The Clean Power Plan is a program developed by the Environmental Protection Agency to reduce greenhouse gas emissions by forcing electric power generation to shift from coal-fired plants to renewable sources, such as wind and solar. In unveiling the Plan in 2015, President Obama called it the “single most important step that America has ever made in the fight against global climate change.” Last week, the Plan was invalidated by the Supreme Court of the United States. The decision, West Virginia v. EPA, could have serious consequences not just for EPA’s ability to adopt climate policies but more broadly for all administrative agencies’ ability to develop regulatory programs. 

The well-known Chevron doctrine has long afforded administrative agencies a wide policymaking berth. Federal statutes governing agencies are often, naturally, ambiguous. Under Chevron, agencies may resolve statutory ambiguity however they wish, as long as their interpretation is “reasonable.” In West Virginia, the Court acknowledged that EPA’s statutory interpretation may have been a reasonable resolution of ambiguous text but—without mentioning Chevron—still rejected EPA’s interpretation. 

To do so, the Court applied what it called the “major questions doctrine”: In certain “extraordinary cases”—where an agency “claims to discover in a long-extant statute an unheralded power representing a transformative expansion in its regulatory authority” to make “major social and economic policy decision[s]”—the agency “must … point to clear congressional authorization” for its regulatory action. And, the Court held, the Clean Power Plan presents such a case, but Congress did not clearly authorize EPA to adopt it. 

West Virginia raises several fundamental questions that will surely affect all government regulatory agencies: Does the decision reflect a change in the Court’s interpretive method or deference toward agencies? What qualifies as a “major question”? When is a statute sufficiently clear to authorize an agency to take a “major” action? Does the doctrine in effect make the courts the policymaker on major questions in the absence of a clear congressional directive? (For more analysis of West Virginia’s implications for environmental regulation specifically, see this alert by WilmerHale’s Energy, Environment and Natural Resources team .)

The Major Questions Doctrine

West Virginia is certainly the first case in which a Supreme Court majority opinion referred to the “major questions doctrine.” But the justices vigorously disputed whether the major questions doctrine is new. Writing in dissent with two other justices, Justice Kagan said that the Court “announces the arrival of the ‘major questions doctrine,’ which replaces normal text-in-context statutory interpretation with some tougher-to-satisfy set of rules.” Until now, she explained, “the Court has considered—without multiple steps, triggers, or special presumptions—the fit between the power claimed, the agency claiming it, and the broader statutory design.” 

In contrast, the opinion for the Court, written by Chief Justice Roberts and joined by the remaining five justices, declared that the “major questions doctrine” was simply a “label … refer[ring] to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.” In support, the Chief Justice supplied a catalog of prior decisions “from all corners of the administrative state,” which provides some insight into what may be a “major question,” including: 

• Whether the FDA could regulate tobacco (FDA v. Brown & Williamson Tobacco Corp. (2000)); 
• Whether EPA could deem greenhouse gas emissions from small stationary sources (e.g., hotels and offices) to be an “air pollutant” (Utility Air Regulatory Group v. EPA (2014)); 
• Whether the IRS could provide tax credits for people who enroll in health insurance plans through a federal exchange (King v. Burwell (2015));
• Whether the CDC could impose a nationwide eviction moratorium to prevent the spread of Covid-19 during a pandemic (Alabama Association of Realtors v. Department of Health and Human Services (2021)); and 
• Whether OSHA could require employers with at least 100 employees to require their workers to take certain steps to prevent the spread of Covid-19 (National Federation of Independent Business v. Department of Labor (2022)).

Arguably, West Virginia changes the role that the presence of a “major question” plays in judicial review. For example, in King v. Burwell, the Supreme Court held that it would not defer to the agency’s interpretation because of the issue’s “deep economic and political significance,” but the Court went on to uphold the agency’s action even though the statute was “ambiguous.” In contrast, West Virginia reflects a clear-statement rule: agency action on a “major question” is prohibited if the statutory authorization is ambiguous.

In any event, whether West Virginia establishes a new or different doctrine, it is certainly true—as the list of cases above shows—that courts and litigants have recently paid greater attention to the economic and political consequences of agency actions in determining whether those actions are within the agency’s statutory authority. West Virginia will undoubtedly amplify the attention paid to such issues during agency rulemakings and ensuing litigation.

