The Intersection of Environmental Law and Energy Development: New Supreme Court Decisions, New Regulatory Approaches and New Energy Development Opportunities

On 12 February 2026, EPA removed the legal cornerstone of federal climate regulation, rescinding its own 2009 Greenhouse Gas Endangerment Finding (“Endangerment Finding”). What made the move possible was not a new statute, but the US Supreme Court’s steady shift over the past three years in its stance toward agency power. A series of the Court’s decisions have returned the reading of statutes to judges, and EPA reached for that very reasoning to rescind a rule it had once defended. For the energy sector, a once-academic dispute over administrative authority now carries direct consequences for investment and projects on the ground.

This article follows that development in three movements. The first sets out the line of US Supreme Court (“Court”) decisions, ranging from Skidmore and Chevron to Loper Bright and Seven County, and distils their combined implication: agencies have lost their old grip on what a statute means, even as they maintain latitude to make the expert, on-the-ground calls a statute entrusts to them. The second shows that teaching in action, dissecting the Endangerment Finding rollback (“Rollback”) and the major questions and best-reading rationales EPA built it on. The third turns practical, asking what the new landscape means for energy investment, regulatory predictability, and the contest between federal and state authority, should the Rollback survive review.

Who decides? The Court’s reallocation of interpretive authority

At the heart of an issue with far-reaching policy implications for the energy industry lies a fundamental question: when a statute is silent, ambiguous, or stretched to address a problem its drafters never named, who decides how that statute is applied? The Court’s evolving jurisprudence provides the answer.

Skidmore v Swift & Co. (1944) is the natural starting point, even though it is a wage-and-hour case rather than an energy or environmental one. Decided four decades before Chevron later rewired the field, Skidmore held that an agency’s interpretation earns respect in proportion to its “power to persuade”, namely its thoroughness, the soundness of its reasoning and its consistency over time. That respect, however, was never binding. A court remained free to disagree with the agency interpretation before it. Skidmore matters now, as recent decisions have worked their way back toward its premise.

Forty years later, Chevron U.S.A. Inc. v Natural Resources Defense Council (1984), a Clean Air Act (CAA) case, supplied the framework that eclipsed Skidmore. Chevron implemented a two-step analysis: (i) whether Congress had directly addressed within the statute the precise question at hand and (ii) if the statute was silent or ambiguous, the court asked whether the agency’s interpretation was a “permissible” or reasonable one, deferring to the agency’s interpretation if it was. As a result, statutory ambiguity operated as implicit agency delegation. Chevron became one of the most-cited US decisions, but created tension between agencies and the courts by routinely handing interpretation to agencies instead of to courts. It is that tension that more recent cases have sought to resolve.

Massachusetts v EPA (2007) is the high-water mark of the empowered agency. There, the Court rejected EPA's argument that it lacked the authority to regulate greenhouse gases (GHGs). The Court held that GHGs fit within the CAA’s “air pollutant” definition and that EPA could not decline to regulate them without grounding its refusal in the statute. Because the Court had ruled that GHGs are “air pollutants”, EPA then sought to formally determine whether GHG emissions endangered public health or welfare. The resulting 2009 Endangerment Finding was the EPA’s official scientific and legal determination, concluding that certain GHG emissions from vehicles or engines pose a threat to public health and welfare, laying the legal foundation for federal US climate regulation.

Eventually, the tide of agency deference began to subside. In West Virginia v EPA (2022), the Court considered the Clean Power Plan (CPP), which used the Endangerment Finding as its justification to seek to reduce carbon emissions from coal-fired power plants. Ultimately, the Court invoked the Major Questions Doctrine (MQD), a legal principle stating that Congress must have explicitly and clearly authorised a federal agency to issue a regulation of vast “economic and political significance” before the agency may do so. The CPP was “generation shifting” in its design, meaning it sought to increase the use of electricity from some energy sources while decreasing the use of electricity from others. The Court held that EPA lacked clear congressional authorisation under the CAA for the CPP’s generation-shifting design. The Court’s reasoning was a clear-statement rule: when an agency claims authority of vast economic and political significance, courts will not infer it from ambiguous or ancillary statutory language; Congress must speak plainly. Although West Virginia struck down the CPP, it did not strike down the Endangerment Finding. It did, however, lay a legal framework EPA later used, as one basis, to justify the Rollback.

