The U.S. Supreme Court’s June 30 decision in West Virginia v. Environmental Protection Agency[1] will reverberate throughout the administrative state, inviting challenges to agency actions on major policy issues – including those in the competition arena – that Congress has not directly addressed in legislation.
West Virginia held that in the Clean Air Act, Congress did not clearly authorize the EPA to adopt regulations to force the U.S. power sector to shift systematically away from coal and toward cleaner energy sources. Formalizing the “major questions” doctrine, the Court held that a policy decision of such magnitude is presumptively for Congress and that Congress will not be found to have delegated legislative authority over a “major question” to an administrative agency absent a “clear congressional authorization” to that effect. Thus, the Clean Air Act empowered the EPA to require the “best system of emission reduction” for each individual power plant but did not thereby authorize the agency to restructure the U.S. power sector as a whole. While the specific question in West Virginia was narrow, the principles declared will apply broadly to any attempt by an administrative agency to tackle a major question.
It’s not hard to think of potential implications for the antitrust agencies, especially given the Federal Trade Commission’s (FTC) efforts to expand its authority and discretion under the current administration. President Biden’s July 9, 2021 “Executive Order on Promoting Competition in the American Economy” expressly called for increased antitrust regulation and enforcement to challenge employee noncompete agreements as well as consolidation in the information technology, telecommunications and other sectors – suggesting these areas of concern could well be deemed major questions under West Virginia. And the FTC has been jettisoning standards that previously acted as constraints on its decision-making under broadly worded enabling statutes. Over the past year, for example, it withdrew the 2015 Statement of Enforcement Principles governing its authority over “unfair methods of competition” under Section 5 of the FTC Act as well as the 2020 Vertical Merger Guidelines it had jointly adopted with the Department of Justice, in both instances without adopting a new standard. The FTC has also signaled it may be preparing to issue rules governing noncompete agreements, notwithstanding skepticism – including from some of its own commissioners – that Congress has granted the agency authority to make substantive competition rules.
To the extent the FTC or any other agency is gearing up to attack the large-scale competition issues highlighted in the President’s executive order through rulemaking or enforcement actions predicated on novel or far-reaching interpretations of its enabling statutes, West Virginia outlines the questions affected parties should be asking. Is the agency departing from established interpretations of its regulatory authority or enabling statute? Will its actions affect a systemic change in the economy or resolve a long-running public debate on an important issue? What is the statutory basis for its asserted authority? And does the statutory language, viewed in context, support an inference of “clear congressional authorization” for the agency’s actions on a particular issue? Depending on the answers, West Virginia may offer an effective weapon for resisting agency overreach.
[1] No. 20-1530, 597 U.S. ____ (June 30, 2022). BakerHostetler was counsel for one of the parties to a companion case the Court decided with West Virginia v. Environmental Protection Agency.
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