-Suzanne Ogle, IRC, APR, CAE, CSR-P
Today’s Supreme Court decision to reverse the Chevron deference carries significant implications for the natural gas industry. This decision, which stems from the 1984 case of Chevron v. The Natural Resources Defense Council, is a legal doctrine that compels courts to defer to a federal agency’s interpretation of ambiguous laws within its jurisdiction. While it may bring about substantial changes and open up new opportunities and potential benefits for the industry, it also introduces a significant level of increased legal uncertainty. Without the Chevron deference, courts will not defer to agencies like the Federal Energy Regulatory Commission (FERC) when interpreting complex regulations. This could lead to a surge in litigation as industry stakeholders challenge regulatory decisions, highlighting the need for legal preparedness and potential delays in project implementation.
On the other hand, the overturning of the Chevron deference could impact several examples of perceived Federal agency overreach. Here are a few notable instances where agencies have been accused of overstepping their authority, which may now face stricter judicial review. These examples provide a clear picture of the potential impacts of the Supreme Court decision on specific regulatory aspects of the natural gas industry.
Methane Emissions Regulations
The SEC’s Climate Rules, finalized on March 6, 2024, is currently facing significant legal challenges and is under a voluntary stay by the SEC. This rule, designed to enhance transparency and accountability regarding environmental issues, mandates companies to disclose their climate-related risks and their impacts on business.
Multiple lawsuits have been filed against the rule, arguing it oversteps the SEC’s authority and violates the First Amendment. These legal challenges have delayed the rule’s implementation. The Environmental Protection Agency (EPA) has enacted regulations to control methane emissions from natural gas operations. Critics argue that some rules are overly burdensome and not authorized by existing statutes. Without the Chevron deference, courts might be more willing to overturn such regulations if they exceed the EPA’s statutory authority.
Permitting
The US Army Corps of Engineers uses Nationwide Permit 12 (NWP12) to streamline the permitting process for pipelines crossing waterways. Environmental groups have challenged the Corps’ broad use of NWP 12, arguing it fails to protect waterways adequately. With the Chevron deference overturned, courts may be more critical of the Corps’ interpretations and use of this permit.
The Federal Energy Regulatory Commission (FERC) has sometimes been criticized for either too stringent or too lenient approval processes for natural gas pipelines. With the Chevron deference overturned, courts may scrutinize FERC’s decisions more closely, potentially limiting its discretion in improving or denying pipeline projects.
During oral arguments, Justice Brett Kavanaugh stated that deferring to agency interpretations “ushers in shocks to the system every four or eight years when a new Administration comes in” and implements “massive change” in areas like securities law, environmental law and communication law.
