West Virginia v. Environmental Protection Agency

Justine E. Lenehan & T. Daniel Logan*

I. Why It Made the List

Although this case does not directly implicate the U.S. Food and Drug Administration (FDA) or its authorities, it has been included for two reasons. First, the Major Questions Doctrine (MQD) has the potential, if employed broadly by courts, to upend the traditional Chevron deference accorded to agency interpretation of statutes. While the doctrine has been previously deployed by the Supreme Court, the instant case is the first instance of it being referred to by name. Second, the provenance of the MQD traces back to a seminal case in FDA history—FDA v. Brown & Williamson Tobacco Corp.

II. Discussion

A. Background and Procedural History

Section 111 of the Clean Air Act authorizes the U.S. Environmental Protection Agency (EPA) to establish “standards of performance” for stationary sources of pollutants that cause or contribute to air pollution that can endanger public health or welfare.^[1] These standards reflect limitations of air pollution emissions that are achievable through application of the “best system of emission reduction” (BSER) that has been “adequately demonstrated” by the EPA.^[2]

In 2015, EPA adopted the Clean Power Plan (CPP), a regulation promulgated pursuant to Section 111(d) of the Clean Air Act, to reduce greenhouse gas emissions from existing power plants.^[3] Under the CPP, EPA determined that the BSER would involve shifting power generation from higher emission sources (e.g., coal) to lower emission sources (e.g., solar and wind), rather than traditional methods aimed at reducing emissions from existing sources (for example, through heat-rate improvements allowing for more efficient fuel consumption). As written, the emission limits specified in the CPP were such that no existing coal plant could comply with the standard absent some form of generation shifting. In other words, EPA effectively mandated existing plant operators to change their electricity generation inputs, such as from coal to natural gas or from natural gas to solar. The CPP presented a novel strategy to limit emissions in that it attempted to regulate net pollution across the national system rather than individual sources of pollution.

Immediately following the CPP’s promulgation, West Virginia, other states, utilities, and coal mining companies challenged EPA’s authority to issue the CPP. The DC Circuit refused to stay the rule, but the Supreme Court did so in 2016 pending judicial review.^[4] Following a change in Presidential administration, EPA repealed the CPP in 2019.^[5] Finding that the CPP exceeded its authority under the Clean Air Act, EPA concluded that the determination as to whether generation shifting could serve as the BSER fell under the MQD pursuant to which courts “expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’”^[6] In the same rulemaking, EPA promulgated the Affordable Clean Energy (ACE) rule. EPA based the ACE rule on a new reading of the Clean Air Act, which involved BSER measures that could be adopted at each stationary source (e.g., equipment upgrades and operating practices) as opposed to the generation-shifting approach of the CPP.

The challenges to the CPP pending at the DC Circuit were dismissed as moot and various states and private parties challenged EPA’s repeal of the CPP and issuance of the ACE rule. The DC Circuit vacated the ACE rule in January 2021, effectively reviving the CPP, finding that generation shifting could reasonably qualify as the BSER under Section 111(d) of the Clean Air Act.^[7] Following yet another change in Presidential administration, EPA stated that it intended to refrain from enforcing the CPP and instead replace it with a new rule. The DC Circuit granted a partial stay of its repeal of the ACE rule to provide EPA an opportunity to do so.^[8] Nevertheless, West Virginia and the American Coal Corporation, among others, filed petitions for certiorari with the Supreme Court appealing the DC Circuit’s decision.^[9]

B. The Supreme Court’s Analysis and Holding

In a 6–3 opinion, the Court invalidated the CPP, holding that Section 111(d) of the Clean Air Act did not authorize EPA to create a standard setting emissions caps based on generation shifting. The Court’s reasoning rested on a doctrine that had never before been explicitly invoked in a majority opinion—the so-called “Major Questions Doctrine.”

