Chevron v. Natural Resources Defense Council

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1984 United States Supreme Court case

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), was a landmark decision of the Supreme Court of the United States that set forth the legal test used when U.S. federal courts must defer to a government agency's interpretation of a law or statute . The decision articulated a doctrine known as "Chevron deference". Chevron deference consisted of a two-part test that was deferential to government agencies: first, whether Congress has spoken directly to the precise issue at question, and second, "whether the agency's answer is based on a permissible construction of the statute".

The decision involved a legal challenge to a change in the U.S. government's interpretation of the word "source" in the Clean Air Act of 1963 . The Act did not precisely define what constituted a "source" of air pollution . The Environmental Protection Agency (EPA) initially defined "source" to cover essentially any significant change or addition to a plant or factory. In 1981, the EPA changed its definition to mean only an entire plant or factory. This allowed companies to build new projects without going through the EPA's lengthy new review process if they simultaneously modified other parts of their plant to reduce emissions, avoiding any net change. Natural Resources Defense Council , an environmentalist advocacy group, challenged the legality of the EPA's new definition. NRDC won the case in a federal court, but the Supreme Court overturned that decision and ruled in favor of Chevron on the grounds that the courts should broadly defer to EPA and other independent regulatory agencies.

Chevron was one of the most important decisions in U.S. administrative law and was cited in thousands of cases. Forty years later, in June 2024, the Supreme Court overruled Chevron in Loper Bright Enterprises v. Raimondo , on the grounds that it conflicts with the Administrative Procedure Act , reversing decades of administrative agency power to interpret ambiguous statutes and regulations. This ruling shifted interpretation authority from federal agencies to the courts, requiring them to decide the "best reading" of a law rather than deferring to an agency's interpretation, and impacting agencies like the EPA and OSHA.

Background

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Legal history

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Under the Supreme Court's ruling in _Marbury v. Madison _, United States federal courts have the authority to judicially review the statutes enacted by Congress , and declare a statute invalid if it violates the Constitution . But the Constitution sets no express limits on how much federal authority can be delegated to a government agency. Rather, limits on the authority granted to a federal agency occur within the statutes enacted by Congress. It is also worth noting that federal courts are constitutionally of "limited jurisdiction". Congress bestowed on them the authority to adjudicate administrative matters in 1948.

In 1974, the Supreme Court stated that deference depends on an administrative interpretation being consistent with the agency's other statements and being consistent with the congressional purpose:

We have recognized previously that the weight of an administrative interpretation will depend, among other things, upon "its consistency with earlier and later pronouncements" of an agency. Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944). See generally 1 K. Davis, Administrative Law Treatise §§ 5.03-5.06 (1958 ed. and Supp. 1970). ... In order for an agency interpretation to be granted deference, it must be consistent with the congressional purpose. Espinoza v. Farah Mfg. Co., 414 U. S. 86 (1973); Red Lion Broadcasting Co. v. FCC, 395 U. S. 367, 381 (1969).

Case background

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In 1977, the U.S. Congress passed a bill that amended the Clean Air Act of 1963 to require any project that would create a major "stationary source" of air pollution to go through an elaborate new approval process conducted by the EPA called "new-source review". The EPA interpreted the word "source" in the new law to cover nearly any addition or change to a factory or plant. This meant that even a single building or machine, such as a smokestack or a boiler , could be a "source" of air pollution under the law.

In 1981, after Ronald Reagan became President, the EPA changed its interpretation of the word "source" in the law to mean only an entire plant or factory, not an individual building or machine. Under this new interpretation, a change at a plant or factory needed to go through the "new-source review" process only if it increased the total air-pollution emissions of the entire plant or factory. Any company that wished to build a project at a plant that would create new air pollution could avoid the "new-source review" process by simultaneously making other changes to the plant in order to reduce its overall emissions by the same amount. The EPA's new interpretation allowed companies to make industrial decisions more freely as long as the total impact of their plants or factories on air pollution did not increase. It made building industrial projects easier, even if the projects created new air pollution.

In late 1981, the environmental advocacy group Natural Resources Defense Council (NRDC) filed a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit challenging the legality of the EPA's new interpretation. The D.C. Circuit ruled in the NRDC's favor in 1982. In an opinion written by U.S. circuit judge (and future Supreme Court justice) Ruth Bader Ginsburg , the D.C. Circuit ruled that the EPA's new interpretation of "source" conflicted with the Circuit's prior cases interpreting the term and that the EPA's new interpretation was invalid.   Chevron Corporation , which had been affected by the EPA's new regulation and had intervened[_clarification needed
_] in the case, appealed the D.C. Circuit's decision to the Supreme Court.

Decision

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