AI, Data Centers, and Permitting Reform: Has the Moment Arrived?
Author
Ethan Shenkman - Arnold & Porter
Arnold & Porter
Current Issue
Issue
5
Ethan Shenkman

“The urgency is real and the appetite for change is bipartisan.” Brave words from the congressional Problem Solvers Caucus. Its Working Group on Permitting, Energy, and Environment, lead by Representatives Gabe Evans (R-CO) and Scott Peters (D-CA), has released a new framework for achieving the desperately needed streamlining of environmental and judicial review for energy infrastructure of all kinds, including those for carbon dioxide pipelines, electric transmission lines, and geothermal and nuclear projects.

For decades, energy infrastructure developers have advocated for such reform, only to watch proposals stall in Congress or get tangled in litigation. Now, a new and powerful set of players has entered the arena: technology companies racing to build the data centers and energy projects that artificial intelligence demands. Their resources, innovation, and urgency raise a critical question: will these new players finally catalyze the permitting reform that has eluded us for decades?

The potential is there. Earlier this summer, the White House released its long-anticipated America’s AI Action Plan, as well as a trio of executive orders aimed at securing U.S. global dominance on AI. The action plan and the “Accelerating Federal Permitting of Data Center Infrastructure” EO deliver a stark message: the federal permitting system is an impediment that must be addressed. The executive branch is pulling all sorts of levers to eliminate that impediment, but many argue only Congress can solve this predicament.

The permitting EO offers concrete tools for harnessing the power of AI to expedite the process, among other things encouraging the expansion of the Department of Energy’s PermitAI tool to other agencies. Building on a comprehensive dataset of nearly 30,000 documents, PermitAI enables agencies to automatically reference data and conclusions in previous reviews and automate repetitive tasks like comment review and document consistency checks.

The intriguing prospect of using AI to help clear the very hurdles slowing its own growth is likely to draw challenging inquires: Can machine-generated analysis satisfy statutory “hard look” requirements? Will courts accept decisions informed by algorithms? How will agencies relying on AI tools ensure transparency in decisionmaking? Is our existing legal framework up to the task? Moreover, organizations seeking to use the courts to block infrastructure projects will inevitably start wielding AI tools themselves, making it all the more important for judicial reforms to accompany advances in permitting.

The permitting EO also directs the Environmental Protection Agency to aid in siting data centers and other associated infrastructure on brownfield and Superfund sites; the Permitting Council to enable use of the FAST-41 process; and relevant agencies to potentially expand existing fast-track reviews— categorical exclusions under NEPA and nationwide permits to impact waters of the United States under Section 404 of the Clean Water Act. Importantly, the administration also interprets NEPA not to apply to federal financial assistance when that assistance accounts for less than half of total project cost.

While executive actions are accelerating, pending legislation could lock in reforms more permanently. For example, the bipartisan SPEED Act, introduced by Representatives Bruce Westerman (R-AR) and Jared Golden (D-ME), seeks to codify many of the NEPA reforms currently being tested through policy initiatives and in the courts: narrowing the scope of environmental reviews, expanding categorical exclusions, clarifying what is “reasonably foreseeable,” and tightening timelines and standing in litigation.

The bill remains under consideration, and stakeholder concerns—especially around environmental justice, local control, and procedural safeguards—could modify its final form or limit its reach. Still, in the broader story of permitting reform, initiatives such as those being pursued by the Problem Solvers Caucus and the sponsors of the SPEED Act, represent a critical inflection point: a chance for Congress to join in reshaping the permitting arena.

Of course, even if federal agencies succeed in streamlining their processes, local resistance remains a wild card. Communities from Virginia to California are tightening zoning restrictions on data centers, citing noise, visual impacts, and ballooning energy consumption. Those conflicts mirror the battles long fought over pipelines and wind farms, suggesting that AI may inherit—not escape—the politics of land use.

Nonetheless, for businesses and policymakers, the stakes are enormous. If permitting reform succeeds, it could unlock not only AI infrastructure but also long-delayed clean-energy projects, transmission corridors, and industrial investments. If it fails, the United States risks ceding technological leadership to countries able to build faster and better.

AI, Data Centers, and Permitting Reform: Has the Moment Arrived?

Solar and ESG Cases Test the New Loper Bright Standard
Author
Bethany A. Davis Noll - NYU Law
NYU Law
Current Issue
Issue
5
Bethany A. Davis Noll

The Supreme Court decided Loper Bright a little over a year ago. By now the effects of the new standard on rulemaking are coming into view. Two recent cases—one about renewable energy and the other on environmental, social, and governance factors—illustrate the new precedent’s impacts so far.

In Loper Bright, the Supreme Court overruled Chevron deference to agency implementation of a statute and held that it is the court’s job to decide on the best interpretation of a law. In both the renewable energy and ESG cases, the trial courts had deferred to an agency interpretation under Chevron, but by the time the two cases were on appeal, the Supreme Court overturned the longstanding precedent. The appellate courts in both cases thus sent them back to the lower courts for new decisions.

