Supreme Court Requires Specific Congressional Authorization For Regulations That Give Federal Agencies “Extravagant” Power Over The National Economy

Goldberg Segalla
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Goldberg Segalla

As regular readers of this blog know, we have been keeping tabs on the Supreme Court’s review of West Virginia v. Environmental Protection Agency, a case addressing how broadly executive agencies can interpret the legislation authorizing their activities.  Today, the Supreme Court issued its opinion on the matter, holding that the “major questions” doctrine precluded the EPA from using the Clean Air Act to require energy producers to change the type of energy generation they use.

Under Section 111(d) of the Clean Air Act, the EPA determines energy-generation emissions limits with which the states must comply.  Prior to 2015, the EPA had always set such limits based on the cleaner use of existing energy sources.  In the EPA’s 2015 Clean Power Plan, however, it determined that the best system of emissions reduction (or “BSER”) for existing coal and natural-gas plants involved “generation shifting”—i.e., a shift from higher-emitting to lower-emitting energy producers. 

Today the Supreme Court held that Section 111(d) of the Clean Air Act does not grant the EPA the authority to devise emissions caps based on such generation shifting.  Restructuring the nation’s overall mix of electricity generation, it opined, was not BSER within the meaning of Section 111.

The Court invoked the ”major questions” doctrine to support its decision.  This doctrine requires an agency to identify “clear congressional authorization” for its actions.  The Court found that the Clean Air Act did not contain such authorization, and that the EPA was instead relying on “the vague language of a long-extant, but rarely used, statute designed as a gap filler” to create a regulatory program that Congress itself had declined to enact.

This EPA’s view of its authority was not only unprecedented, the Court held, but also effected a fundamental revision of the Clean Air Act, changing it from one sort of regulatory scheme into an entirely different kind.  In the EPA’s view of Section 111(d), the Court observed, Congress implicitly tasked it, and it alone, with balancing the many vital considerations of national policy implicated in the basic regulation of how Americans get their energy.  The Supreme Court disagreed with this view, and held that the Clean Power Plan exceeded the EPA’s authority.

Ultimately, West Virginia v. Environmental Protection Agency limits the ability of executive agencies to read into ambiguous statutory text “the delegation claimed to be lurking there.”  It characterized the EPA’s generation-shifting interpretation as “extraordinary” and that assertions of “extravagant statutory power over the national economy” should be greeted with “skepticism.”  The Court found that the major-questions doctrine applies when, as here, “agencies assert[] highly consequential power beyond what Congress could reasonably be understood to have granted.”

As we noted in our earlier analysis of this matter, the Court’s use of the major questions doctrine to decide the case will likely affect the scope of regulation allowed to numerous other federal agencies.  This opinion severely limits the ability of those agencies to make independent decisions regarding regulatory activity if that activity could cause a major economic or other “extraordinary” impact.  This will allow businesses and investors to operate with more certainty within the existing regulatory environment, which will likely benefit the economy, but at the cost of limiting the ability of federal agencies to regulate activity without specific Congressional authorization.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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