In the Wake of the Chevron Decision

Last month, in a decision that is likely to have far-reaching impacts, the Supreme Court eliminated a 40-year-old legal precedent known as the “Chevron doctrine.” In the 6-3 ruling issued in Loper Bright Enterprises v. Raimondo, the justices overruled their landmark 1984 decision in Chevron v. Natural Resources Defense Council. Under the Chevron doctrine, if Congress had not directly addressed the question at the center of a dispute, a court was required to uphold the agency’s interpretation of the statute as long as it was reasonable. The decision, many legal and environmental experts say, could greatly affect everything from  environmental rules that aim to limit air and water pollution, safeguard people from the harms of toxic chemicals, protect endangered species, advance the transition to clean energy, and tackle climate change. With time for reflection, faculty experts from the Yale School of the Environment, the School of Management, and Yale Law School weigh in on the ruling and its potential impact on the environment and corporate sustainability efforts.

Unleashing an unprecedented level of uncertainty into the regulatory arena

Daniel Esty - Hillhouse Professor of Environmental Law and Policy

By overturning the Chevron principle of reasonable (and limited!) deference to federal agencies in rulemaking, the Supreme Court has knocked out a core pillar of American administrative law and created a real risk of regulatory chaos across a range of policy domains, including environmental protection, health care, labor standards, land use, and corporate reporting. In eliminated a long-established policymaking framework and providing almost no guidance for courts to apply in determining whether agencies have acted reasonably in implementing the legislation adopted by the Congress and signed into law by the president, the court may well have unleashed an unprecedented level of uncertainty into the regulatory arena. The chaos that will result as lower courts pass judgment individually on regulations in areas that are often quite technical and in which the judges involved often lack any expertise will translate into risk and cost for all regulated parties and impose, in effect, an uncertainty tax on businesses large and small, which will spillover onto every American.

Shifting the responsibility for addressing complex scientific questions

Shimon Anisfeld - Senior Lecture and Research Scientist, Water Resources and Environmental Chemistry, Yale School of the Environment

Modern water-quality regulation — under both the Clean Water Act (protecting our rivers and lakes) and the Safe Drinking Water Act (protecting the water we drink) — involves complex scientific questions of toxicology, risk, and environmental fate. This unfortunate SCOTUS decision shifts the responsibility for addressing these questions from EPA professionals to ill-equipped courts and will hamstring the EPA’s ability to protect water quality. Critical regulations to protect our water from emerging contaminants such as PFAS (“forever chemicals”) — which already take far too long to pass and implement — are likely to be slowed even further by a wave of litigation.

The ‘push and pull’ of ESG

Todd Cort - Senior Lecturer in Sustainability, Yale School of Management and Faculty Co-Director, Yale Center for Business and the Environment

Progress by corporations on ESG is a matter of ‘push and pull.’ There is the ‘push’ of regulations and liability for failing to meet expectations of minimal acceptable performance. The court opinion to throw out the Chevron rule will make it difficult for regulators in the U.S. to maintain that baseline of performance expectation. But it will not completely hollow out the bottom because most large companies have to comply in more countries than just the United States, and it is generally easier for companies to have one approach to ESG rather than strong practices in one area and weak practices in another. Whenever poor practice creates harm, there is also the threat of liability from other stakeholders. It is not good that the Chevron rule has been removed, but it will not pull the rug out from under ESG either.

At the same time, there is also a ‘pull’ on companies to pursue ESG. The pull of shareholder capital, the pull of customer expectations, the pull of employees that want to work for responsible companies. These pulls vary in strength and stakeholder for different companies, but they are real and can sometimes be quite compelling. The Chevron ruling won’t impact these because these stakeholders that exert a pull are motivated by more than short-term cost savings.

Cracking the foundations of federal environmental and public health protections

Robert Klee '99 MEM, '04 JD, '05 PhD - Lecturer, Yale School of the Environment and Managing Director of Clean Energy Programming, Yale Center for Business and the Environment

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The decisions in Loper Bright Enterprises and Relentless at the end of the Supreme Court’s term jettisoned a 40-year-old foundational principle of administrative law that judges and courts should defer to the expertise of executive branch administrative agencies in interpreting their governing statutes. Known as “Chevron deference” (from the 1984 case Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.), this expression of judicial humility recognized that there could be multiple interpretations of an ambiguous statute, and that courts need not substitute their views if an administrative agency chose a reasonable interpretation of its own. Writing for a 6-3 majority in Loper Bright Enterprises, Chief Justice Roberts replaced humility with hubris. Roberts declared that there must always be a “single, best meaning” of a statute, and judges — not agency experts — should have the final say on what’s best for all of us, no matter how complicated or technical the subject matter. This seismic shift resets the balance of power between branches of government (generally favoring the courts) and between regulators and regulated industries (generally favoring the regulated).

But reading Loper Bright Enterprises in conjunction with three other rulings (Corner Post v. Federal Reserve, SEC v. Jarkesy, and Ohio v. EPA) issued at the end of this Supreme Court term reveals how the conservative majority on the Court may have cracked the foundations of federal environmental and public health protections beyond repair.

Instability rather than clarity

Gerald Torres - Professor of Environmental Justice and Professor of Law

The decision in the Loper case overturned a 40-year-old precedent that permitted agencies to resolve statutory ambiguities without excessive judicial oversight as long as the agency interpretation was reasonable. That deference is now gone. It should be noted that reliance on the Chevron doctrine had declined, and the court, in many ways, merely confirmed the emerging law. The difficulty with the decision is that it introduces rules that will likely produce instability rather than the clarity the majority claimed to be providing. While agency interpretations will be considered with appropriate respect, when courts review agency actions, agency determinations will no longer be given the deference they had enjoyed.