SCOTUS in Loper Bright Sends Us Back 40 Years

Tue Jul 2nd, On Environmental Law, by

Last Friday, June 30th, 2024, in Loper Bright Enterprises et al. v. Raimondo et al., case number 22-451, and Relentless Inc. et al. v. Department of Commerce et al., case number 22-1219, the U.S. Supreme Court eliminated a powerful and longstanding precedent that has controlled administrative law for 40 years. The high court’s 6-3 decision overruled Chevron USA v. Natural Resources Defense Council, pursuant to which federal judges have deferred to reasonable agency interpretations of federal laws since 1984.  For those of us who practice environmental law, the Chevron standard has been woven throughout our daily lives perhaps more frequently than a trip to the bathroom.  This is a groundbreaking moment, to be sure.  Many of us will abandon our usual practice of negotiating with agencies on behalf of clients to achieve compliance with federal law, such as the Clean Air Act, Clean Water Act, RCRA, and CERCLA.  In place of attempted collaboration towards compliance, I predict we will spend the rest of our careers litigating every agency action that is not accompanied by clear and explicit statutory direction. 

The high court sided with two New England fishing companies, Loper Bright Enterprises and Relentless Inc.  The case involved the 1976 Magnuson-Stevens Act, which requires fisheries operating within 200 nautical miles off the U.S. coast to allow federal observers onboard its vessels to collect data for preventing overfishing.  A group of fisheries from New England challenged the National Marine Fisheries Service’s interpretation of the Magnuson-Stevens Act, asserting they should not be required to pay the salaries of the observers.  The lower court ruled that, under the Chevron doctrine the National Marine Fisheries Service has the power to interpret any statute’s ambiguity that falls under its purview.  NMFS construed the statute to allow it to require domestic fishing vessels to pay or partially subsidize the salary of federal observers.

The justices split along ideological lines, with the majority conservative justices ruling that the Chevron deference doctrine cannot be reconciled with the Administrative Procedure Act, which subjects federal agency rule-making to judicial review.  In 1984, the Supreme Court ruled in Chevron that Congress intended ambiguities to be resolved by federal agencies, not the judiciary.  In 2024, the Supreme Court reversed this principle, finding that such a congressional delegations to agencies was a “fiction” that wrongly allowed the executive branch to change regulations at whim, making the regulatory horizon uncertain.

The dissenting Justices, Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson, challenged the majority’s rejection of stare decisis, or the respect for precedent, replacing the deference to the agencies with deference to the judiciary.  They argued that the judiciary lacks the expertise held by the agencies, which was one of the key reasons for the Supreme Court to establish the Chevron deference doctrine in the first place.

Pundits and court observers have noted that right-leaning legal groups have been pushing for this move for years, asserting that it is necessary to uphold the separation of powers doctrine.  Others counter that the move by the Court undermines, rather than upholds, the separation of powers doctrine by putting the power of interpreting Congress’s intent in the judiciary, and ultimately in the Supreme Court, which arguably now is under the control of the executive branch. 

Overturning a major precedent is significant and should be reserved for precedents that have been determined to be unjust or outdated, or involve new legal issues.  The Roberts Court, however, has made a practice of overruling precedents that do not meet these standards; instead, the current majority of justices overrule precedents they simply do not agree with, or think were wrongly decided based on their view of the law. 

Justice Roberts cited the Skidmore doctrine as a means of softening the impact of overturning the Chevron precedent, arguing that judges are still allowed to take a federal agency’s interpretation of a statute into consideration to determine the meaning of ambiguous text.  However, they are no longer required to defer to agency interpretations.  The Skidmore doctrine was established in 1944 in Skidmore et al. v. Swift & Co., 323 U.S. 134 (1944), which established a doctrine instructing judges to consider a federal agency’s interpretation when deciding what a statute or term means.  The Skidmore doctrine, in lieu of the Chevron doctrine, leaves significant ambiguity around when and to what extent a court should defer to an agency interpretation.  The lack of guidance from Skidmore, or any other court before Chevron, is what led to the Chevron doctrine in the first place.  That same lack of guidance will lead to significant litigation as the courts attempt to sort out their place in the interpretation of ambiguous statutes after Loper Bright

