On June 28, in a 6- 3 decision, the Supreme Court overturned the Court’s 1984 Chevron “deference” ruling. Under that decision, courts largely deferred to federal agency rules if the agencies’ interpretation of an ambiguous law was reasonable and not inconsistent with the authority granted by Congress.
Many believe Chevron led to the growth of the federal administrative state and this generated major criticism that such deference violated the Constitution’s separation of powers principles. The cases of Loper Bright Enterprises v. Raimondo and Relentless v. Commerce involved NOAA fisheries rules holding vessel operators responsible for paying salaries of on-board monitors to guard against overfishing. In overturning Chevron, the Court vacated the NOAA fisheries rule as not consistent with the NOAA’s underlying authority
Implications of the ruling
The Supreme Court’s ruling gives federal courts primary responsibility to determine if federal agency interpretation is consistent with federal law. This decision, along with the Court’s July 1 decision of Corner Post inc. v. Board of Governors could open the door to challenging past rules.
In particular, the Court’s ruling could have a major impact on multiple recent federal actions affecting environmental permitting including:
The September 8, 2023 Environmental Protection Agency (EPA)/Corps of Engineers rule defining Waters of the United States (WOTUS)
EPA’s September 27, 2023 State Water Quality Certification (WQC) rule under the Clean Water Act, and
The White House’s Council on Environmental Quality’s (CEQ) revised rules implementing the National Environmental Policy Act (NEPA).
All of these rules impact permitting for many activities including energy, mining, infrastructure and housing.
The EPA/Corps WOTUS rule (88 F.R. 61964) implemented the Supreme Court’s May 25, 2023 Sackett v. EPA decision that limited the geographic extent of CWA jurisdiction only to wetlands abutting traditionally navigable streams, rivers and lakes. The Court struck down the “significant nexus” test that allowed EPA to assert jurisdiction over wetlands that do not abut traditional flowing waters based on the ecological value of those wetlands.
The September 8, 2023 EPA/Corps rule relies on a “hydrologic connection” test but does not define that term or whether the abutting water was a “relatively permanent” flowing water. A landowner must consult technical studies and data to understand how those undefined terms would apply to a project.
Failure to define those terms will likely cause confusion as to the scope of federal regulation and cause delay and expense in permitting for many projects. The rule was challenged in North Dakota and Texas Federal Courts by a coalition of 26 states and industry groups. By vacating Chevron, the courts could find that EPA and the Corps could no longer rely on deference principles to uphold reliance on undefined technical data and studies to comply with the CWA.
The Biden Administration’s September 27, 2023 CWA WQC rule (88 F.R. 66559) addressed the CWA section 401 requirement that an affected state or tribe find that a proposed discharge into a WOTUS meets the state or tribe’s water quality standards. Any conditions issued by the state or tribe would become conditions of a federal permit and a state or tribe must act within one year of the request or the WQC is deemed waived.
The Trump Administration’s 2020 WQC rule reversed EPA’s longstanding policy that the state review encompasses the entire project’s impact on water quality and not just the impact of the discharge itself. The Biden Administration’s September 27 2023 rule reversed the Trump rule and reinstated the long-standing scope of review. By overturing Chevron, a court reviewing the 401 rule might not give deference to the Biden administration’s view that EPA’s longstanding interpretation is correct. The result could impact on federal and state permitting for many projects that have broad water quality impacts
CEQ’s NEPA rule authorized federal agencies to consider the indirect and cumulative effects of proposed actions on climate change and environmental justice communities, revising the 2020 Trump rule that limited such considerations. (89 FR 35442, May 1, 2024). With Chevron deference no longer in effect, a reviewing court could find that CEQ exceeded its authority by considering factors that were beyond the scope of NEPA as enacted in 1969 and subsequently interpreted. That could profoundly impact the scope of environmental review for large scale infrastructure projects.
The Supreme Court’s Corner Post Inc decision holding that the six-year statute of limitations under 28 US C 2401 did not start running until an individual was actually harmed by the rule could allow challenges to older permitting rules that were thought to be settled law. An applicant could argue that its right to sue did not start until they were actually injured by the prior rule and sue to challenge prior rules applying the “no deference” standard under Loper Bright.
Will the end of Chevron actually help permitting? The answer depends on how agencies respond and how courts enforce the ruling. Agencies will likely have to be careful in drafting clearer rules consistent with delegated authority. That could result in rules limiting the scope of analysis required for permits and this could result in faster permit decisions. Strong judicial enforcement of the Loper Bright ruling could also result in agencies being more careful in the rulemaking process to prevail in any litigation. Stay tuned!
Larry Liebesman, Esq.
Senior Advisor
A nationally recognized environmental lawyer with more than 40 years of experience, including 11 years at the U.S. Justice Department, Larry specializes in federal Clean Water and Endangered Species Acts and the National Environmental Policy Act (NEPA).