Supreme Court Decision Curbs Agency Authority

Published on: July 7, 2022

Authors: Gregory Hoff

Topics: Employment Law

A recent decision by the Supreme Court delineated limits on deference to administrative agency authority and opened the door for the conservative Court to invalidate future regulatory action that is of particular “economic and political significance.”

The case, West Virginia v. EPA, involved the Environmental Protection Agency’s authority to issue emissions caps for power plants under the Clear Power Plan. The Court, in a 6-3 decision split along ideological lines, held that the EPA had exceeded its statutory mandate and authority, and in so doing offered a framework for the “major questions” doctrine to evaluate future administrative agency actions.

Per Chief Justice Roberts’ majority opinion, federal agencies must have “clear congressional authorization” for regulatory actions of great “economic and political significance,” and the Court will be skeptical of any sweeping agency action.

The exact type of agency action that presents a “major question” requiring such heightened scrutiny remains somewhat vague, although Justice Gorsuch provides some guideposts in his concurring opinion. According to Gorsuch, factors to be considered include whether the agency action is unprecedented or otherwise outside of the agency’s normal expertise, whether it is inconsistent with past actions, and the “age and focus” of the statute from which the agency claims authority.

The opinion offers a substantial preview of the skeptical approach that the current, conservative Court will take towards federal agency actions, and in particular those that would have significant economic or political effects. While the majority opinion made no explicit reference to Chevron deference, the decision nevertheless signals that the Court’s conservative wing does not consider itself wholly bound to that doctrine of statutory interpretation.

Outlook: The decision, while not totally discarding Chevron deference as some predicted it would, clearly opens the door for the Court to more easily discard agency actions in the future. Such an approach could prove to be a formidable wall against the Biden administration’s all-of-government approach to labor and employment policy. Recent efforts from the SEC and FTC to wade into labor and employment policymaking, for example, could be seen as outside the agencies’ normal areas of expertise and accordingly be a “major question” subject to heightened scrutiny by the Court. Further, even traditional labor and employment regulators, such as the NLRB, could find ambitious uses of regulatory authority invalidated under the “major questions” approach. The Court is likely to hear a slew of challenges to agency action in the coming years.