Released by the Supreme Court on June 30, 2022, the case of West Virginia v. EPA represents the latest touchstone in a series of cases regarding the power of regulatory agencies to regulate according to their own interpretations. The decision, still just a few weeks old, is already having an effect on agency rulemaking and litigation as agency adversaries begin to utilize the Supreme Court’s definition of “major questions” to their advantage.
The Roots of Modern Judicial Deference to Agency Interpretation
- The modern standards for interpreting the scope of an agency’s power to regulate and to interpret statutes stems from a line of cases, most notably in the 1984 case Chevron v. National Resource Defense Council, Inc. (commonly referred to as Chevron).
- Chevron defined the current scope of judicial deference, where a court places significant trust in how an agency interprets the law, to agency interpretations of a statute enacted by Congress. In the Chevron case, the Supreme Court set forth guidelines for how courts should review an agency’s interpretation of a U.S. federal statute (enacted by Congress, as opposed to an agency rules or regulations which are promulgated, or put into effect, by the agencies themselves), by first determining whether Congress has spoken on the “precise question at issue” in the case. If Congress has answered the precise question in a statute, then the court must interpret the statute as to the unambiguous expressed intent of Congress rather than the agency’s interpretation.
- However, if the statute in question is silent or ambiguous on the precise question, the court decides whether the agency’s interpretation is based on a permissible reading of the statute.
- If Congress explicitly left a gap for the agency regulations to fill, then the court must follow the agency’s interpretation, as long as it is not arbitrary, capricious, or manifestly disregards the statute. If Congress only implicitly left a gap for agency regulations to fill, the court must follow the agency’s interpretation if the interpretation is reasonable. This deference to agency interpretation is referred to as Chevron deference and has provided much of the basis for the administrative state (i.e., modern rulemaking).
- As Congress is often silent or ambiguous on many issues for the statutes it enacts, Chevron deference provides an important avenue for agencies to promulgate regulations based on the agency’s interpretation of the statute. For example, in National Women’s Law Center v. Office of Management and Budget (2019), Judge Chutkan of the United States District Court for the District of Columbia found that the OMB’s request to stay Equal Employment Opportunity Commission data collection from employers with over 100 employees was arbitrary and capricious. Judge Chutkan noted that OMB had failed to demonstrate good cause for issuing the stay order and subsequently vacated OMB’s stay.
- Chevron deference remains a contentious point in arguments relating to the role of agencies and their role in promulgating important policies.
The Major Questions Doctrine
- The “major questions doctrine” acts as a check against the breadth of Chevron deference. As articulated by the Court in West Virginia v. EPA (2002), a court should reject agency claims of regulatory authority when (1) the agency’s claimed scope of authority involves an issue of “vast economic and political significance” and (2) Congress has not clearly empowered the agency to address the issue.
- Specifically, the Supreme Court noted that when there is something extraordinary about the breadth of the claimed regulatory authority that an agency asserts, the court should “hesitate” before concluding that Congress validly conferred that authority to the agency. The Supreme Court had not specifically addressed the major questions in a majority opinion before West Virginia v. EPA, but has since invoked the doctrine in review of multiple cases.
- Cases that have addressed the major questions doctrine have included (1) the Food and Drug Administration’s (FDA) ability to regulate the tobacco industry pursuant to its statutory authority to regulated “drugs” and “devices” in FDA v. Brown & Williamson Tobacco Corp.(2000); (2) The EPA’s consideration of costs for national ambient air quality standards (NAAQS) that are requisite to “protect public health” with an adequate margin of safety in Whitman v. American Trucking Associations, Inc. (2001); and (3) the Attorney General’s attempted regulation of assisted suicide in Gonzales v. Oregon (2006).
- In addition, two recent cases from the Supreme Court related to the COVID-19 pandemic invoked the major questions doctrine and set the scene for the West Virginia v. EPA decision. In Alabama Association of Realtors v. HHS (2021), the Supreme Court blocked the Centers for Disease Control and Prevention’s (CDC) national eviction moratorium that the CDC issued on August 3, 2021. The Supreme Court explained in its opinion that the action was a matter of vast economic and political significance as it covered more than 80% of the nation’s population, created an economic impact of tens of billions of dollars, and interfered with the landlord-tenant relationship, which is traditionally under the purview of state law. In National Federation of Independent Business v. OSHA (2022), the Supreme Court also blocked the Occupational Safety and Hazard Administration’s (OSHA) enforcement of a COVID-19 vaccination mandate and testing standard for employers with more than 100 employees. The court determined that the mandate was a significant expansion of OSHA’s authority and COVID-19 was not an “occupational hazard” under OSHA’s purview.