1. The Major Questions Doctrine

Tracing a direct line from the decision in FDA v. Brown & Williamson Tobacco Corp.,^[10] the Court’s decision explained that while the starting point for most statutory construction analyses is the text of the statute, there are “extraordinary cases . . . in which the history and the breadth of the authority that [the agency] has asserted, and the economic and political significance of that assertion, provide a reason to hesitate before concluding that Congress meant to confer such authority.”^[11] The Court highlighted that the MQD was developed to address “a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”^[12]

In such “extraordinary cases,” an agency must be able to point to “clear congressional authorization” for its initiative.^[13] In circumstances where the doctrine applies, a “merely plausible textual basis” for an agency’s action will not suffice.^[14] In fact, the majority opinion counsels that lower courts should “hesitate” before concluding that Congress intended to confer transformative authority on the agency.

Although not explicitly mentioned in a majority opinion prior to West Virginia v. EPA, the Court cited to numerous cases in which the MQD was namelessly invoked.^[15]

Far from a model of clarity, the Court did not clearly define the contours of the MQD—that is, when an agency’s action raises a “Major Question” and what legislative acts constitute clear congressional authorization. Nevertheless, the majority and concurring opinions shed light on how lower courts could embark on an MQD analysis.

2. What is a “Major Question”?

The majority opinion offered several non-exhaustive factors to determine whether an agency action raises a “Major Question”: 1) whether the agency “discover[ed] in a long-extant statute an unheralded power” that represents a “transformative expansion” of its regulatory authority; 2) whether the agency relies upon an “ancillary,” “gap filler,” or “rarely used” provision of the statute; and 3) whether the agency adopted a regulatory program that “Congress had conspicuously and repeatedly declined to enact itself.”^[16]

Perhaps in an attempt to elucidate more concrete guidance for lower courts, Justice Gorsuch’s concurrence enumerated several additional factors: 1) whether an agency attempted to resolve a matter of “great political significance” (which might be discerned from Congress failing to enact similar actions); 2) whether the issue represents a “significant portion of the American economy” or requires significant spending by those being regulated; or 3) whether the agency’s action intrudes into an area of state law.^[17]

Here, the Court determined that the case presented a major question because it represented a “transformative expansion” of EPA’s regulatory authority discovered in the “vague language of an ‘ancillary provision’” of the Clean Air Act that was “designed to function as a gap filler” and had “rarely been used in the preceding decade.”^[18] The Court noted that Congress had historically rejected proposals to amend the Clean Air Act to create a cap-and-trade scheme for carbon (which, according to the Court, is the essence of the CPP) and similar measures such as a carbon tax.^[19]

Additionally, the Court found that the Clean Air Act’s charge to EPA to implement the “best system of emission reduction” was not a sufficiently clear congressional mandate to impose emissions caps based on generation shifting as under the CPP. In arriving at this conclusion, it relied heavily on how EPA had historically interpreted and used Section 111(d) since its enactment decades prior.^[20] In particular, the Court found the changes in EPA’s use of the Clean Air Act’s provision (from regulating single sources of pollution to multiple sources) to be “not only unprecedented,” but also a “‘fundamental revision of the statute, changing it from [one sort of] scheme of . . . regulation’ into an entirely different kind.”^[21]

The Court further found fault in EPA’s own characterizations that broader regulation of energy generation markets was beyond its traditional scope, noting that the agency’s appropriations requests related to the generation-shifting approach sought special funding for “technical and policy expertise not traditionally needed in EPA regulatory development.”^[22]

Justice Gorsuch noted that the size of the electric power sector and the potential effects the CPP could have on this industry and on consumers—the closure of dozens of power plants, the elimination of thousands of jobs, and the rise of electricity costs by over $200 billion—reinforced the magnitude of the impact the EPA’s action could have on the American economy.^[23]

3. Clear Congressional Authorization

The Court was even less clear on what language Congress must employ in order to provide its clear authorization for agency action, essentially invoking the Justice Potter Stewart obscenity test (“we’ll know it when we see it”).^[24]

The concurrence provided some level of guidance, recommending that courts examine legislative provisions, the “age and focus of the statute” in relation to the problem the action seeks to address, the agency’s past interpretations of the statute, and any “mismatch between an agency’s challenged action and its congressionally assigned mission and expertise.”^[25]