In the renewable power case, entitled Solar Energy Industries Association v. FERC, the question was how to interpret the Public Utility Regulatory Policies Act. Passed in the 1970s, PURPA’s goal is to diversify power production, including through small renewable facilities, increase domestic power production capabilities, and promote conservation. It provides that utilities have to connect with and buy power from certain small renewable energy facilities.

The question in the case was whether a facility in Montana, Broadview Solar, qualified as that kind of smaller facility. To qualify, a renewable-fueled facility has to have a “power production capacity” that is “not greater than 80 megawatts.” Broadview’s facility consists of a 160-megawatt solar array and a 50-megawatt battery storage system—a design that helps optimize delivery of power to the grid even when conditions are not ideal for solar generation. Solar panels produce direct current power, which needs to be converted to alternating current through an inverter in order to be delivered to the grid. Broadview’s inverter has a maximum output of 80 megawatts, ensuring that the facility cannot send more than 80 megawatts to the grid at any one time.

But the utility that the solar company would connect with objected and challenged whether the facility exceeded the statutory limit. The case is interesting because incentivizing the use of storage and extra solar panel capacity under PURPA, as in the Broadview system, has benefits not only for the renewable energy industry but for the resilience of the overall national grid.

The question was whether “power production capacity” meant what Broadview could add to the grid or the total that it could generate and store. FERC said that “power production capacity” meant the amount Broadview could add to the grid and thus the facility qualified under PURPA. In the first iteration of the case, the D.C. Circuit gave FERC deference under Chevron. The utility sought Supreme Court review and after Loper Bright, the high court granted it and remanded the case to the D.C. Circuit to look at the statutory question again without deference this time. The D.C. Circuit has now held that FERC’s is the “best reading.” The appeals court explained that the “most natural reading” of the term is the amount of power that can be transmitted to the grid.

Utah v. Micone, the ESG case, is interesting too. The lawsuit was filed in the Amarillo division of the Northern District of Texas and assigned to Judge Matthew Kacsmaryk (the only judge in the division). The case is about how to interpret the Employee Retirement Income Security Act. The Department of Labor had issued a rule governing the consideration of environmental, social, and governance factors when fiduciaries choose investment options for retirees. ERISA’s text says that a fiduciary must act “solely in the interest of the participants and beneficiaries.” In the rule, DOL was trying to clear up confusion over a 2020 rule about what fiduciaries could do with ESG factors.

In the new rule, finalized in 2022, DOL said that fiduciaries could consider ESG factors if they were materially relevant and could consider them as “collateral” factors if that would not change the impact on the investor’s financial interests. Plaintiffs thought the rule encouraged too much ESG investing.

Judge Kacsmaryk ruled in DOL’s favor twice. In 2023, he wrote that he was “not unsympathetic” to the concerns plaintiffs in that case had raised about ESG investing. Nonetheless he decided that, after applying deference under Chevron, the rule did not violate ERISA. After Loper Bright came down, Kacsmaryk still found that DOL’s interpretation passed muster because nothing in the 2022 rule allows a fiduciary to act against a retiree’s interests.

Robin Kundis Craig published an article in the Minnesota Law Review looking at the cases decided in the first six months under Loper Bright. Craig found that courts were invalidating the majority of new agency rules under the new standard. But as these recent solar and ESG cases demonstrate, so far at least for these Biden-era decisions, agency rules are holding up after Loper Bright.

Solar and ESG Cases Test the New Loper Bright Standard

From Deference to Deliberation
Author
Loza Taye - Johns Hopkins University Bloomberg School of Public Health
Rebecca Critser - Johns Hopkins University Bloomberg School of Public Health
Akosua Dufie - Johns Hopkins University Bloomberg School of Public Health
Johns Hopkins University Bloomberg School of Public Health
Johns Hopkins University Bloomberg School of Public Health
Johns Hopkins University Bloomberg School of Public Health
Current Issue
Issue
4
From Deference to Deliberation

In the summer of 2024, the Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo, a case that may well reshape the landscape of federal regulation for decades to come. By overruling Chevron deference, the long-standing principle—named for the precedent-setting 1984 case—that courts should bow to reasonable agency interpretations of ambiguous statutes, Loper Bright has fundamentally changed the relationship between the branches of government. Where agencies like EPA once had considerable latitude to interpret scientific and technical language in the laws they implement and enforce, courts now seem to have to make such determinations as “questions of law,” usually the province of a judge. It is not yet possible to catalogue all the impacts that Loper Bright will have on administrative agencies, but one early lesson seems to be that they will need to be more exacting in their definition and use of key terms. In other words, the power to regulate now comes with the burden to clarify.

The balance between providing clear definitions on the one hand and on the other preserving agency discretion has for some time been a contentious issue for lawmakers, regulators, industry, and the public. These two approaches offer distinct advantages and challenges, which impact both the efficiency of governance and the trust the public and industry place in agencies responsible for regulations. Proponents of clear definitions point out that one of their key advantages is the ability to provide consistency and predictability in regulatory frameworks. By establishing clean boundaries and specific guidelines, precise definitions make it less burdensome for agencies to apply regulations uniformly. Uniformity reduces the potential for confusion or bias, which can help to build trust in agency leadership.

