West Virginia v. EPA and the Future of the Administrative State

On Thursday June 30th, the U.S. Supreme Court handed down its decision in West Virginia v. EPA, applying a newly robust form of the “major questions” doctrine to limit the Environmental Protection Agency’s (“EPA”) authority to regulate greenhouse gas emissions. Here, Stanford Law Professor David Freeman Engstrom, an expert in administrative law, and John Priddy, a member of the Stanford Law School class of 2023, discuss the Court’s ruling and its implications for climate policy and the future of the administrative state.

David Freeman Engstrom, Professor of Law

What is at issue in this case, and how did it get before the Court?

The case has one of those ping-ponging procedural histories that have become all-too-common in our politically polarized times.

The saga began back in 2015, when the Obama-era EPA promulgated regulations initiating the Clean Power Plan (“CPP”). The Obama Administration sought to combat climate change by reducing carbon dioxide pollution from new and existing power plants. In particular, the EPA sought to “generation shift” the nation’s overall mix of electricity generation from 38% coal to 27% coal by 2030, to be replaced by renewables like solar or wind. The CPP aimed to effect this shift by setting stringent goals for each state to cut power plant emissions by 2030. The EPA claimed authority for this move under Section 111 of the Clean Air Act (“CAA”), which, although known as the New Source Performance Standards program, also authorizes regulation of certain pollutants from existing sources under Section 111(d).

The CPP, however, never went into effect, as several states and private plaintiffs challenged it in court, and a divided Supreme Court put it on hold in February 2016.

That’s where it sat until 2019, when the Trump administration outright rescinded it and replaced it with the more lenient Affordable Clean Energy (“ACE”) Rule. That Rule regulated existing coal-fired steam plants only on an individual basis, rather than effecting state-wide (i.e., “system”-wide) change. The Trump administration justified its rescission by arguing that the Obama EPA had overstepped its statutory authority, as the CAA only permitted regulations “inside the fence-line”—that is, the EPA’s authority was restricted to regulations governing a power plant’s physical premises.

Yet more litigation followed, this time from blue states, rather than red ones, as numerous plaintiffs challenged the Trump EPA’s rescission of the CPP. In a 2021 decision, the D.C. Circuit sided with those challengers, vacating both the Trump EPA’s repeal of the CPP and also its promulgation of the (lenient) ACE rule. Unsatisfied with that ruling, West Virginia and several other Republican-led states sought certiorari from the U.S. Supreme Court—and the Court took the case. Interestingly and controversially, the Court did so even after the Biden EPA announced that it did not intend to reinstate the CPP and would instead implement different climate regulations.

West Virginia v. EPA and the Future of the Administrative State
John E. Priddy, Stanford Law School JD ’23

So if the EPA no longer planned to pursue the CPP, how was the case even before the Court?

The Solicitor General, representing the U.S. Government, raised that exact argument. The Solicitor General asserted that the state challengers lacked standing to raise this dispute in federal court because the original, Obama-era regulation never went into effect and the Biden administration had essentially given up on it. The Court disagreed.

First, the Court held that there was little question that the states would be injured by the CPP since they were the “object of” the power plant regulations within their borders. That satisfied Article III standing requirements.

More significantly, the Court determined that the federal government’s argument had a “basic flaw.” The real issue was mootness, not standing. And, under a mootness inquiry, the government bears a “heavy” burden to prove that a once-live case is no longer so. The Court held that “voluntary cessation does not moot a case” unless it is absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur. Since the government failed to promise that it would not reimpose emission limits predicated on generation shifting, the case was not moot.

Nothing in this part of the decision appears to hold significant longer-term doctrinal implications. It’s at best a clarification of the mootness rule. But the Court’s willingness to take the case at all—and the majority’s fancy footwork in the first part of its opinion to keep hold of it—was a clear signal that the Court’s ascendant conservative majority would use the case as a vehicle to make a broader statement. The only question was how far it would go in doing so.

Once it got to the merits, what did the Court hold?

Chief Justice Roberts, writing for a 6-3 majority, held that the EPA did not have clear congressional authorization to enact the CPP. According to the majority, Section 111(d) of the CAA was a mere gap-filler that had “rarely been used in the preceding decades.” The EPA’s efforts to smuggle such a major set of regulations through ambiguous statutory language was an attempt to exercise “unprecedented power over American industry.” It did not help, the majority further contended, that Congress had previously rejected efforts to enact similar programs that the EPA sought to implement with the CPP.

The Chief Justice concluded the opinion by acknowledging that capping carbon dioxide emission might be a sensible solution to “the crisis of the day,” but the authority to do so did not lie in the CAA. Instead, “[a] decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.” In other words, the agency lacked clear authority to regulate on a major question of policy.

What is the “major questions” doctrine?

Here’s Chief Justice Roberts’s articulation: “[O]ur precedent teaches that there are extraordinary cases . . . in which the history and the breadth of authority that the agency has asserted and the economic and political significance of that assertion provide a reason to hesitate before concluding that Congress meant to confer such authority.”

