In June 2024, the U.S. Supreme Court overturned the long-standing Chevron doctrine, fundamentally altering how businesses interact with federal regulations. The decision will almost certainly make it easier for companies to challenge agency regulations and other agency action interpreting federal statutes (that is, federal laws passed by Congress). However, it could also introduce new uncertainties in the regulatory landscape that will pose new challenges for business. Here, I will provide some "before and after" context about the doctrine and then highlight some of the most important takeaways for businesses operating in a post-Chevron environment.
What Was Chevron?
The 1984 Supreme Court decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. established a crucial legal doctrine that required federal courts to defer to administrative agencies' reasonable interpretations of ambiguous federal statutes. The doctrine gave agencies significant power to interpret laws. For example, a provision in the Clean Air Act required that a permit system be established to regulate "new or modified major stationary sources" of air pollution. The Environmental Protection Agency (EPA) regarded an entire plant with multiple pollution-emitting devices as a single stationary source rather than treating each device as a separate source. That interpretation allowed plants to modify or add devices without having to obtain new permits, as long as overall emissions did not increase. The Supreme Court upheld this interpretation, finding the statute ambiguous and the EPA's view reasonable.
How and Why Was the Chevron Doctrine Overturned?
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