Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), was a landmark decision of the United States Supreme Court that set forth the legal test for when U.S. federal courts must defer to a government agency's interpretation of a statute.[1] The decision articulated a doctrine now known as "Chevron deference".[2] The doctrine consists of a two-part test that is highly deferential to government agencies: first, whether Congress has spoken directly to the precise issue at question, and second, "whether the agency's answer is based on a permissible construction of the statute."

Chevron U.S.A. v. Natural Res. Def. Council
Supreme Court of the United States
Argued February 29, 1984
Decided June 25, 1984
Full case nameChevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., et al.
Docket nos.82-1005
82-1247
82-1591
Citations467 U.S. 837 (more)
104 S. Ct. 2778; 81 L. Ed. 2d 694; 21 ERC (BNA) 1049; 14 Envtl. L. Rep. 20,507; 52 U.S.L.W. 4845; 1984 U.S. LEXIS 118
ArgumentOral argument
Case history
PriorNatural Resources Defense Council v. Gorsuch, 685 F.2d 718 (D.C. Cir. 1982), cert. granted sub nom. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 461 U.S. 956 (1983).
SubsequentRehearing denied, 468 U.S. 1227 (1984).
Holding
Courts must defer to administrative agency interpretations of the authority granted to them by Congress (1) where the intent of Congress was ambiguous and (2) where the interpretation was reasonable or permissible.
Court membership
Chief Justice
Warren E. Burger
Associate Justices
William J. Brennan Jr. · Byron White
Thurgood Marshall · Harry Blackmun
Lewis F. Powell Jr. · William Rehnquist
John P. Stevens · Sandra Day O'Connor
Case opinion
MajorityStevens, joined by Burger, Brennan, White, Blackmun, Powell
Marshall, Rehnquist and O'Connor took no part in the consideration or decision of the case.
Laws applied
Clean Air Act Amendments of 1977 (Pub. L. No. 95-95, 91 Stat. 685); 40 C.F.R. 51.18(j)(1)(i)-(ii) (1983)
Administrative law of the United States
General
Statutory framework
Policy coordination
Judicial review of agency action
Separation of powers
Related areas of law (and agencies)
Related topics

The decision involved a lawsuit challenging the U.S. government's interpretation of the word "source" in an environmental statute. In 1977, the U.S. Congress passed a bill that amended the Clean Air Act of 1963—the United States's comprehensive law regulating air pollution. The bill changed the law so that all companies in the United States that planned to build or install any major source of air pollutants were required to go through an elaborate "new-source review" process before they could proceed. The bill did not precisely define what constituted a "source" of air pollutants, and so the Environmental Protection Agency (EPA) formulated a definition as part of implementing the changes to the law.[3] The EPA's initial definition of a "source" of air pollutants covered essentially any significant change or addition to a plant or factory, but in 1981 it changed its definition to be simply a plant or factory in its entirety. This allowed companies to avoid the "new-source review" process entirely if, when increasing their plant's emissions through building or modifying, they simultaneously modified other parts of their plant to reduce emissions so that the overall change in the plant's emissions was zero. The Natural Resources Defense Council, an American non-profit environmental advocacy organization, then filed and ultimately lost a lawsuit challenging the legality of the EPA's new definition.[3]

Chevron is one of the most important decisions in U.S. administrative law, and has been cited in thousands of cases since being issued in 1984.[4]

Thirty-nine years later, in May 2023, the Supreme Court granted certiorari to reevaluate Chevron. Loper Bright Enterprises v. Raimondo, No. 22-451. A decision is expected in the first half of 2024.[5]

Background

Under the Supreme Court's ruling in Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803), United States federal courts have the authority to judicially review the statutes enacted by Congress, and declare a statute invalid if it violates the Constitution. But the Constitution sets no express limits on how much federal authority can be delegated to a government agency. Rather, limits on the authority granted to a federal agency occur within the statutes enacted by Congress. It is also worth noting that federal courts are constitutionally of "limited jurisdiction". Congress bestowed on them the authority to adjudicate administrative matters in 1948. [28 USC sec. 1331 (1948)]

In 1974 the Supreme Court stated that deference depends on an administrative interpretation being consistent with the agency's other statements and being consistent with the congressional purpose:

We have recognized previously that the weight of an administrative interpretation will depend, among other things, upon "its consistency with earlier and later pronouncements" of an agency. Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944). See generally 1 K. Davis, Administrative Law Treatise §§ 5.03-5.06 (1958 ed. and Supp. 1970). . . . In order for an agency interpretation to be granted deference, it must be consistent with the congressional purpose. Espinoza v. Farah Mfg. Co., 414 U. S. 86 (1973); Red Lion Broadcasting Co. v. FCC, 395 U. S. 367, 381 (1969).[6]

