With the Supreme Court’s decision in WEST VIRGINIA ET AL. v. ENVIRONMENTAL PROTECTION AGENCY ET AL., No. 20-1530 (June 30, 2022) rattling the legal world, what does it mean for counsel that represent regulated industries? Is this an earthquake or a tremor?
First, a quick summary of the case. The issue presented was whether the Environmental Protection Agency has the legal authority to regulate and order the reduction of carbon dioxide emissions “outside the fence” of an individual coal-powered plant. Although there were several other interesting issues in the case–including the future of Chevron and the “non-delegation” doctrine–the main thing to take away is the newly-minted “major question doctrine,” which provides that there must be “clear statutory language” delegating legal authority to the agency on a question that impacts a “major sector of the economy”. Lacking such language, the Court blocked the EPA’s carbon-reduction plan.
The “major question doctrine” has its antecedents in the Brown and Williamson, MCI and UARG cases – though most observers viewed these cases as statutory interpretation cases, not a new theory of administrative law. But until the recent CDC decision on vaccine mandates a few months ago, and other than in certain academic circles, “major question” was not the legal test in such cases.
The exact contours of the doctrine – and hence the problem for counsel – are as yet unclear.
So, if you’re sitting in the law department of a regulated industry, what to make of this case? Certainly, the Supreme Court’s doctrinal result is itself “important” and “significant” and “major”. But does the decision open entirely new avenues to challenge agency regulations and significantly “reign in” the administrative state? Is it really only about “new” and “significant” regulations versus more traditional regulations that have been on the books for many years, or that are more typically within the assumed scope of an agency’s statutory authority? Quite frankly, no one really knows. No one knows how far the three Justices who form the heart of the plurality decision will go in ruling on any particular case because it is hard to know what they will consider a “major question.” And the test itself is not easily amenable to clear application.
West Virginia joins a number of “major” opinions from the newly-constituted Supreme Court’s majority that threaten significant uncertainty when long-relied upon decisions are simply thrown overboard in very rapid and absolute fashion. Businesses, particularly heavily-capitalized, regulated businesses, require years of expected stability in order to comfortably support long-term capital investments and business practices.
For example, when it comes to carbon emissions, many if not most industry participants have been working toward rapid decreases and transitioning to more renewable and cleaner forms of energy both for regulatory and market-based reasons. However, if the Court has now thrown a life-line to certain sectors of the industry which have been unwilling or unable to adapt, it may well give polluters more time to convert to cleaner forms of energy, putting off the investments needed for longer-term planning for the rest of the industry.
Given the possibility of competition from foot-dragging last-movers, is it wise to hop on the anti-administrative bandwagon and start challenging all sorts of regulations on the books? Because many of the recent cases are not just industry-fueled, but are also reflect ideology disconnected from economics, there might be limited control over the legal ecosystem and what might happen to any given set of regulations. How do we even know a “major question” when we see one? The Court has not really told us.
Make no mistake about it, the Court has not done most businesses or industries any favors by issuing decisions out of whole-cloth that are more ideologically-based than gradual, incremental and predictable. Those who wonder whether West Virginia is “pro-business” may be asking the wrong (“major”) question.
Jonathan M. Broder (LAW ’83) is a retired Vice President of Corporate Development and General Counsel for Conrail. He managed Conrail’s legal and corporate affairs, as well as its real estate and business development departments. Jon is currently a Temple 10-Q Editor and an Adjunct Professor at the Temple University Beasley School of Law.