May 9, 2023
You would think, by now, that the Supreme Court of the United States (SCOTUS) would be used to handling “fishy” situations. Afterall, the most senior court in the all the land casts a pretty wide jurisdictional “net.” In a current case before SCOTUS, Loper Bright Enterprises v. Raimondo, (Loper), a commercial fishing company challenges the federal agency responsible for the stewardships of marine resources.
How could a commercial fishing company possibly have anything to do with the Renewable Fuel Standard? Since I’ve baited the hook so well, Loper directly challenges the precedent set in Chevron v. Natural Resources Defense Council [1] (Chevron) which determined that courts should grant deference to administrative agencies in those agencies’ interpretation of congressional statutes, so long as that interpretation was reasonable. For example, EPA couldn’t unilaterally decide to interpret a provision of the Renewable Fuel Standard (RFS) to force us all to go fishing on Fridays, but it could apply interpretation to regulations to apply rules on RFS participants.
On a certain level, this should make a fair amount sense. The federal agency tasked with enforcement probably has the most experience with the application of the regulations they’re enforcing. Given that they are situated in the best position to understand the issues affecting participants in the various regulated industries, administration agencies (i.e. EPA, IRS, USDA, FCC, etc.) are skilled in interpreting rules and regulations in way that balances statutory requirements with industry participation.
We saw a real-world application of the use of this precedent when SCOTUS ruled on the 10th Circuit decision brought by Holly Frontier and Wynnewood challenging EPA’s interpretation of small refinery exemptions. At the time, SCOTUS used Chevron to determine how much deference EPA should receive in its interpretation of small refinery exemption provisions. While EPA was not successful in its defense, SCOTUS’s final opinion cited Chevron, as a means to review EPA’s regulatory interpretations.
Now, it would not be fair to lead you to the conclusion that administrative agency’s always interpret things correctly. This leads us to the critique of this decision which is that it gives federal regulators overly broad powers, far beyond what the branches of government intended. In the words of current Justice Neil Gorsuch, “…Chevron did not undo and could not have undone, the judicial duty to provide an independent judgment of the law’s meaning in the cases that come before the Nation’s courts.” Basically, the Chevron decision was not a substitute for the court system.
This is not the first time Chevron has been challenged. While the decision has stood for nearly four decades, it has been debated many times, even before SCOTUS. For instance, last year, SCOTUS heard West Virginia v. EPA, which put the rare and hardly used Major Questions Doctrine before the court. When used, the Major Questions Doctrine strengthens the ability to strike down regulations, the opposite purpose of the Chevron holding.
Not that you’ve been waiting on bated breath or anything, but why should you care? As a participant in the RFS, you have first-hand experience with the number of times EPA has interpreted regulations, for better or worse. EPA’s setting of annual Renewable Volume Obligations, particularly the waiver provisions, and the upcoming 2023 Set rules are perfect examples of times when EPA used its administrative powers for provisions which, well, could be open to interpretation.
Should SCOTUS decide to overturn the precedent set in Chevron, does that mean that all EPA decisions can be undone? No, absolutely not. It does, however, mean that going forward, EPA’s ability to set things like annual RVOs and granting or denying small refinery exemptions could be greatly affected. As we all know, those two things are industry chatter, even when SCOTUS doesn’t have a case like Loper before it.
What will be the result of this fishy situation? If critics of the original Chevron decision are to be believed, the decision will be overturned. If the proponents of the decision are to be believed, the decision will stand. Either way, this “fishy” situation will come to a final resolution.
[1] Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984).