Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc.
The Supreme Court upheld an EPA rule letting states treat an entire industrial plant as one single source of pollution for permit purposes, rather than regulating each smokestack or piece of equipment separately.
In doing so, the Court laid out a now-famous two-step approach for judges reviewing agency rules: first ask if Congress has clearly spoken on the issue, and if not, defer to the agency's reasonable reading of the law rather than substituting the court's own judgment.
“the question for the court is whether the agency’s answer is based on a permissible construction of the statute.”
States the core two-step test for when courts must defer to an agency's reading of an ambiguous law.
How it got here: The D.C. Circuit set aside the EPA's plantwide "bubble" regulation as contrary to law, and the EPA and industry intervenors asked the Supreme Court to review that ruling.
The Case in Depth
What happened
Congress required states with dirty air to set up permitting programs for new or modified major pollution sources. The EPA allowed states to treat an entire industrial plant as if it were enclosed in a single "bubble," so a company could add or change equipment without a permit as long as the plant's total emissions didn't increase. Environmental groups challenged this "bubble" approach as too lenient.
The question before the Court
When a federal law is unclear about how it should be applied, does a court have to accept a federal agency's reasonable interpretation instead of substituting its own?
Why it matters
This ruling gave federal agencies wide latitude to interpret ambiguous laws they administer, shaping how environmental, health, safety, and financial regulations have been written and enforced for decades. Businesses gained more flexibility in complying with pollution rules, and courts reviewing agency decisions were pushed toward deferring to expert regulators rather than second-guessing them.
What changes now
The Court's ruling is final on the merits and reverses the Court of Appeals, meaning the EPA's plantwide "bubble" definition remains valid and enforceable. States may continue to let companies avoid individual permits for equipment changes as long as total plant emissions don't rise. The decision also sets a durable framework that later courts would use whenever reviewing how agencies interpret ambiguous statutes.
What this does not decide
The Court did not decide which definition of "source" is the best policy choice, only that the EPA's chosen definition was a reasonable one Congress left it free to adopt. It also did not rule out the EPA later changing its interpretation if it offers a reasoned explanation.
How the Court got there
The legal reasoning, step by step
- The Court set out a two-part framework for reviewing an agency's interpretation of a law it administers: first, ask whether Congress has directly addressed the precise question; if so, that clear intent controls.
- If the statute is silent or ambiguous on the specific point, the court does not impose its own reading but instead asks whether the agency's interpretation is a permissible, reasonable one — a standard now known as Chevron deference.
- Applying step one, the Court agreed with the lower court that Congress never specifically decided whether pollution sources should be defined plant-by-plant or unit-by-unit, so the statute was ambiguous on this point.
- Because the law was silent, the Court held that the lower court erred by imposing its own judicial rule distinguishing programs meant to improve air quality from those meant to maintain it, since Congress itself never drew that line.
- Moving to step two, the Court found the EPA's plantwide definition reasonable because it reasonably balanced the statute's goals of economic growth and environmental progress, was supported by the statute's text and history, and reflected a policy judgment properly left to the agency rather than the courts.