The nomination of Brett Kavanaugh as a US Supreme Court justice raises hope for improvement to the regulatory climate of the oil and gas industry. Kavanaugh’s confirmation would accelerate movement away from agency deference, a judicial doctrine that enhances power of federal regulators, often at the industry’s expense.
Because agency deference grew out of a 1984 Supreme Court decision in a case styled Chevron v. Natural Resources Defense Council Inc., it’s often called “Chevron deference.” The court held in that case that when statutes are unclear or silent on regulatory questions, courts must defer to the “reasonable” interpretations of agencies charged with implementing them. At issue in Chevron v. NRDC was the Environmental Protection Agency’s treatment of pollution-emitting devices within an industrial grouping as a single stationary source for regulation. The Supreme Court’s ruling answered constitutional questions raised by the Administrative Procedures Act of 1946, passed to embed in law the activities of federal agencies created during the New Deal of the 1930s.
Executive activism
Agency deference nourishes Executive Branch activism, which became extreme during the regulatory siege against hydrocarbon energy while Barack Obama was president. It also raises alarm among legal thinkers about disturbance to the federal balance of power established by the US Constitution.
According to Barry Smitherman, former member and chairman of the Railroad Commission of Texas and Public Utilities Commission of Texas, agency deference was subject to growing resistance before Kavanaugh’s nomination. In an article early this year in the Journal of Oil, Gas, and Energy Law published by the University of Texas School of Law, Smitherman said cases arising during the Obama administration tested limits of the doctrine, which fell under increased pressure after Neil Gorsuch joined the Supreme Court in April 2017.
Smitherman cited Massachusetts v. EPA, in which the Supreme Court ruled in 2007 that greenhouse gases met the Clean Air Act’s definition of “pollutant” and that the agency could be compelled to regulate them, as the point when the legal battle over agency deference, “at least in the context of EPA-related cases, seems to [have begun] in earnest.” In subsequent cases, opinions written by conservative Supreme Court justices increasingly challenged EPA’s reliance on the doctrine. The February 2016 death of one justice wary of agency deference, Antonin Scalia, left the vacancy filled by Gorsuch.
“Ironically,” Smitherman wrote, “Justice Gorsuch may be even more opposed to Chevron deference than the late Justice Scalia.” Lower-court opinions indicate Gorsuch “is opposed to Chevron deference on principles of constitutional separation of powers, almost regardless of the context of the case.” Smitherman predicted Gorsuch and Associate Justices Clarence Thomas and Samuel A. Alito Jr. would continue to try to constrain or eliminate agency deference. He said Associate Justice Anthony M. Kennedy might join them when an agency breeched “clear statutory language.” And he said retirement by Kennedy or one of the four liberal justices before 2020 would bring to the court a justice more philosophically aligned than Kennedy with agency-deference opponents.
‘Shift of power’
Indeed, the June 27 announcement of Kennedy’s retirement brought about Kavanaugh’s nomination, now subject to Senate confirmation. As an appellate judge and legal commentator, wrote William A. Galston of the Brookings Institution in a July 10 blog post, Kavanaugh has criticized the Supreme Court’s decision in Chevron v. NRDC. For example, the nominee wrote a Harvard Law Review article in 2016 that called the decision “nothing more than a judicially orchestrated shift of power from Congress to the Executive Branch.” Kavanaugh said he learned, during 5 years in the George W. Bush White House, that “Chevron encourages the Executive Branch (whichever party controls it) to be extremely aggressive in seeking to squeeze its policy goals into ill-fitting statutory authorizations and restraints.”
Kavanaugh’s confirmation would further encourage the Supreme Court to rebalance federal power. The center of energy policymaking therefore would shift toward the branch of government most directly accountable to energy buyers and sellers. That’s where it belongs.