EMA Journal • Fall 2024 • At the Agencies

The U.S. Supreme Court’s 6-3 decision in June to overturn their 1984 decision giving deference to the federal regulations when challenged in court will significantly weaken the regulatory power of agencies like the EPA, U.S. DOT, OSHA, etc. The now overturned 1984 ruling, known as the “Chevron deference,” required courts to defer to federal agencies’ expertise when interpreting ambiguous statutes passed by Congress. Typically, congressional legislation is broad in nature, leaving the task of filling in the gaps to the federal agencies. The Supreme Court determined in 1984 that federal agencies had more expertise to fill in those gaps than federal judges. As a result, when a federal regulation was challenged in court, judges assumed the agencies acted within their statutory authority, absent clear evidence to the contrary. Thus, the Chevron deference allowed agencies, in some cases, to expand their regulatory authority well beyond what Congress intended. The demise of the Chevron deference will not only reign in the power of federal agencies but also encourage legal challenges to future federal rulemakings.

According to the written opinion of U.S. Chief Justice John Roberts, the 1984 decision creating the Chevron deference is “contrary to the Framers’ understanding or our form of government.” Roberts went on to quote Chief Justice John Marshall’s famous 1803 decision in Marbury v. Madison, declaring “[i]t is emphatically the province and duty of the [judiciary] to say what the law is.” That, said Roberts, means that courts, not agencies, decide what the law is, and if Congress wants to do something different, it should say so explicitly.

So, what does all this mean for energy marketers? Certainly, the absence of judicial deference will slow down the regulatory process as agencies more carefully weigh their authority granted under congressional legislation. Moreover, an expected increase in the number of lawsuits challenging new regulations will significantly delay their implementation as final rules. Lawsuits could add years to the length of time it takes federal agencies to promulgate a new rule. A typical two-year final rule promulgation period could stretch beyond six years or more in some cases. Dozens of lawsuits have already been filed against the EPA in the month since the Chevron deference was overturned. Numerous lawsuits challenging the denial of small refinery hardship relief from compliance with the renewable fuel standard (RFS), new greenhouse gas emission standards for heavy-duty trucks and new standards for hazardous emissions from gasoline bulk plants. Lawsuits are also challenging automobile electrification and carbon emission standards, automobile mileage standards and tailpipe emission standards.

While these lawsuits will certainly delay new rulemakings, they are less likely to vacate federal rulemakings altogether — at least as it relates to EPA regulations. The overturning of Chevron may not drastically affect the EPA’s most ambitious programs since the agency has already dealt with a non-deferential court. Similarly, compromises between agencies and industry might reduce the likelihood of litigation. Most importantly, the EPA is meticulous in ensuring the legality of its rulemakings, often avoiding reliance on ambiguous authorities like Chevron. This meticulous approach could help the agency navigate the new legal landscape.

There have been many attempts over the years to rein in the authority of federal agencies to promulgate new regulations. Few have succeeded in any tangible way. Whether the Supreme Court decision is the silver bullet many have been waiting for remains to be seen.

On a personal note, this will be my last column. After 35 years in the industry, I am retiring on December 31, 2024, to my native Cape Cod in Massachusetts. It has been an honor and pleasure serving energy marketers across the nation over these many years. I will truly miss all the friends I made along the way. So long.