Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984)
By Anastasiia Chumachenko ‘29
In the late 1960s, rising public concern over air pollution and environmental degradation gave rise to widespread demands for stronger federal environmental protections. Responding to this pressure, President Richard Nixon and Congress enacted a series of major environmental statutes, most notably the Clean Air Act Amendments of 1970. The 1970 Act significantly expanded federal authority over air pollution control and directed the newly established Environmental Protection Agency (EPA) to set National Ambient Air Quality Standards (NAAQS) for pollutants that endanger public health and welfare. To achieve these standards, the Act regulated pollution-emitting sources across the country. Defining a “stationary source” as “any building, structure, facility, or installation which emits or may emit any air pollutant.”
However, as the years passed, many states failed to meet the national air quality standards, meaning that pollutants such as ozone, nitrogen dioxide, and sulfur dioxide, among others, exceeded the maximum levels permitted under federal law, particularly in heavily industrialized regions. Despite the deadlines established in the 1970 amendments, many areas continued to struggle to meet these requirements. In response to this persistent noncompliance, Congress enacted the Clean Air Act Amendments of 1977. These amendments introduced the concept of “nonattainment areas,” defining regions that failed to meet the national air quality standards. States containing nonattainment areas were required to implement permit programs regulating any new or modified major stationary sources of air pollution. This imposed stricter regulatory controls on industrial development in already polluted regions.
But this didn't last long. In 1981, President Ronald Reagan took office, and his administration emphasized economic growth and deregulation. One of his first actions was appointing a new Administrator of the EPA, Anne Gorsuch Burford. Under her leadership, the EPA revised its interpretation of the term “stationary source” within the nonattainment permitting program. As explained by the Natural Resources Defense Council (NRDC) in an article discussing the development of Chevron, the agency adopted a plantwide approach, commonly referred to as the “bubble concept,” under which an entire facility could be treated as a single source for purposes of emissions regulation.
This meant that a facility could increase emissions from one pollution-emitting unit as long as it offset that increase by reducing emissions elsewhere within the same plant. As long as the total emissions from the entire facility did not increase, the company would not be required to obtain a permit or comply with stricter regulatory requirements. At first glance, this approach may seem reasonable because the numbers stay the same. However, in nonattainment areas that were already heavily polluted, this system could allow emissions to increase at specific locations within a plant, even if total emissions remained the same. As a result, pollution could become more concentrated in certain areas, potentially worsening local air quality even more and undermining efforts to improve conditions in regions that already failed to meet federal standards.
The Natural Resources Defense Council challenged the EPA’s interpretation in the Court of Appeals, arguing that the plantwide definition of “stationary source” was inconsistent with the Clean Air Act because it allowed facilities to avoid stricter permitting requirements for individual pollution-emitting units in nonattainment areas. The Court of Appeals agreed, holding that the bubble concept was contrary to the statute because the purpose of the nonattainment program was to improve air quality, not merely maintain it.
In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., Chevron U.S.A., Inc., a large oil and gas company that was subject to the Clean Air Act regulations, along with other industry parties, supported the EPA’s plantwide interpretation of “stationary source,” as it provided greater regulatory flexibility for facilities. So Chevron and other petitioners sought review in the Supreme Court, arguing that the Clean Air Act did not clearly define the term “stationary source” and that the EPA’s plantwide interpretation was a reasonable construction of the statute. The Court granted certiorari.
The question before the Court was whether the EPA’s plantwide definition of “stationary source” was a permissible interpretation of the Clean Air Act. This raised a further question of how courts should approach ambiguous statutes, specifically whether they must defer to an administrative agency’s reasonable interpretation or instead exercise their own independent judgment.
The Supreme Court, in a unanimous decision, reversed the Court of Appeals, holding that it had applied the wrong legal standard. The Court explained that when reviewing an agency’s interpretation of a statute, courts must follow a two-step analysis. First, a court must determine whether Congress has directly spoken to the precise issue; if congressional intent is clear, both the court and the agency must give effect to that intent. However, if the statute is silent or ambiguous, the court may not impose its own interpretation. Instead, the question becomes whether the agency’s interpretation is a permissible construction of the statute. Applying this framework, the Court agreed that Congress had not directly addressed the definition of “stationary source” and concluded that the EPA’s plantwide interpretation was reasonable.
