The potential Arizona water impacts of recent US Supreme Court opinions

Rhett Larson is the Richard Morrison Professor of Water Law at Arizona State University’s Sandra Day O'Connor College of Law. He is also a senior research fellow with the Kyl Center for Water Policy – a pillar of the Arizona Water Innovation Initiative (AWII) – at ASU's Morrison Institute for Public Policy. Professor Larson’s research and teaching focus on property law, administrative law and environmental and natural resource law, in particular, domestic and international water law and policy.

Faith Kearns, director of research communication for AWII, spoke with Larson about how recent US Supreme Court opinions might affect water in Arizona.

The US Supreme Court has recently released an opinion on the Loper Bright Enterprises v. Raimondo case, which overturns what is known as the Chevron deference. This opinion has tremendous implications for federal regulatory decisions, particularly when it comes to the environment. Can you tell us a bit about this case and its potential impacts?

Chevron v. Natural Resources Defense Council (NRDC) is the most cited decision in American courts, meaning that courts refer to it more than any other case. When you ask the average person to name a US Supreme Court decision, they might say Brown v Board of Education or Marbury v Madison. Those are important cases, but none have been cited as much as Chevron. 

The basics of the Chevron case are that during the Reagan administration, in 1984, the US Environmental Protection Agency (EPA) wanted to make air pollution regulation less burdensome for industry. EPA passed a rule under the Clean Air Act that would have made it easier for businesses to comply. Then there was a lawsuit brought by the environmental group NRDC that went to the US Supreme Court, saying the Clean Air Act did not allow the EPA to pass such a rule.

In the Chevron case, the US Supreme Court held that if Congress unambiguously tells the EPA they have to do a particular thing, EPA has no choice. For example, if Congress says EPA must prohibit releases of formaldehyde into rivers by anything above 15 micrograms per liter, EPA has to do it. There's no flexibility. But if Congress says something ambiguous or vague or doesn’t give clear instructions, like telling the EPA they have to make sure there's not too much air pollution, the agency is allowed to interpret it the way they want to, as long as the interpretation is reasonable. With a reasonable interpretation, the Court under Chevron would defer to EPA.

What's interesting is that when Chevron was decided, it was really about an agency being more relaxed on environmental regulation. Then along comes this case, Loper Bright Enterprises. We won't get deeply into the facts, but basically a federal agency was telling fishermen they had to pay for third-party observers to monitor fishing activity on their own boats. Some fishermen sued, saying that the government couldn’t make them pay for observers under the applicable law. This goes all the way to the US Supreme Court, which then said basically, ‘we overrule Chevron.’

So from now on, courts don't have to defer to agencies, even if the agency interpretation is reasonable. Courts can instead look at the statutory language themselves and decide to overrule the agency, even if the agency has more technical expertise. Courts may still choose to defer to agencies.

The justification for Chevron has always been that agencies are staffed by scientists and experts. When in doubt, shouldn't a bunch of lawyers defer to the scientists? But, the counter argument has always been, aren't the lawyers experts in the law, and shouldn’t the judicial branch be a check on the executive branch? The idea there is that the judges keep the executive from overreaching. Those have always been the two sides of the argument in Chevron.

Water quality immediately comes to mind as an area that could be directly impacted by this case, for example, the recent EPA release of a drinking water rule for PFAS. What other kinds of water issues might be affected by this case?

The PFAS maximum contaminant level (MCL) ruling that just came out is probably an instance where overruling Chevron isn't going to end up having an impact. First of all, for legal reasons, the 1972 Clean Water Act (CWA) gives significant authority to an agency to establish MCLs and to go through the rulemaking process. If the Court was going to overrule the PFAS drinking water rule, it would basically mean that they were overruling all kinds of MCL determinations. I'm skeptical that it would go in that direction. 

I also think that there are practical reasons why it's unlikely to happen. This isn't really a partisan issue. People want their water to be as clean as possible, but still affordable. The bigger fight won’t be about whether the EPA can establish an MCL, but about whether and by how much drinking water gets more expensive, which is a decision made by state or local authorities.

There are, however, a whole bunch of other ways in which overruling Chevron might have an impact on water. It may impact determinations of what is jurisdictional under the CWA, which basically says that all navigable waters are jurisdictional and then defines navigable waters as the Waters of the United States. It's hard to get much fuzzier than that. But in a relatively recent decision called Sackett, the US Supreme Court also held that the agencies were overreaching on that issue. The Loper case may not end up having much impact there because the Court already constrained jurisdiction under the CWA. 

I would also note that in the Loper decision, the Supreme Court pointed out that they hadn't deferred to an agency since 2016. It's possible we'd already moved away from Chevron. In addition, Chevron left a bunch of holes open if courts didn't want to defer.

