It is hardly surprising that the Supreme Court led by Chief Justice John Roberts—likely “the most pro-business Court in a century”—has been tweaking (or inventing) legal doctrines to curb progressive regulation. Most notably, the conservative majority has formulated an anti-regulatory “major questions doctrine” (MQD) to limit agency initiative. The Court has also invited and then recently heard cases that may limit or overrule so-called Chevron deference, that is, the ordinary duty of federal courts to accept reasonable agency interpretations of the statutes they administer when those laws are legally ambiguous. Furthermore, the conservative justices have flirted with reinvigorating the so-called nondelegation doctrine to cut back Congress’s power to authorize administrative initiative in the first place. The current version of the doctrine allows Congress to confer broad policy discretion upon administrative agencies so long as the statutes that grant such discretion put boundaries on the agency’s authority through what the Court generously defines as an “intelligible principle.”
Of these judicial sorties against the administrative state, it is the major questions doctrine that will most likely cause heartburn for agency general counsels in a presidential election year. Justice Neil Gorsuch’s push for reformulating the nondelegation doctrine has seemingly stalled due to a lack of consensus on how to articulate a more stringent version. As for reversing or even circumscribing Chevron deference, the Court’s formal narrowing or overruling of Chevron might portend a sea change in the ability of administrative agencies to interpret legally ambiguous statutes. But it is hard to know how much of a transformation there would be. After all, pro-business judges already often interpret statutes to preclude challenged regulatory initiatives. Conversely, even if Chevron “deference” is overruled, agency interpretations of law will still be entitled to “weight” under an earlier case called Skidmore. A judge sympathetic to a challenged agency initiative may decide to uphold the agency’s understanding of the law not because of the Chevron duty of mandatory deference but rather because, as Skidmore instructed, an agency’s legal interpretations may “constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance” and find persuasive.
Thus, among the three looming doctrinal threats to agency authority—a potentially more stringent nondelegation doctrine, the Supreme Court’s potential narrowing of Chevron deference, and the Roberts Court’s elaboration of a “major questions doctrine, it is the MQD that looms most conspicuously as the source of legal headaches for regulatory agencies. In West Virginia v. EPA, the case that crystallized the MQD, the Court seemed to establish a new two-part framework for determining whether an administrative initiative is statutorily authorized. First, a reviewing court should determine if the administrative action qualifies for extra scrutiny as a “major question.” This threshold determination requires assessing the “history and the breadth of the authority that the agency has asserted and the economic and political significance of that assertion.” If the challenged agency initiative would result in an “unheralded” and “transformative expansion” of the agency’s regulatory reach, then the second step of the test requires the agency to locate “clear congressional authorization” for its ambitions in its statute.
Since the 2022 ruling, the Court has deployed the doctrine to overturn the Biden administration’s initial student loan forgiveness program. A majority thought the education secretary’s statutory power to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” did not license the creation of a loan forgiveness program under Title IV of the Higher Education Act with sufficient clarity for so major an initiative.
But the Court has not been rigorous in specifying the contours of the MQD criteria: How much economic or political impact is “significant?” How is “significance” to be weighed against “history,” that is, against the novelty or familiarity of the challenged regulatory strategy? And just how “clear” must the authorization be to be “clear enough?”
Given the MQD’s fuzziness, it is now all but malpractice for any lawyer representing big business not to play the MQD card to challenge regulation. Judge James D. Cain, Jr. of the U.S. District Court for the Western District of Louisiana recently confirmed the utility of arguing the doctrine to any sufficiently creative anti-regulatory judge. In a January opinion, Cain used the major questions doctrine to invalidate longstanding Environmental Protection Agency antidiscrimination regulations. The targeted rules require grant recipients to avoid administering federally funded programs in a manner that has “the effect of subjecting individuals to discrimination because of their race.” Regulations based on an antidiscrimination “effects test” have been on the books at EPA since 1973, ostensibly making their current version an unlikely MQD target. If the EPA had gone unacceptably far in interpreting its antidiscrimination enforcement authority, one would expect some Congress since the Richard Nixon era to have addressed the issue.
But Cain is the Trump-appointed judge who invoked the MQD in 2022 to bar environmental rule makers from using, as part of their regulatory cost-benefit analyses, estimates developed by President Joe Biden’s interagency working group on the social costs of greenhouse gas emissions—a judgment that a unanimous Fifth Circuit panel threw out for lack of standing. If Judge Cain isn’t giving up, why should big business?
