Overturning Chevron

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The Supreme Court’s Chevron ruling is a landmark shift in regulatory power from agencies to Congress and courts.

Chevron has been much in the news since June 28, 2024 – but not for selling gasoline. Instead, a Supreme Court decision has people either hailing newfound freedom from federal government regulatory overreach, or claiming the court’s decision will end civilization as we know it by hugely diminishing government agencies’ ability to implement laws and impose on American businesses wide-ranging and expensive regulations.

To understand what the Supreme Court did by overturning Chevron, it’s necessary to know what it undid: the Cornell University School of Law opens its explanation of Chevron with a brief description:

“’Chevron deference’ is referring to the doctrine of judicial deference given to administrative action. It was coined after a landmark case, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 468 U.S. 837 (1984).

In Chevron, the Supreme Court set forth a legal test as to when the court should defer to the agency’s answer or interpretation, holding that such judicial deference is appropriate where the agency’s answer was not unreasonable, so long as Congress had not spoken directly to the precise issue at question. Chevron was one of the most important principles in administrative law for 40 years.”

Under Chevron, federal courts were to defer to an agency’s interpretation of the law if the interpretation wasn’t considered unreasonable and there was ambiguity in the law’s language. Before June’s Chevron Supreme Court ruling, Congress could pass a law, regardless of how ambiguous, and leave it to federal agencies to figure out how to put it into effect. Now, Congress may have to understand the impact of what it’s doing before, not after, it sends a bill for the president’s signature.

The last 40 years benefited government’s legislative and administrative sides: it enabled agencies to increase their power and for Congress to say it had passed laws benefiting Americans, after which individual members could criticize regulatory overreach when people in their states and districts complained about the cost and demands of regulatory compliance.

Regulatory reach to find something to regulate can go back a long way, says Glenn Reynolds, a University of Tennessee law professor, newspaper and magazine columnist, and author of 10 books.

“The Federal Communications Commission (FCC) some years ago enacted regulations on people who launched satellites to cut down on debris in outer space; they did that interpreting the Communications Act of 1934, which authorized the FCC. No one thinks Congress had any intent on regulating satellite debris in 1934. Now the question being asked is are the FCC regulations invalid? It’s happening across the board in all kinds of agencies.

“Agencies have taken advantage of freedom Congress hadn’t authorized and might not have authorized if it had been asked.”

Fed regulations come at a high cost, Reynolds said.

“I just recently saw an estimate of $2.1 trillion across the economy,” he said. “If there are fewer regulations, it’s less of a burden on business. All regulations aren’t created equal: some do harm, some do good, some do both harm and good. If the federal government is going to order people to do things, it ought to come from Congress and not some bureaucrat.”

The passion on multiple political and ideological sides to the court’s Chevron decision results from a variety of factors. For government regulators, it means their authority is curtailed, which goes against two government priorities. Government at its most basic level is an organism with two functions: survival and reproduction. Survival means ensuring supervisors and employees continue to have jobs. Reproduction means that individuals and bureaucracies within government expand the scope and reach of their power and authority, which also aids in survival: the bigger and more powerful you are, the more likely it is that your position and agency will survive and grow in importance. As a practical matter, it’s in a government agency’s interest to always find new things to regulate, because it contributes to both basic functions.

“If the federal government is going to order people to do things, it ought to come from Congress and not some bureaucrat.”
— Glenn Reynolds

For some, the Chevron decision is explained in a simple narrative: evil has triumphed over good. For example, The Sierra Club’s magazine’s headline was unambiguous about Chevron: “The Supreme Court Overturns the Chevron Doctrine, Gutting Federal Environmental Protections.” The headline is an emotional response meant to compel negative emotions on what for the Sierra Club is an emotional subject; however, environmental protections haven’t been “gutted.” Instead, how they’re crafted post-Chevron will not give the wide-ranging leeway that regulators and their allies have come to enjoy.

As stated, conflict over agency actions is not new. The Environmental Protection Agency (EPA) is a source of frequent overreach complaint. In 1971, its first year in operation, the EPA’s budget was about $1.4 billion, num- bering 5,800 employees: for fiscal year 2025, the projected budget is nearly $11 billion, and more than 17,000 employees. Again, it’s a simple concept: the more the agency regulates, the more it can point to as to why it should not only survive, but reproduce. The regulatory process itself is enormous: Congress passes a law and then, in the 1984 Chevron Supreme Court decision, EPA wrote rules that could take years to formulate, disseminate, and promulgate. Additional rules sometimes had to be written to clarify, correct, or add to the original rules.

The result is that the EPA over the years saw its authority expanded. And when it imposed new rules, it would create offices and employees to advise affected organizations on how to comply with the new rules – and avoid punishment. The EPA grew in that way as well. In 1982, the EPA’s criminal enforcement program was created, which, the agency says, “was granted full law enforcement authority by Congress in 1988. We enforce the nation’s laws by investigating cases, collecting evidence, conducting forensic analyses and providing legal guidance to assist with prosecutions.”

Clearly, it’s no small thing to run afoul of the EPA. But efforts to overcome its decisions and orders have
been going on for years. A 2011 controversy shows that sometimes, even a U.S. president might find it a challenge to work their will on a regulatory agency. As reported by the Reason Foundation, in July 2011 the EPA released their Cross-State Air Pollution Rule on regulating power plant emissions in states the EPA said significantly contributed to air quality in neighboring states.

In 2010, the proposed rule was released, and the state of Texas’ impact on out-of-state emissions weren’t high enough to be included. But when the final rule was released, Texas found itself counted in. Said Reason, “The last-minute inclusion is based on a hypothetical linkage between Texas emissions and a pollution monitor hundreds of miles away in Granite City, Illinois. The monitor is located half-a-mile from a steel mill, and was placed there specifically to monitor it. In fact, the area meets air quality standards today after the Illinois Environmental Protection Agency and the mill agreed on the installation of pollution controls.

“Texas was never given the opportunity to publicly comment on this information because it was not part of the proposed rule, which is when the public has the opportunity to share concerns.” Compliance costs were estimated at $2.4 billion annually.

Reason said that when President Obama ordered agencies to use least burdensome tools and take benefits and cost into account, the EPA “has simply ignored this.” But sometimes, even presidents reach their limit. In Sept. 2011, Obama “ordered the Agency to withdraw a burdensome regulation on ozone that would have cost $100 billion a year and shut down economic growth in hundreds of communities across the nation.”

Apart from the EPA, similar processes have been employed across the federal government spectrum: the Departments of Labor, Commerce, and Treasury, and others, have operated under the same previous Chevron standard, leading to oceans of regulations and corresponding compliance costs.

In this environment, Glenn Reynolds has a feel for what federal agencies will do next. “They will talk to their in-house counsel a lot,” he said. “Some agencies will just plow ahead and do what they want, leaving it to the courts to rein them in, if somebody bothers to sue. Others will be more cautious. There will probably be more caution if Trump is elected than Harris.”

The Supreme Court’s Chevron ruling has put gas in the tanks of opponents of big-government, high-regulation, high-cost regulation. Much of the complaint around the overturning of Chevron is that it reverses 40 years of precedent. That’s a non-issue. Precedents are overturned when a court determines it necessary. Whatever side you’re on, if you don’t like what a previous Supreme Court has done, precedent doesn’t matter: you’re happy when the outcome finally goes your way.

Power has, at least in a court decision, been shifted away from federal bureaucracies and back to Congress and the courts. That, in itself, goes against the survival and reproduction functions of government, and creates an interesting precedent.

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