The undoing of the US Supreme Court's longstanding doctrine known as Chevron deference could spell the demise of the Biden administration's signature energy- and climate-related administrative rules, according to legal experts.
"I'll state the obvious," Jeff Holmstead, a partner at Bracewell LLP, said in an interview. "I think all the big Biden administration regulations are already cooked."
The Supreme Court's June 28 decision in Loper Bright Enterprises v. Raimondo will also require Congress to be far more precise in future delegations of agency authority, attorneys said.
"What this ruling is really about is the Supreme Court sending a message across the street to Congress," said Bill Scherman, a partner at Vinson & Elkins. "It's obviously wishful thinking in this age of polarization to think that Congress will actually write clearer statutes, but the Chevron doctrine would have never emerged had the laws Congress enacted been more precise and clearer."
Arguing that the 40-year-old Chevron doctrine has led to regulatory whiplash, the high court's 6-3 conservative majority decision in Loper Bright requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority.
Under the Chevron doctrine, first established by the Supreme Court in 1984, courts were required to defer to agencies' readings of ambiguous statutes so long as the interpretation was reasonable. Loper Bright said courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.
'Up to our ears in litigation'
Environmental attorneys were quick to condemn the Loper Bright decision, arguing that the ruling amounts to a power grab for the federal judiciary.
"This decision shows yet again that the current court majority is on a rampage designed to make it harder for our government to protect us," David Doniger, a senior attorney for the Natural Resources Defense Council, said during a media briefing following the decision.
Doniger, a longtime Chevron supporter, argued the losing side of the Supreme Court's 1984 decision in Chevron v. NRDC. There, the high court established the doctrine in a decision affirming the Reagan administration's interpretation of how "stationary sources" of emissions should be defined under the Clean Air Act.
Sean Donahue, a partner at Donahue Goldberg & Herzog, noted that Loper Bright is the latest in a series of Supreme Court decisions where conservative justices have used environmental cases to curb agency authority.
"The agencies have adjusted, and they will continue to take into account the new rules of judicial review. There's still a lot they can do," Donahue said during the briefing. However, the Supreme Court has demonstrated "a troubling lack of pragmatic concern with getting critical things done, whether it's on climate or more mundane things," Donahue said.
Two years earlier, the high court invoked what is known as the major questions doctrine for the first time in finding that the Obama-era Clean Power Plan illegally sought to force a transition away from coal-fired electricity. The major questions doctrine holds that federal agencies cannot regulate on matters of "vast economic or political significance" without clear authorization from Congress.
A day before Loper Bright, the Supreme Court indefinitely stayed the US Environmental Protection Agency's Good Neighbor Plan for interstate smog. The final regulation, set to take effect in 2026, was projected to force approximately 13% of the nation's operating coal-fired capacity to retire by 2030.
In a ruling described by the court's three dissenting liberal justices as "staggering," the high court on July 1 also ruled 6-3 that longstanding federal regulations can now be challenged if the plaintiff's injury took place within the past six years.
Sam Sankar, senior vice president of programs for Earthjustice, predicted that the Supreme Court's administrative law rulings will create a "huge asymmetry in resources."
"The federal government and environmental groups are going to be up to our ears in litigation just trying to preserve the status quo," Sankar said.
Vulnerable energy, climate rules
In a research note, Clearview Energy Partners said the Loper Bright ruling could raise new legal hurdles for the EPA in defending greenhouse gas emissions standards for targeted industries such as power generation, oil and gas production, and the transportation sector.
The EPA's final rule requiring 90% carbon capture for existing coal-fired power plants by 2032 is particularly vulnerable because the agency adopted an expansive reading of "best system of emission reduction" under the Clean Air Act, said Holmstead, who was the EPA's air chief during the George W. Bush administration.
"I think the courts are going to say, 'Something that has been adequately demonstrated doesn't mean something that you expect to be demonstrated in the future,'" Holmstead said.
Two particularly vulnerable oil and gas regulations following the Loper Bright decision, which both already face legal challenges, are the US Bureau of Land Management's regulation on venting and flaring methane and the agency's new rule allowing leasing of public lands for conservation, said Tina Van Bockern, a partner at Holland & Hart.
However, Doniger said the EPA's oil and gas methane rule was designed in anticipation that the Supreme Court would overturn Chevron. The rule assumes a "best reading of the statute" review standard and "is on sound footing," he said in a July 8 email.
On the flip side, the Loper Bright ruling could lead to more court scrutiny of agency decisions approving infrastructure projects.
The US Court of Appeals for the District of Columbia Circuit often upholds the Federal Energy Regulatory Commission's interpretation of the Natural Gas Act (NGA) when authorizing gas infrastructure projects "using an analysis steeped in Chevron," said Emily Mallen, a partner at the law firm Akin. The court has also reviewed tariff matters under NGA Section 4 and Section 5 for gas infrastructure with "Chevron-like" deference, Mallen added.
"I don't necessarily think that the demise of Chevron means that FERC would lose these cases because its analysis under the NGA typically follows precedent, but future cases may require the DC Circuit or other reviewing courts to delve deeper into FERC's analyses," Mallen said.