Several Biden administration initiatives will evoke MQD objections, even if unjustified. One is a proposed Department of Labor rule, entitled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.” Under the Fair Labor Standards Act (FLSA), employees who function in a “bona fide executive, administrative, or professional (EAP) capacity” are excluded from the statute’s mandatory overtime provisions. The Secretary of Labor is authorized by the statute to “define” and “delimit” what it means to function in a “bona fide executive, administrative, or professional capacity.” The tools Congress grants the secretary for doing so are “regulations,” which may be issued “from time to time.” The broader the EAP exemption that the Secretary allows, the fewer employees will enjoy the wages-and-hours protections of the FLSA.
Since the 1940s, the Labor Department has consistently determined that some employees make too little income to be deemed bona fide executives, administrators, or professionals. The newly proposed rule would raise the salary level below which a worker is categorically deemed not an EAP employee. Once the rule is made final, full-time salaried workers who make less than $1,059 per week or $55,068 annually for a full year would be entitled to overtime regardless of how their jobs are labeled. This would be the first revision in the low-wage category since 2004. To prevent future obsolescence, the rule would be periodically indexed to inflation.
Sure enough, a comment from an opponent of the new rule—the U-Haul Holding Company—asserts that it violates the MQD because it would impose “a tremendous economic effect” on employers without sufficiently clear authority. U-Haul thinks the proposal raises two “major questions”—whether a minimum salary test is permissible to decide who a bona fide EAP employee is and whether the minimum figure may be indexed. These challenges should be ignored. Some minimum salary requirement has long been part of the Labor Department’s rules. Such a requirement was judicially upheld as early as 1944.
Indexing may be a new regulatory feature for the overtime rule, but it does not change the regulation’s scope or underlying strategy; it just prevents a static dollar figure from rendering the rule obsolete. Even if new in the FLSA context, it is hardly novel. For example, over 40 years ago, the Seventh Circuit approved a rule from the Copyright Royalty Tribunal that provided for a later automatic cost-of-living adjustment in the royalty fee payable by jukebox operators for the public performance of copyrighted musical works. Still, the rationality of indexing for FLSA salary thresholds doesn’t guarantee there isn’t a “Judge Cain” somewhere to void the rule under a misapplied MQD.
Another rule that will surely attract an MQD challenge is the proposed Federal Trade Commission regulation banning employer-imposed noncompete agreements as an unfair method of competition. Former FTC Commissioner Christine S. Wilson, who dissented from the decision to propose the rule, declared such a regulation vulnerable to an MQD attack. In her view, echoed in comments from the U.S. Chamber of Commerce, among others, a major question exists whether the FTC has any rulemaking authority when it comes to enforcing the statutory ban on “unfair methods of competition” or must do so exclusively through case-by-case adjudication. The Chamber goes further, arguing that, even if rulemaking authority exists, a categorical ban on imposing noncompete agreements on workers would pose a major question.
Whether the final FTC rule will take as ambitious an approach as its proposal, of course, remains to be seen. But an MQD challenge to the agency’s preference for rulemaking to attack an “unfair method of competition” would have to face the fact that the D.C. Circuit upheld the existence of such authority as long ago as 1972, and the choice of agency enforcement process is ordinarily within the discretion of the agency. It is also the case that because the FTC has concretely dealt with unfair noncompete agreements before through case-by-case determinations, the subject matter of the rule is not “unheralded.” Yet again, it seems worrisome that a forum-shopping challenger might nonetheless find a court willing to overlook these niceties because businesses dislike the rule.
Of course, when finalized, an FTC rule on noncompete agreements would be subject, like any rule, to a court’s inquiry into the agency’s rationale and whether the commission’s factual record substantiated the agency’s reasoning. In this case, the FTC would have to show that such agreements likely hurt competition in fact and, thus, the rule is not “arbitrary and capricious.” A problem with the MQD—and what makes its use even more tempting for an unsympathetic court—is that invoking the MQD relieves a court from dealing with the far more labor-intensive inquiry into the adequacy of the agency’s supporting evidentiary record. A court doesn’t have to worry if an agency’s rationale for a rule is well-founded based on facts and analysis if the court determines at the outset that the rule is too big a deal to be rooted in legally ambiguous statutory language.
It seems a safe bet that presidential election years will be especially ripe for MQD challenges. Agencies will get their final rules out to help protect them against easy revision or rescission in a subsequent administration. In the run-up to Election Day, any incumbent administration will want to make good on the promises that got it elected. Agency communications teams—and the White House—are most likely to tout their fourth-year initiatives as especially impactful. Courthouses like Judge Cain’s, housing jurists most likely to invalidate regulation “of economic and political significance,” can expect to see a lot of business.
