The Supreme Court Reins in the Administrative State

While much attention has been given to the Supreme Court’s recent cases on religious liberty, the Second Amendment, and abortion, the Court’s decision in West Virginia v. Environmental Protection Agency could have the most far-reaching implications. It signals the beginning of a new era of jurisprudence on the administrative state that could transform the way the federal government operates.

In that decision, the Court ruled that the Environmental Protection Agency (EPA) overstepped its congressional authorization by capping power-plant emissions in a way that would shift America’s power sources from coal to renewables. Under the major-questions doctrine, the Court ruled that administrative agencies may not promulgate rules of vast “economic and political significance” without clear congressional authorization.

While President Biden denounced the decision for jeopardizing America’s ability to “combat climate change,” the Court’s opinion is less about air pollution than it is about the proper role of the administrative state in our constitutional system. It isn’t about what the law should be, but who should decide what the law should be. As such, it is a major victory for constitutional government and democratic accountability.

Distorting the Constitution

Since the early twentieth century and especially since the 1960s, the federal government has operated quite differently from the way School House Rock describes it. Responding to increasingly complex social problems, Congress created dozens of federal agencies, staffed by impartial experts and removed from the pressures of politics, to help administer the law. Thus the administrative state was born.

At its best, this administrative state enables experts “to fill up the details” of law, as Chief Justice John Marshall wrote in 1825. At its worst, however, it short-circuits the legislative process and undermines democratic accountability.

As governed by the Administrative Procedure Act, the administrative rulemaking process goes something like this: an agency proposes a rule and posts it in the Federal Register, soliciting and reviewing comments from the public for thirty to sixty days; if the rule is “economically significant,” the agency then submits it to the Office of Information and Regulatory Affairs for a cost-benefit review. Then it becomes law. And that’s it.

This process’s relative ease encourages Congress to hand off its legislative responsibility to the executive branch. Congress passes vaguely worded, aspirational statutes that delegate to unelected administrators the responsibility of filling in breathtakingly significant gaps in the law. This allows members of Congress to celebrate their legislative “victories” on social media, while deflecting blame for the difficult decisions that administrative agencies make. And when Congress fails to pass important legislation—for example, on immigration, COVID vaccines, or climate change—the president can then direct his own administration to handle it. Either way, Congress is off the hook for making difficult decisions.

Administrative rules don’t require broad consensus, so they don’t enjoy the benefits of a diverse group’s deliberations. Instead, they reflect the will of the president or administrators. But these rules are unstable because, as if controlled by a light switch, they can be undone by the next administration. And because administrative agencies are intentionally insulated from the democratic process, the people exercise only tangential control over the rules that regulate their lives. The current rulemaking process clearly suffers from many defects.

The Administrative State and the Court

Congress isn’t likely to fight to restore its own constitutional responsibilities because the rise of the administrative state distorts Congress’s institutional incentives to legislate. Instead, it falls to the Supreme Court, strengthened by the “fortitude” of its independence from the other branches as Alexander Hamilton wrote in Federalist 78, to faithfully guard the Constitution and rein in the administrative state.

For the first time since the New Deal, the Supreme Court seems eager to try to constrain the administrative state, by employing two similar lines of jurisprudence.

The first is the nondelegation doctrine, which asserts that Congress may not delegate its essential, legislative authority to administrative agencies. The principle stems from the first words of the Constitution: Article I, Section 1 vests in Congress “all legislative Powers herein granted.” The word “all” suggests that, unless otherwise noted, Congress alone has the power to create generally applicable rules regulating behavior.

The second is the major-questions doctrine, which asserts the expectation that Congress will speak clearly when authorizing an agency to make decisions of vast “economic and political significance.” The interpretive principle of the major-questions doctrine can be traced to the 1825 case of Wayman v. Southard: “important subjects,” Chief Justice John Marshall wrote in that decision, “must be entirely regulated by the legislature itself.”

Under the nondelegation doctrine, the Court asks: can Congress authorize an agency to do “x”? Under the major-questions doctrine, the Court asks: did Congress authorize the agency to do “x”? The major-questions doctrine is the more moderate of the two, since it reviews an agency’s interpretation of a statute and not the statute itself.

The best example of the Court bringing an administrative agency back in line is the 1935 decision Schechter Poultry Corporation v. United States. During the Great Depression, Congress passed the National Industrial Recovery Act, authorizing President Franklin Delano Roosevelt to write and approve “fair codes of conduct” for the poultry industry. But the Court overturned this delegation of power when it found that Congress supplied “no standards” whatsoever for FDR in writing the codes. In other words, Congress gave the executive “virtually unfettered” discretion in creating the law. In a concurring opinion, Justice Benjamin Cardozo called it “delegation running riot.”

But since 1935 the Court has been reluctant to constrain the administrative state’s unconstitutional authority. Indeed, in the 1984 decision of Chevron v. Natural Resources Defense Council, the Court announced that it would “defer” to an agency’s interpretation of a statute, as long as its interpretation was not “arbitrary, capricious, or manifestly contrary to the statute.” In effect, in what became known as Chevron deference, the Court gave administrative agencies an almost blank check to write and rewrite the law.

The tide began to turn in the Court’s 2019 decision, Gundy v. United States. In that case, the Court considered whether Congress impermissibly empowered the attorney general to decide how to apply a law that created a national database of sex offenders to those who became offenders before the act became law. (Justice Brett Kavanaugh did not participate in the case as he was not yet on the Court when it was argued.) In his dissent, Justice Neil Gorsuch argued that the law “scramble[d]” the Constitution’s promise that “only the people’s elected representatives may adopt new federal laws restricting liberty.” According to Justice Gorsuch, that the Attorney General first did nothing, then required all pre-act offenders to register, then required some but not others to register, then required only repeat offenders to register, suggests that Congress delegated “unbounded” discretion to the executive branch. Notably, Justice Samuel Alito wrote in his concurring opinion that he would “support” the effort to “reconsider” the Court’s jurisprudence on the administrative state when a majority of justices were ready.