The Clean Power Plan

The Clean Power Plan was adopted by EPA in 2015 to “shift” electric power generation from existing coal-fired power plants to producers that emit less carbon dioxide. As authority for the Plan, EPA invoked section 111 of the Clean Air Act, which charges EPA with setting a “standard of performance” to regulate power plants’ emission of certain pollutants into the air. Each standard must reflect the “best system of emission reduction”—or BSER—for a given category of pollutant. With respect to existing emissions sources, section 111, as the Court put it, “operates as a gap-filler,” applying only if the pollutant is not already covered by one of two other provisions of the Clean Air Act (for the National Ambient Air Quality Standards program or the Hazardous Air Pollutants program).

Because carbon dioxide is a pollutant but is not otherwise covered by the Clean Air Act, EPA determined that it could use section 111 to set carbon-dioxide performance standards for existing coal-fired power plants. The result is the Clean Power Plan, which sought to reduce carbon emissions by shifting electricity generation away from coal and into cleaner sources: first to natural-gas-fired plants and then to “new low- or zero-carbon generating capacity, mainly wind and solar.” Plant operators could achieve these shifts by reducing their own production, replacing their plant with a cleaner facility, or purchasing credits from cleaner producers—in effect, a cap-and-trade program. 

Thus, the question presented in West Virginia was whether shifting power generation from coal to cleaner sources is a “best system of emission reduction” within the meaning of section 111 of the Clean Air Act. The Supreme Court held it was not. 

The Court first determined that “this is a major questions case” given the Clean Power Plan’s economic and political significance and “the history and the breadth of the authority that the agency has asserted.” Government modeling cited by the Court measured the consequences of the shift: the Plan “would entail billions of dollars in compliance costs (to be paid in the form of higher energy prices), require the retirement of dozens of coal-fired plants, … eliminate tens of thousands of jobs across various sectors, [and] reduce GDP by at least a trillion 2009 dollars by 2040.” Yet, in the Court’s view, EPA’s use of section 111 was “unprecedented”: EPA had used section 111 only to improve same-source efficiency, not to shift generation to other types of sources. Additionally, the Plan embodied “a regulatory program that Congress had conspicuously and repeatedly declined to enact itself,” namely, cap-and-trade.

Next, the Court determined that section 111 did not provide the requisite clear congressional authorization. In the Court’s view, the key statutory phrase—“system of emission reduction”— was “an empty vessel” that could encompass “almost anything.” Given the Plan’s consequences, the Court concluded, EPA could not “locate[]” its “newfound power in the vague language of an ancillary provision of the Act, one that was designed to function as a gap filler and had rarely been used in the preceding decades.”

The Implications of West Virginia and the Major Questions Doctrine for Regulatory Programs

West Virginia and the major questions doctrine could have significant consequences for regulatory programs. Whether West Virginia created a new doctrine or not, it will certainly increase attention on the statutory authority for regulatory programs with broad economic or social effects, potentially leading agencies to abandon or scale back their more ambitious regulatory programs and leading courts to invalidate some regulatory programs. 

Whether a regulatory action would have “such economic and political significance” to qualify as a “major question” may be in the eye of the beholder, at least initially, while courts develop a body of case law on the issue. Following West Virginia’s lead, courts are likely to consider the number of affected entities and their compliance cost, as well as broader effects on the economy, such as jobs and GDP or other economic measures. Whatever the types of evidence considered, however, West Virginia leaves the threshold unclear: how much effect is too much to presume Congress left it to the agency?

As for whether a statute contains a clear statement of congressional intent, agencies and courts already have extensive experience with that inquiry, but it may be more complex when directed toward “major questions.” For example, courts will probably grapple with whether common statutory provisions empowering an agency to adopt whatever regulations “may be necessary to carry out the purposes of” the statute provide the necessary clear authorization, whether the asserted authority is unprecedented, and what post-enactment congressional activity—or inactivity—means about the scope of the relevant statutory authority. Courts will also probably face questions of whether the skepticism underlying the doctrine is unwarranted, or mollified, when the policy decision calls for technical expertise that the agency has but Congress lacks.

Indeed, in West Virginia the Court stressed the fact that “EPA itself admitted” it did “not traditionally” exercise the “technical and policy expertise” needed for the Clean Power Plan. The Court explained: “When an agency has no comparative expertise in making certain policy judgments, … Congress presumably would not task it with doing so.” Thus, the practical effect of West Virginia could be less about keeping agencies out of major policy issues and more about keeping them out of areas where they lack a technical advantage over Congress.