Will the Chevron Decision Reshape the Oil Industry?

Just two weeks ago the US Supreme Court overruled over 18,000 judicial opinions, some as many as 40 years old. This landmark decision was rendered on June 28 in Loper Bright Enterprises vs. Raimodo. Later, on July 1, they held that the statute of limitations to challenge the actions of federal agencies under the Administrative Procedure Act (APA) does not begin until a plaintiff actually suffers injury by means of final agency action.

Liberals were not pleased. L. Delta Merner, Lead Scientist, Science Hub for Climate Litigation bemoaned that the industry had gained more latitude to slow down and block regulations, “allowing them to pollute with near impunity”. She claimed the ruling to be “undermining scientific expertise…and creating obstacles at a time when urgent action is needed to address the climate crisis”. It seems the sky is always falling for these people.

Vice-President Kamala Harris was quick to assail the justices for “reversing a critical precedent that has been on the books for four decades” and accused the court of siding with special interests. White House Press Secretary Jean Pierre also chimed in saying the Biden administration would affectively defy the Court, assuring supporters that they would “continue to deploy the extraordinary expertise of the federal workforce to keep Americans safe”. Excuse me for a moment. I just threw up in my mouth a little.

In a 6-3 decision, Justices Elana Kagan, Sonta Sotomayor and Kentanji Brown dissented. And what did the justices have to say afterwards? Well, Justice Brown, claimed the decision was “flawed” and would “wreak havoc on government, businesses, and society at large”. This “myopic rationalization” she claimed, would effectively make it “open season” on almost any and all government regulations.
Kagan was especially critical, predicting that the ruling “will cause a massive shock to the legal system”. She claimed SCOTUS was dispensing “judicial hubris”, calling the ruling a “judicial power grab. In one fell swoop, the court has now given itself exclusive power over every open issue….involving the meaning of regulatory law”.

Exactly what ”regulatory law” are they so concerned about protecting? How about the Clean Water Act? The Clean Air Act. How about Biden’s Executive Order requiring agencies to review (and revoke) all of President Trump’s measures to deregulate and stimulate the industry? The same Executive Order which required agencies to increase crippling emission regulations, catering to the Green agenda of the left. The exclusion of large swaths of land from oil and gas exploration by hiding behind the guise of National Monument Designations. The moratorium on all E&P activity in the vast Arctic National Wildlife Refuge. He hit-job performed on the Keystone Pipeline. The revocation of both President Trump’s Wotus (Waters of the United States) Executive Order and the Antiquities Act, both which had significantly decreased regulations regarding drilling on Federal Lands and elsewhere. The proposal of “ending international financing of the carbon-intensive fossil fuel-based industry”. The subsidization of Green energies to allow them to compete unfairly with oil. The issuance of nearly 50B in tax increases for American oil companies. The responsibilities and authority of FERC could even be curtailed. I could go on and on, but surely you get the picture by now.

Ironically, the initial challenge to the Chevron ruling centered around a dispute regarding Atlantic herring fishermen, who sued over Federal rules requiring them to pay for independent observers to monitor their catch. They argued that Federal law did not authorize officials to create industry-funding monitoring requirements and that regulatory agencies had failed to follow proper rulemaking procedures. The fishermen asked the court to overturn the ruling, which stems from a unanimous Supreme Court ruling involving the Clean Air Act. They lost, requiring judges to defer to agencies’ reasonable interpretations of congressional statutes. Not any longer folks.

In essence, the two recent rulings says that courts no longer have to defer to congressional agencies whenever ‘ambiguity” was found in the statute, instead giving them sole rights to settle the matter(s). Courts now have the power to issue their own interpretations, and effectively cancel or overrule what was once considered legal precedent. Pundits say the ruling is also interpreted as potentially affecting reproductive rights, gun control efforts, student loan forgiveness, overtime pay, and affordable housing among other issues. Opponents bemoan the fact that this may well open up challenges to many environmental issues that they hold dear.

Obviously consenting Justices shared this opinion. Justice John Roberts, in his written consensus, explained the Chevron decision to be “inconsistent with the Administrative Procedures Act”, a federal law that sets necessary procedures that federal agencies must follow. It also gives clear instructions for courts to be able to review any actions taken by those agencies.

What will the end results be? Will our courts be backlogged with challenges and lawsuits for decades? Only time will tell, but our legal system has worked pretty well over two centuries now and I expect that to continue. Just how much relief this legislation will provide to the oil and gas industry remains to be seen, but I predict it will be quite significant. Will it indeed re-shape the industry? Stay tuned for further developments.