A new decision from America's high court is raising questions about how much authority federal agencies have to issue major regulations without clear and precise directions from Congress.
The June 30 decision on West Virginia v. EPA, made 6-3, found that Congress did not grant the Environmental Protection Agency the authority to devise emissions caps based on a particular approach the agency had tried to take. While the decision is limited to the EPA, the rationale the court used relied on the so-called "major questions doctrine," which, as Chief Justice John Roberts wrote in the court's opinion, addresses a "recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted."
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Major questions doctrine requires that agencies have clear statutory authority from Congress to impose regulations that involve an issue of major national significance. This is different from the doctrine many courts have used in the past, established under the high court's 1984 Chevron U.S.A. Inc. v. Natural Resources Defense Council decision. That case declared that courts should generally defer to agencies for reasonable interpretations of ambiguous directives from Congress.
A shift toward applying major questions doctrine over Chevron deference will likely create legal complications for federal agencies across the board, including those that govern consumer and broadband competition. The Federal Trade Commission and the Federal Communications Commission will face conflicts with courts and Congress over how regulation statutes can be written and interpreted, policy experts said. This in turn would greatly slow the rollout of rules meant to protect Americans' use of technology and broadband services.
"Congress cannot be in a position of trying to write every single rule that an industry might oversee," said Greg Guice, public affairs director at internet consumer advocacy group Public Knowledge, in an interview.
New legal challenges
Guice called Congress an entity that has failed to micromanage industries, pointing to already-existing complications in regulating the digital landscape. Those complications would only be exacerbated further, he said.
Congress typically authors legislation that delegates authority to federal agencies in general or broad terms, essentially leaving the experts to figure out the details in terms of deploying and enforcing the law.
This would have to change dramatically should there be a shift toward major questions doctrine over Chevron deference, experts and analysts said.
"While the Court did not overturn the Chevron doctrine, it based its decision on 'major question' jurisprudence, meaning that anyone can challenge a proposed rule on the grounds that the rule is a 'major question' that only Congress can address," wrote Blair Levin, policy adviser at New Street Research and former chief of staff to ex-FCC Chairman Reed Hundt, in a June 30 note after the decision.
With power shifting from entities traditionally deemed as expert agencies to the courts, agency regulations are more likely to face "years of litigation," Levin said. "The new regulator for each sector will be the over 670 district court judges, the courts of appeals judges in the 13 circuits and the Supreme Court," Levin wrote in a separate note leading up to the decision.
Defining terms
One question that has long surrounded the major questions doctrine is what exactly counts as a major question. In a concurring opinion written by Justice Neil Gorsuch and supported by Justice Samuel Alito, the justices lay out three scenarios where the doctrine applies.
The first is when an agency is dealing with a matter of great "political significance" or that will result in an "earnest and profound debate across the country." The second is when an agency seeks to regulate "a significant portion of the American economy" or issues regulations that will require "billions of dollars in spending" by private entities. Notably, Gorsuch cited the elimination of rate regulation in the telecommunications industry as a major question under that second definition.
The third instance where the major questions doctrine may apply is when an agency seeks to "intrud[e] into an area that is the particular domain of state law."
Notably, only two of the nine justices signed off on this concurring opinion.
FCC matters at stake
Still, the FCC has historically relied on the Chevron deference to rework well-established programs like the Universal Service Fund or technical standards for spectrum management, Guice of Public Knowledge said. Given the billions of dollars at stake with both, those could now be subject to major questions doctrine.
"The decision increases the odds of the 5th and/or the 6th Circuit invalidating the FCC's ability to raise funds for universal service, throwing the current universal service framework into chaos," Levin said.
Chevron deference has also played a major role in three key court decisions about net neutrality. During the George W. Bush administration, the Republican-led FCC classified cable broadband as an information service, an order the Supreme Court upheld based on Chevron. More than a decade later, during Barack Obama's administration, the Democratic-led FCC reclassified broadband as a telecommunications service, making it subject to more regulatory authority from the FCC and enabling the commission to impose net neutrality protections on broadband providers like Comcast Corp., Charter Communications Inc., Verizon Communications Inc. and AT&T Inc. The U.S. Court of Appeals for the D.C. Circuit similarly upheld that decision due to Chevron deference.
During Donald Trump's administration, broadband was reclassified yet again as an information service and the net neutrality rules were repealed. The D.C. Circuit Court of Appeals, in its 2019 decision upholding the order, wrote, "Our review is governed by the familiar Chevron framework in which we defer to an agency's construction of an ambiguous provision in a statute that it administers if that construction is reasonable."
President Joe Biden has encouraged the current FCC to restore net neutrality protections, a task that could now prove "more difficult ... as courts may see that as a major question that only Congress can answer," Levin said.
At the FTC
As to the FTC, the agency would be especially affected in court matters, wrote Matt Perault from New Street. Perault said tech sector rulemakings would face more hurdles in trying to survive judicial reviews.
"To survive a challenge in court, the FTC would not only need to prevail on the question of whether Congress intended to delegate to the FTC the authority to issue the rule in question, but also whether the FTC has properly used authority in the case at hand," Perault said.
Guice called enforcement actions a "wide-open" process that have relied on the FTC to define unfair and deceptive practices.
The Supreme Court's ruling also raises questions about a pending omnibus federal privacy bill, which had largely tasked the FTC with enforcement, and about a series of bills that had sought to address competition in the tech space.
Noting the "various drafts of regulation still in process on Capitol Hill," Levin said, "The Court decision will throw sand on those efforts, as supporters will have to address numerous details that would have been easier to delegate to the expert agency for the law to be effective."