EXPERT ANALYSIS: Chevron Doctrine Overruled – What's Next?

In a landmark ruling that reshapes the balance of power between the judiciary and federal agencies, the Supreme Court overruled the decades-old Chevron Doctrine on 28 June 2024, ending the practice of courts deferring to agencies' interpretations of ambiguous statutes.

In the majority opinion overturning the Chevron Doctrine, Chief Justice Roberts wrote that the final “interpretation of the laws” would be “the proper and peculiar province of the courts.” The Chief Justice argued that the views of administrative agencies could only “inform the judgment of the Judiciary but did not supersede it.”

With the Chevron Doctrine overruled, courts now must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, rather than deferring to “permissible” agency interpretations of ambiguous statutes.

In her dissenting opinion, Justice Elena Kagan described the Chevron Doctrine as “a cornerstone of administrative law, allocating responsibility for statutory construction between courts and agencies.”

With the doctrine now jettisoned, the decision’s potential impacts on both the administrative powers of federal agencies and the industry’s efforts to comply with administrative laws are significant and far-reaching.

Michael R. Blumenthal, counsel for law firm McGlinchey Stafford, and Rob Campbell, Senior Chemical Business Advisor with 3E's Regulatory Consulting team, weighed in on the potential impact of the recent Supreme Court decision.

Potential Long-Term Impacts

In terms of the overall impact, Blumenthal, who represents clients in environmental due diligence, mergers and acquisitions, and compliance with various environmental regulations, said the Supreme Court ruling to overturn the Chevron Doctrine was “a landmark decision that has effectively forever pivotally changed the relationship between administrative agencies and the judiciary.”

As a former Ohio Assistant Attorney General in its Environmental Enforcement Section, Blumenthal has seen firsthand how the Chevron Doctrine functioned in decades past, allowing the EPA considerable latitude in interpreting, implementing, and enforcing their regulations. However, in Blumenthal's view, the significance of this doctrine has been in decline over the last several years as cases slowly worked their way up to the Supreme Court, gradually chipping away at the doctrine until the court finally overruled it outright.

In contrast, Campbell, who has over 40 years of experience helping global companies manage their product stewardship and EHS programs, presented a different perspective on the overall impact.

“When it comes to the recent Supreme Court decision, I find it interesting that depending upon what news sources and thought leaders you look at, it is either the worst thing that could happen for U.S. society or the best,” Campbell said.

Campbell noted that environmentalists view the decision as a weakening of current regulations, while proponents of smaller governments see it as a victory for industry by reducing overreaching administrative interpretations.

“Personally, I have never felt that court decisions around the topics of EHS law are as favorable as the vocal winners and their supporters claim nor as catastrophic as the losers and their supporters claim. Only time can tell the larger ramifications of this recent decision,” Campbell said.

Despite the philosophical differences, both Campbell and Blumenthal pointed out that significant long-term effects could be felt in several different ways in the years or even decades to come.

Increased Judicial Scrutiny

Blumenthal indicated that overturning the Chevron Doctrine will lead to increased judicial scrutiny of agency interpretations, as courts can no longer defer to the agencies' expertise in ambiguous cases, ultimately undermining the principle that agencies possess the specialized knowledge necessary for effective regulation.

“You have people who have devoted their lives, their careers to EPA and doing nothing but focusing on toxicity, health risks, how certain contaminants migrate, how certain people are exposed,” Blumenthal said. “The bodies of work that they’ve developed is immense, and historically, there was always deference given to the hard work that these career scientists who have worked on these particular bodies of law.”

Blumenthal added that, unlike in the past, agency work will no longer receive special deference. Courts will now consider it alongside input from private party litigants and make their own independent decisions.

While the expertise of agencies is recognized and respected, there are also voices challenging the notion that the agencies are at the center of specialized expertise in the environmental, health, and safety space.

“The Chevron Doctrine was established at a time in history when the expertise really did reside within EPA, the Occupational Safety and Health Administration (OSHA), the Mine Safety and Health Administration (MSHA), and others,” 3E's Campbell argued. “However, the world has changed, and expertise now extends beyond the agencies. Often the agencies no longer are the center of scientific expertise.”

Legal and Regulatory Challenges Ahead

The decision to overturn the Chevron Doctrine introduces significant regulatory uncertainties and is expected to increase litigation challenging administrative agency regulations and interpretations.

