By Walker Livingston, Capstone energy analyst

In the wake of the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, Congress has attempted to grapple with the death of Chevron deference and the future authority of administrative agencies. In the ensuing confusion over the status of agency authority post-Chevron, Republican and Democratic lawmakers have published dueling bills highlighting the sharp contrast of their parties’ leanings. While we believe both bills have little to no chance of passing through the current Congress, they set the stage for how each party would look to define agency authority if they were to win a trifecta in the November election.

Capstone believes the court’s decision tooverturn the longstanding Chevron deference is a tailwind for heavily regulated industries, especially those with exposure to environmental rules. However, the question of how far agency authority should reach has been a core concern of both parties that will still have implications for companies and investors, and the current Supreme Court has helped accelerate the question with recent highly impactful rulings. In 2022, the Court articulated the “major questions doctrine” in West Virginia v. EPA, which called on courts to reject claims of agency authority over areas of “vast economic and political significance” where Congress had not clearly granted the agency the authority to regulate. Additional cases have clarified the Court’s interpretation of downsized agency authority, especially in the case of the mammoth environmental laws like the Clean Water and Air Acts.

However, the court had not yet reached its apotheosis until it overruled Chevron U.S.A., Inc. v. National Resources Defense Council (Chevron). This bedrock administrative law ruling had expanded agency authority for four decades before it was overruled in 2024. At its core, Chevron provided a level of deference to agency interpretations of ambiguous statutes if the agency could provide a court with a reasonable interpretation of the law, allowing agencies like the FCC to regulate certain internet services differently or restricting the EPA from considering cost in setting air regulations. Despite the Court relying on the doctrine for years, it had fallen out of favor within the last decade, with a Justice stating in 2022 that it “deserves a tombstone no one can miss.” In Loper Bright, the Court eschewed the doctrine, but qualified that the new decision did not overrule prior rulings that relied on Chevron.

Congress must grapple with aging statutes and agency authority in the coming years. Many of the statutes that agencies derive their regulatory powers from are decades old and have not been amended recently, such as the Clean Air Act, which was initially passed in 1970 and received its last major amendments in 1990.

Republican Vision for Agencies

The Republican vision for agency authority in the future seeks to inject additional scrutiny from Congress into the rulemaking process, while maintaining a dearth of deference to agencies. Sen. Bill Cassidy (R-LA) stated in a press release for his bill that “for decades, the executive branch has exploited Chevron deference to increase its power beyond what Congress intended, all while skirting congressional oversight,” and that Congress should exercise additional powers over agencies to hold them accountable.

Cassidy’s bill would allow Congressional committees greater latitude to compel testimony or written responses of agency officials either after the promulgation of a major rule or if the committee officially requests information from the agency. Nominees for Senate-confirmed positions would also be required to testify before relevant committees prior to the Senate confirmation process being finalized. The bill, if passed, would provide significant coercive power to Congressional committees over agency officials to respond to all requests for testimony or written information or face draconian penalties.

Other sections of the bill would specifically greenlight members of Congress to communicate with agencies during the rulemaking process outside of the traditional comment period. We believe the practical effect of the section would implicate a much larger place in the rulemaking process for members of Congress, who would be able to influence the rulemaking process at all stages prior to a final rule. In concert with the ruling in Loper Bright, this would likely lead to fewer, less stringent rules promulgated by agencies.

Democratic Vision for Agencies

Contrasting Sen. Cassidy’s bill, sections of Sen. Elizabeth Warren’s (D-MA) bill would codify Chevron deference into blackletter law and blunt the use of the major questions doctrine. The bill would enshrine Congressional intent that broad authorizing language is necessary for agencies to take effective action, and consequently, broad agency interpretive authority should be the rule, not the exception. The bill, as written, would be a significant expansion of agency, positioning agencies to more effectively issue rules surrounding whole-of-government topics like climate change and the economy.

In addition to promoting agency authority, the bill would also seek to reduce the influence of industry actors in the rulemaking process while promoting additional input from the public on the process. The law would mandate additional disclosures related to the funding and review of studies submitted in favor or in opposition to a specific rulemaking. The law would also create an Office of the Public Advocate to solicit additional input from the public in the rulemaking process. The mission of the Office would dovetail with current Biden administration priorities, charging agencies to better engage the public in the rulemaking process. We believe that the effects of this law would make it more difficult to challenge agency interpretations of ambiguous statutes, and would lead to agencies taking more wide-ranging actions, leaning into their interpretive power to cover new areas of regulation.

What’s Next

Although the bills will proceed to committee and the legislative process, both face little chance of moving forward in the face of a short legislative session before the election. In addition, due to the politically polarized nature of the bills, each will only be viable in the 119^th Congress if one party controls both Congress and the White House. However, if either party sweeps the November 2024 elections, the corresponding party’s bill may be revived and could set the standard for agency regulation for the future.

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