The End of Chevron and Its Implications for EHS

August 13th, 2024 by Dakota Software Staff

“Chevron is overruled.” So states the majority opinion of Chief Justice John Roberts in a landmark 6-3 ruling issued by the U.S. Supreme Court (SCOTUS) on June 28, 2023. The decision overturning the legal standard commonly known as the “Chevron Doctrine” is expected to create a pathway for numerous challenges to federal rulemaking—and it could potentially have big implications for the Environmental, Health, and Safety (EHS) field.

Let’s take a look at what Chevron was, why it was overturned after 40 years, and what this development could mean for the future of EHS compliance.

What Is “Chevron deference,” and Where Did It Come From?

In short, Chevron deference established the interpretive rule that courts should defer to an administrative agency’s reasonable interpretation of an ambiguous statute rather than substituting their own judgment. It emerged from a 1984 SCOTUS decision, Chevron U.S.A. v. Natural Resources Defense Council (NRDC). In that decision, the Court established a two-step analysis that applied in the event of a challenge to a federal agency’s regulation or other legal interpretation:

• Has Congress “directly spoken to the precise question at issue”? In other words, does a statute directly and unambiguously address the specific question before the court? If so, both the courts and the regulating agency must give effect to what Congress intended.

• If the statute is silent or ambiguous on the question, is the agency’s interpretation reasonable? If so, a court was required to defer to the regulating agency’s interpretation, even if it is not the interpretation the court would have chosen.

In Chevron v. NRDC, the issue was that Congress did not clearly define what the term “stationary source” meant under the Clean Air Act (CAA) Amendments of 1977. The Environmental Protection Agency (EPA) interpreted the term as applying to an individual piece of equipment or to an entire facility (what’s become known as the “bubble” concept). SCOTUS agreed that the EPA’s interpretation of the regulation was reasonable and therefore permissible—and this led to the creation of the two-step analysis described above.

This legal precedent gave federal agencies like the EPA and the Occupational Safety and Health Administration (OSHA) significant latitude to issue regulations that “fill the gaps” within the statutes that they are charged with implementing (and which are often written broadly and light on specific details).

The recent decision overturning Chevron shifts most of this power to fill these statutory gaps to the courts—and away from the agencies.

The Review, the Decision, and Reactions

The SCOTUS review of the Chevron Doctrine was prompted by two related cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce. The cases were brought by fishing companies challenging a rule passed by the National Marine Fisheries Service (NMFS) under the Magnuson-Stevens Fishery Conservation and Management Act of 1976.

The Magnuson-Stevens Act authorized a program for monitoring compliance in commercial herring fishing but did not specify who should bear the cost (an estimated $710 per day). The NMFS, in its interpretation of the statute, passed a rule compelling the fishing companies to assume the costs of the monitoring program. In their challenge to this rule, the companies put two questions before the court:

• Is the NMFS authorized under the Magnuson-Stevens Act to require industry to pay for compliance monitors?

• Should SCOTUS overrule Chevron or otherwise clarify agency deference when a statute is silent on a key point?

SCOTUS only addressed the latter—and decided to overturn Chevron.

Supporters of the decision say that it corrects an uneven balance of power between branches of government by allowing the judiciary to step in when agencies overstep the bounds of their authority. As Chief Justice Roberts wrote for the majority, deference to agency interpretations “is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.”

Critics of the decision say that it will lead to what amounts to regulatory chaos, as judges across jurisdictions could interpret statutes very differently—and agencies’ ability to implement and enforce laws that apply in often complex contexts could be undermined. In a dissenting opinion, Justice Elena Kagan wrote, “Some interpretive issues arising in the regulatory context involve scientific or technical subject matter. Agencies have expertise in those areas; courts do not.”

How the Loper Decision Might Impact EHS

Perhaps the most important thing for EHS leaders to know about this ruling (for now) is this: No existing regulations have been overturned or nullified by this decision, including those that relied on Chevron deference to uphold them. This is made quite clear in the Roberts opinion, and EHS managers shouldn’t be under the mistaken impression that any currently applicable compliance obligations have vanished (or are even on hold or in limbo) at this point.

What EHS leaders need to watch for is the ripple effect of the decision. It is probable that more legal challenges will emerge in the wake of Loper, especially to any regulation upheld by Chevron deference—but it’s not a guarantee that they will be successful. After all, the end of Chevron has not stripped agencies of their authority to regulate; agencies simply now face a higher bar when creating new rules and defending them in court, as their interpretation of a statute has to be found correct by a court, and not merely reasonable.

This higher bar could potentially mean even more drawn-out rule promulgation processes as well as pressure on lawmakers to create unambiguous statutes, which may perhaps result in less “regulatory whiplash” across administrations.

EHS Software—Your Guide in Uncertain Times

The only thing certain about the end of Chevron is that it’s created a lot of uncertainty in industry. As its impact becomes more understood over time, EHS leaders will have to watch closely for new developments that could affect their compliance obligations. Dakota Software keeps you in the know with an expert-curated regulatory database and regulatory alerts, part of a software solution that helps you plan, track, verify, and improve your programs no matter what changes may lie beyond the horizon.

View our demo library to see how we can help you stay prepared amid the shifting EHS compliance landscape.