A victory in the Supreme Court is generally welcome news for the U.S. Environmental Protection Agency (EPA). But, the Court’s decision last month in a Clean Water Act case may foreshadow a sweeping change in administrative law that would certainly not please EPA or other agencies: the end of a long-standing rule of judicial deference to agencies in the interpretation of their own regulations.

It is well established that when they interpret statutes, federal agencies are accorded substantial deference, such that a court must uphold an agency’s reading of an ambiguous statute as long as it is a plausible, reasonable reading. This is known as Chevron deference.

The Court has long applied the same rule when agencies interpret their own regulations. Beginning with Seminole Rock in 1945, the Court laid down the rule that an agency’s interpretation controls, even it is not the best or most natural reading, as long as it is not “plainly erroneous or inconsistent with the regulation.” This is often called Auer deference, after the 1997 case that reaffirmed the principle.

A seed of doubt about the continued viability of Auer deference was planted in the Court’s recent decision in Decker v. Northwest Environmental Defense Center. At issue was whether the Clean Water Act required a permit for stormwater discharges from some logging roads in Oregon. The statute requires a permit for any discharge from a “point source,” but exempts from the permit requirement most “discharges composed entirely of stormwater.” That exemption does not apply, however, to stormwater discharges “associated with industrial activity.”

EPA promulgated detailed regulations to implement the statutory language. Its regulatory definition of a “silvicultural point source” clearly included logging activities, but what about the statutory exemption for many stormwater discharges? And what about the “exception to the exemption” for stormwater discharges associated with industrial activity?

EPA’s stormwater rule said that a discharge was “associated with industrial activity” when it was “directly related to manufacturing, processing or raw materials storage areas at an industrial plant.” The rule also specified that facilities covered by the Standard Industrial Classification that included logging activities would be considered as engaging in industrial activity. But despite the inclusion of logging activities in that classification, the agency read its stormwater rule as covering only “traditional industrial sources such as sawmills.” It pointed to the rule’s references to “facilities” and “industrial plant[s]” in support of its interpretation of the rule as excluding stormwater discharges from logging activities. The Court, citing Auer, upheld EPA’s reading of its regulation as a permissible one, neither plainly erroneous nor inconsistent with the regulation.

In a lone dissent, Justice Scalia disagreed with EPA’s reading of its regulation, and, more significantly, openly called for an end to Auer deference. Ironically, Justice Scalia himself authored the opinion (for a unanimous Court) in Auer.

The reasons for Chevron deference, said Justice Scalia — an implied grant of discretion from Congress when it enacts an ambiguous statute, and the pragmatic benefit of avoiding prolonged periods of uncertainty over the statute’s meaning if Congress failed to act quickly to eliminate the ambiguity — do not support Auer deference. There is no grounds for presuming that Congress impliedly granted the agency the power to resolve ambiguities in its own regulations, especially where it would place the power to write a law and the power to interpret it in the same hands, thus violating “a fundamental principle of separation of powers.” “Auer is not a logical corollary to Chevron,” said Justice Scalia, “but a dangerous permission slip for the arrogation of power” and an invitation to write vague regulations that can later be interpreted in any number of plausible ways. And an agency need not wait for Congress to clarify an ambiguous regulation — it can do so itself. Indeed, in the case before the Court, EPA had done just that, amending its regulation, three days before oral argument, to clarify that the stormwater rule did not cover logging activities. (Given its holding on the “old” rule, the Court did not need to decide whether the original rule or the amended rule applied.) As for the argument that an agency would have some special insight into the meaning of its own regulations, Justice Scalia dismissed it for the same reason he is notoriously suspicious of legislative history — because with both statutes and regulations, “we are bound by what they say, not by the unexpressed intention of those who made them.” Finally, while the special technical expertise of agencies might be a good reason for having agencies (and not courts) make regulations, it does not give agencies any special advantage in interpreting a rule that has already been promulgated — the core judicial function to “say what the law is.”

Justice Scalia’s dissent did not attract the votes of any of the other Justices, but in a concurring opinion, joined by Justice Alito, Chief Justice Roberts signaled that he might be prepared to reconsider the principle set forth in Auer “in an appropriate case,” that is, one “in which the issue is properly raised and argued.” Noting that the issue is “a basic one going to the heart of administrative law” that comes before the Court “as a matter of course on a regular basis,” the Chief Justice invited future challenges, as “[t]he bar is now aware that there is some interest in reconsidering” Seminole Rock and Auer. With at least three votes for granting certiorari on the issue, we can anticipate an explicit call to overturn Auer in the near future.

Paul M. Hauge is an Associate in the Gibbons Real Property & Environmental Department.