‘We’re All Going to Be in a Lot of Trouble:’ Officials Warn of Far-Reaching Impacts of Recent Supreme Court Decision

A recent Supreme Court decision could have devastating ripple effects at federal agencies across government, according to former officials and stakeholders, who said the ruling could prevent agencies from regulating issues ranging from climate change to consumer abuse by financial firms. 

The 6-3 decision in West Virginia v. the Environmental Protection Agency firmly established a legal theory known as the “major questions doctrine,” setting the precedent that agencies have little leeway in setting new regulations with major economic impact or political salience that rely on powers not clearly laid out in statutory text. The immediate effect of the ruling restricted EPA’s ability to set new regulations on the emissions from power plants, but the full impact will likely have much more sweeping implications that will disrupt the work of civil servants governmentwide. 

“Agencies operating their programs under older statutes will need to be attentive—as always, but now for new reasons—to their legal authorities,” said Bridget Dooling, a professor at The George Washington University’s Regulatory Studies Center and a former deputy chief at the White House’s Office of Information and Regulatory Affairs. “To the extent that the agencies plan to advance creative interpretations, they'll want to be careful in doing so.”

The Consumer Financial Protection Bureau, for example, is already a frequent target for legal challenges. Its capacity to help those subject to unfair, deceptive or abusive acts and practices, or UDAAPs, will likely now come under question. John Wells, a former deputy enforcement director at CFPB, said some regulatory actions the bureau already has in the queue, such as the fees credit card companies charge for late payments, are clearly written into statute and on firmer legal ground even under this new framework. UDAAP policy, however, relies on a much less specific statute, Wells said, and agency employees will have to "be much more conscious" of how they write related rules. He speculated his former colleagues were bracing for this outcome from the high court and are already making preparations. 

“The bureau is doubtless conscious of this decision and already thinking about what could be challenged if it makes a formal rule,” Wells said, “and is thinking about all its legal options.” 

Wells explained CFPB may find workarounds to make it harder for opponents to file legal challenges, such as by tweaking its Supervision and Examination Manual to update policy rather than engaging in the rulemaking process. Just days after the decision in West Virginia, however, the American Bankers Association and other groups challenged CFPB for overstepping by updating its manual on UDAAP enforcement, saying it was exerting authority that extended "beyond the bounds carefully set by Congress."

The experience at each agency will be unique. Jordan Barab, the former acting head of the Occupational Safety and Hazards Administration and its long-time deputy, said OSHA’s authorizing statute is fairly specific and courts have generally deferred to the agency’s expertise. Still, even OSHA is not immune; the Supreme Court last year struck down its vaccine-or-test mandate for large employers that attempted to reduce risks related to the COVID-19 pandemic in the workplace. In a preview of the fallout from that doctrine, the American Bankers Association challenge to the CFPB’s UDAAP policy already cited the “major questions” discussion in the court’s decision in that OSHA case. 

“The court is basically assuming all power on what federal agencies can do,” Barab said. If the court decides it's going to be the arbiters on science, that it's going to be the expert…then we’re all in a lot of trouble.” 

In the majority opinion, Chief Justice John Roberts suggested Congress could resolve the issue by simply passing a law explicitly allowing EPA to regulate power plants’ emissions. Barab, like many experts and observers, said it was unrealistic to expect a Congress as divided as the current one to address pressing demands in a timely manner. Even if lawmakers attempted to do so, he and others said, they lack the expertise on deeply complicated matters that exists within federal offices. 

In her dissenting opinion, Justice Elena Kagan said Congress must make delegations to agencies, which then must be able to adapt their rules to changing circumstances and maintain "ample latitude to revisit, rethink and revise their regulatory approaches." 

“The court appoints itself—instead of Congress or the expert agency—the decision maker on climate policy,” Kagan wrote. “I cannot think of many things more frightening.”

Martha Kinsella, a senior counsel at the Brennan Center for Justice and a former attorney at the National Labor Relations Board, said the decision will have the greatest impact when agencies take novel approaches or address new problems, such as climate change and the pandemic. Kinsella echoed Kagan in suggesting the courts and Congress do not have the technical expertise needed to legislate at the granular level and the laws authorizing many agencies were not designed to confront today’s issues. 

Some of those statutes are decades old, she said, and do not “contain these kind of magic words that would grant agencies authority to do the things that they need to do in a contemporary society.” 

She said it is unclear what will constitute a “major question”—Barab likened it to the infamous “you know it when you see it” test for pornography—noting Roberts’ suggestion that it could come down to when an agency rule “raises an eyebrow.” 

“It's so vague and ambiguous that it's quite concerning,” Kinsella said. 

Peter Pitts, a former associate commissioner of the Food and Drug Administration and the president of the Center for Medicine in the Public Interest, said an overly restrictive interpretation of the ruling from FDA leadership would actually inhibit innovation in the pharmaceutical industry. A self-described small-government thinker, Pitts said FDA's role is "to make sure the regulations on the books are regulations that can be used with current times.” 

“If any administration told the FDA, ‘Don’t do anything new and only do what you’re doing right now,’ it would be telling industry not to innovate,” Pitts said, “which is a big problem.” 

Pitts expressed some optimism about the impact of West Virginia v. EPA, noting FDA bases its rulemaking solely on science and not on a desired policy outcome. Still, the agency is constantly stepping into new ground. FDA’s authorizing statute does not mention biologics—drugs composed, in part, from matter within living organisms—because they did not exist at the time, Pitts said, but industry would not be able to make advancements in that field without regulation from the FDA. Technical decisions at the agency are driven by career staff, he said, and its tendency to “move at warp speed” makes any outside effort to interfere a fool’s errand. 

“People who don’t understand the realities of science should be smart enough to step aside,” Pitts said. 

Several of the former officials and experts expressed significant concern about the impact the decision will have on those civil servants making decisions on the ground. 

“They will be looking ahead,” Barab said. “There will be some sort of chilling effect on agencies when they are putting out new regs or standards.” 

At CFPB, said Wells, now an attorney at WilmerHale, the director makes "the big picture decision" on what rules get written. But, he added, it falls on the career staff to actually “write the rule [and] have to think about this in terms of how it gets written.”

That process could grow even more complicated if the Supreme Court decides to rethink the doctrine known as Chevron deference. The majority did not mention Chevron—which says broadly that courts must defer to agencies when interpreting ambiguous statutory language—in the EPA case, but several cases could soon wind their way to justices that will touch on that principle. Striking it down would leave agencies much more handicapped when carrying out their duties. 

Ross Gianfortune contributed to this report.