Beltway Bulletin: West Virginia v. EPA— Will Chevron Go the Way of the Dinosaurs?

The U.S. Supreme Court’s end-of-term decision in West Virginia v. EPA¹ offers something for almost everyone. While strictly speaking the case served as a repudiation of EPA’s storied attempt to regulate greenhouse emissions from existing electric power plants, the impact of the Court’s decision will have far wider consequences in the administrative arena. For the gladiators whose legal practices involve daily combat in the federal regulatory arena, the Court’s decision could be a new sword or shield; for those of us who enjoy agency rulemaking strictly as a spectator sport, the decision promises years of suspense as its full import is gradually revealed. Additionally, the history of the case shows the impact that changes in presidential administrations and the resultant policy shifts can have on the implementation of a regulatory scheme.

In 2015, the EPA finalized the Clean Power Plan (CPP) rule, which set federal standards of performance for existing power plants under Section 111(d) of the Clean Air Act based on the “best system of emission reduction which … has been adequately demonstrated.” The rule gave power plants three options for achieving the required reduction in CO2 emissions, all of which would result in shifting the electric energy sector away from coal toward natural gas and renewable sources (referred to as “generation shifting”). The rule was eventually stayed and never went into effect.

In 2019, under a new administration, the EPA changed course, repealing the CPP and replacing it with the Affordable Clean Energy (ACE) rule. The new rule did not take a generation-shifting approach to emissions reduction, as the agency had concluded that such a transformation was a “major question” of “vast economic and political significance,” which it could not address without a clear delegation of authority from Congress. As before, the rule did not take effect because it was immediately challenged in the D.C. Circuit by states and other parties who opposed the repeal of the CPP and its replacement by ACE. West Virginia and other parties intervened to defend the EPA’s actions.

In January 2021, the D.C. Circuit agreed with the challengers, finding that the CPP did not implicate the major question doctrine, vacating the repeal of the CPP and remanding the case to the EPA for further consideration. The parties supporting the repeal of the CPP filed petitions for certiorari, which the Supreme Court granted. The Court heard oral argument in the case on Feb. 28, 2022, and released its decision on June 30. Writing for the majority, Chief Justice John Roberts announced that, while Section 111(d) does allow the EPA to regulate greenhouse gas emissions, it does not grant the EPA plenary authority to effectively remake the energy market.

Central to the Court’s analysis (and to the analyses of the D.C. Circuit and the EPA) was the major question doctrine, under which administrative actions with transformative effects, such as actions with significant economic or political impact, actions that intrude in areas within the domain of state law, or actions that involve a mismatch between agency action and congressional mandate, require a close look at the authorizing legislation to confirm that Congress explicitly authorized the action. Chief Justice Roberts wrote that “clear congressional authorization” was required for a generation shifting EPA rule because of the transformative effect of such a rule on the power sector; however, no such authorization was provided in the language of Section 111(d).

The application of the Court’s use of the major question doctrine in West Virginia to usurp administrative action is far-reaching, and the impact will become evident in the coming years. While the doctrine itself is not new, the Court’s blessing of the doctrine as a principal technique for statutory interpretation may change the paradigm for new, existing, and potential regulation. This is particularly true because the Court in West Virginia does not clearly identify the boundaries of the doctrine. How transformative must a rule be and how significant the economic impact, for instance, for the viability of a rule to depend on a court’s scrutiny of the authorizing legislation?

For those seeking to challenge a new rule, the major question doctrine as applied in the West Virginia decision provides a new, strong, weapon to attack the proposed regulation based on the clarity of the underlying statute and the significance of the regulation itself. For existing rules, the major question doctrine raises the likelihood of fresh challenges to existing regulations that are similar to the impact and cost of the CPP. And for forthcoming regulations, the threat of challenges under the major question doctrine may have diverging effects. That is, for agencies unwilling or unable to agree on a new rule, the decision could be deployed as a shield, justifying inaction on issues that could be classified as major questions. Alternatively, agencies may delay future regulations to evaluate the susceptibility of the proposed rule under the construct of the authorizing statute. Although progressives are often seen as more supportive of agency regulation than conservatives, in reality, one’s view of agency action is often inextricably entwined with the policies of the administration in control of the agency at the time. In other words, we may see both progressives and conservatives deploying West Virginia as a sword and a shield, depending on the circumstances.

The elephant²—or perhaps dinosaur—in the room is the Chevron doctrine. Chevron deference, or the Chevron doctrine, is an administrative law principle whereby federal courts defer to a federal agency’s interpretation of an ambiguous or unclear statute that Congress delegated to the agency to administer. The principle derives its name from the Supreme Court’s decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.³

Writing for the majority in Chevron, Justice John Paul Stevens explained:

First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute . . . Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.⁴

The major question doctrine, which was central to the Court’s decision in West Virginia, has been described as an exception to the Chevron doctrine, but neither Chevron nor the word “deference” was even mentioned in Chief Justice Roberts’ West Virginia opinion or Justice Neil Gorsuch’s concurrence. Only in the dissent, authored by Justice Elena Kagan and joined by Justices Stephen Breyer and Sonia Sotomayor, is Chevron mentioned, albeit briefly, in criticizing the majority’s analysis of its decision in FDA v. Brown & Williamson Tobacco Corp.⁵ Rather than “deference,” all three opinions focus on “delegation,” though Justice Roberts’ opinion does describe the language of Section 111(d) as “vague” and “ambiguous.”

Chevron deference has been criticized by a number of current justices on the Court, including Chief Justice Roberts, Justice Thomas, and Justice Gorsuch, the latter of whom has written that it is “a judge-made doctrine for the abdication of the judicial duty.”⁶ Whether the West Virginia decision presages its own generation-shift in administrative law away from the Chevron doctrine remains to be seen. But, the Court’s embracement of the major questions doctrine is a clear signal that it will likely not require that lower courts defer to federal agencies on novel or transformative issues absent explicit intent from Congress.

For those studying the applicability of the West Virginia decision from a government relations perspective, it will be important for advocates to consider whether the language of a proposed statute authorizing agency action implicates a major question and how clearly congressional intent regarding that issue is expressed. Part of the rationale for Chevron deference is a recognition that Congress leaves gaps in legislation because no agreement on how to fill the gaps could be reached. With its decision in West Virginia, the Court seems—at least with respect to major questions—to be insisting that it do so.

Endnotes

 ¹142 S.Ct. 2587 (2022).
² Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1149 (10th Cir. 2016) (Gorsuch, J., concurring) (“There’s an elephant in the room with us today.”).
³ 467 U.S. 837 (1984).
⁴ Id. at 842-43.
⁵ 529 U.S. 120 (2000).
⁶ Gutierrez-Brizuela, 834 F.3d at 1152 (Gorsuch, J., concurring).

About the Authors

Prior to joining ArentFox Schiff, LLP, Cissy Jackson served as counsel and national security adviser to Sen. Doug Jones, D-Ala. Jackson also has extensive experience in the private practice of law, handling white collar, False Claims Act, grand jury investigation, and commercial property tax appeal matters. She has represented multinational corporations, small businesses, and individuals in high-stakes civil and criminal litigation. Guest co-author David M. Loring is a partner at ArentFox, with more than 15 years of experience representing electric generation, biofuels, manufacturing, and large industrial clients on a variety of federal, state, and administrative litigation and regulatory matters, including carbon capture, utilization, and storage.

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