Critics of the Court’s decision are saying that the Court made up this rule out of whole cloth. But that’s not quite right. For starters, American administrative law is full of doctrinal improvisations of one sort or another. More importantly, the Court has been working around the edges of the “major questions” idea for decades. In an earlier environmental law case, decided in 2001, Justice Scalia famously quipped that Congress “doesn’t hide elephants in mouseholes.” (Less colorfully, he wrote in that same decision that “the degree of agency discretion that is acceptable varies according to the scope of the power congressionally conferred.”) In another case decided just before, this one about whether the FDA had the authority to regulate tobacco, the Court noted, though in a make-weight way, that “the court must be guided to a degree by common sense as to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency.” More recently, the Court invoked the “major questions” idea in the second of the major challenges to the Affordable Care Act. The design of the health insurance exchanges at the heart of the ObamaCare law, the Court noted, raised “a question of deep ‘economic and political significance’ that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly.”

In other words, the Court’s approach in Thursday’s decision has been long in gestation. Instead, the innovation of the decision is two-fold. First, it puts the “major questions” idea front and center—and, for the first time in a majority opinion, squarely endorses the idea that the power and discretion of agencies becomes more suspect as the significance of the agency’s action increases.

Second, the Court’s decision plainly weakens a longstanding, even bedrock, principle of administrative law. That longstanding principle is that courts are to grant agencies deference—known as Chevron deference—when the agency interprets its own statutes. To be sure, the Roberts Court has been chipping away at that deference rule for years. Among other things, it has narrowed the types of agency actions that are entitled to Chevron deference. And, increasingly, the Court doesn’t mention Chevron at all even in cases where it would seem to apply. What makes the Court’s decision so important is that, in contrast to these earlier efforts to nibble around Chevron’s edges, the “major questions” doctrine mounts something closer to a full-scale frontal assault.

What does all of this portend for the future of administrative law?

The huge question, in our view, is where the “major questions” doctrine fits within American administrative law—and just how much traction it will gain going forward. Where will the Court—or the lower courts who must implement the Court’s decision—set the threshold for “economic and political significance” in other cases? And just how aggressive will the Court be?

One could imagine the “major questions” doctrine functioning as a marginal and rarely invoked exception to the Chevron doctrine. Of interest on this score is that the majority decision failed to so much as mention Chevron. But, as already noted, the Court’s decision unquestionably raises questions about Chevron’s future applicability—and it seems inescapable that the situations where the Court will defer to the agency upon judicial review are increasingly narrow. It’s certainly possible that, in time, the “major questions” exception will swallow, or at least substantially pare back, the Chevron rule. The doctrine might even come to function as a kind of stalking horse for a more robust non-delegation doctrine. That’s the doctrinal rule, derived from the Constitution’s vesting of “legislative powers” in Congress, that says, at least in its current formulation, that Congress can’t delegate policymaking authority without an “intelligible principle” to guide the agency.

However the decision fits into existing doctrine, it clearly shifts the power to make complex regulatory policies to the courts (and, in theory, Congress) and away from expert agencies. 

What will be the policy effect of Thursday’s ruling on American climate policy?

West Virginia v. EPA delivers a gut punch to the Biden administration’s efforts to fight climate change because it severely limits the EPA’s ability to enact nationwide, systemic changes to cut America’s carbon emissions.

To be sure, other policy levers remain. The EPA may be less constrained in its efforts to regulate new, as opposed to existing, power plants. EPA’s ability to regulate non-stationary carbon sources (i.e., cars)—the nation’s largest source of carbon emissions—remains intact. But we can’t soft peddle the fact that, when it comes to fighting climate change, the Court struck a devastating blow. Going forward, if we’re going to act, we’ll be more reliant on Congress and states and municipalities. But Congress is so polarized it’s paralyzed, and states and municipalities are hobbled by their limited reach, inadequate funding, and piecemeal authority. The picture is bleak.

Will the decision have effects beyond climate policy?

Very likely. Going forward, all federal agencies (not just the EPA), will need to show that their actions are supported by clear, express statutory authority, at least when their actions might be adjudged to have “vast economic and political significance.” Agency attempts to use “long-extant” statutory language that the agency never wielded will be intensely scrutinized. Regulatory changes that affect an entire industry at a fundamental level will be highly suspect. And if Congress has “conspicuously and repeatedly declined to enact” a similar rule, the agency’s decision to nevertheless issue a regulation will rarely pass muster.

We can only guess what might be next on the chopping block. Vaccine rules are an obvious candidate. Indeed, Justice Gorsuch invoked the “major questions” doctrine in his concurrence in the vaccine-or-mask workplace cases back in January. So are the recently promulgated SEC rules requiring companies to disclose their exposure to climate risk and the climate impacts of their operations.

But the decision’s biggest effects will be unseen. Agencies will trim their sails in precisely those policy areas where agency action could be most impactful in securing public safety and health. Those effects will be hard to monitor or measure. With corporations primed and poised to use the Court’s ruling to challenge agency rules, many agencies will think twice about crafting policies aimed at significant problems, lest their policies get caught up in protracted judicial review proceedings and, potentially, face invalidation.

David Freeman Engstrom is the LSVF Professor in Law and co-director of the Deborah L. Rhode Center on the Legal Profession at Stanford Law School. He is a far-ranging scholar of public law and the design and implementation of litigation and regulatory regimes whose expertise runs to civil procedure, administrative law, constitutional law, federal courts, legal history, and empirical legal studies. John E. Priddy is a 3L student at Stanford Law School.