Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.

Based on Wikipedia: Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.

For forty years, a single Supreme Court case quietly shaped more of American life than most people ever realized. It determined whether the Environmental Protection Agency could regulate pollution, whether the Food and Drug Administration could approve drugs, whether workplace safety rules had teeth. The case wasn't about any of those things directly. It was about the definition of a single word: "source."

That word, buried in the Clean Air Act, sparked a legal battle that would fundamentally reshape the balance of power between Congress, federal agencies, and the courts. The result was a doctrine called Chevron deference, named after the oil company that won the case. And in June 2024, four decades later, the Supreme Court struck it down.

The Fight Over a Word

In 1977, Congress amended the Clean Air Act to require that any project creating a major "stationary source" of air pollution go through an elaborate approval process. The Environmental Protection Agency would conduct what was called "new-source review" before giving the green light.

But Congress never precisely defined what counted as a "source."

Was a source a single smokestack? A boiler? An entire factory? The answer mattered enormously. If every piece of equipment counted as its own source, then adding a new machine to an existing plant could trigger months of regulatory review. If only the whole plant counted, companies had far more flexibility.

The EPA initially took the strict view. Under their interpretation, essentially any significant change or addition to a plant could be considered a new source of pollution, requiring the full review process.

Then Ronald Reagan won the presidency in 1980.

His administration took a different approach to regulation. In 1981, the EPA changed its interpretation. Now "source" would mean an entire plant or factory, not individual components. This created what became known as the "bubble" concept, imagining an invisible bubble over the whole facility. As long as the total emissions from inside that bubble didn't increase, companies could make whatever internal changes they wanted without triggering new-source review.

A company could build a new, polluting piece of equipment as long as they simultaneously reduced emissions elsewhere in the plant by the same amount. The overall pollution stayed the same, but industry gained significant flexibility.

The Environmental Challenge

The Natural Resources Defense Council, an environmental advocacy group, saw this as the EPA gutting its own regulations. They filed a legal challenge in late 1981, arguing that the agency's new interpretation violated the Clean Air Act.

They won in the D.C. Circuit Court of Appeals, one of the most influential courts in the country for regulatory matters. The opinion was written by Ruth Bader Ginsburg, then a circuit judge, years before she would join the Supreme Court. The court ruled that the EPA's new interpretation conflicted with prior cases and was therefore invalid.

Chevron Corporation had intervened in the case because the new regulation affected their operations. They appealed to the Supreme Court.

The Supreme Court Flips the Script

On June 25, 1984, the Supreme Court unanimously reversed the D.C. Circuit. All six justices who participated ruled in favor of the EPA's interpretation. The opinion, written by Justice John Paul Stevens, didn't just decide this particular case. It established a framework that would govern thousands of future disputes.

The Court's reasoning was striking. When Congress writes a law with ambiguous language, that ambiguity might represent an implicit delegation of authority. Congress, in effect, passes the question to the executive agency responsible for implementing the law. The agency, not the courts, should fill in the gaps.

Why? Because agencies have expertise that judges lack. And because agency heads are appointed by elected presidents and confirmed by elected senators. They have democratic accountability that lifetime-appointed federal judges do not.

Justice Stevens put it bluntly: "Federal judges—who have no constituency—have a duty to respect legitimate policy choices made by those who do."

The Two-Step Test

The Court established what became known as the Chevron doctrine, a two-step analysis for courts facing challenges to agency interpretations.

Step one: Has Congress directly spoken to the precise question at issue? If the law is clear and unambiguous, that settles it. The agency must follow what Congress said, and so must the courts.

But if the law is ambiguous or silent on the specific issue, the court moves to step two: Is the agency's interpretation based on a permissible construction of the statute? Notice the word "permissible," not "correct." The agency doesn't have to have the best interpretation, just a reasonable one.

If the agency's reading is reasonable, the court must defer to it. The judge cannot substitute their own preferred interpretation, even if they think it's better.

This was a dramatic shift in the relationship between courts and agencies. Previously, under a 1944 case called Skidmore v. Swift, courts gave agency interpretations some weight based on factors like the agency's expertise and the consistency of its position. But the court retained the final say on what the law meant.

Chevron went further. If Congress left ambiguity, and the agency filled it reasonably, the court's job was essentially to step aside.

Why This Mattered So Much

Consider how modern government actually works. Congress passes laws that are often vague by necessity. Legislators cannot anticipate every situation that might arise. They write broad mandates and delegate the details to expert agencies.

The Clean Air Act tells the EPA to regulate air pollution. But it doesn't specify the exact parts-per-million of every pollutant in every context. The Food and Drug Administration is told to ensure drugs are "safe and effective." But what exactly does that mean for a cancer treatment that extends life by three months but has severe side effects?

These questions involve scientific expertise, policy tradeoffs, and value judgments. Chevron said that when Congress leaves room for interpretation, agencies should make these calls, not judges.

