules).  This seems to contradict the established principle that the executive branch doesn’t make law, only the legislative branch does.

To understand what Chevron deference looks like practically, we should look at the case it came from.  Then we’ll talk about why it would matter to us, as businesses and consumers, if the Supreme Court takes a look at it and decides to change something about it.

We go back to 1977 when Congress passes an amendment to the Clean Air Act, which is the comprehensive law regulating air pollution. The change Congress made required all companies in the US planning to build or install any major source of air pollutants to go through a “new-source review” process that could be pretty elaborate.

The issue wasn’t that people were unhappy with the requirement, it was that the bill didn’t precisely define what a “source” of air pollution was. Remember, composing the bill was Congress’ (the legislative branch) responsibility, but they left a really important term ambiguous.  So the EPA stepped in to write a more specific definition of “source”.  The EPA would end up changing that definition a few times over the proceeding years, sometimes to give companies the ability to avoid the process altogether. The Natural Resources Defense Council, an environmental advocacy organization, sued over the legality of the EPA getting to define the terms the way it did (maybe they didn't like the definitions being changed to enable companies to skirt the requirements). Ultimately, they lost. And the big doctrine that came out of the SCOTUS decision was that agencies like the EPA were allowed to decide what certain things meant if those things weren’t defined well enough in the legislation they came out of.

Over the years, Chevron has probably been the most frequently cited case in American administrative law. It has certainly been an influential part of some different cases whose results help govern key parts of our lives. 

In 2002, Chevron deference informed the Court’s ruling on employment rules, that an employer could refuse to hire a disabled applicant when the applicant’s disability on the job would pose a “direct threat” to their own health. The Equal Employment Opportunity Commission was the agency that got to specifically define “direct threat”. Chevron deference also informed rulings in cases like the Net Neutrality case from a few years ago, where SCOTUS ruled Chevron deference allowed the Federal Trade Commission to define the terms that lead to deciding whether internet service providers are allowed to give preference to internet transmissions from different kinds of companies. If you think that one’s not a big deal, think about it this way. Let’s say two political candidates, one Republican, and one Democrat, were running against each other. One of them goes to your local Comcast or Verizon internet provider and says “I’ll pay an extra bonus if you make sure my website and emails go out before the other guy’s”.  The Net Neutrality doctrine would say they can’t do it - internet providers have to be fair and serve up all parts of the internet with equal speed. But the SCOTUS ruling invalidated that law (or at least severely hampered it), so now internet providers can do anything like that that they want.  The Chevron doctrine helped inform some of the Supreme Court’s decision here, that the Federal Trade Commission (with a head administrator known to be “favorable” to businesses who don’t like Net Neutrality requirements) gets to define the key terms to help give the decision meaning.

The Key Case: Loper v. Raimondo

All of this came to mind when it was announced on May 1st that the Supreme Court had agreed to consider the case (to “grant cert”) of Loper Bright Enterprises v. Raimondo.  This case centers on a federal regulation requiring fishing vessels on national waters to carry monitoring personnel onboard to make sure they comply with relevant federal laws. Not only to carry them, and pay for them as well. But who pays for these monitors?  The regulation says the fishing vessels have to foot the bill.  That can amount to as much as 20% of the vessel owners’ income, so it’s a substantial thing.

Digging down into the details, the law making this requirement says the vessels are required to pay for the monitors only in three specific circumstances. The law also limits the amount of financial burden that expenses can impose. So it would seem to be pretty straightforward, except that it's not. The governing agency has argued that this requirement actually means they can interpret it as giving them the power to require a lot more different kinds of vessels to pay for these monitors. 

At least, that’s how the petitioner Loper has characterized the situation.

In their petition to the Supreme Court, Loper asked them to consider overruling Chevron or at least tell the world that in at least some instances where a statute (a rule) is silent or isn’t specific about something, the agency doesn’t get complete freedom to define that thing any way they want.

We know that at least one of the justices could be amenable to making some changes to the doctrine. Justice Neil Gorsuch has gone on record before that he doesn’t think Chevron completes passes constitutional muster. Ironically, his mother is Anne Gorsuch, who happened to be the Head of the EPA in 1984 when the Chevron case was argued. So he likely is more familiar than most with all of this.

Now, What Does This Have To Do With Us?

Let’s say the Supreme Court makes a ruling that concludes that Chevron deference is no more. It’s unconstitutional and agencies can’t use it anymore to make all the decisions on what means what.  What consequences might that have for us? Consequences in what areas? Lots of digital ink has been spilled over this, but let’s just say it would have major practical implications in a bunch of places.

For one, it’s going to make it much much more difficult for any federal agency to defend actions of all kinds in court. Up till now, there was always a strong presumption in favor of the validity of the agency’s action, whether in healthcare, education, trade, commerce, or whatever.   The only requirement was that the agency’s action had to be deemed to be “reasonable”.  If Chevron deference goes away, that presumption goes away, too.  Agencies would forever be acting in the broad shadow of uncertainty about whether a federal court is going to come along and undo everything they’ve worked towards.  Really, it’s not a very attractive possibility to be working under.  Not if we want a government that gets things done instead of being paralyzed by inaction. We've already got too much of that.

In addition, scrapping Chevron deference is going to give the courts a lot more power, as they will be deciding many more challenges to any number of agency rules that people don’t like. For us, as users of fuel, we could see big challenges to all of those EPA rules that people want to find fault with.  All those new EPA emissions limits will undoubtedly face some court challenges. All of the environmental rules for Clean Air and Water will be challenged in court by parties hoping to be able to successfully argue that some part of some statute wasn't specific enough and that the EPA shouldn’t have been allowed to decide what it meant.

Ultimately, we think this case is going to have unforeseen consequences that are going to ripple through the marketplace. Think of all the rules and statutes governing the fuels that we use.  All of those could be under attack. One thing’s for sure, the courts are potentially going to get a whole lot busier.