Overturning The Chevron Deference

by | Jul 3, 2024 | Regulation

Despite sky is falling rhetoric from some quarters, this decision is hardly the end of the administrative state.

On Friday, the Supreme Court issued a very significant decision in the case Loper Bright Enterprises v. Raimondo. The specific facts of the case, which involved fishing vessels being forced to pay the salaries of government workers, are secondary to the major holding of the case which overturned a court doctrine known as Chevron deference (from the 1984 case Chevron v. NRDC). Chevron deference had established a standard where a court was supposed to defer to an agency’s interpretation of a statute, rather than exercise independent judgment, when a statute’s meaning was arguably ambiguous, so long as the agency’s interpretation was reasonable. The Supreme Court itself had not followed Chevron deference in nearly 10 years, but in Loper Bright the Court officially overruled the Chevron precedent, meaning that lower courts were no longer bound to follow its reasoning. This rebalancing of interpretive power away from the administrative state has potentially significant long term impacts in all areas of federal regulation, not least energy and environmental policy.

The fundamental problem with Chevron deference was always that it gave the administrative state the power to interpret the boundaries of its own power. Over time, unsurprisingly, bureaucrats tended to interpret statutes to maximize their own authority. The bureaucracy expands to meet the needs of the expanding bureaucracy. This fed a steady increase in the scope of federal power. Congress was sometimes complicit in this expansion, passing laws that were deliberately vague to avoid accountability, leaving the bureaucrats to fill in details. Members of Congress could then express outrage that the regulators had gone much further than intended.

However, in more recent years as Congress has grown more divided, passing new laws, whether ambiguous or not, has become more difficult. This difficulty has been lamented by advocates for increased federal power, and there have been many claims that Congress “doesn’t work” anymore. But the difficulty of passing new laws, especially affecting regulation, reflects deep divisions in society about the appropriate scope of the federal government. Thus Congress arguing to a standstill is actually a democratic outcome, reflecting the disagreement among the citizenry.

This deadlock has led creative regulators, under presidents of both parties, to search for novel interpretations of old statutes to give themselves the powers that they believe are necessary. The Obama administration kicked this creative regulation into high gear, with much of their creative energy focused on climate change regulation. The problem was that Congress had never passed any legislation directing the federal government to regulate greenhouse gases. But that couldn’t be allowed to stand between regulators and their goals, so the administration went back to mine old statutes in search of places where ambiguity could be claimed. The administration then could reinterpret an “ambiguous” provision in a way that allowed them to undertake climate change action, expecting that lawsuits could be defended against by citing Chevron deference.

The obvious issues with democratic accountability in this Chevron construct are glaring, which is likely why the Supreme Court itself stopped citing Chevron some time ago. But as long as the precedent remained on the books, lower courts were expected to follow it. In finally sweeping Chevron away, the Court made clear that judges were responsible for interpreting the law, not bureaucrats. It is notable that the Court in its decision makes clear that courts should give weight to agency expertise in technical matters, but interpreting statutory language is not an area of agency expertise. Indeed, statutory interpretation is precisely where courts are the experts. The Court also notes that Congress could explicitly give an agency the power to interpret a given statute, so this decision is not some aggressive limitation on the expansion of the administrative state. At the core of this decision is really democratic accountability: federal powers must be clearly granted by Congress.

The impacts of the Loper Bright decision on energy policy will be mixed. Agencies that have been aggressively creative about expanding their power, such as the EPA, are likely to see courts reining them in more often. However, there are other areas where deference to agency interpretation has been important for good government and speedy decision making purposes, for example permitting decisions for federal land use or proceedings before the Federal Energy Regulatory Commission. Loper Bright makes clear that courts should still give due weight to regulators on matters of technical expertise, but exactly what counts as a technical question, or a fact question, versus a question of law is unsettled in many regulatory areas and will be fought out in the courts over the next few years.

In the longer term, Loper Bright should help limit some of the most egregious regulatory overreach from the federal government. Since the Court issued West Virginia v. EPA in 2022, which articulated the “major questions” doctrine whereby huge claims of regulatory power must derive from an explicit grant from Congress, it has already been possible to discern more caution among regulators about adventurism, for example in the latest iteration of the Clean Power Plan where the Obama administration’s sweeping, unprecedented assertion of regulatory power has been pared back substantially. The end of Chevron deference should encourage more regulatory modesty, with regulators now knowing that they will not be getting automatic deference when they are sued.

Despite sky is falling rhetoric from some quarters, this decision is hardly the end of the administrative state. Congress has handed over enormous power to bureaucrats to run our lives. All this decision means is that if bureaucrats want to seize more power, they need Congress to actually give it to them, they don’t get to just make it up. In a democratic society this is really how it should be, elections should decide the scope of federal power.

Made available by IER.

Kenny Stein is the Vice President of Policy and has worked for the Institute for Energy Research since 2017. Kenny received his J.D. from the University of Houston and his B.A. in international relations from American University.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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