Caseflicks

Supreme Court of the United States • 1984

Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc.

467 U.S. 837 | 104 S. Ct. 2778 | 81 L. Ed. 2d 694 | 1984 U.S. LEXIS 118 | 52 U.S.L.W. 4845

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Takeaway

In short, this case established the original Chevron framework: courts enforce clear congressional commands, but when Congress leaves a statutory gap or ambiguity, they defer to a reasonable agency interpretation rather than impose their own policy judgment.

Background

The Clean Air Act Amendments of 1977 required States with areas that had not attained national ambient air-quality standards to establish permit programs for “new or modified major stationary sources” of pollution. A permit generally triggered demanding conditions, including use of the lowest achievable emission rate and emissions offsets.

In 1981, the EPA allowed States to define a stationary source on a plantwide basis. Under this “bubble concept,” all pollution-emitting equipment in the same industrial plant could be treated as one source. A plant could therefore alter or replace a particular emitting unit without obtaining a permit if the modification did not produce a significant net increase in emissions from the plant as a whole.

Environmental organizations petitioned for review. The D.C. Circuit set aside the EPA rule. It concluded that, although neither the statutory text nor legislative history squarely resolved the definition of “stationary source,” the bubble concept was unsuitable for a nonattainment program intended to improve air quality. The Supreme Court granted certiorari and reversed.

Issues

Issue #1

Whether a court may substitute its own interpretation of an ambiguous statutory term for an agency’s interpretation of the statute the agency administers.

Holding

No. A court must first determine whether Congress has directly spoken to the precise question; if Congress has not done so and the statute is silent or ambiguous, the court must uphold the agency’s interpretation if it is permissible or reasonable.

Reasoning

Justice Stevens articulated a two-step framework for judicial review of agency statutory interpretations. At the first step, the court uses the ordinary tools of statutory construction to ask whether Congress has directly and unambiguously resolved the precise issue. If it has, both the agency and the court must carry out that clearly expressed congressional intent.

At the second step, if Congress has not addressed the specific issue or has left ambiguity, a court does not decide the best reading of the statute for itself. It asks instead whether the agency adopted a permissible construction of the statute. The agency need not choose the only permissible interpretation, or even the interpretation a court would have selected in the first instance.

A statutory gap may be an express delegation of authority to the agency, in which case its regulation controls unless arbitrary, capricious, or manifestly contrary to the statute. Even when the delegation is implicit, agencies may reasonably resolve statutory ambiguity because administering a complex congressional program necessarily entails making policy choices and filling gaps.

The D.C. Circuit misapplied this principle. After deciding that Congress had not itself prescribed a definition of “stationary source,” the court asked whether it thought the bubble concept was appropriate for a program designed to improve air quality. The proper question was whether EPA reasonably considered the concept appropriate in this particular statutory program.

Issue #2

Whether the Clean Air Act required EPA to define “stationary source” as each individual pollution-emitting unit rather than as an entire plant for the nonattainment permit program.

Holding

No. Congress did not directly resolve that question, and EPA’s plantwide definition of “stationary source” was a permissible construction of the Act.

Reasoning

The relevant statutory provisions did not compel either definition. Section 302(j) defined a “major stationary source” or “major emitting facility” by its potential annual emissions, but it shed little light on whether the relevant source was a whole plant or a component within it. Ordinary usage of “facility” could reasonably refer to an integrated plant rather than every individual piece of equipment.

The Act’s definition of “stationary source” in §111(a)(3)—“any building, structure, facility, or installation”—applied by its terms to the separate new-source performance-standard program, not directly to the nonattainment permit program. Even if it provided some interpretive guidance, its broad and overlapping terms could reasonably encompass either an individual unit or an integrated operation. Parsing those general words did not reveal a clear congressional answer.

The legislative history was similarly inconclusive on the precise question. It showed that Congress meant to balance two competing goals: improving air quality in nonattainment areas and allowing reasonable economic growth and modernization. But it did not specifically endorse or reject a plantwide bubble for the permit program.

EPA had reasonably concluded that a plantwide definition could advance both objectives. The rule enabled firms to modernize equipment and make pollution-control decisions where reductions were most efficient, while avoiding a regulatory structure that might discourage replacement of older, dirtier equipment with cleaner technology. EPA also explained that other statutory safeguards remained: States still had to demonstrate reasonable further progress and timely attainment of air-quality standards, new-source performance standards continued to apply, and a plant with a significant net emissions increase still faced review.

EPA’s prior changes in position did not eliminate entitlement to deference. An agency is not bound forever by its initial interpretation; informed rulemaking may require it to reconsider competing interpretations and revise policy. EPA’s varying definitions of “source” in different regulatory settings instead reinforced the conclusion that the statutory term was flexible.

The dispute ultimately concerned the wisdom of EPA’s policy balance, not a clear statutory command. In a technical and complex program where Congress left competing environmental and economic interests unresolved at this level of detail, the agency—not a court—could reasonably choose how to reconcile them.