Agency deference, a legal doctrine troublesome for oil and gas work, has survived a challenge in a case decided last month by the US Supreme Court. Following agency deference, courts yield to reasonable interpretations of regulatory agencies in decisions involving ambiguity. Because the doctrine tips authority to interpret laws and regulations with the force of law toward executive agencies and away from the judiciary, it creates worry about constitutional separation of powers. It also emboldens authoritarian bureaucracies, such as the Environmental Protection Agency under former President Barack Obama, to regulate zealously.
The oil and gas business should not want to repeat that experience.
Hope remains
As noted here last year, President Donald Trump’s two nominees on the Supreme Court dislike agency deference (OGJ, July 23, 2018, p. 20). As lower-court judges and legal commentators, Associate Justices Neil M. Gorsuch and Brett M. Kavanaugh disparaged the doctrine.
Hope that their joining the Supreme Court signals change need not fade with the court’s upholding of one version of agency deference during its session just ended. In Kisor v. Wilkie, Secretary of Veterans Affairs, the court rejected a request to discard deference established by two precedent cases on which the Department of Veterans Affairs relied in a benefits decision unfavorable to the plaintiff. The court remanded the case to a lower court with instructions to review applicability of agency deference to the case within new limits. But it left agency deference intact, however newly restricted, citing the legal principle that obliges courts to follow precedent.
Even from justices supporting the decision, therefore, concern about agency deference is evident. And Kisor v. Wilkie addressed an application of the doctrine different from the one most vexing to the oil and gas industry. It challenged judicial deference to agency interpretation of ambiguous regulations. More consequential to the oil and gas industry is deference related to agency interpretation of ambiguous statutes.
The latter version is often called Chevron deference because it’s grounded in a 1984 Supreme Court decision in Chevron USA Inc. v. Natural Resources Defense Council. Chevron deference says a court should yield to agency interpretations that are not unreasonable of laws in which Congress did not precisely make its wishes known for the issue in question. It’s Chevron deference to which Gorsuch and Kavanaugh were most outspokenly opposed before joining the Supreme Court.
It’s also Chevron deference to which the Obama administration’s EPA regularly appealed in justifying its antihydrocarbon activism. Statutory imprecision became a license for regulators to fashion their own laws. Congress didn’t address greenhouse gases in the Clean Air Act, for example. But the Supreme Court in 2007 said EPA could be compelled to regulate carbon dioxide as an air pollutant if it determined the gas threatened public health. Obama’s EPA quickly made that determination and used the CAA to claim control over US power generation.
Judicial resistance to such Executive Branch expansionism persists. Gorsuch wrote a lengthy opinion opposing the Kisor decision’s refusal to discard the doctrine’s precedents related to regulatory ambiguity. “The doctrine emerges maimed and enfeebled—in truth, zombified,” he wrote. And he excoriated it for undermining the separation of powers. Under deference applicable to Kisor, “the powers of making, enforcing, and interpreting laws are united in the same [executive agency] hands—and in the process a cornerstone of the rule of law is compromised,” Gorsuch argued.
‘Distinct’ issues
Chief Justice John G. Roberts, meanwhile, in a note supported by Kavanaugh, stipulated that defense of agency deference in Kisor doesn’t bear on Chevron deference. “Issues surrounding judicial deference to agency interpretations of their own regulations are distinct from those raised in connection with judicial deference to agency interpretations of statutes enacted by Congress,” he wrote, citing the Chevron case. “I do not regard the court’s decision today to touch upon the latter question.”
In the Supreme Court, agency deference of most concern to the oil and gas industry thus remains a ripe issue.