The Court and the EPA

Then came West Virginia v. Environmental Protection Agency on June 30. As the 6-3 decision demonstrates, the Court is indeed ready—“pleased,” even, as Justice Gorsuch says in his concurring opinion—to defend Congress’s authority to legislate against the encroachment of the administrative state.

The issue before the Court was an “obscure” section of the Clean Air Act that empowered the EPA to regulate existing power plants by determining the “best system of emission reduction.” From 1970 to 2015, the EPA interpreted that word—“system”—as authorizing the agency to issue “source-specific” regulations on the technology of the physical power plant. (The EPA required power plants to install smoke-stack scrubbers, for example.)

Congress repeatedly considered but ultimately did not pass a more aggressive cap-and-trade regulatory scheme, which prompted President Barack Obama to announce in his 2013 State of the Union Address: “if Congress won’t act soon to protect future generations, I will.”

Thus in 2015, the EPA reinterpreted the word “system” as empowering the agency not merely to decrease the pollution of individual power plants, but to “improve the overall power system”:  known as the Clean Power Plan, the rule would progressively reduce (or “cap”) the amount of pollution allowed and then encourage power plants to buy and sell (or “trade”) pollution credits from and to their competitors, as well as build their own solar or wind farms. The goal, as the Obama Administration noted at the time, was to “drive a[n] . . . aggressive transformation in the domestic energy industry.” By ratcheting up the cost of coal and effectively subsidizing renewable energy sources, the EPA would, over time, shift the source of power generation in the United States from coal to renewables.

Writing the opinion of the Court, Chief Justice Roberts announced that “this is a major questions case”: the Court has historically been “skeptical” when administrative agencies claim to suddenly “discover” vast power to make “a radical or fundamental change” in a regulatory scheme, especially when Congress has “conspicuously and repeatedly declined” to authorize that very power. Rather than rely on Chevron deference and accept the agency’s interpretation of the statute, Chief Justice Roberts noted that, under the major-questions doctrine, an agency can overcome this skepticism by pointing to “clear congressional authorization” of its action. The EPA did not meet that test. Instead, the EPA found its “unheralded power” in “the vague language of a long-extant, but rarely used, statute designed as a gap filler.” As one amicus brief put it, it tried to hide an elephant in a mousehole.

Justice Gorsuch’s concurring opinion (which Justice Alito joined) further explores the major-questions doctrine: the Constitution reserves to Congress the authority to legislate.

By vesting Congress with this power, the Constitution attempts to secure good laws and sound procedures. Congressional statutes require broad consensus from a bicameral institution made up of geographically and ideologically diverse members. Congress’s institutional design thus privileges deliberation and compromise. This structure does not guarantee perfect laws, of course, but it does increase the likelihood that the laws Congress does pass will be moderate and stable, and protect minority rights.

Furthermore, thanks to popular elections, Congress is accountable to the people for its decisions in a way that executive agencies aren’t. In other words, it makes possible the rule of the people, rather than the rule of unelected bureaucrats. Unfettered administrative lawmaking, by contrast, substitutes the deliberation of the people’s representatives with “nothing more than the will of the current President, or, worse yet, the will of unelected officials barely responsive to him,” Justice Gorsuch wrote.

In her dissenting opinion, Justice Elena Kagan faulted the majority for overriding Congress’s choice to “make broad delegations” to the EPA. Aware of “what it doesn’t and can’t know when it drafts a statute,” Congress should be able to delegate to “an expert agency the power to address issues—even significant ones—as and when they arise,” she writes.

Justice Gorsuch recognized the tension between the exigencies of modern government and the Constitution’s system of separated powers: “administrative agencies have important roles to play in a modern nation.” But, he added, “none of us wishes to abandon our Republic’s promise that the people and their representatives should have a meaningful say in the laws that govern them.”

Political and Constitutional Implications

In the aftermath of the decision, some have claimed the Court gutted the EPA’s ability to fight climate change. But as Justice Kagan noted, even though the Clean Power Plan never actually went into effect because of various lawsuits and changes in presidential administrations, the power industry still met the Clean Power Plan’s “nationwide emissions target.” As a policy matter, the Clean Power Plan may have been unnecessary and, in any event, is now “obsolete.”

Certainly, the decision will hamper the EPA under the Biden administration to unilaterally regulate power plants without clear congressional authorization. But for that same reason it will also mean that future administrations will have less room to create rules that erode congressional statutes and, hence, will make the law more stable. As Sarah Isgur points out, the United States cannot successfully fight climate change if it relies on administrative rules that are rescinded every four years. Under President Trump, the EPA repealed the Obama-era Clean Power Plan, and before the Court struck it down, President Biden was planning to reinstate something similar.

In the end, Chief Justice Roberts argues that the decision is not fundamentally about whether the Clean Power Plan is a “sensible solution.” It may be, he admits. Instead, the Court must require “a decision of such magnitude and consequence” to be made by Congress, or at least “an agency acting pursuant to a clear delegation from that representative body.”

West Virginia v. Environmental Protection Agency upholds the will of Congress, as authorized by the Constitution, on behalf of the American people. As such, the decision encourages Congress to speak clearly when addressing issues of political or economic significance. In a word, it attempts to make Congress legislate again.