Environmental Defense Fund v. EPA: Does Loper Bright Impact the Chenery Doctrine? 

In Environmental Defense Fund v. EPA, the D.C. Circuit recently flagged an interesting impact Loper Bright might have on administrative law. Judge Henderson’s opinion suggests the possibility that, after Loper Bright, the Chenery doctrine—which holds that “reviewing courts ‘must judge the propriety of [agency] action solely by the grounds invoked by the agency’”—may not apply to “pure statutory interpretation questions.” This question matters because in challenges to agency decisions like federal regulations and adjudications, to the extent the Chenery doctrine applies it limits the grounds on which a court may uphold the agency action. So, if this doctrine does not apply to statutory interpretation questions post-Loper Bright, agency decisions that match what a law is best understood to mean can be upheld on that basis in certain circumstances, even if the agency gave different reasons for its decision at the time.  

EDF v. EPA involved a challenge to an EPA regulation known as the “Accounting Rule,” which changed how the agency goes about evaluating “whether a stationary source of air pollution can be modified absent a permit under the Clean Air Act’s New Source Review program.” The Accounting Rule was promulgated in 2020 under the then-extant Chevron framework. Under Chevron, ambiguous statutory provisions could be given multiple meanings by federal agencies. But in 2024, Loper Bright squarely overruled Chevron. As Loper Bright makes clear, federal statutes “do—in fact, must—have a single, best meaning,” which “is fixed at the time of enactment.” And under Loper Bright, if an interpretation of a statute “is not the best, it is not permissible.” In other words, after Loper Bright pure questions of statutory interpretation involving putatively ambiguous statutory language are no longer conceived as a policy choice for a federal agencies to make with multiple permissible answers. Instead, there is only one “best” answer to what the text of the statute Congress enacted means.  

Nonetheless, the petitioners in EDF v. EPA contended the Accounting Rule could not be upheld on the ground that it matched the best reading of the Clean Air Act, arguing that under the Chenery doctrine that justification was foreclosed because the rule, in their view, rested instead on the EPA’s policymaking authority to fill in putative statutory ambiguities under the now-defunct Chevron regime. The D.C. Circuit rejected petitioners’ argument that it was “limited to that [Chevron-era] rationale in deciding whether to sustain the Rule” for several reasons. 

Writing for the unanimous panel, Judge Henderson noted that “[t]o start, the Chenery doctrine’s application in this case is far from certain.” She further observed that “[t]here is reason to think that the [Chenery] doctrine does not apply to a pure statutory interpretation question following Loper Bright,” citing as support the D.C. Circuit’s decision in Centro de Trabajadores Unidos v. Bessent and Judge Barker’s concurrence in the Ninth Circuit’s decision in Alcocer-Vargas v. Bondi. The Court also expressed the view that “it is unclear whether the [Chenery] doctrine is less stringent—and more forgiving of agency error—if the challenge is to a putative ‘procedural error[]’ in a rule promulgated pursuant to the [Clean Air] Act.” In a footnote, it observed “[t]he Chenery doctrine has long sat in ‘tension’ with the APA’s prejudicial-error provision. . . .  And the Clean Air Act’s prejudicial-error provision appears more forgiving of agency error than the APA’s analogous provision.” (Section 706 of the APA provides that “due account shall be taken of the rule of prejudicial error” in resolving APA challenges.).  

Ultimately, the Court found “no need to answer these questions” because, in its view, the EPA had advanced the “best reading” rationale in the Accounting Rule and thus the Chenery doctrine would not bar upholding the rule on that basis anyway. As the panel noted, “[t]he idea that the EPA would have forgone promulgation of a rule it believed to be legally sound and desirable as a policy matter had it known it would not receive Chevron deference seems unlikely especially because, at the time the Pruitt Memo was published in 2018, the future of Chevron was already in doubt.” As a practical matter, this result may give companies greater clarity on the NSR’s permitting requirements moving forward and prevent regulatory whiplash should EPA’s policy preferences change in the future. Nevertheless, the panel highlighted an interesting, perhaps relatively overlooked impact of Loper Bright on administrative law. 

Other decisions have flagged the lurking tension between Loper Bright and Chenery as well. In Matson Navigation Co. v. Department of Transportation, for example, Judge Randolph Moss expressly highlighted the tension between Loper Bright and Chenery in a footnote, writing:  

Although the Supreme Court has not yet addressed whether SEC v. Chenery Corp. . . . continues to have force in cases involving questions of statutory interpretation after Loper Bright . . . and although it the ‘prerogative’ of the Supreme Court—and the Supreme Court alone—to ‘overrul[e] its own decisions,’ . . . this Court must nonetheless take ‘due account’ of whether Loper Bright leaves anything further for the agency to do on remand, after the Court has construed the statutory text at issue. 

Likewise, in Consumer Financial Protection Bureau v. MoneyLion Techs. Inc., a federal judge reached the same conclusion: after Loper Bright, the Chenery doctrine “does not limit what interpretive arguments the Court may consider in determining the meaning of the” statute. 

It is interesting to consider how Loper Bright interacts with other administrative law doctrines outside of the obvious context of agency deference.  In Centro de Trabajadores Unidos v. Bessent, for example, the D.C. Circuit suggested Loper Bright might impact the change-in-position doctrine in pure statutory interpretation cases. Under that doctrine, an agency’s unexplained change in how it interpreted a statute could justify setting aside or remanding a challenged agency action. At least absent a Loper Bright delegation of interpretive discretion, Centro de Trabajadores Unidos suggests that may no longer hold true. The panel observed that the change-in-position doctrine was grounded in Chevron’s teaching that a statute could have multiple permissible meanings that an agency may select from that are entitled to judicial deference so long as the agency’s chosen interpretation is “reasonable.” But as the panel in that case wrote, “[a]s applied to agency changes in the interpretation of statutory text, Loper Bright upended this foundation for change-of-position challenges.” Quoting Loper Bright, the D.C. Circuit concluded: 

[W]here there is no suggestion that the contested statutory provision ‘delegates discretionary authority’ to the agency . . .  the court engages in de novo review to determine the meaning of the statute. Once the court determines the meaning of [the statute], there is no reason to seek an agency’s explanation as to why it may have changed its view on the meaning of the statute. 

Thus, the change-in-position doctrine has no role to play. 

It will be fascinating to see how the changes to both statutory interpretation methodology and the relationship between federal agencies and courts that Loper Bright has ushered in not only impact other deference regimes but interact with other administrative law doctrines, such as the Chenery I principle and change-in-position doctrine.  

Michael Pepson is regulatory counsel at Americans for Prosperity Foundation.