Two years later, in Loper Bright Enterprises v Raimondo (2024) the Court removed the structural scaffolding that supported decades of expansive agency interpretation. Formally overruling Chevron, the Court held that the Administrative Procedure Act requires courts to exercise independent judgment and to decide questions of statutory meaning de novo. Thus, agencies would no longer receive binding deference simply for adopting a reasonable reading of ambiguous text. Loper Bright expressly preserved Skidmore’s more modest, non-binding respect as the surviving standard. Read together, the two decisions restate the principle, as old as Marbury v Madison, that it is for the courts to “say what the law is”.

These recent decisions should not, however, be read as the end to all forms of agency deference. Seven County Infrastructure Coalition v Eagle County (2025) organises the field: de novo review governs what a statute means; deferential review governs the discretionary, technical and predictive judgments an agency makes within the authority the statute confers. In Seven County, the Court reviewed an environmental impact statement for a proposed Utah rail line, and held that courts owe agencies “substantial deference” on the scope and content of a review under NEPA, and that an agency need not analyse the upstream and downstream effects of separate projects lying outside its regulatory authority. Crucially, Seven County did not retreat from Loper Bright; it drew the line.

The distinction in law versus discretion is the real lesson of the last three years. Deference did not vanish; it relocated. Skidmore respect survives as the floor for an agency’s interpretive views, and Seven County preserves robust deference for the fact-laden, judgment-heavy calls that are the daily work of administration. What the Court has withdrawn is the agency’s claim to control the meaning of the statute itself.

The road from West Virginia and Loper Bright leads to EPA’s Rollback of the Endangerment Finding

Background

Drawing upon the Court’s West Virginia and Loper Bright holdings, on 12 February 2026, EPA rolled back its 2009 Endangerment Finding relating to GHGs, which served as the basis to establish emission standards for motor vehicles and engines, known as “tailpipe” regulation. In so doing, EPA largely eroded the foundation supporting the extension of its GHG regulation to other sources.

The Rollback, which has been judicially challenged, is important beyond its immediate impact on tailpipe regulation. First, it provided clear guideposts on how EPA will interpret the CAA when analysing pollutant endangerment considerations and clarified EPA’s position that to establish endangerment there must be a direct causal nexus between the pollutant and its regulated source to the harm that is being addressed by the regulation. This is the “cause or contribute” standard. Second, it demonstrated the key limiting role that the MQD can play in circumscribing broad agency actions. Third, the Rollback demonstrated how Loper Bright can be relied upon to question and rein in agency actions. Fourth, the Rollback refined and distinguished the Supreme Court’s Massachusetts decision. Fifth, in the Rollback, EPA interprets Congress’s intent that the CAA was intended to authorise the regulation of emissions affecting localised or regional areas, not globalised conditions, like climate change. Finally, this framework affects not only the Endangerment Finding, but also necessarily erodes EPA’s authority to regulate GHGs from other nonmobile sources.

The endangerment finding Rollback

To appreciate the Rollback’s implications, it is important to understand the Endangerment Finding. In 2009, EPA interpreted Section 202(a)(1) of the CAA to authorise the regulation of emissions from new motor vehicles and engines to address global climate change. EPA took the position that global concentrations of six “well mixed GHGs” in the upper atmosphere constitute air pollution, and when the emissions of GHGs from vehicles and engines became combined with the global concentrations of those six “well mixed” GHGs from all worldwide sources, collectively they constituted “the largest anthropogenic driver of climate change”, which “can increase the risk of morbidity and mortality”. In the Rollback, EPA scrutinised the approach required under Section 202(a)(1) to regulate a pollutant. EPA concluded, based on the statutory language, that it must find that the specific emissions from motor vehicles or engines must cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare on a local or regionalised basis. In 2009, in an effort to meet the causation or contribution standard, EPA relied upon emissions data from automobiles in 2005 and extrapolated that GHG emissions from all new autos could collectively amount to about 4.3% of annual global GHG emissions. EPA did advise that typically “contribution” would need to be at a greater scale to authorise regulation, but because climate change was unique, and contributors must “do their part”, even if contributions are smaller than would be expected to address regional or local air emission impacts.