Here, the Court rejected EPA’s position that Congress conferred its clear authorization for the CPP based on inclusion of the term “system” in Section 111, explaining that the term is merely an “empty vessel” and too “vague” to authorize a transformational program such as the generation-shifting approach.^[26] In its closing, the majority opinion acknowledged that setting emission limits in a manner that would necessitate a nationwide exodus from coal as a source of electricity generation might be a “sensible ‘solution to the crisis of the day,’” but ultimately emphasized that a “decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation” from Congress.^[27]

Writing for the dissent, Justice Kagan took issue with the majority’s conclusion that a generation-shifting approach is beyond the bounds of EPA authority, arguing that it deprives EPA of the power it needs, and the power Congress granted it, to curb greenhouse gas emissions.^[28] In a particularly critical passage of the dissent, Justice Kagan alleged that the Court is “textualist only when being so suits it . . . [w]hen that method would frustrate broader goals, special canons like the ‘major questions doctrine’ magically appear as get-out-of-text-free cards.”^[29]

III.   Impact of the Decision

Names have power—this is a lesson demonstrated by the likes of Rumpelstiltskin, Polyphemus, and Voldemort. The Supreme Court has, for many years, alluded to the idea that “Major Questions” obviate the need for deference to an agency where it has asserted an authority in which it has neither expertise nor experience. Now, the “thing” has been named, given a nascent structure, and can be referred to directly without indirect case citation. Indeed, a lower court scrutinizing an agency action can now begin its analysis with the question: does the Major Questions Doctrine apply?

In many ways, the majority opinion is a warning—an agency should stay in its lane. Thus, as an initial matter, any agency policymaker, attorney, or regulatory counsel must, in advance of developing new rulemaking, consider whether the scope of such rulemaking risks “rais[ing] the eyebrow” of a court.^[30] Additionally, given the Court’s examination of past agency interpretation and practice, agency policymakers would be wise to consider whether past agency treatment of a statutory delegation provision may affect present initiatives.

Following the outcome here, the $64,000 question remains: what about Chevron deference?

Under Chevron, courts defer to agency interpretations of ambiguous statutory language where that interpretation is reasonable. This framework functions not based on clear congressional authorization, but through Congress’ broad delegations of authority that implicitly allow agencies to resolve statutory ambiguities or fill in statutory holes using their specialized knowledge that Congress lacks. The MQD dictates, however, that even where an agency’s interpretation is textually plausible, courts should not necessarily defer to agency interpretations where questions of vast economic or political significance are involved.

The Court did not engage with Chevron in the three most recent cases applying the MQD, suggesting that the doctrine is an entirely independent principle of statutory interpretation and not merely an exception to Chevron. For “major” agency actions, the MQD doctrine appears to effectively precede or supplant ordinary statutory construction principles, but the precise relationship between the doctrines has not, as of yet, been elucidated.

With relatively minimal guidance defining the contours of the MQD and the Court’s use of vague terms such as “economic and political significance” and “extraordinary cases,” lower courts are left to use their own judgment in assessing when and how to apply this doctrine. One might reasonably anticipate, however, that courts may elect to invoke the MQD where an agency’s action will have a meaningful impact on the economy or national policy, represents a new area of regulation by the agency, and/or stems from an agency’s novel use of the delegating statute. While one might expect, then, that only a small portion of agency actions will implicate “major” questions, these actions will, by definition, be “major”—initiatives implicating broad or “transformative” powers involving large portions of the population and the economy or having great political significance.

In the context of food and drug law, especially, the West Virginia v. EPA decision could have profound impacts. As an agency broadly known for scientific expertise, FDA may be especially vulnerable to allegations that any ambitious assertions of its authority must be examined under the MQD. Because Congress often lacks the expertise necessary for legislation to comprehensively address the complex and nuanced substantive issues under the ambit of the FDA, it relies on the agency to deploy scientific and regulatory expertise to effectuate its legislative objectives (which are not always entirely crystal clear).