Furthermore, clear definitions often lead to more efficient decisionmaking because both regulatory bodies and businesses have a better understanding of what is required. Those who advocate for flexible definitions argue that rigidity oversimplifies complex issues, particularly in environmental policy or health and safety, which require nuance and flexibility. They argue that strict, one-size-fits-all definitions fail to address the variability and nuance of real-world situations. Balancing the legal clarity needed for effective enforcement with the uncertainties inherent in scientific research remains a challenge. New scientific discoveries can shift the assessment of risks. In regulatory contexts, this dynamic creates significant challenges for agencies that base decisions on the best available information.

For decades, the scope of judicial deference afforded to federal agencies by federal courts has evolved, as shown by a trio of administrative law doctrines: In Skidmore v. Swift & Co. (1944), the Supreme Court established that an agency’s interpretation of a statute may be entitled to respect—but not binding deference. Courts were to consider factors such as the agency’s reasoning, consistency, and specialized experience—the so-called “power to persuade.” This ruling reflects a functional respect for agency expertise but leaves ultimate interpretive authority to the judiciary.

Forty years later, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., altered the Skidmore standard of review by introducing a two-step test. Under Chevron, a court would first identify whether the statutory language is unambiguous. If the statute was clear, the court would stop there and apply that meaning. However, if the statute was ambiguous, then the court would determine whether the agency’s interpretation was “permissible.” As long as the interpretation was not arbitrary or contrary to the statute, the regulation would pass the Chevron test. This doctrine recognized that agencies, not courts, are better positioned to make policy judgments when there were statutory gaps, particularly if technical, scientific, or economic expertise was required. Chevron became a cornerstone of modern administrative law and, for the past 40 years, had provided agencies with significant leeway to implement broad and ambiguous statutory language.

Now, in Loper Bright, the Supreme Court has decisively rejected Chevron. The Loper Bright majority asserted that the 1984 precedent violated the separation of powers by allowing agencies to effectively determine the meaning of law when the statute is ambiguous. The Court said that questions of law are “emphatically the province and duty of the judiciary.” Under Loper Bright, courts are now required to independently interpret ambiguous statutory language. The ruling does not abolish agency discretion for questions of fact, but it does make clear that legal ambiguity is not an opportunity for agencies to make policy decisions.

Importantly, Loper Bright did not overturn Skidmore. Agencies may still receive respect from courts if their interpretations are well-reasoned and grounded in expertise. But Skidmore deference is discretionary, context-specific, and, some have argued, lacks the doctrinal clarity that Chevron once provided. Laws are often written with purposeful flexibility—sometimes to secure bipartisan support, sometimes to allow for evolving science, but perhaps most often because the problems they address are complex. In scientific and technical areas where Congress has historically left statutory terms purposefully vague, Loper Bright places agencies on unsettled ground. Judges, many of whom lack technical training, now serve as the primary arbiters of statutory terms and concepts that demand technical judgment.

For decades, EPA has used what might be seen as “strategic ambiguity” to assist in its implementation of statutes and regulations, and to fulfill its mission. The agency interpreted its statutory language in ways that allowed it to address emerging threats without waiting for Congress to rewrite environmental laws or to pass new ones. In many cases, this approach was not just a matter of administrative convenience but deemed essential to the agency’s ability to protect public health and the environment in real time. When new environmental challenges arose—such as greenhouse gas emissions, endocrine-disrupting chemicals, biotechnology, or novel industrial byproducts—EPA often interpreted existing statutory authorities to respond to such problems.

The agency often leaned on expert judgment to navigate the vague language in laws. The Clean Air Act contains terms like “adequate margin of safety” or “requisite to protect public welfare,” which aren’t clearly defined. However, these words are key to establishing air quality standards. Similar situations have been the subject of lawsuits, but after Loper Bright, legal watchers have observed a spike in new legal challenges despite this Court’s insistence that “mere reliance on Chevron cannot constitute a special justification for overruling such a holding.” While Loper Bright didn’t start this wave of litigation, it has clearly added momentum.

For decades, courts have been asked to review how EPA and other agencies interpret terms embedded in statutes. When Congress enacted the Toxic Substances Control Act in 1976, it gave EPA the authority to regulate chemicals that pose an “unreasonable risk of injury to health or the environment,” yet Congress did not define what constitutes an “unreasonable risk.” In Corrosion Proof Fittings v. EPA (1991), an appeals court struck down the agency’s attempt to ban asbestos under TSCA. The Fifth Circuit found that EPA failed to demonstrate that its regulatory ban was the “least burdensome” method of addressing the “unreasonable risk” posed. In doing so, this court interpreted TSCA’s language to require a higher evidentiary bar, and limited the agency’s ability to ban existing chemicals.

