Get All Access for $5/mo

The Supreme Court Discards Chevron Doctrine, Unleashing a Threat to Biden's Climate Policies Chief Justice John Roberts authored the decision, joined by five conservative justices. The three liberal justices dissented.

By Catherine Boudreau

Key Takeaways

  • Supreme Court overturns Chevron doctrine, curtailing federal regulatory power.
  • Chevron doctrine gave federal agencies leeway to interpret ambiguous laws like the Clean Air Act.
  • Biden's climate policies, including limits on power plant emissions, could face threats.
Andrew Harnik/Getty Images via Business Insider
The US Supreme Court is issuing its most highly anticipated decisions before the term ends in July.

This article originally appeared on Business Insider.

The Supreme Court on Friday overturned a decades-long legal precedent that has empowered the federal government to regulate the environment and other issues, unleashing a potential threat to President Joe Biden's climate policies.

The court overruled the Chevron doctrine, one of the most important principles guiding federal regulation for the past 40 years. It held that when the laws that Congress writes are ambiguous, courts should defer to federal agencies' interpretation, as long as it's reasonable.

Now, however, it could be harder for agencies to address a wide range of policy areas, including the environment, health, and labor and employment. Chief Justice John Roberts authored the decision, joined by five conservative justices. The three liberal justices dissented.

The ruling comes as President Joe Biden has raced to finalize a flurry of rules to combat climate change. Over the last year, the Environmental Protection Agency has set stricter limits on greenhouse gas emissions from cars, trucks, power plants, and oil and gas infrastructure. The agency for the first time put limits on toxic "forever chemicals," also known as PFAS, in drinking water. All of those regulations are the targets of lawsuits from Republican-led states, the fossil-fuel industry, or other businesses.

Legal analysts widely expected the Supreme Court's decision. The Chevron doctrine has long been a target of business groups and conservatives who argued it allows federal bureaucrats to overstep their authority on issues related not only to the environment but also to broad swaths of the economy, such as workplace safety, telecom, and finance.

The Supreme Court's conservative supermajority is similarly skeptical of federal agencies' power, as past rulings have shown.

On Thursday, the court put a temporary hold on the EPA's plan to reduce air pollution from power plants and pipelines that blow across state lines while a lawsuit plays out in a lower court. Last year, the Supreme Court significantly narrowed how many wetlands EPA can regulate to keep them clean. In 2022, the court limited the EPA's ability to regulate carbon emissions from power plants, leading the Biden administration to issue another plan under the Clean Air Act that it hopes can withstand legal challenges.

How did this case end up at the Supreme Court?

The plea to overturn the Chevron doctrine came to the court in two cases — Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce. These cases involved commercial fishermen who opposed fees they had to pay to have federal observers aboard their vessels to prevent overfishing.

The lawyers representing the commercial fisherman are from the Cause of Action Institute, a nonprofit group in the libertarian network built by Charles Koch, the petrochemicals billionaire who has advocated for deregulation.

They argued the Chevron doctrine injures small businesses and individuals who have little power to influence federal agencies.

"Today's restoration of the separation of powers is a victory for small, family-run businesses like ours, whether they're involved in fishing, farming, or retail," Bill Bright, the fisherman and plaintiff in the Loper Bright case, said in a statement.

Defenders of Chevron argued that a broad swath of health, safety, and environmental regulations protecting the public could be upended if the doctrine were overturned, causing chaos. The doctrine is cited in more than 15,000 court decisions. Chevron also recognizes that agencies are often staffed by people with technical and scientific expertise that judges don't have.

What did the Supreme Court justices say?

Roberts, in his opinion, said Chevron defies the Administrative Procedures Act, which requires courts to decide whether a federal agency acted within its legal authority.

"Perhaps most fundamentally, Chevron's presumption is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do," Roberts said.

He also argued that the decision to overturn Chevron doesn't call into question prior cases that relied on it. Courts that decided agency actions were lawful are still subject to "statutory stare decisis."

In her dissent, Justice Elena Kagan countered that abandoning Chevron will make it difficult for policymakers to issue regulations that keep air and water clean, food and drugs safe, and financial markets honest.

Kagan added: "Congress knows that it does not — in fact cannot —write perfectly complete regulatory statutes. It knows that those statutes will inevitably contain ambiguities that some other actor will have to resolve, and gaps that some other actor will have to fill. And it would usually prefer that actor to be the responsible agency, not a court."

Justice Ketanji Brown Jackson recused herself from Loper Bright because she was involved in the case as a federal appeals court judge.

What could be the impact on climate policy?

The reversal of Chevron doesn't change EPA's legal obligation under the Clean Air Act to regulate greenhouse gas emissions, which was affirmed in a 2007 Supreme Court decision, legal experts say. Congress in the 2022 Inflation Reduction Act also affirmed that power.

But the Clean Air Act was written decades ago and left a lot of room for interpretation by EPA. The specific details of the agency's climate regulations may be more legally vulnerable now.

At the same time, Biden's EPA hasn't relied on the Chevron doctrine to defend its climate rules because it's been preparing for this very decision from the Supreme Court, said David Doniger, a senior attorney at the Natural Resources Defense Council who argued the original Chevron case on behalf of the group in 1984.

Paul DeCamp, an attorney at the Washington, DC-based firm Epstein Becker Green, said the overturning of Chevron creates a lot of uncertainty.

"There is now a new path to challenging agency action because the heavy thumb on the scale toward agencies as a result of Chevron has been removed," he said.

That doesn't mean that most regulations are invalid, he added. He predicted that most federal action would survive because agencies try to stay within their legal boundaries.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

How to Be a Billionaire By 25, According to a College Dropout Turned CEO Worth $1.6 Billion

Austin Russell became the world's youngest self-made billionaire in 2020 at age 25.

Living

Taylor Swift Has a Lucky Number. And She's Not the Only High Performer Who Leans Into Superstitions to Boost Confidence.

Even megastars like Swift need a little extra something to get them in the right mindset when it is game time.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Marketing

SEO Trends You Need to Be Aware of Right Now, According to a Seasoned Pro

Navigate the future of search engine optimization to elevate your online presence and drive meaningful engagement.