The doctrine became one of the most cited principles in American administrative law. It shaped regulations on environmental protection, workplace safety, financial markets, telecommunications, healthcare, and virtually every area where federal agencies operate.

The Doctrine Under Pressure

From the beginning, Chevron had critics. Some argued it gave the executive branch too much power at the expense of Congress and the courts. Others worried it allowed agencies to flip positions whenever a new president took office, creating regulatory whiplash.

Over the years, the Supreme Court developed refinements and limitations. A concept emerged called "Chevron step zero," asking whether deference should apply at all. Not every agency statement deserves deference. A formal regulation created through notice-and-comment procedures, where the public can weigh in before rules take effect, gets more respect than an informal letter or guidance document.

The Court also suggested that Chevron deference might not apply to questions of "deep economic and political significance." If Congress didn't clearly authorize an agency to make a major policy decision with huge economic consequences, courts should be skeptical that Congress intended to delegate that choice.

This became known as the "major questions doctrine," and it grew more prominent in recent years. In 2022, in West Virginia v. EPA, the Court used this doctrine to strike down an EPA rule that would have required power plants to shift from coal to natural gas or renewable energy. The majority, led by Chief Justice John Roberts, said the agency had claimed authority far beyond what Congress had explicitly granted.

In 2023, the Court applied the same reasoning to invalidate President Biden's student loan forgiveness program, ruling that the Department of Education lacked the authority to cancel hundreds of billions of dollars in debt.

The End of Chevron

The final blow came from an unlikely source: a dispute about who should pay for fish counters.

The National Marine Fisheries Service requires fishing boats in certain areas to carry federal observers who monitor their catch. Under the agency's rules, the fishermen themselves had to pay the observers' wages, sometimes over four hundred dollars per day. Commercial fishing operations challenged this requirement, and the case reached the Supreme Court.

The petition specifically asked the Court to overrule Chevron. On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the Court did exactly that, voting 6-3.

The majority held that Chevron conflicted with the Administrative Procedure Act, the 1946 law that governs how federal agencies operate. Under that statute, courts are supposed to "decide all relevant questions of law" and "interpret constitutional and statutory provisions." Chevron's command that courts defer to agency interpretations, the majority said, violated this basic principle.

Going forward, courts must determine the "best reading" of a statute rather than accepting any reasonable agency interpretation. The expertise of agencies might still inform a court's analysis, but the final word on what a law means belongs to judges.

What Comes Next

The implications are vast and uncertain. Every existing regulation that rested on Chevron deference could now face fresh legal challenges. Rules on environmental protection, drug approval, financial regulation, workplace safety, telecommunications policy, and countless other areas might be relitigated.

Some observers predict chaos. Agencies built their regulatory frameworks assuming courts would defer to their reasonable interpretations. Now courts will substitute their own judgments. Different courts might reach different conclusions about the same statute, creating conflicting rules in different parts of the country until the Supreme Court steps in to resolve the disagreement.

Others see a restoration of constitutional order. In this view, unelected bureaucrats had accumulated too much power. Major policy decisions were being made by agencies rather than Congress. Chevron let the executive branch effectively rewrite laws through creative interpretation. Now courts will hold agencies to what Congress actually said.

There's a certain irony in the original case. Chevron, the oil company, won by arguing that agencies deserve deference. That victory helped oil and gas companies when administrations favorable to industry interpreted environmental laws loosely. But it also enabled strict regulations when administrations changed. The doctrine cut both ways depending on who held power.

Now neither side can rely on agency deference. Every regulatory interpretation becomes a question for judges to decide. The administrative state, that vast apparatus of federal agencies that touches nearly every aspect of American life, enters a new era of uncertainty.

A Deeper Question

Behind the legal technicalities lies a fundamental question about how a democracy governs itself. Congress cannot possibly write laws detailed enough to cover every situation. Someone must fill in the gaps. Should it be expert agencies accountable to the president? Or should it be federal judges with lifetime appointments?

Both answers have problems. Agencies can be captured by the industries they regulate. They can overreach their authority. They change course with each new administration.

But judges have their own limitations. They lack scientific and technical expertise. They can't respond quickly to new circumstances. They aren't accountable to voters. And the federal judiciary has its own ideological composition that shifts slowly over time.

For forty years, Chevron represented one answer to this dilemma: trust the agencies, at least when Congress hasn't been clear. That answer is now gone. What replaces it will be worked out case by case, court by court, over the years and decades to come.

The fight over the word "source" in the Clean Air Act may seem like an obscure technical dispute. But it raised questions that go to the heart of American government. Who decides what the law means? How much power should unelected officials have? When Congress is vague, who fills in the blanks?

The Supreme Court has given a new answer. Whether it proves wiser than the old one, only time will tell.