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Supreme Court ruling on Chevron deference won’t change corporations’ climate obligations, for now

Federal agencies now have less power to drive climate policy.

United States Supreme Court in Washington, DC

The decision to overturn the precedent of the Chevron Deference happened in the US Supreme Court in Washington DC . Photo: Shutterstock/Orhan Cam

On June 28, in a landmark decision, the Supreme Court overturned the Chevron Deference, dramatically limiting the federal government’s ability to implement climate regulation.

The Chevron rule dates to 1984, when the Supreme Court ruled that if a law is ambiguously worded, Congress should defer to the specific government agency in charge of carrying out that law. And thus, the Chevron Deference was born. It has given federal bodies broad authority to interpret and enforce environmental laws, enabling groundwork legislation such as the EPA power plant rule and the Inflation Reduction Act.

The Court’s latest decision limits that authority, and further specifies that lower courts are the proper venue to implement laws. 

"The end of the Chevron doctrine completely upends 40 years of precedent," said Daniel Bresette, president of the Environmental and Energy Study Institute, in a statement. "This decision takes the necessary leeway to resolve ambiguities in statute away from technically- and scientifically-qualified experts and policymakers, and instead hands it to judges."

Agencies such as the Environmental Protection Agency now have less power to curb the climate impact of heavy-emission industries.  

The EPA’s power plant rule requires fossil fuel-run power plants to cut emissions by 90 percent by 2039 or exit the grid, and newly built natural gas power plants to cut 90 percent of emissions by 2032.    

"This makes agency actions more vulnerable to being overturned in court," said Ian Fein, senior council at NRDC. 

The Supreme Court also reversed a lower court’s decision to defer to the Federal Energy Regulation Commission’s (FERC) approval of a solar facility in Montana. Instead, the Court ordered the Washington, D.C. Circuit Court to reconsider its decision in light of the end of the Chevron deference.

Trade associations celebrate the win

Industry groups celebrated the decision.

"This decision reaffirms the importance of checks and balances," wrote Eric Hoplin, president and CEO of the National Association of Wholesaler-Distributors , in a statement. "[The Chevron Deference] has often led to regulatory overreach, stifling business innovation and economic growth."

"This is an important win for accountability and predictability at a time when agencies are unleashing a tsunami of regulation," said Rob Nichols, president and CEO of the American Bankers Association, in a statement

The ruling "will help create a more predictable and stable regulatory environment," said Suzanne P. Clark, president and CEO of the U.S. Chamber of Commerce.

Redefining corporate sustainability expectations

What the strikedown will not affect is corporate commitments to reach net-zero, according to Holly Carr, managing director of forensics accounting and investigations at BDO and former assistant director in the office of market intelligence at the Securities and Exchange Commission.

"Regulations are what you need to do, it’s the bare minimum," Carr said. But investors, stakeholders and employees still expect corporations to meet the "ceiling" of requirements when it comes to sustainability reporting.

"OK, the floor has shifted, but has the ceiling?" posited Carr. "Chevron isn’t going to change [a company’s] obligations."  

[Learn how companies are navigating the fast changing sustainability agenda and driving more impact with Trellis Network.]

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