Statutory interpretation supporting the Rollback

In its Rollback, EPA analysed the specific language of Section 202(a)(1) and its interpretive history and concluded the 2009 Endangerment Finding got it wrong. Citing the language of Section 202(a)(1), EPA can only establish standards for air pollutants which “cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare”. EPA laid out how that provision (and the CAA generally) had for decades been used to address “local and regional air pollution problems”. EPA also concluded that Section 202(a)(1) is best read by requiring the EPA to establish that emissions from the regulated source materially diminish the harm. In its review of the CAA’s structure, EPA noted that “air pollution” as defined in CAA Section 302 refers to basically anything that pollutes – ie, an air pollutant agent that is emitted into ambient air, and air pollution is that which harms local or regional areas. Thus, there was intended to be a direct nexus between the air pollutant at issue and its causation or contribution to the targeted harm. EPA noted that in contrast to the historical interpretation of the CAA, GHGs did not “endanger public health or welfare through local or regional exposure”. Moreover, the Endangerment Finding could only link health effects in an attenuated indirect manner – not based on any direct exposure. Finally, the Endangerment Finding was not limited to the impacts of GHG emissions from new motor vehicles and engines, but rather climate change attributed to all worldwide emissions. Therefore, because global impacts, not local or regional conditions, were implicated, there was no true statutory link to authorise regulation. EPA also noted in the Rollback that GHG emissions from US vehicles and engines only account for a de minimis share of global emissions and that the vehicle standards would not materially diminish the harm associated with climate change.

The role of the MQD

The MQD also supported EPA’s Rollback. In West Virgina, the Court made clear that the “economic and political significance” of a regulatory action must be carefully evaluated against whether “Congress meant to confer such authority”. Thus, under West Virginia, there must be more than a “merely plausible textual basis” to affect a significant policy-making activity under a Congressional statutory enactment. In the Rollback, EPA drew an analogy between the subject matter of West Virginia and that of the Endangerment Finding. In West Virginia, the Court reviewed what it understood to be an administrative attempt, absent clear Congressional authority, to “shift the power grid away from fossil fuels through GHG standards”. The Endangerment Finding, implicitly sought to shift the national vehicle fleet “from one type of vehicle to another”, namely from diesel or internal combustion engines to electric vehicles. In support of its position, EPA cited Utility Air Regulatory Group v EPA (2014), where EPA’s regulatory effort to expand the number of stationary sources subject to the CAA’s permitting requirements based on GHG emissions was struck down based on the MQD. In the Rollback, EPA took the position that the standards established under the Endangerment Finding were becoming so stringent that compliance necessarily would lead to electric vehicles. EPA concluded this type of regulation represented a major question, having vast economic and political implications, and would result in material impacts to the US economy, triggering the need for a clear statement from Congress as to its intent to regulate GHGs in such a manner.

The Role of Loper Bright

EPA’s rescission analysis also utilised the Loper Bright holding to undermine reasoning supporting the Endangerment Finding. EPA asserts in its Rollback, that in 2009, EPA did not sufficiently consider traditional “interpretive principles” or the “ordinary meaning” of the concept of “air pollution”, stating EPA had “asserted an unlimited discretion to decide what EPA may target through regulation by defining air pollution, without reference to the best reading of the statutory term”. Under Loper Bright, that type of deference to address statutory gaps or ambiguities is misplaced. EPA noted that in Loper Bright, the Court ruled that Congress has often expressly delegated to an agency the authority to provide content and meaning to statutory terms. But that was not the case with Section 202(a)(1). The Rollback posited that in 2009 EPA simply lacked the discretion to “redefine air pollution” from “local and regional exposure problems”... “to global climate change concerns”. Thus, EPA now takes the position that notwithstanding prior agency interpretations, EPA’s actions must align with what Congress authorised under a statute’s best reading. EPA concluded in the Rollback that here, Congress did not extend that degree of authority to the agency. The Rollback even raised potential infringement of the separation of powers between Congress and the executive branch, through the non-delegation doctrine.

Refining the Massachusetts holding

Another key to the Rollback’s analysis was refining and distinguishing the Supreme Court’s 2007 holding in Massachusetts, where the Court determined that Congress, when drafting the CAA, did not intend to exclude GHGs from its broad definition of “air pollutant”. That holding opened the door for the Endangerment Finding and subsequent regulatory action addressing vehicle emissions and other sources. Massachusetts did not, however, address whether EPA necessarily had to issue an endangerment finding for GHG emissions under Section 202(a)(1), nor the way the critical “cause or contribute” provision should be construed, nor whether broader economic/policy concerns should be taken into account or were at issue in making such a finding. EPA now asserts that the Endangerment Finding took the language of Massachusetts beyond its proper scope. In 2009, EPA appeared to assume that the treatment of air pollutants by the Court in Massachusetts allowed EPA to bypass the critical analysis of whether a specific air pollutant causes or contributes to harmful air pollution. The Rollback explains in detail that a direct causal connection must exist between individual pollutants and a local or regional harm, necessary to satisfy an endangerment finding. Thus, while Massachusetts held GHGs may be pollutants, it did not address the core issue for an endangerment finding.

