The Demise of Chevron Deference

Chevron, which helped pioneer the oil industry in Alaska, intervened in the case along with the American Petroleum Institute, Chemical Manufacturers Association, Rubber Manufacturers Association, American Iron and Steel Institute, and General Motors. As an intervenor, Chevron appealed to the US Supreme Court to uphold EPA’s industry-friendly interpretation.

In Loper Bright, Alaska joined with twenty-six other states to file an amicus brief asking the Supreme Court to reverse Chevron deference.

Michael Drysdale, a partner at Dorsey & Whitney in the areas of environmental law and general litigation, notes, “Chevron deference has been cited more than 17,000 times since its enactment in 1984, making it one of the most cited Supreme Court decisions. But this court has been skeptical of Chevron for several years. They made a point of saying they haven’t cited it since 2016. It has still been a very important piece of precedent for the lower courts that are looking to deal with the issues that come up.”

The US Supreme Court’s ruling generally means that it is now much easier for courts, particularly lower courts, to overturn federal rules. “If they find an ambiguity, they now are not supposed to defer to what the agency says. The court may listen to what the agency has to say, but won’t necessarily afford it any extra weight,” says Drysdale. “So the likelihood that the agency and the court land in the same place is now a lot lower.”

The Impact on Alaska

The US Supreme Court’s decision will likely have far-reaching effects across the country, but in Alaska those effects are magnified.

Bonnie Paskvan, a Dorsey & Whitney partner who leads the firm’s Anchorage office, has significant experience working with Alaska Native corporations and municipalities. Paskvan believes Loper Bright will have a disproportionately large impact on Alaska.

“It’s hard to say with certainty exactly what the impact will be in Alaska,” she says. “We are heavily dominated by federal regulation all over the state, whether it be via federal funding or federal oversight for mining, fisheries, or any other large, heavily regulated projects. It just seems likely there will be a bigger impact here than in some other states where those factors are not at the forefront. Also, about 65 percent of Alaska’s land is federally owned and managed, so federal policies about land use are going to be very heavily determined by federal bodies, whether that be by litigation or regulatory agencies. So who gets to decide the rules of the road and what that looks like in timing, costs, and process?”

In a recent press release, Alaska Attorney General Treg Taylor noted his approval of the Loper Bright decision. “Federal agencies have used Chevron deference as a shield, limiting the ability of federal courts to look critically at the agencies’ actions all while moving to improperly expand their discretion and authority. By getting rid of Chevron, the Supreme Court has restored the separation of powers. Under our system of government, it is a court’s job to offer a final interpretation of the law, not the job of federal agencies,” Taylor wrote.

Anchorage attorney Christopher Slottee, an industry group leader for Schwabe with a focus on Native corporations and natural resources, anticipates a mixed response to the reversal of the Chevron deference.

“For Native corporations, it’s going to be dependent on the specific situation or the specific regulation. Some Native corporations are going to be very in favor of challenges to regulations that restrict development of certain resources because they want to have more freedom to develop the natural resources on their lands,” says Slottee. “On the other side, there’s certainly going to be some Native corporations and some Native groups that are opposed to striking down those regulations because they want to see them in place to preserve the traditional habitat or traditional nature of their Alaska Native lands. It’s going to be specific both as to the regulation but also to which side someone is on.”

Alaska Governor Mike Dunleavy stated his approval of the Loper Bright decision. “Ever since statehood, Alaska has had to continually fight just to try and hold on to what was already given—fish and game management, submerged lands, land entitlements, resource development, the list goes on. This constant deference given to federal agencies has made the fight that much harder and resulted in Alaska being treated as a volleyball going back and forth depending on who’s in the White House. Our legal rights as a state should not depend on who’s in office—those rights either exist or they don’t. The US Supreme Court’s decision at least gives us a fair chance to fight back and secure the rights we were promised,” Dunleavy says.

The Environmental Impact

Loper Bright does not automatically nullify all federal regulations in a single stroke. Rather, it rebalances the scales when regulations are challenged in federal courts. Recent court decisions apart from Loper Bright provide a glimpse into the potential challenges environmental agencies will face in a post-Chevron-deference legal environment.

“With regard to the Clean Water Act, we’ve seen the US Supreme Court, even this past session, restrict the ability of the US Army Corps of Engineers (USACE) to regulate certain aspects of waters. We expect to see significantly more challenges to EPA, USACE, and other natural resources governing agencies from this, and they will have a better chance to succeed under this new regime,” says Slottee. “We haven’t seen those specific results to date, but we know that they are coming, and they are coming quickly.”

Drysdale expects EPA to be most affected. “They have so many regulations that affect so many economic activities and many of those regulations are controversial,” he says. “There are many other areas that will be very affected, like telecommunications and cyber security and the rules for those industries. When you think about fast-moving industries, it’s going to be much harder to manage those because the statues are often way behind.”

Drysdale notes an additional example of the problems this new process could present. “Imagine you are the Biden administration or a future Democratic administration and you want to do something aggressive to fight climate change. And you’re looking within your authority, whether it be Clean Air Act or any other federal act, and you say, ‘I want to accomplish this policy to fight climate change,’ while it’s not clear on whether you can do that. Under Chevron you could say, ‘Well, is my interpretation reasonable?’ Yes, go forth and enact. Now it’s like, well, what is a judge in Texas going to think about it?”

Regulating Expectations

Attorneys face numerous uncertainties now that the Chevron deference is overturned. “It’s hard to overstate the magnitude of this change in process,” says Paskvan. “Decisions may be better or worse coming from the court. I think they’re likely to be more expensive and potentially slower.”

Drysdale notes the importance of distinguishing between how good a rule is and how clear the rule is. “In many cases, there may be a rule that you don’t like as a business, but if it’s clear you can deal with it in terms of your pricing and your contract terms, et cetera. Consider OSHA [Occupation Safety and Health Administration] regulations: companies complain about those all the time. But if they’re clear, they can deal with them,” he says. “An unclear rule, whether it’s a good or bad rule, poses problems over and above that. You just don’t know whether what you’re doing is going to ultimately be OK and whether the investments you’re making in compliance are going to be worth it.”

Attorneys recommend remaining proactive. “I think the biggest impact of this ruling is that it’s going to raise a lot of uncertainty. We just don’t know how the removal of Chevron is going to shake out yet, and we’re not going to know for a year or two until these initial challenges are tested and we can see the impact,” says Slottee. “What I’ve been saying to my clients is, let’s look at your regulatory regime, let’s try to find areas in which we can take advantage of this and stay aware of areas where we need to be concerned about attacks under this new regime.”

Slottee adds, “It’s best to be prepared, monitor what’s going on, and see what the potential consequences are.”

Time will provide more insights into the outcomes of Loper Bright across the country and in Alaska. One factor to watch is how the agencies respond. “We’re not going to know how federal agencies will respond for a while because they are big entities. It takes them a while to change course, and combined with a new administration, there could be a wholly different agency approach as well,” explains Slottee.

Drysdale also notes, “The significance of this case is now much greater today than it would have been if the same decision had been made in 1984, due to the difficulty of passing legislation today. The simple solution to any error is to obtain statutory authority. Congress can always fix any problem that a court may have with a rule, but Congress doesn’t often pass laws anymore, so that’s not really a solution.”

Despite the uncertainty, Drysdale doesn’t think Loper Bright will necessarily result in more litigation. “Almost every major rule gets litigated these days anyway. But what it does do is it makes it more likely that the rules will be overturned,” he says, “so the agency will have to take multiple bites of the apple, and it will be a much longer period of uncertainty. This could go on for years.”