ANALYSIS: Notice & Comment Can Hint at Major Questions Suits

The major questions doctrine is increasingly being relied on by litigants to challenge federal agency actions. Following the 2021 explosion of major questions citations in federal complaints, parties are now raising major questions challenges in the rulemaking process before the applicable regulations are even final.

Major questions disputes at the notice and comment stage of the rulemaking process can hint at future challenges in court. Arguments both for and against the application of the doctrine could be picked up by litigants and judges in an eventual court battle. It’s an interesting avenue for potential future litigants, or parties with similar interests, to test out and preview arguments that may be made later.

Prologue: EPA’s Major Questions Past

The major questions doctrine had its first consequential appearance last year in West Virginia v. EPA, when a US Supreme Court majority applied the doctrine to invalidate a federal regulation. Notably, the EPA cited to the doctrine in some of the proposed regulations at issue before they were even challenged in court.

In West Virginia, the initial regulation proposed by the Obama administration (the Clean Power Plan) was repealed by the EPA administrator under the Trump administration, who stated that the CPP had been beyond the EPA’s statutory remit. It’s strange to see an agency stating it hadn’t had statutory authority to take an action that it had taken just a few years prior. This can happen, though, when different administrations prioritize different policy objectives.

EPA’s Major Questions Present

The major questions doctrine is again enmeshed in the EPA’s comments, this time regarding California’s motor vehicle emissions standards.

Ordinarily, the federal Clean Air Act preempts states from passing emissions standards for new motor vehicles. The law does, however, allow for California to ask the EPA to grant a waiver to that preemption. Like the regulation at issue in West Virginia, the California waiver has been a politicized issue, having been granted and revoked under different presidential administrations.

The EPA is now proposing to grant a waiver once again, having determined that California met the statutory factors. The agency published the requested waiver in the Federal Register in July 2022 for notice and comment.

Valero Energy Corporation filed a comment contending that the waiver constituted a “major policy question that was not contemplated by Congress, much less authorized with sufficient clarity under Clean Air Act Section 209(b).”

In its April notice of decision concerning the waiver request from California, the EPA considered and addressed Valero’s comment, calling out the major questions doctrine by name. The agency stated that it didn’t believe the doctrine applied.

Soon after the EPA’s decision, two parties asked a federal court to review the waiver. Because of the nature of the case, the plaintiffs haven’t yet revealed the substance of their challenge, but the major questions doctrine will very likely play a part.

FTC: To Compete or Noncompete

The FTC is definitely in the crosshairs of legal challenges so far this year. As discussed by Bloomberg Law analyst and antitrust expert Eleanor Tyler, the agency’s very existence could be at risk based on court and constitutional challenges.

The largest share of comments raising the major questions doctrine against FTC actions recently has been with respect to its proposed rule concerning noncompete clauses in employment contracts. And here, too, the doctrine has been squarely addressed by agency rulemakers.

As part of the proposed rule, individual FTC commissioners have provided statements concerning the rule’s promulgation, and their positions are divided. Two commissioners stated that the FTC has the statutory authority to promulgate the rule, and that the major questions doctrine doesn’t apply. The remaining commissioner dissented, also mentioning the doctrine, but this time as a reason for why the FTC should be precluded from taking the action.

Litigation is sure to ensue. Much like the EPA’s regulation in West Virginia, the dissenting commissioner’s views could provide support to a court looking to invalidate any final rule. But the opposite is also true: Courts seeking to uphold regulations could adopt the views of the two commissioners who thought the major questions doctrine didn’t apply.

SEC & FAR: Pending Climate Battlegrounds

The SEC’s long-pending climate disclosure rule is another potential target for court challenges. Based on the several major questions challenges that were filed last year as public comments, the final rule will undoubtedly also face similar objections.

The Federal Acquisition Regulation filed a similar proposed rule last November that applies to federal contractors and that has also received comments raising the major questions doctrine.

Neither rule is final so no litigation has been filed, but lawsuits are highly likely. And it’s almost certain that the parties challenging the rule will use the major questions doctrine to bolster their arguments, based on the doctrine’s presence in the comments.

If regulatory comments referring to the major questions doctrine serve as a signal of what’s to come, litigators can expect the FTC’s proposed rule concerning noncompete clauses to be a key focus going forward. In addition, the EPA will remain a target, as will the SEC and FAR with respect to their proposed climate regulations. Arguments made in the comments should be noted, as they’ll come up again in court.

Bloomberg Law subscribers can find related content on our Environment & Energy News page, our Noncompetition Agreements Chart Builder resource, and our In Focus: SEC Rulemaking page.

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