Blumenthal warned that this will lead to unpredictable regulatory outcomes, as courts may not align with agencies’ expertise, causing confusion about rule applicability. He expects this shift to hinder the EPA’s ability to regulate complex issues like climate change, air quality, and water pollution, while regulatory uncertainties will challenge the industry due to inconsistent court interpretations across states.

“The overall problem is that you’re going to get differing results,” Blumenthal said. “One result in Massachusetts could differ significantly from one in Ohio, leading to multiple holdings on the same regulation.”

However, as Campbell points out, these regulatory uncertainties could benefit the industry. “Uncertainties in the rulemaking process generally mean more time to reach a final rule stage,” he explained. “Typically, the industry is happy if it takes longer because until then, it is business as usual.”

Blumenthal added that overturning Chevron will likely lead to increased litigation, with businesses, states, and other stakeholders more likely to challenge EPA regulations, resulting in prolonged legal battles and delays in implementing critical environmental protections.

Campbell agreed, noting that both ongoing and future cases will be affected. He explained that while the traditional notice-and-comment process allows for input from those being regulated, agency interpretations, enforcement guidance, and other administrative actions do not offer the same opportunity for feedback. This situation, he suggests, echoes early colonist lawyer James Otis’s sentiment, “Taxation without representation is tyranny.”

Impact on Rulemaking and Legislative Processes

The overturning of Chevron might also have an impact on policy and administrative considerations. More specifically, increased legislative clarity is needed to minimize the potential regulatory uncertainties that come as the courts abandon the doctrine.

“We need Congress to draft clear, concise, detailed environmental statutes to reduce ambiguity and limit judicial interpretation,” said Blumenthal.

Blumenthal also noted that federal agencies might need to change their rulemaking process to adapt to this new ruling. “They now have to include very clear, robust justifications and statutory interpretations in the rulemaking process, assuming that whatever they draft will undergo judicial scrutiny.”

Regarding the impact of the ruling on the balance of power between the branches of government, Blumenthal commented, “Some argue that the change strengthens judicial checks on executive power, while others believe it undermines the efficiency and effectiveness of specialized agencies. I think there will be a period of uncertainty, but ultimately, I believe it is better for this shift in power to move from the federal agencies to the judicial branch.”

Campbell also agrees that the rulemaking and legislative processes are key to minimizing the potential uncertainties that come with overturning the Chevron Doctrine.

“Congress will have to raise the bar on their own actions, being more precise and prescriptive with their legislation. Agencies will continue to test the boundaries of their reach and will probably turn to rulemaking more often than they have in the past,” he noted.

“A tougher standard for compliance is not necessarily objectionable if it is justified and there are appropriate provisions to allow U.S. companies to adjust and comply,” Campbell added.

Future Outlook

While the long-term effects of overturning the Chevron Doctrine remain uncertain, it undoubtedly adds another factor for the industry to consider in business decisions: “If you’re thinking about building a factory or doing something where one of those rules is crucial, you are more likely to look to places that are judicially friendly,” said Blumenthal.

On the other hand, the regulated community can celebrate their new opportunity to contest agencies' administrative and interpretive actions, according to Campbell.

“While it may slow the pace of new regulations, it will also provide more opportunities for public comment and input from all stakeholders. Environmental and public health advocates will have more chances to make the case for stricter regulations, and the regulated community can present their arguments for the most effective and efficient approaches to address the issues,” he added.

Despite differing views on several issues, both experts shared a similar vision of the post-Chevron future. Blumenthal believes that how the EPA and other agencies navigate this change will be critical in shaping the future of federal regulatory practices.

“The administrative agencies will need to adapt to this new landscape given the overruling of the Chevron Doctrine. As they learn to adapt and draft rules accordingly, they can expect many litigation challenges,” Blumenthal said.

Campbell agrees that federal agencies will need to expend their resources defending their administrative actions, and it will take years for these cases to move through the system as new precedents are established.

“We have had an earthquake, but the key buildings remain intact. The occupants are shaken, some things fell off the shelf, but whether serious damage has been done, only time will tell,” Campbell said.

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Editor's Note: 3E is expanding news coverage to provide customers with insights into topics that enable a safer, more sustainable world by protecting people, safeguarding products, and helping businesses grow. Expert Analysis articles, produced by 3E subject matter experts, researchers, and consultants as well as external thought leaders, examine the regulations, trends, and forces impacting the use, manufacture, transport, and export/import of chemicals.