Case background

In 1977, the U.S. Congress passed a bill amending the Clean Air Act of 1963. Under the new law, any commercial or industrial project that would create a major new "source" of air pollution had to go through an elaborate "new-source review" process conducted by the EPA before the project could be built.[3] At first, the EPA interpreted the word "source" in the new law to mean nearly any significant addition or change at a factory or plant.[3] The EPA's interpretation meant that even individual buildings and machines, such as smokestacks and boilers, could be "sources" of air pollution for the purposes of the law.[3][7]

In 1981, after Ronald Reagan became President of the United States, the EPA changed its interpretation of the word "source" in the law to mean an entire plant or factory, not individual buildings and machines.[3] The EPA adopted the "bubble concept", which aggregated all sources of air pollution at a factory or plant into one conceptual "bubble". Under this new interpretation, a project needed to go through the "new-source review" process only if its net effect across an entire factory or plant was to increase air pollution emissions above a certain level.[3]

The EPA's new interpretation of the word "source" in the amendments to the Clean Air Act made it easier for companies to build industrial projects, even if the projects created new air pollution.[3] Any company that wished to build a project at a plant that would create new air pollution could avoid the "new-source review" process by simultaneously making other changes to the plant that reduced its overall emissions by an equal amount.[3] The change allowed companies to make industrial decisions more freely as long as the total impact on air pollution of their plants or factories did not increase.[3]

The environmentalist advocacy group Natural Resources Defense Council (NRDC) filed a petition in the U.S. Court of Appeals for the District of Columbia Circuit challenging the legality of the EPA's new interpretation of the term "source" in the amendments. The D.C. Circuit ruled in the NRDC's favor in 1982. In an opinion written by U.S. circuit judge (and future Supreme Court justice) Ruth Bader Ginsburg, the D.C. Circuit ruled that the EPA's new interpretation of "source" conflicted with the Circuit's prior cases interpreting the term, and it ruled that the EPA's new interpretation was invalid.[3] Chevron Corporation, which had been affected by the EPA's new regulation and had intervened in the case, appealed the D.C. Circuit's decision to the Supreme Court.

Decision

On June 25, 1984, the Supreme Court issued a unanimous 6–0[lower-alpha 1] decision in favor of the EPA and against the NRDC. In an opinion written by justice John Paul Stevens, the Court ruled that the ambiguous meaning of the term "source" in the Clean Air Act indicated that Congress had delegated to the EPA the power to make a policy decision and choose the meaning of "source".[3] The Court admonished the D.C. Circuit for trying to make a "policy decision" on the regulation of air pollution emissions.[3] The Court said that the U.S. judiciary is not a political branch of government, and it emphasized that U.S. federal judges are not elected officials.[3]

When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency's policy, rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail. In such a case, federal judges—who have no constituency—have a duty to respect legitimate policy choices made by those who do. The responsibilities for assessing the wisdom of such policy choices and resolving the struggle between competing views of the public interest are not judicial ones ....

— Chevron, 467 U.S. at 866.[9]

The Court said that when Congress passes a law that contains an ambiguity, it can represent an implicit delegation of authority to the executive branch agency that implements the law. The Court explained that these delegations of power should limit a federal court's review of the agency's interpretation of the law.[10]

The power of an administrative agency to administer a congressionally created program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress. If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.

— Chevron, 467 U.S. at 843–44 (internal quotation marks, alterations, citations, and footnotes omitted).[11]

The Court's decision set forth a two-step analysis for federal courts to use when adjudicating a challenge to an agency's interpretation of a law. This two-step analysis is now known as "the Chevron doctrine".[12]

First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute . . . Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

— Chevron, 467 U.S. at 842–43.