In addition to its implementation of congressional directives, FDA’s initiatives and efforts are often motivated by trends and crises that require it to clarify or adapt policies in response to evolving circumstances (pandemics, technological advances, etc.) where congressional action is delayed or infeasible. The MQD could, if used more frequently by courts, result in greater scrutiny of policies intended to address such rapidly evolving situations, and ultimately, FDA reluctance to engage in ambitious rulemaking. Further, Congress’ broad delegations of authority to FDA allow the agency to adopt science-driven policies and rules that the agency intends to benefit the public health. Moving forward, FDA may find it more difficult to defend such actions against challenge, particularly where the agency’s action amounts to assertions of authority over a new product type (such as in the case of electronic cigarettes) or novel areas not expressly contemplated by the Federal Food, Drug, and Cosmetic Act. Finally, as FDA’s routine operations, such as review and approval of new drug applications, are increasingly politicized, there remains the possibility that the MQD may find broader application in judicial scrutiny of such decisions.

 

* Justine E. Lenehan and T. Daniel Logan are associates at Kleinfeld, Kaplan & Becker LLP. They counsel clients on a variety of FDA regulatory issues relating to the food, cosmetic, drug, dietary supplement, and tobacco company industries and advise FDA-regulated companies on relevant matters throughout the product lifecycle, including labeling, advertising/promotion, enforcement risk, and regulatory strategy and compliance.

[1]   42 U.S.C. § 7411(b), (d) (relating to new and existing sources of air pollution, respectively).

[2]   42 U.S.C. § 7411(a).

[3]   Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64,662 (Oct. 23, 2015).

[4]   West Virginia v. EPA, 577 U.S. 1126, 136 S. Ct. 1000 (2016).

[5]   Repeal of the Clean Power Plan; Emission Guidelines for Greenhouse Gas Emissions From Existing Electric Utility Generating Units; Revisions to Emission Guidelines Implementing Regulations, 84 Fed. Reg. 32,520 (July 8, 2019).

[6]   Id. at 32,529 (citing Utility Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014) (quoting FDA v. Brown & Williamson Corp., 529 U.S. 120, 159 (2000))).

[7]   See West Virginia v. EPA, 142 S. Ct. 2,587, 2,605–06 (prior history omitted).

[8]   See id. at 2,606.

[9]   The keen reader may question whether this case was justiciable in the first place given that EPA informed the DC Circuit that it intended to replace the CPP and not enforce it. The Court’s analysis extends beyond the bounds of this Article; however, in brief, the Court clarified that the case was not mooted as a result of EPA’s statements. Specifically, notwithstanding the agency’s voluntary non-enforcement of the CPP, there remained a possibility that the alleged wrongful behavior could recur (as the CPP remained on the books). See id. at 2,607.

[10]  529 U.S. 120 (2000) (concerning FDA’s attempt to regulate or ban tobacco products).

[11]  142 S. Ct. at 2,608 (internal quotations omitted).

[12]  Id. at 2,609.

[13]  Id.

[14]  Id.

[15]  See, e.g., Gonzalez v. Oregon, 549 U.S. 243 (2006) (U.S. Attorney General’s regulation of physician administration of assisted suicide drugs under Controlled Substances Act); Ala. Assn. of Relators v. Dep’t of Health & Hum. Servs., 594 U.S.         (2021) (the Centers for Disease Control and Prevention’s attempt to impose an eviction moratorium in response to the COVID-19 pandemic); Nat’l Fed’n of Indep. Bus. v. Occupational Safety & Health Admin., 595 U.S.         (2022) (the Occupational Safety and Health Administration’s attempt to impose a vaccine or testing mandate on private employers).

[16]  142 S. Ct. at 2,610 (internal citations and quotations omitted).

[17]  Id. at 2,620–21 (internal citations and quotations omitted).

[18]  Id. at 2,610.

[19]  Id. at 2,614.

[20]  See id. at 2,610–12.

[21]  Id. at 2,612 (quoting MCI Telecomm. Corp. v. Am. Telephone & Telegraph Co., 512 U.S. 218, 231 (1994)).

[22]  Id. (citing U.S. Env’t Prot. Agency, EPA-190-R-15-001, Fiscal Year 2016: Justification of Appropriation Estimates for the Committee on Appropriations 213 (Feb. 2015)).

[23]  Id. at 2,622.

[24]  Jacobellis v. Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring).

[25]  142 S. Ct. at 2,623.

[26]  See id. at 2,614–15.

[27]  Id. at 2,616.

[28]  Id. at 2,628.

[29]  Id. at 2,641.

[30]  Id. at 2,613.