To address issues in TSCA, including the interpretation of “unreasonable risk,” Congress passed the Frank R. Lautenberg Chemical Safety for the 21st Century Act in 2016. This was the first major update to TSCA in 40 years and was an attempt to improve the transparency and accountability of EPA’s chemical safety evaluation process. Although the Lautenberg Act was hailed as a bipartisan victory for public health, its language reflects the very compromises that often lead to statutory ambiguity and court cases that result. Lawmakers sought to preserve agency flexibility while also imposing clearer requirements for transparency and consistency. As a result, the revised TSCA contains both mandatory procedural elements and open-ended terms that still require expert interpretation.

For example, the Lautenberg Act seeks to correct many of TSCA’s earlier shortcomings by removing the “least burdensome” language and mandating that EPA evaluate chemical safety without considering costs in its initial risk determinations. Yet the term “unreasonable risk” remains undefined—even though this was the term at issue in Corrosion Proof Fittings. Further, the Lautenberg Act now directs EPA to consider “susceptible subpopulations” and to base decisions on “the weight of the scientific evidence,” but this language did not directly fix the issues raised in earlier litigation in the area. Instead, Congress left considerable room for interpretation about how to implement these requirements, weigh different types of data, address scientific uncertainty, and define what level of risk is acceptable. The Lautenberg Act may provide stronger legal grounding for regulatory decisions that err on the side of caution, but it also invites litigation over the methodological details that remain imprecisely defined.

Consider another example under the new TSCA. To modernize toxicity testing and reduce animal use, TSCA Section 4(h)(2)(C) mandates the agency “reduce and replace animal testing” and promotes the use of scientifically reliable alternatives, often referred to as New Approach Methodologies. If challenged in court, EPA could face regulatory whiplash. On one hand, this section of TSCA encourages innovation in toxicity testing. On the other, EPA’s decisions to use NAMs can be second-guessed by courts unfamiliar with emerging technologies. The application of Loper Bright likely means that courts must make their own determinations about whether novel scientific approaches meet statutory requirements, and can thus bypass an agency’s technical rationale. As agencies continue to advance and validate scientifically sophisticated tools, they must also navigate the growing tension between innovation and legal risk.

However, while Loper Bright has sharpened the legal consequences of statutory ambiguity, litigation over vague definitions is nothing new. In Entergy Corp. v. Riverkeeper, Inc. (2009), the Supreme Court tackled the meaning of the Clean Water Act’s requirement that facilities use the “best technology available” to minimize environmental harm from cooling water intake structures. EPA had interpreted the statute to allow consideration of cost-benefit analysis when selecting technology for existing facilities. Environmental groups challenged this interpretation, arguing the statute required the most environmentally effective technology regardless of cost. The Court ruled with EPA, holding that the statute did not unambiguously prohibit cost considerations and that the agency’s interpretation was permissible under Chevron. This case exemplifies how the 1984 precedent allowed agencies to fill in gaps in ambiguous statutes where Congress left terms like “best” undefined. It also underscores how courts historically applied the judicial standard to agencies’ technical judgment, particularly in the face of complex scientific and economic trade offs.

However, judicial skepticism of agency interpretations did exist prior to Loper Bright. In Sackett v. EPA (2023), the Supreme Court narrowed EPA’s authority under the Clean Water Act by rejecting the agency’s interpretation of what qualifies as federally protected wetlands. While not a Chevron case, it was fundamentally about competing definitions. The agency offered one definition, rooted in scientific expertise, while the Court adopted another, grounded in its interpretation of the statutory text. These cases illustrate two different judicial approaches to statutory ambiguity. In Entergy, the Court accepted that ambiguity invited agency discretion. In Sackett, that ambiguity was fixed by the justices. The Loper Bright decision formalizes this shift and places regulators like EPA in a more precarious legal position. If ambiguity is an increasing liability, clarity must become a core objective.

Agencies must now anticipate legal scrutiny not just of their conclusions, but of the scientific methods they used to reach them. Every definition, assumption, and inference must be backed by robust legal and scientific justification. Shifting interpretive authority toward the judiciary raises important questions about institutional competency. Judicial control over statutory interpretation may lead to less adaptive regulatory outcomes. While judges have the discretion to consult with experts, in litigation complex technical debates are often captured simplistically as binary legal arguments.

As a result, this new era in regulatory science places increased emphasis on the legal distinction between questions of law and questions of fact, as well as their overlap. In parsing this distinction, it is useful to consider that a question of law concerns how a statute should be interpreted or applied while a question of fact involves a determination about what happened or what the evidence shows. In litigation, the judge determines questions of law. Questions of fact are determined either by a jury or, in a bench trial, by the judge. Given the change in direction that Loper Bright has created, courts are now faced with the task of distinguishing between these two questions. It might be especially challenging to address mixed scientific/legal determinations, especially if courts classify them as questions of law subject to de novo review (without deference to the lower court ruling). If every use of expert discretion is vulnerable to being recast as a question of law, agencies will probably face a very high hurdle when implementing statutes that contain broad mandates to protect public health.