At the first step, the Chevron doctrine requires a court to evaluate whether a law is ambiguous. If the law is unambiguous, then the court must follow it. If the law is ambiguous, however, then the court must proceed to step two. At step two, the Chevron doctrine requires the court to evaluate whether the interpretation of the law that the executive agency proposes is "reasonable" or "permissible". If it is, then the court must accept the agency's interpretation. If it is not, only then may the court conduct its own interpretation of the law.[12]

Importance

Chevron is probably the most frequently cited case in American administrative law,[13] but some scholars suggest that the decision has had little impact on the Supreme Court's jurisprudence and merely clarified the Court's existing approach.[14] The ruling that the judiciary should defer to a federal agency's interpretation of ambiguous language from Congressional legislation relevant to the agency is often referred to as the Chevron deference. Several of the EPA's rulings for emissions regulations, as well as the Federal Communications Commission's stance on net neutrality have been based on cases decided on the Chevron deference.[15]

Chevron, 18 years later, was able to invoke Chevron deference to win another case, Chevron U.S.A., Inc. v. Echazabal, 536 U.S. 73 (2002), before the Supreme Court. In a unanimous decision, the Court applied Chevron deference and upheld as reasonable an Equal Employment Opportunity Commission regulation, which allowed an employer to refuse to hire an applicant when the applicant's disability on the job would pose a "direct threat" to the applicant's own health.

Three 21st-century decisions of the Supreme Court may limit the scope of administrative agency actions that receive Chevron deference to agency decisions that have the "force of law".[16] This new doctrine is sometimes referred to as "Chevron step zero".[17] Thus, for example, a regulation promulgated under the "notice and comment" provisions of § 553 of the Administrative Procedure Act would be likely to receive Chevron deference, but a letter sent by an agency, such as a US Securities and Exchange Commission (SEC) "no-action" letter, would not.[18] However, an agency action that does not receive Chevron deference may still receive some degree of deference under the old standard of Skidmore v. Swift & Co., 323 U.S. 134 (1944).[19] The majority in Christensen v. Harris County (2000) suggested that Chevron deference should apply to formal agency documents which have the force of law while Skidmore should apply to less formal agency documents in an attempt to draw a bright line for the question of "force of law" under Chevron step zero. In King v. Burwell (2015), the Supreme Court has suggested that Chevron deference may be inappropriate in regulatory actions of "deep economic and political significance",[20] hinting at the possibility of substantially limiting, or even eliminating, the doctrine.[21]

West Virginia v. EPA, 597 U.S. ___ (2022), established the first significant use of the major questions doctrine by the Supreme Court which is seen to further weaken the Chevron deference. Under the major questions doctrine, rules and decisions made by executive branch agencies that are not explicitly defined by their Congressional mandate and may incur a significant economic or political cost raise major questions of the agency's authority, and thus can be deemed unlawful. Roberts wrote in the majority of West Virginia, "[O]ur precedent teaches that there are extraordinary cases . . . in which the history and the breadth of authority that the agency has asserted and the economic and political significance of that assertion provide a reason to hesitate before concluding that Congress meant to confer such authority."[22] Within the context of West Virginia, the major questions doctrine was applied to rule-making by the EPA to require existing power plants to implement "outside the fence" measures, beyond the scope of the power plant, to reduce emissions, as implementing these measures was considered costly. The major questions doctrine was further evoked in Biden v. Nebraska, 600 U.S. ___ (2023), which determined that the Department of Education did not have the authority to cancel hundreds of billions of dollars in federal student loans under the HEROES Act.[23]

The Supreme Court granted petition for a writ of certiorari in the case Loper Bright Enterprises v. Raimondo to be heard during the court's 2023–2024 term. The case deals with payment of observers from the National Marine Fisheries Service that travel with fishermen during their outings, which under the Service's rules, must be paid by the fishermen. The fisherman challenged this rule, which in lower courts was upheld based on the Chevron deference, but has been argued by lawyers that oppose the use of Chevron as a means to challenge the validity of the rule. The petition for certiorari to the Court specifically questioned whether Chevron should be overturned.[24]

Opposition

Federal

The United States House of Representatives in the 115th Congress passed a bill on January 11, 2017, called the "Regulatory Accountability Act of 2017", which, if made into law, would change the doctrine of Chevron deference.[25][26][27] Supreme Court Justice Neil Gorsuch (son of Anne Gorsuch, who was head of EPA at the time of the events which led to the Chevron decision) has also written opinions against Chevron deference,[28] with news commentators believing that Gorsuch may rule against Chevron deference on the Supreme Court.[29]

In the U.S. Supreme Court case City of Arlington, Tex. v. FCC,[30] the dissent by Chief Justice Roberts joined by Justice Kennedy and Justice Alito objected to excessive Chevron deference to agencies:

My disagreement with the Court is fundamental. It is also easily expressed: A court should not defer to an agency until the court decides, on its own, that the agency is entitled to deference.[30]: 1877 

In Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., we established a test for reviewing "an agency's construction of the statute which it administers." 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). If Congress has "directly spoken to the precise question at issue," we said, "that is the end of the matter." Ibid. A contrary agency interpretation must give way.[30]: 1878 

