Businesses that must respond regularly to new federal rules should be aware of a new decision on federal executive authority that has the potential to change how agencies interpret and apply their authority and discretion. On the last day of a contentious term, a divided U.S. Supreme Court in West Virginia v EPA ruled 6-3 that the U.S. Environmental Protection Agency exceeded its authority under the Clean Air Act in issuing a rule called the “Clean Power Plan” to curb greenhouse gas emissions from fossil fuel power plants. The West Virginia case has the potential to reshape how all federal agencies respond to Congressional mandates in the future.
The Court’s decision turns on the “major questions” doctrine, a body of law that has developed over a series of significant cases all addressing a particular and recurring problem, at least according to the Court: that of agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.
In citing this doctrine, the Court referenced a series of cases that limited executive branch power on issues of major policy import, including FDA v. Brown & Williamson Tobacco Corp. (finding the FDA did not have the power to regulate tobacco products), Utility Air Group (rejecting EPA rule that would regulate greenhouse gas emissions from very small sources), and the recent decision in National Federation of Independent Business v. Occupational Safety and Health Administration (striking down OSHA’s mandate that employees be required to get COVID vaccines or undergo weekly testing). Although the Court acknowledged it is typically given to applying a contextual approach to statutory interpretation, it determined that some cases are so “extraordinary” that “both separation of powers principles and a practical understanding of legislative intent make us ‘reluctant to read into ambiguous statutory text’ the delegation claimed to be lurking there” and that “clear congressional authorization” is necessary.
The Court found the section of the Clean Air Act upon which EPA relied for the Clean Power Plan to be lacking clear authorization for rules that would require a transition of the nation’s energy generation from 38% coal to 27% coal by 2030 and would affect multiple economic sectors and millions of consumers. It also noted that Congress itself had considered and failed to pass greenhouse gag controls for power plants such as a carbon tax and cap and trade program, reasoning that it could not have intended for EPA to do so by the vague language in EPA’s chosen authority.
Although the Clean Power Plan was withdrawn by the EPA before the case was decided, the Court took an opportunity, in the face of the EPA’s upcoming replacement rule, to place firm limits on the EPA’s authority and give full support to the Court’s new “major questions” doctrine. That doctrine is not confined to the EPA but is applicable to any exercise of executive branch authority that the Court deems “extraordinary.” The Court has shown in West Virginia that it intends to be the arbiter and enforcer of limits on congressional grants of authority to the executive branch. Many will be watching for the further development and application of the “major questions” doctrine in the next term.
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Stoll Keenon Ogden PLLC’s Environmental practice delivers comprehensive services to clients on complex environmental issues spanning areas of litigation, transaction and compliance in air, water, and waste. Our environmental team also manages environmental due diligence related to the sale, acquisition, and financing of real property transactions. Please contact the team for legal advice for all types of complex environmental issues.