Efforts to reinstate broad agency deference are unlikely to find a sympathetic audience in the courts. Loper Bright reflects a broader skepticism toward permitting agencies to define the scope of their own power. While courts have long accepted that agencies possess institutional expertise in complex regulatory arenas, the new judicial approach would seem to elevate statutory clarity over administrative flexibility. However, Congress does retain the authority to clarify the scope of agency discretion through statutory amendments. In theory, this could involve updating statutes to explicitly delegate interpretive authority to the relevant agency, or to provide more detailed definitions of ambiguous terms. This language would reinforce the agency’s ability to implement technically complex programs in a manner consistent with legislative intent. However, legislative solutions like that are not easy to achieve, as demonstrated by the 2016 amendments to TSCA discussed earlier. Also, they might raise other legal issues, such as the high court’s non-delegation doctrine. In addition, any effort to revise foundational regulatory laws is likely to become entangled in broader debates about the size and role of the administrative state. Attempts to legislatively mandate agency deference could be interpreted as attempts to expand federal regulatory power, triggering partisan opposition. Procedurally, securing the bipartisan consensus required to make these changes could prove difficult in the current political climate.

One of the enduring challenges in relying on Congress to clarify statutory ambiguities is the increasing difficulty within the legislative branch of preparing and enacting tightly drafted laws. Congress often prefers to leave the details of implementation to agencies precisely because it allows lawmakers to avoid difficult political choices. Vague statutory language can be designed to secure a broad coalition or punt contentious decisions to administrative experts. In this sense, Chevron deference functioned as a release valve for legislators. Loper Bright can be seen as eliminating that mechanism. The incentives in Congress to maintain strategic ambiguity remain strong, especially in politically charged policy areas.

There is also a danger that Congress might overcorrect and draft excessively rigid statutes that limit agency flexibility in ways that would hinder the implementation of the law in question. In highly technical domains, such as environmental regulation, detailed statutory prescriptions are at risk of becoming obsolete as science and society change. A statute that specifies precise exposure thresholds or prescriptive methodologies could preclude the incorporation of scientific advances. One potential solution is for Congress to include dynamic regulatory mechanisms such as review clauses or explicit scientific reevaluation triggers that preserve flexibility while still providing clear guardrails. However, designing such legislation is not a simple task, and could require a level of technical understanding and political coordination that is not always available.

Furthermore, there are legal complexities that would affect congressional efforts to reaffirm agency authority. While Congress can delegate interpretive responsibilities to agencies, the delegation must be made in a way that does not run afoul of the Constitution. The non-delegation doctrine prohibits Congress from transferring its core legislative powers to another branch without providing an “intelligible principle” to guide the exercise of that authority. The doctrine can be seen as a potential constraint on broad agency discretion. Statutory amendments that attempt to restore interpretive flexibility could lead to litigation.

Regardless of one’s perspective on this change in delegation, agencies must now adapt to a legal landscape where regulatory clarity is more important than ever. The preferable strategy for agencies points toward embracing clearer definitions and more precise rulemaking. Agencies must strengthen the transparency, precision, and defensibility of their rulemakings within the bounds of their existing authority. They can take steps to ensure that their rules withstand judicial scrutiny, and in doing so, they may create benefits for a range of stakeholders by fostering greater predictability and transparency in regulatory decisionmaking.

While a clear picture of the full impact of Loper Bright on the promulgation of regulations is not yet visible, given what we know an outline of some steps that could be taken has begun to emerge, especially suggested steps by EPA. The agency should seize this opportunity to reassert the value of its scientific judgment, building regulatory narratives that are not only technically correct but also compelling to the courts. It should prioritize defining key statutory terms with specificity in its rulemaking process, anchoring definitions in both legislative history and science. Terms like “hazardous air pollutant,” “unreasonable risk,” and “best available technology” should be accompanied by detailed regulatory justifications that are backed by the best scientific data available. To the extent that scientific uncertainties are involved, EPA should explain their nature and show how they have been addressed. In rulemakings under various laws like the Clean Air Act, EPA might seek to more explicitly explain how it assesses terms such as “adequate margin of safety,” including the threshold assumptions, risk models, and uncertainty factors used to justify that margin. By clearly documenting how it balances risks to vulnerable populations against feasibility concerns, the agency can build a record that anticipates judicial scrutiny and underscores its role as a technical authority, with the goal of distinguishing questions of fact (based in science) from questions of law.

EPA should proactively address sources of uncertainty in order to be more transparent in its rulemaking. It and other regulatory agencies should also explicitly point to past interpretations, demonstrating how scientific developments justify any shifts, and acknowledge limitations or uncertainties. If possible, it and other agencies should explicitly distinguish between scientific uncertainty (e.g., data gaps or evolving methodologies) and policy choices (e.g., protective assumptions). This transparent framing may preempt legal challenges that conflate scientific discretion with unbounded governmental power. Additionally, an agency could publish more timely responses to public comments that explain how scientific and legal concerns raised were evaluated and incorporated—or not. These materials can serve as a persuasive record of reasoned decisionmaking. Finally, agencies must expand their use of public-facing databases that allow external experts to replicate and evaluate agencies’ analyses.