As explained in an editorial by Jason Bohrer, President and CEO of the Lignite Energy Council, the Court justified this approach by emphasizing the role of administrative agencies in implementing complex statutory laws. It reasoned that when Congress leaves gaps or ambiguities in a statute, it implicitly allows agencies to make policy choices within those gaps. This approach reflects principles of separation of powers, as it limits the role of courts in making policy decisions and preserves that function for the executive branch. These agencies are led by officials appointed by the president, who is accountable to voters. According to the Court, this creates a level of democratic accountability, because voters can respond through elections if they disagree with the policies being implemented. Based on this reasoning, the Court concluded that agencies, rather than courts, are better positioned to make these kinds of policy judgments, as long as their interpretations remain reasonable.
For decades after this decision, agencies exercised significant control over how ambiguous laws were applied in practice. Under Chevron, they were not only permitted to interpret unclear statutory provisions but could also revise those interpretations over time, so long as the new interpretation remained reasonable.
However, in 2024, Loper Bright Enterprises v. Raimondo overruled Chevron, with the Supreme Court concluding that Chevron deference conflicted with the Administrative Procedure Act (APA) and the judiciary’s role in interpreting the law. The Administrative Procedure Act is a federal statute that governs how administrative agencies, like the EPA, must act and establishes the standards courts apply when reviewing agency decisions. The Court emphasized that Section 706 of the APA requires courts to “decide all relevant questions of law” and to determine the meaning of statutes independently. As summarized in a client alert by attorneys at Flaster Greenberg, the Court rejected Chevron’s assumption that statutory ambiguity implies delegated interpretive authority, emphasizing instead that agencies have no special competence in resolving such ambiguities. For that reason, the Court concluded that ambiguity does not relieve courts of their duty to exercise independent judgment.
Ironically, many environmental groups supported retaining Chevron, even though it was initially regarded as a defeat. Over time, Chevron proved to be an important tool for advancing regulatory protections. By allowing agencies to interpret ambiguous statutes, Chevron enabled agencies like the EPA to adopt broader and more protective readings of environmental laws, particularly in cases such as Massachusetts v. EPA, where the EPA interpreted the Clean Air Act to include greenhouse gas emissions. This interpretation allowed the agency to regulate greenhouse gas emissions from major sources, therefore helping to reduce pollution contributing to climate change.
As a result of overturning Chevron, agencies now have to act more carefully and stay within the limits set by Congress. For businesses, this change can be counted as a win because it offers greater protection against overly burdensome or unlawful regulations. This shift also reflects a return to a more traditional understanding of separation of powers, in which courts, rather than administrative agencies, are responsible for interpreting the law.
Anastasiia Chumachenko is a freshman majoring in political science.
Sources
5 U.S.C. § 706.
Administrative Procedure Act, 5 U.S.C. § 706 (1946).
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).
Chinnaraj, Kanishka. “Nation at Stake After Supreme Court Overturns Chevron.” The Daily Wildcat, July 15, 2024. https://wildcat.arizona.edu/155601/news/n-chevron-case/
Congressional Research Service. Loper Bright Enterprises v. Raimondo and the Future of Agency Interpretations of Law. R48320. 2024. https://www.congress.gov/crs-product/R48320
Environmental Law Institute. The Supreme Court, Environmental Regulation, and the Regulatory Environment. 2024. https://www.eli.org/sites/default/files/files-pdf/SCOTUS%202024%20Report.pdf
H.R. 6161, 95th Cong. (1977).
Matthew Noxsel, From Gorsuch to Gorsuch: Family Reformation on Agency Power, 13 Fla. A&M U. L. Rev. 45 (2017). https://commons.law.famu.edu/cgi/viewcontent.cgi?article=1174&context=famulawreview
Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007).
National Cable & Telecommunications Ass’n v. Brand X Internet Services, 545 U.S. 967 (2005).
Rinde, Meir. “Richard Nixon and the Rise of American Environmentalism: How a Republican President Ushered in the EPA.” Distillations, June 2, 2017. https://www.sciencehistory.org/stories/magazine/richard-nixon-and-the-rise-of-american-environmentalism/