For example, there have been multiple cases lately where courts have invoked what's called the Major Questions Doctrine. This is basically the idea of the Court deciding a regulation was such a big deal they were not going to defer to agencies. They did this when the Food and Drug Administration (FDA) attempted to regulate tobacco, deciding that if Congress wanted to regulate tobacco through the FDA, they would've said so explicitly. So, courts were already using the Major Questions Doctrine to avoid deferring. 

Even with Chevron, there were two ways that a court could avoid deferring to an agency. One was to just say we think Congress spoke clearly and the agency is not doing what they said. The other way was to say Congress didn't speak clearly, but the agency’s interpretation is unreasonable. So if courts didn't want to defer, they really didn't have to. It's just they had to do a little dance to justify why they didn't defer. 

After Loper, courts can still choose whether or not to defer to agency expertise, they are just going to do different dance steps to justify that choice. But the Loper decision didn’t establish what those new dance steps should be. I think that is where a lot of the uncertainty is now. 

This is a federal case, so will apply broadly, but are there any issues specific to Arizona water that we should be looking out for? 

At least for Arizona state agencies, we got rid of anything like Chevron deference in 2018 with legislation under the Ducey administration. In Arizona, state courts do not defer to state agencies in interpreting statutes, except in very narrow instances. However, a big issue for Arizona and where overturning Chevron might come into play is on the Colorado River. 

You'll notice that a lot of the ways in which we're having the interstate conversation about the Colorado River right now is through the National Environmental Policy Act (NEPA) process. NEPA is a federal regulatory structure that requires environmental impact assessments. With the Chevron deference removed, agencies will not get the same level of deference from courts as they would have before. That might impact the way we negotiate on the Colorado River. 

There was a controversial water rights transfer from a farm in Cibola, a town on the Arizona border, which sold their Colorado River rights to the city of Queen Creek in central Arizona. A lot of the challenge to that transfer was about the Endangered Species Act (ESA). The ESA has been a really powerful statutory structure for people to challenge agency actions. Now there will be less deference afforded to agencies under the ESA. 

In addition, one really tricky thing about water issues in Arizona is that in a very important case called Arizona v California, those two states sued each other over the Colorado River in 1963. When two states sue each other, the lawsuit goes straight to the US Supreme Court. 

In that case, the US Supreme Court said when there's a shortage in the Colorado River Basin, the US Department of the Interior (DOI) has the authority to determine cuts to water users. The dissent in Arizona v California said that the amount of power and deference the Court gave the DOI raised the gravest constitutional concerns. What's interesting is that Arizona v California predates Chevron. So the question is: does that deference that was afforded to the DOI on how we share the Colorado River still exist?

Chevron was overruled by Loper, but it did not overturn the whole idea of agency deference. Maybe DOI still gets deference under Arizona v California, or maybe Loper is opening up the door to less deference in general and might ultimately lead to overruling at least the deference aspect of Arizona v California. 

This would be a major change because right now, a lot of what pushes us towards negotiating on the Colorado River is the fear that if the states don't agree to something, the federal government will force the issue. Maybe Loper is signaling that a court will look at agency action with a lot more scrutiny in the future, which will change the nature of our negotiations.

Right now I'm optimistic about a potential seven state, two country multi-tribal agreement, but that optimism waxes and wanes depending on the moment. We've seen the politics of the conversation shift. It used to be very much six states against California, and now the politics of it has seemed to shift to where it's much more Upper Basin against Lower Basin. 

There's enough overlap between the two basins’ different proposals that I am hopeful that we'll be able to come together. But a lot of what was pushing us to come together was a fear that if we don't, DOI would take actions nobody would like. Maybe after Loper, we're not as afraid and someone will sue and win because courts won't defer to the agency.

Another major issue that Arizona is facing is tribal water settlements. There's settlement legislation going up now with the Navajo Nation, Hopi and San Juan Paiute. The Yavapai Apache Nation settlement was just approved by the Tribe. These will be new federal statutes laying out how water is shared between these Tribes and their neighbors. How courts interpret them will end up perhaps having greater weight now than how agencies like the Bureau of Indian Affairs or DOI might interpret them.

There is a lot of focus on how overturning Chevron deference might lead to less regulation, but the flip side is that it’s also prevented some groups from pushing for stronger regulation. How do you see that playing out?

It's been interesting the way a lot of this has been portrayed in the media as terrible for the environment. Chevron v NRDC itself was at the time considered to be a conservative, pro-industry decision during the Reagan administration. Whether or not Chevron was good or bad for the environment depended on the president and who was running the agencies at the time, and which judge was deciding the case at hand. 

I don't think it's necessarily true that overruling Chevron is a blanket terrible thing for the environment. If you are an environmental advocate dealing with an agency that's hostile to the environment but you have a pro-environment judge, you might be glad Chevron is gone.

Colorado River Policy Water quality Management