For industry, a shift toward sharpened regulatory definitions could reduce uncertainty and compliance costs and provide clarity about how regulations will be applied. Should regulators adopt well-defined rules, businesses may find it easier to anticipate and plan for regulatory obligations. This could result in more stable operational decisionmaking and fewer legal challenges. State governments and policymakers could also experience shifts in their roles within regulatory systems. With courts applying stricter statutory interpretations, the boundaries between federal and state authority could become more clearly defined. Narrower readings of federal statutes might limit the scope of federal preemption and create more space for state-level regulation, leading to adjustments in how federal and state agencies collaborate on policy implementation. States potentially could have greater impact in areas where federal law is less explicit. Public interest organizations will also likely see changes in how they engage with regulatory decisions. Now more constrained in their interpretive flexibility, agencies must lean more heavily on transparent and inclusive rulemaking processes. The public comment period gains renewed importance as a venue for establishing the factual record and rationale underlying new rules. By strengthening procedural rigor and opening their decisionmaking to greater scrutiny, agencies can enhance the defensibility of their actions and improve stakeholder buy-in and trust.

The end of Chevron deference does not mean the end of effective regulation, but it does mean the federal government must adapt to a fundamentally different legal and political environment. In this new era, agencies must lead not only as regulators but as strategic communicators, legal architects, public educators, and consumers of science. Agencies must take the invitation still left open by Skidmore to demonstrate the persuasiveness of their interpretations and the integrity of their science. They must proactively clarify the terms they use, distinguish the sources of uncertainty they face, and build rulemaking records that are as compelling to judges as they are to scientists and stakeholders. Federal agencies can no longer rely on the judicial deference standard that dominated the last 40 years of administrative law. Their role is now more complex, because they must justify, defend, and explain their decisions clearly, forcefully, and transparently. In doing so, the door is open for agencies to chart their path, and bolster their credibility, in a changed regulatory landscape.

CROSS-EXAMINATION With less room to interpret ambiguous laws after the demise of the Chevron precedent, agencies must now work within narrow legal boundaries. Further, statutory meaning may come to be shaped by judicial reasoning rather than regulatory interpretation.

The Problem of Loper Bright Delegation
Author
Eli Nachmany - Covington & Burling LLP
Covington & Burling LLP
Current Issue
Issue
2
Parent Article
Eli Nachmany

The Supreme Court’s recent elimination of Chevron deference raises an important question: What happens to the major questions doctrine? A full scholarly treatment of the answer would demand more space, but one immediate consequence is evident. The doctrine now has a critical role to play in defining the post-Loper Bright limits of “delegated” authority from Congress to agencies. The Court in Loper Bright Enterprises v. Raimondo saw delegated discretion as an area where something like deference might continue apace. The major questions doctrine will help to check the limits of those delegations.

Applying Chevron, a court would defer to a permissible agency interpretation of an ambiguous statute. But in Loper Bright, the Supreme Court ended this practice and established that courts must review agency statutory interpretations without deference. Nevertheless, the Court stated that Congress may “confer discretionary authority on agencies,” and it instructed courts to “independently identify and respect such delegations of authority, police the outer statutory boundaries of those delegations, and ensure that agencies exercise their discretion consistent with the” Administrative Procedure Act. As the Court pointed out, sometimes “the best reading of a statute is that it delegates discretionary authority to an agency.”

Following Loper Bright, the government has repeatedly argued that its regulations are exercises of delegated discretionary authority. Courts, including the Fifth Circuit in Mayfield v. Department of Labor, have accepted this argument. But if everything is just an exercise of delegated discretion, Chevron deference will return under a new name—what Professor Adrian Vermeule calls “Loper Bright delegation.”

The major questions doctrine solves this dilemma. The doctrine is focused primarily on curbing the worst excesses of agency assertions of delegated authority. In West Virginia v. EPA, the case that recognized the existence of the doctrine, the Supreme Court noted that “in certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make [courts] ‘reluctant to read into ambiguous statutory text’ the delegation claimed to be lurking there.” The discussion of delegation in Loper Bright elevates the meaningfulness of this passage.

The government has every incentive to claim that statutes delegate broad administrative authority. If a court acknowledges that assertion, then its review of the agency’s interpretation will be more circumscribed—thereby increasing the agency’s odds of victory in litigation. Some delegations may be so capacious that they violate the nondelegation doctrine, but the Court has recently been reluctant to apply it in the regulatory context.

Thus, in practice, the major questions doctrine is one of the most promising tools for courts to second-guess the most egregious agency assertions of delegation. That is a good thing. The language of Loper Bright is shifting the focus to delegation and discretion, and courts will need to deal with increasingly bold agency assertions of delegated regulatory authority. And in the face of such assertions, litigants and judges can look to the major questions doctrine to “police the outer statutory boundaries of . . . delegations,” as Loper Bright demands.