"It is emphatically the province and duty of the judicial department to say what the law is." Marbury v. Madison, 1 Cranch 137, 177, 2 L.Ed. 60 (1803). The rise of the modern administrative state has not changed that duty. Indeed, the Administrative Procedure Act, governing judicial review of most agency action, instructs reviewing courts to decide "all relevant questions of law." 5 U.S.C. § 706.[30]: 1880 

Likewise before joining the U.S. Supreme Court, 10th Circuit Judge Gorsuch in his concurrence in Gutierrez-Brizuela v. Lynch[31] also objected to excessive Chevron deference to agencies:

Quite literally then, after this court declared the statutes' meaning and issued a final decision, an executive agency was permitted to (and did) tell us to reverse our decision like some sort of super court of appeals. If that doesn't qualify as an unconstitutional revision of a judicial declaration of the law by a political branch, I confess I begin to wonder whether we've forgotten what might.[31]: 1150 

In the Administrative Procedure Act (APA) Congress vested the courts with the power to "interpret ... statutory provisions" and overturn agency action inconsistent with those interpretations. 5 U.S.C. § 706.[31]: 1151 

For whatever the agency may be doing under Chevron, the problem remains that courts are not fulfilling their duty to interpret the law and declare invalid agency actions inconsistent with those interpretations in the cases and controversies that come before them. A duty expressly assigned to them by the APA and one often likely compelled by the Constitution itself. That's a problem for the judiciary. And it is a problem for the people whose liberties may now be impaired not by an independent decisionmaker seeking to declare the law's meaning as fairly as possible — the decisionmaker promised to them by law — but by an avowedly politicized administrative agent seeking to pursue whatever policy whim may rule the day.[31]: 1152–1153 

Subsequently, in Waterkeeper Alliance v. EPA[32] the court did not defer to the agency's interpretation.

Arizona

At the state level, Arizona has statutorily overturned Chevron deference with respect to most of its own agencies. In April 2018, the state's governor Doug Ducey signed HB 2238 into law, which states in relevant part,[33]

In a proceeding brought by or against the regulated party, the court shall decide all questions of law, including the interpretation of a constitutional or statutory provision or a rule adopted by an agency, without deference to any previous determination that may have been made on the question by the agency.

The bill explicitly exempts health care appeals and actions of agencies created by the state's Corporation Commission.[33]

Florida

In November 2018, voters in Florida approved an amendment to the Florida State Constitution, which states,[34]

In interpreting a state statute or rule, a state court or an officer hearing an administrative action pursuant to general law may not defer to an administrative agency's interpretation of such statute or rule, and must instead interpret such statute or rule de novo.

The amendment also stopped deference to agencies' interpretation of its own rules, ending Auer deference in the state.

Mississippi

The Mississippi Supreme Court judicially overturned Chevron deference at the state level in King v. Mississippi Military Department (2018).

North Carolina

The North Carolina Supreme Court has rejected Chevron deference,[35] but the state agencies are still entitled to deference comparable to Skidmore deference. Nevertheless, some lower courts have continued to give agencies deference under Chevron.[36]

Ohio

The Ohio Supreme Court judicially overturned Chevron deference at the state level in TWISM Enterprises v. State Board of Registration in 2023.[37]

Wisconsin

The Wisconsin Supreme Court judicially overturned Chevron deference at the state level in Tetra Tech, Inc. v. Wisconsin Department of Revenue (2016). In 2018, Governor Scott Walker signed a bill prohibiting courts from deferring to agency interpretations, and thus codifying the end to deference in Wisconsin.[38]

See also

Further reading

References

Notes
  1. Justices Thurgood Marshall and William Rehnquist did not participate in the decision because of illnesses. Justice Sandra Day O'Connor had a financial interest in one of the parties and recused herself to avoid a conflict of interest.[8]

Citations

 This article incorporates public domain material from judicial opinions or other documents created by the federal judiciary of the United States.

