Supreme Court’s Chevron, Corner Post decisions could delay energy investments, spur litigation: analysts


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The energy sector faces uncertainty following back-to-back U.S. Supreme Court decisions that limit federal agency authority for new rules and sharply extend the statute of limitations for filing suits for existing regulations under the Administrative Procedure Act, according to ClearView Energy Partners.

The Supreme Court on Friday struck down the Chevron doctrine in Loper Bright Enterprises v. Raimondo and on Monday said plaintiffs can sue over regulations for up to six years after they are affected by them, instead of six years after they take effect, in Corner Post v. the Board of Governors of the Federal Reserve System.

“To the extent that uncertainty can quash investment and impair return, we would suggest that Loper Bright could have significant implications for U.S. energy infrastructure on its own,” ClearView said Monday in a client note. “And, to the degree that Corner Post provides a means for reopening (or extending) disputes, we think it could increase the amplitude and frequency of future policy flux.”

Under Chevron deference, investors may have generally assumed that new agency rules were largely durable, the research firm said. Now, they may wait to invest until judicial reviews are completed, and regulated entities’ may forgo early compliance with anticipated or pending regulations, ClearView said.

“This is going to inject a heightened level of litigation in courts, extraordinary uncertainty in the coming years as to what is permissible and what is not as far as establishing rules and promulgating rules, and will likely hamstring an agency’s ability to move quickly,” Basil Seggos, a Foley Hoag partner, said Tuesday.

The decisions could lead states to take a more expansive regulatory role, creating a growing patchwork of rules across the country and increased uncertainty for regulated entities, he said.

The Chevron doctrine, established in a 1984 Supreme Court decision, held that in cases where a federal statute is ambiguous, courts must give federal agencies deference in their interpretation of the law, as long as the interpretation is reasonable. It has been cited more than 18,000 times in federal court decisions, making it the most cited administrative law case in history, according to Varu Chilakamarri, a K&L Gates partner.

The court’s two decisions, plus a Thursday decision in Securities and Exchange Commission v. Jarkesy that will move certain proceedings that were handled by agency administrative law judges to the courts, will likely spark increased litigation in the federal court system, K&L Gates attorneys said during a webinar on Monday.

“It really seems like you’re going to have a lot of people going into court for a number of reasons,” Chilakamarri said. “First is because [without Chevron deference] the universe of cases that you might win now that you didn’t win before just got a whole lot bigger … For the regulated community, your interpretation of a statute could be given just as much weight as the agencies.”

Also, there will likely be increased litigation around new rules and regulations where an agency’s statutory interpretation may be “iffy,” Chilakamarri said. The decision will likely lead agencies to be more cautious when issuing new regulations, the K&L Gates lawyers said.

Litigation could take longer because judges will no longer be able to rely on agency expertise when writing decisions on often technical and complex issues, David Fine, a K&L Gates partner, said, noting that judges are typically “generalists.”

There could be “bum” decisions by some judges who don’t understand the technicalities of technology and science, for example, according to Fine.

“So folks who think that being before judges rather than agencies helps their cause may find that judges, at least some judges, really just don’t have the ability to run with this stuff to get it right,” Fine said.



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