Of course, the major questions doctrine applies only “in certain extraordinary cases,” and courts are working through the meaning of “extraordinary.” For example, courts are grappling with the contours of such concepts as economic and political significance—threshold requirements to trigger the major questions doctrine’s applicability. Yet the existence of the doctrine as a background rule of interpretation, applicable in at least some cases, discourages agencies from claiming powers that Congress has not actually conferred.

Loper Bright threatened to open the floodgates of government assertions of delegated discretion when defending regulations. But two years earlier, in West Virginia v. EPA, the Supreme Court had already built (or, at least, recognized the existence of) a dam.

Through the Looking Glass?: Chevron and the Future of the Regulatory Environment
US Supreme court building
Thursday, January 18, 2024

Yesterday morning, the U.S. Supreme Court heard oral argument in a pair of cases—Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce—that by all accounts have the potential to result in a seismic shift in administrative and regulatory law, including changes for courts, the President and federal agencies, Congress, and the public.

Guidance Needed for Practitioners on Some Discharges to Groundwater
Author
Ethan Shenkman - Arnold & Porter
Arnold & Porter
Current Issue
Issue
2
Ethan Shenkman

The Clean Water Act does not cover groundwater. But what if an aquifer acts as a “conduit” to surface water? Is a facility liable if pollutants discharged into groundwater eventually flow into “waters of the United States,” which are covered under the act? Must facilities obtain permits in such circumstances?

The answer to these questions has been about as clear as mud. Practitioners are watching to see if the Supreme Court will take up the issue this term, to resolve a brewing circuit split, and if EPA and the Justice Department will finally clarify where the government stands.

The courts have been all over the map. For example, a recent Ninth Circuit case, County of Maui v. Hawaii Wildlife Fund, involved a locality-operated wastewater facility that used underground injection wells to dispose of treated sewage, where pollutants from the well seeped into the Pacific Ocean through groundwater. The court held that a National Pollutant Discharge Elimination System permit was required because the pollutants originated “from a point source” and “are fairly traceable from the point source to a navigable water.”

The Fourth Circuit followed suit in Kinder Morgan Energy Partners LP v. Upstate Forever, where a pipeline in South Carolina ruptured, leaking gasoline into groundwater, which later contaminated local streams. The court held that the “direct hydrological connection between groundwater and navigable waters” meant the discharge was regulated by the CWA.

The Sixth Circuit has taken the opposite tack in a pair of recent cases, including Kentucky Waterways Alliance v. Kentucky Utilities Co., which rejected a CWA citizen suit based on chemicals stored in a coal ash pond that allegedly traveled through groundwater to a nearby lake. Expressly disagreeing with its sister circuits, the appeals court ruled that the definition of “discharge” requires that a point source deliver pollutants directly to navigable waters.

Meanwhile, the government has sent mixed signals. In 2016, DOJ filed an amicus brief in the County of Maui case, supporting the district court’s finding of liability, albeit on a narrower theory. “It has been EPA’s longstanding position that discharges moving through groundwater to a jurisdictional surface water are subject to CWA permitting requirements,” but only “if there is a ‘direct hydrological connection’ between the groundwater and the surface water,” Justice lawyers told the court. The department advocated a case-by-case inquiry, recognizing that “some hydrological connections are too circuitous and attenuated to come under the CWA.”

The amicus brief would have required authorization from the solicitor general — entailing a rigorous review process — which meant the government’s position was now pretty well defined, right? Not so fast.

In February 2018, EPA published a notice soliciting input on whether it should continue to adhere to these views, in particular, on whether and to what extent “subjecting such releases to CWA permitting is consistent with the text, structure, and purpose of the CWA.” The agency said it would clarify its views through “memoranda, guidance, or in the form of rulemaking” to “provide additional certainty for the public and the regulated community.” But EPA has yet to act.

Fast forward to December. In response to petitions for certiorari filed in the Ninth and Fourth circuit cases, the Supreme Court issued a formal request for the views of the solicitor general, and, in an unusual move, ordered a response under a tight deadline, putting the government’s feet to the fire.

The United States submitted an amicus brief urging the Court to grant certiorari to decide “whether a ‘discharge of a pollutant,’ . . . occurs when a pollutant is released from a point source, travels through groundwater, and ultimately migrates to navigable waters.” Notably, however, the SG, keeping his cards close to the vest, was silent as to how EPA itself would answer that question. Rather, he reported that the agency would issue clarification “within the next several weeks.” The SG nonetheless declared a strong interest in resolving the matter, which “has the potential to affect federal, state, and tribal regulatory efforts in innumerable circumstances nationwide.”

Practitioners seeking to advise their clients are watching these developments closely. Will the Supreme Court agree to hear the case? Will EPA articulate its views, either through guidance or rulemaking, and if so, will it adhere to its Ninth Circuit arguments, flip positions, or land somewhere in between? And wherever the agency lands, will DOJ continue to argue that EPA’s interpretation is entitled to Chevron deference? Meanwhile, if the Supreme Court grants the case, practitioners will be looking for clues as to what kind of interpretive approach the justices might take if and when they have the chance to review the agency’s ongoing rule redefining “waters of the United States.”