Impacts on energy development

The Loper Bright decision, the West Virginia decision, and the Rollback have raised significant questions regarding how energy development will be affected. No consensus clearly exists, but several developments seem likely if courts sustain the Rollback.

Currently, the Rollback is limited because it only removed the predicate for regulating GHG emissions from new motor vehicles and new motor vehicle engines. Nevertheless, it relied heavily upon the Supreme Court’s reasoning in Loper Bright and West Virginia. The principles established under those decisions of (i) not automatically deferring to an agency’s interpretation of ambiguous statutes and (ii) emphasising the need for clear Congressional authorisation before regulating matters having significant economic and political effects, each carry substantial weight and potential application beyond motor vehicles. The reasoning behind the decisions can be applied to much of the GHG regulation affecting aspects of the energy sector, particularly as related to the traditional oil and gas industry and the power plant industry.

The immediate aftermath of the Rollback will almost certainly entail a lighter regulatory touch over power plant and oil and gas sectors of the energy economy. In fact, the current administration has already signalled such an approach by proposing to repeal the previous administration’s regulatory efforts to require coal-fired and gas-fired plants to implement carbon capture technology or cease operations. Similarly, regarding the oil and gas industry, the current administration has communicated that it intends to undertake a comprehensive reconsideration of new source performance standards and emission guidelines for new and existing emission sources. So, for a time, investment in these energy sectors would seem more likely as the current administration focuses on enabling the energy development, production and delivery that recent technological drivers require. Chevron’s recent announcement that its wholly owned subsidiary, Energy Forge One LLC, signed an agreement with Microsoft to develop a co-located power facility in West Texas to provide dedicated electricity to a Microsoft-operated data centre under a 20-year power purchase agreement is illustrative of recent power-driven investment that the current regulatory environment will more easily foster.

There is, however, some concern that the Rollback, with any subsequent reversal of other regulatory programs tied to the Endangerment Finding, will introduce uncertainty into the regulated community that may frustrate development and operational predictability, and investment that values such predictability. These considerations have been raised particularly regarding renewable energy producers. Indeed, short-term adjustments are almost certain to occur as EPA re-evaluates more of its regulatory programmes against the backdrop of the demands of Loper Bright and West Virginia.

In the longer run, however, more, not less, predictability is likely to arise. In recent history, with federal elections empowering administrations that routinely move back and forth between the two major political parties, it is not unusual for wide swings in policy to occur. Those widely varying policy approaches can have profound effects on predictability and the investment of capital if the only constraining force is an agency’s interpretation of decades-old statutes that are ambiguous, especially within the context of current events and modern market developments.

If, instead, regulatory agencies apply an approach that is mindful that courts may second-guess an agency’s statutory interpretations as something less than the “best reading” of a statute, or outside of a clear congressional authorisation to regulate, then abrupt shifts in regulatory approaches are likely to be less frequent, unless specifically predicated upon clear congressional direction. Such a result increases regulatory certainty, and improves predictability upon which investment can be based.

But caveats remain. For example, although Federal regulation of traditional energy development may become more constrained, state regulation may increase. Not every state has a judicial or statutory analogue reinforcing the principles of Loper Bright and West Virginia. So, in some states, the battlefront for energy development may simply shift from a federal level to the state level. Yet, this risk has always existed. There have always been states that believed federal regulation was insufficient, and which would regulate above and beyond federal requirements. In fact, without universally applicable federal regulation prodding energy and power producers everywhere to specific federally established policy results, energy producers and developers will be able to more clearly identify the cost profile of operating in certain jurisdictions and consequently make better decisions regarding the jurisdictions where investment is, in their view, more worthwhile. So, even with the risk of increased state regulation in certain jurisdictions, investment resources should be allocated more efficiently, based upon the regulatory costs incurred in those jurisdictions. Put simply, if the regulatory costs in certain jurisdictions are markedly higher, energy development in those jurisdictions will likely reflect the effects of those regulatory costs, with either less energy development, or with energy user costs increasing.

In summary, the Rollback, if sustained, and the Loper Bright and West Virginia decisions which support it, will have material impacts upon energy development, and the mix of conventional and renewable energy comprising that development. On balance however, and over time, these developments will likely result in more efficient energy development and production based upon clear congressional direction and more constrained regulation based upon such direction.