West Virginia v. EPA
- On June 30, 2022, in a 6-3 decision, the Supreme Court reversed the United States Court of Appeals for the District of Columbia Circuit’s (D.C. Circuit) decision and provided a new framework for the major questions doctrine. The case focused on the 2015 Clean Power Plan (CPP) and the 2019 Affordable Clean Energy Rule (ACE Rule), which were proposed by the EPA but were temporarily stayed by the Supreme Court before the rules were finalized.
- The first section of the decision focused on whether the Supreme Court could even hear the case, as neither the CPP nor the ACE Rule had ever gone into effect. The Court held that the states who petitioned the court were economically damaged by the D.C. Circuit’s previous decision and that the EPA’s representation that it did not intend to enforce the CPP did not mean that the case should not continue.
- The Court then focused on the EPA’s interpretation of the Clean Air Act (CAA) under the major questions doctrine. In addition to summarizing the major questions doctrine (as explained above), the Court noted that Congress will rarely, if ever, provide an extraordinary grant of authority through language that is modest, subtle, or ambiguous. In asserting its authority to promulgate the CPP, the EPA had relied on Section 111(d) of the CAA. The Supreme Court described Section 111(d) as a “previously little-used backwater” of the statute and underscored the difference between the CPP and previous EPA regulation regarding Section 111(d). In addition, the Court indicated that based on the EPA’s reasoning, the Agency could theoretically push its regulation of coal power plants under the CPP, including forcing coal power plants to shutter.
- The Court asserted that it was unlikely that Congress would task the EPA with the vital task of “balancing the many vital considerations of national policy implicated in deciding how Americans will get their energy” without specific authorization. The Court also pointed to the EPA’s own description of its expertise in the area as well as the fact that Congress had rejected legislation that would have created programs similar to the EPA’s CPP.
- Associate Justice Neil Gorsuch wrote a concurring opinion which added an additional avenue of reasoning for the major questions doctrine. Justice Gorsuch, while concurring in the judgment, would have based the major questions doctrine in traditional principles regarding separation of powers, which the majority opinion did not do. Justice Gorsuch also focused on how courts should apply the doctrine, focusing on whether the agency’s action invoked economic or political significance or how the agency’s action related to state law.
Implications of the Ruling and Current Effects
- Although the Supreme Court’s specific ruling in West Virginia v. EPA may only affect a small section of environmental policy, the implications for the major questions doctrine and its effect on agency regulations are much wider. Attorney General Ken Paxton of Texas and 11 other states attorneys general used the major questions doctrine as reasoning for why the EPA should not ban chrysotile asbestos use in the country, arguing that the proposed rule failed to account for whether the EPA had the statutory authority to impose a flat ban on chrysotile asbestos in a July 13, 2022 comment. Paxton’s comment argued that the ban was a matter of major economic significance and that since Congress had not banned the use of chrysotile asbestos, the EPA may not have the authority to issue such a regulation.
- Anticipating the Supreme Court’s ruling in West Virginia v. EPA, Paxton and 11 other attorneys general also filed a comment on June 17, 2022, arguing that a proposed Securities and Exchange Commission (SEC) rule on environmental, social, and governance (ESG) mandates. Paxton argued that the proposed rule ran afoul of the major questions doctrine, and that the SEC had exploited ambiguous language in a statute to expand its regulatory authority.
- Because of the relatively nebulous definition of matters of “vast economic and political significance,” the Supreme Court’s ruling has opened the door to a litany of challenges to wide-ranging agency regulation. Although the SEC’s and the EPA’s challenged regulations occupy a “hot button” area of political discourse today, the ramifications for challenges to any significant agency regulation could lead to significant hurdles for agencies to overcome before promulgating those regulations. In addition, the ability for advocacy groups to potentially tie up the enforcement of a regulation through litigation related to whether the regulation targets an area of “vast economic or political significance” could create new regulatory headaches.
Key Documents and Dates
West Virginia v. EPA (February 2022)