Guidance needed for practitioners on some discharges to groundwater.

Justice Gorsuch Faces Case Where Neither Choice Entirely Satisfactory
Author
Richard Lazarus - Harvard University
Harvard University
Current Issue
Issue
1
Richard Lazarus

Before joining the Supreme Court, Neil Gorsuch made clear that he, like the justice he replaced, Antonin Scalia, believes in strict adherence to statutory text. According to Gorsuch, a judge’s personal policy preferences should play no role in statutory interpretation. And, going even further than Scalia, nominee Gorsuch admonished that judicial deference to agency construction of ambiguous statutory language under Chevron v. Natural Resources Defense Council amounts to an unconstitutional violation of separation of powers. An environmental case now pending before the Court on petition for a writ of certiorari, however, may well put Justice Gorsuch’s stated commitment to statutory text to the test.

At issue in the petition pending before the Court in New York vs. EPA is the validity of the agency’s so-called Water Transfer Rule, which provides that a movement from one navigable waterbody to an entirely distinct waterbody does not amount to an “addition of any pollutant to navigable waters” requiring a Clean Water Act Section 402 permit. Under this reading, EPA readily acknowledges, a person can discharge highly polluted water from one water body into a highly pristine separate water body without the need for a Section 402 permit.

EPA statutory grounding for the validity of the WTR is the Clean Water Act’s phrasing of the definition of “discharge of a pollutant” to mean “any addition of any pollutant to navigable waters.” EPA contends that the term “navigable waters” in this context treats all navigable waters in the nation as a “unitary” concept such that conveyances of pollutants from one navigable waterbody to another do not “add” pollutants to navigable waters overall. The pollutants are merely redistributed within the nation’s navigable waters.

The origins of EPA’s unitary waters theory can be found in an amicus brief filed by the solicitor general in the Supreme Court’s South Florida Water Management District vs. Miccosukee Tribe of Indians, decided in 2004. Relying on the notion that the Clean Water Act treated navigable waters as a unitary concept, the amicus brief argued for the first time that point sources that transfer water from one navigable waterbody to another distinct navigable waterbody do not require Section 402 permits even though the “point source . . . might be described as the ‘cause-in-fact’ of the release of pollutants into navigable waters.”

The reason for the solicitor general’s surprising filing at the time was clear. The federal government was concerned that a different rule might subject to Clean Water Act permitting requirements the routine transfers of water by federal agencies such as the Bureau of Reclamation or the U.S. Army Corps of Engineers between distinct bodies of navigable water. In this respect, the primary institutional motivation behind the interpretation appeared to derive from the concerns of those agencies rather than from EPA.

Both during the Miccosukee oral argument and in the opinion she wrote for the Court in the case, Justice Sandra Day O’Connor left little doubt of her skepticism of the validity of the solicitor general’s view. At oral argument, she described it as “an extreme position” that needed “a fall-back position,” generating courtroom laughter.

And in the opinion she went to great lengths to explain the many ways that such an interpretation could not be squared with the structure and operation of the Clean Water Act. The opinion emphasized in particular how the unitary waters theory conflicted with those parts of the statute that seek to protect “individual waterbodies as well as ‘waters of the United States’ as a whole.” The Court, however, declined ultimately to decide the issue because it had not been raised in or decided by the lower courts.

Notwithstanding the Miccosukee Court’s clear skepticism, EPA subsequently embraced the solicitor general’s unitary waters theory in a rulemaking that established the WTR, which exempts from Clean Water Act Section 402 permit requirements transfers of water (even if polluted) between distinct waterbodies. And, relying very heavily on Chevron deference, two federal courts of appeals have rejected challenges to EPA’s rule that argued that the rule cannot be squared with the act’s plain meaning and clear focus on individual waterbodies.

The state of New York’s pending petition in New York v. EPA asks the Supreme Court to review the issue. Should Gorsuch adhere to his view of both the conclusive role of statutory text and the impropriety of Chevron deference in judicial review of agency interpretation, there is good reason to expect he would support the WTR’s challengers on the merits. Yet, hailing from Colorado, where such water transfers are routine, the justice’s personal policy preferences are likely sympathetic to EPA’s contrary position.

How Justice Gorsuch votes on New York’s petition may well provide an early test of the strength of the justice’s stated convictions.

Justice Gorsuch faces a case where neither choice is entirely satisfactory.

The Debate: Chevron Enshrined Deference to Agencies. Will Supreme Court Neuter It?
Current Issue
Issue
5
The Debate

HEADNOTE ❧ The Supreme Court’s decision in Chevron v. NRDC has been at the heart of environmental law and administration law generally. But even before the ascension of Neil Gorsuch to the High Court, there were signs that the justices were looking on deference with skepticism.