  1. Brannon, Valerie C.; Cole, Jared P. (September 19, 2017). Chevron Deference: A Primer (PDF). Washington, DC: Congressional Research Service. Retrieved October 12, 2017.
  2. United States v. Mead Corp., 533 U.S. 218, 226 (2001).
  3. Hickman & Pierce (2019), § 3.2, p. 201.
  4. Hickman & Pierce (2019), § 3.2, p. 200.
  6. Morton v. Ruiz, 415 U.S. 199, 237 (U.S. 1974).
  7. Merrill (2021), p. 1177.
  8. Merrill (2021), p. 1190, n.117.
  9. Quoted in part in Hickman & Pierce (2019), § 3.2, p. 201.
  10. Hickman & Pierce (2019), § 3.2, p. 202.
  11. Quoted in Hickman & Pierce (2019), § 3.2, p. 202.
  12. Merrill (2021), pp. 1174–75.
  13. Barnes, Robert (March 5, 2015). "When the subject is Obamacare, never forget about Chief Justice Roberts". The Washington Post. Retrieved March 6, 2015. Roberts's question was referring to "Chevron deference," a doctrine mostly unknown beyond the halls of the Capitol and the corridors of the Supreme Court. It refers to a 1984 decision, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., and it is one of the most widely cited cases in law ... A decision based on Chevron deference could say to Congress: Fix the law to make it unambiguous. It says to the executive branch: Implementation of the law is up to you.
  14. Thomas W. Merrill, "Judicial Deference to Executive Precedent", 101 Yale L.J. 969, 982–985 (1992)
  15. Lee, Timothy (February 2, 2017). "How Neil Gorsuch could rein in regulators like the EPA and the FCC". Vox. Retrieved November 12, 2021.
  16. See Barnhart v. Walton, 535 U.S. 212 (2002); United States v. Mead Corp., 533 U.S. 218 (2001); Christensen v. Harris County, 529 U.S. 576 (2000).
  17. See, for example, Cass R. Sunstein, "Chevron Step Zero", 92 Va. L. Rev. 187 (2006).
  18. See Christensen v. Harris County, 529 U.S. 576 (1999) (no Chevron deference to opinion letter sent by NLRB about interpretation of overtime laws)
  19. See Barnhart v. Walton, 535 U.S. 212 (2002) (stating explicitly that Skidmore still applies to agency actions that do not receive Chevron deference)
  20. King v. Burwell, 576 U.S. 473, 486 (2015) (internal quotation marks deleted)
  21. See Michigan v. EPA, 576 U.S. ___, ___ (2015) (Thomas, J., concurring) (slip op., at 1).
  22. Engstrom, David Freeman; Priddy, John E. (July 6, 2022). "West Virginia v. EPA and the Future of the Administrative State". Stanford Law School. Retrieved July 9, 2023.
  23. Showalter, J. Michael; Garel-Frantzen, Alex; Rasche, Samuel A. (July 7, 2023). "SCOTUS Update: Administrative Law Takeaways from Biden v. Nebraska". National Law Review. Retrieved July 9, 2023.
  24. De Vogue, Ariana; Cove, Devan (May 1, 2023). "Supreme Court to hear major case on limiting the power of federal government, a long-term goal of legal conservatives". CNN. Retrieved May 13, 2023.
  25. "H.R.5 - Regulatory Accountability Act of 2017". Congress.gov. Retrieved January 31, 2017.
  26. "Regulatory Accountability Act of 2017 (H.R. 5)". GovTrack.us. Retrieved March 23, 2017.
  27. "House Passes Bill Ending Chevron Deference". Law360. Retrieved January 31, 2017.
  28. "Should Chevron be reconsidered? A federal judge thinks so". The Washington Post. Retrieved January 31, 2017.
  29. "Bureaucrats May Be The Losers If Gorsuch Wins A Seat On Supreme Court". Forbes. Retrieved January 31, 2017.
  30. City of Arlington, Tex. v. FCC, 133 S. Ct. 1863 (S. Ct. 2013).
  31. Gutierrez-Brizuela v. Lynch, 834 F.3d 1142 (10th Cir. 2016).
  32. Waterkeeper Alliance v. EPA, 853 F.3d 527, 534 (D.C. Cir. 2017) ("Of course, "if Congress has directly spoken to an issue then any agency interpretation contradicting what Congress has said would be unreasonable." Entergy, 556 U.S. at 218 n.4, 129 S.Ct. 1498.").
  33. "Arizona Passes New Law Limiting Deference to Agencies". Pace Law Library. April 11, 2018. Retrieved May 3, 2018.
  34. "THE DEMISE OF AGENCY DEFERENCE: FLORIDA TAKES THE LEAD". The Florida Bar. January–February 2020. Retrieved November 18, 2021.
  35. "N.C. Acupuncture Licensing Board v. N.C. Board of Physical Therapy Examiners".
  36. "FindLaw's Court of Appeals of North Carolina case and opinions". Findlaw.
  37. The Editorial Board. "Opinion | Judicial Thunder Out of Ohio". WSJ. Retrieved March 14, 2023.
  38. "Summary of Bills Passed in Extraordinary Session | MacIver Institute". Retrieved March 14, 2023.

Works cited
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