In one of the final cases of the October 2021 term, the Supreme Court announced it is prepared to limit the authority of agencies to interpret their own authorizing statutes.
West Virginia, et al. v. Environmental Protection Agency (EPA) saw the high court question whether a provision of the Clean Air Act was correctly interpreted by the agency as authorization to reshape national electric grids and “decarbonize” specific sectors of the economy, so long as the agency considered relevant costs and requirements.
In 2015, the EPA promulgated a new rule, the Clean Power Plan rule, which addressed carbon dioxide emissions from existing coal- and natural-gas-fired power plants. The agency cited Section 111 of the Clean Air Act which authorized the EPA to regulate certain pollutants from existing sources under Section 111(d) [42 U.S.C. §7411(a)(1)].
Under that provision, although the states set the actual enforceable rules governing existing sources, such as power plants, the EPA determines the emissions limit with which they will have to comply. The agency derives that limit by determining the “best system of emission reduction . . . that has been adequately demonstrated,” or the BSER, for the kind of existing source at issue. §7411(a)(1). The limit then reflects the amount of pollution reduction “achievable through the application of” that system.
Leading up to the decision for this case, a number of legal experts expressed the possibility that W. Va. V. EPA may be the beginning of the end of the Chevron doctrine. That doctrine dates back to the 1984 Chevron v. Natural Resources Defense Council [467 U.S. 837 (1984)] case which held the courts would exercise judicial deference to agencies when the interpretation of their authorizing statutes was at issue. The court in the Chevron decision erred in favor of the subject matter expertise had by employees of the agency in question in place of a traditional “plain meaning” reading of statutory language.
The Chevron doctrine has had one significant exception to the rule of judicial deference in the form of the “major questions” doctrine. This allowed the courts to disregard the standard of erring on the side of agencies in the interpretation of relevant statutes when a rule based on legislative interpretation concerns an issue of “vast ‘economic and political significance,’” and Congress has not clearly empowered the agency with authority over the issue [see. UARG v. EPA, 573 U.S. 302 (2014)].
The W. Va. V. EPA decision indicated a significant shift in the high court’s opinion of the Chevron doctrine. The Roberts Court in its present makeup has moved away from Chevron deference for agency interpretation in favor of a broader application of the “major questions” doctrine.
The syllabus of the opinion stated it clearly:
“This is a major questions case. EPA claimed to discover an unheralded power representing a transformative expansion of its regulatory authority in the vague language of a long-extant, but rarely used, statute designed as a gap filler. That discovery allowed it to adopt a regulatory program that Congress had conspicuously declined to enact itself. Given these circumstances, there is every reason to “hesitate before concluding that Congress” meant to confer on EPA the authority it claims under Section 111(d). Brown & Williamson, 529 U. S., at 160.”
Only once through the 31-page opinion drafted by Chief Justice John Roberts is the Chevron doctrine named, and that is as a citation of a Cardozo Law Review article entitled “Controlling Chevron-Based Delegations” which compared usage of the Chevron doctrine to agencies adding pages and changing the plot of a book drafted by Congress.
“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 [Utility Air, 573 U. S., at 324],” Roberts wrote for the court. “To convince us otherwise, something more than a merely plausible textual basis for the agency action is necessary. The agency instead must point to “clear congressional authorization” for the power it claims.”
In the dissent drafted by Justice Elena Kagan and joined by Justices Stephen Breyer and Sonia Sotomayor, the court’s three-judge liberal minority, Kagan criticized the majority for what she perceived as a misinterpretation of precedent to avoid the otherwise appropriate usage of the Chevron doctrine.
“The court has applied the same kind of analysis in subsequent cases—holding in each that an agency exceeded the scope of a broadly framed delegation when it operated outside the sphere of its expertise, in a way that warped the statutory text or structure,” Kagan wrote.
The minority opinion pointed to a number of precedents where the Chevron doctrine had been applied and the court still found that the agency was not within its legislated purview to make a particular rule.
W.Va. v. EPA is likely to be just the first in a series of decisions from the Supreme Court which severely limits the flexibility agencies once had to interpret the statutes they are tasked with enforcing. In the October 2022 term, the Supreme Court has already granted cert to cases that seek to further limit the powers of agencies and their ability agencies have to enact and enforce rules.
Additional challenges to the very existence of the Chevron doctrine are also likely to be heard during the upcoming term as three cases have already filed writs of certiorari seeking to overturn the Chevron doctrine. All of which will give this six-judge majority new opportunities to dismantle the decades-old precedent.
This decision and the ones that are likely to follow in the next term will have significant lasting effects on the way the federal government operates. This is nothing short of a warning shot to agencies like the Securities and Exchange Commission and Commodities Futures Trading Commission, currently trying to regulate crypto markets; the Consumer Financial Protection Bureau, currently trying to expand its interpretation of “unfair, deceptive, or abusive acts or practices;” or the Federal Trade Commission trying to update regulations based on the Community Reinvestment Act or the Bank Mergers Act, that without “clear congressional authorization” any and all rulemaking and adjudication is going to face heavy scrutiny from the federal courts.