Justice Roberts claimed that lower courts will still need to defer to agencies if the statute has a “clear” congressional delegation of authority.  First, what does “clear” mean?  We will spend the next decade in court sorting that out, if it ever gets sorted.  Second, such potential deference is only tolerated by courts if Congress left no ambiguity in the underlying statute.  Those of us who have practiced law for the past 40 years know that there is ample ambiguity embedded in multiple provisions of each and every federal environmental statute.  We have spent the past 40 years resolving those ambiguities, creating a body of administrative environmental law that we can rely on to interpret these statutes and provide compliance counseling and transactional advice, as well as represent plaintiffs and defendants in private actions and government enforcement actions.  Now, all of what we know is gone and we can expect that each and every ambiguity that exists in the statutes is back on the table for renewed scrutiny.  It is entirely possible that the standard we thought were “givens” are no longer guaranteed.  The result is an uncertainty about “boots on the ground” compliance with statutory requirements is significant as litigation challenging agency regulations increases.  Practitioners will need to follow the full gambit of lawsuits that will start moving through the courts challenging agency actions to map the varying rulings for their clients.  There will be upheaval and moving targets for some time. 

Some have said that it is up to Congress to legislate more clearly.  Congress serves as a check on the power of the Court to interpret the Constitution.  However, in this political climate colored by dysfunction and lack of collaboration in the legislative branch, there is little hope that Congress will overturn the Supreme Court’s ruling in Loper Bright.  And, even less hope that Congress will amend or rewrite the Clean Water Act, the Clean Air Act, RCRA, CERCLA, or any of the other hundreds of statutes that are embedded in our day-to-day lives, to remove all potential ambiguities.  That would be a yeoman’s challenge that, no doubt, would only generate more litigation.  This is an intractable situation and the future is only bright for those who love to be in court. 

On the other hand, private parties, businesses, municipalities, and others may welcome the moving target because they see the chance to move it in the direction of interpreting regulations to be less stringent.  Many have argued for some time that EPA has been overreaching, making it harder and harder to operate a business in the U.S.  Arguably, in the past decades as Chevron became entrenched in the system, the courts deferred entirely to agency decisions, abdicating any role as overseer of reasonableness.  Removing Chevron deference will foist the responsibility onto the courts to become technical experts and listen to both sides of the case equally.  Many believe this will lead to more reasonable decisions by agencies in the first place.  Time will tell.

Certain to be seen in court are ongoing and new CERCLA cleanups where the government is seeking to demand remedies that parties argue are unreasonable.  The recent rulemaking by EPA declaring certain PFAS constituents to be hazardous substances is also destined to be challenged and now faces courts that will take a hard look at EPA’s rationale.  This has already been foreshadowed by the Supreme Court’s ruling in Ohio v. EPA, which the Court released just before the Loper Bright opinion.  In Ohio v. EPA, No. 22-1081, the Supreme Court stayed the EPA’s “Good Neighbor” smog reduction plan to reduce cross-state pollution finding several states and industry groups challenging it in court will likely prevail on the merits.  Justice Neil Gorsuch held that the challengers are likely to succeed in their claim that the EPA’s moves were arbitrary and capricious because EPA failed to fully explain the plan and ignored important comments during the public comment process.  We can expect to see more rulings like this in the future, raising the bar for EPA to justify their actions.  At this time, we do not know what the courts will expect of EPA.  The Court set no standard for what would pass muster.  It is possible that lower courts, without technical expertise to second guess EPA’s decisions, will throw their hands in the air and continue to defer to EPA.  It is also possible that they default to overturning EPA.  It is likely that both reactions will be seen in equal number, divided only by the personal inclinations (which many fear include political proclivities) of the judicial appointee hearing the case. 

Yesterday, July 1, the Supreme Court made the coming onslaught of litigation even more certain with another blockbuster case, Corner Post v. Board of Governors of the Federal Reserve System, No. 22-1008, holding that the six-year statute of limitations clock should have started running when the regulation first affected the company.  In essence, this opens up every agency rulemaking previously thought immune due to statute of limitations. 

Without the Chevron doctrine to moderate political and personal differences in the views of various jurists, we are certain to see more circuit splits emerge.  Thanks to the Roberts Court, the concern about diverging methodologies and views of the executive branch through agency actions, a concern that is mitigated by the public’s ability to vote a new executive branch into office every four years, has been traded for anxiety about the same divergent views of the judiciary, but the federal judiciary is appointed for life and unaccountable to the public.

The California environmental attorneys at Bick Law LLP will be watching all of the courts closely for any developments that are impacted by or implicate agency actions and challenges to agency actions as the collective environmental bar tries to sort out what’s next after Loper Bright.

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