The Supreme Court’s EPA ruling is bad news for tech regulation, too

The justices just gave themselves a lot of discretion to smack down agency rules.

An exterior view of the Supreme Court.

The ruling could also endanger work on competition issues by the FTC and net neutrality by the FCC.

Photo: Geoff Livingston/Getty Images

The Supreme Court’s decision last week gutting the Environmental Protection Agency’s ability to regulate greenhouse gas emissions didn’t just signal the conservative justices’ dislike of the Clean Air Act at a moment of climate crisis. It also served as a warning for anyone that would like to see more regulation of Big Tech.

At the heart of Chief Justice John Roberts’ decision in West Virginia v. EPA was a codification of the “major questions doctrine,” which, he wrote, requires “clear congressional authorization” when agencies want to regulate on areas of great “economic and political significance.”

That ruling could go far beyond environmental regulation, particularly as the court gave few guidelines about what constitutes a “major question” — thus giving themselves plenty of room in the future to apply the notion broadly, even in some instances when Congress would prefer expert agencies take up particular issues.

“It’s, in effect, a political veto that the Supreme Court has over Congress,” said Jeffrey Vagle, an assistant professor at Georgia State University's law school who specializes in tech issues. “The court is saying, ‘We decide what is and is not a major question.’”

Experts say the justices’ decision could endanger potential efforts at the Federal Trade Commission to make rules on competition issues, efforts by the Federal Communications Commission to restore net neutrality or a potential range of new regulations on platform tech, crypto, markets and other areas.

The ruling comes at a fraught time for regulation, particularly in newer sectors like tech. Federal courts, especially those led by conservative judges who have long fought bureaucrats issuing rules to govern businesses, are increasingly taking aim at agencies’ structures and powers. At the same time, some of those same agencies are trying to reinvigorate their authority — or in some cases explicitly test the boundaries of the law — in an effort to protect consumers in fast-evolving sectors where Congress has asked the experts to take the lead. Lawmakers themselves are also considering granting agencies more powers.

Take the FTC, for example. Chair Lina Khan rose to prominence through criticizing what she portrayed as a narrow view by courts and prior commissioners of the agency’s purpose, and she has pledged to bring big cases, try out new legal theories and invoke powers her predecessors had stepped away from. In addition to bringing cases against alleged one-off lawbreakers, Khan’s efforts also include ambitions to regulate whole sectors and practices.

The FTC relies on broad, but often vague, statutes designed to give the agency the power to tackle anticompetitive conduct and deception throughout the economy. Several experts said the Supreme Court’s ruling could affect the FTC’s potential plans to use the law under which it operates to issue regulations on “unfair methods of competition.”

“The court is saying, ‘We decide what is and is not a major question.’”

“It’s really hard to see, looking at this opinion, how this court is going to uphold this claim of authority,” Berin Szoka, president of libertarian think tank TechFreedom, said about the case during a Twitter Spaces event. Szoka pointed to non-compete agreements as a potential subject for a competition-related rule-making, although the FTC’s signature regulatory push on tech right now is privacy, which might rely on a separate authority to regulate “unfair or deceptive acts.”

Regardless of whether Khan’s privacy rule-making would succeed in court, a bipartisan, bicameral bill would direct the FTC to make regulations on all kinds of new tech topics. Given the ruling, lawmakers do need to be as clear as possible in assigning rule-making responsibilities to agencies, though it’s not obvious how such grants need to be written to be considered clear enough statements of agency authority for the Supreme Court.

Similar dynamics are playing out at the FCC with net neutrality. Democrats seem intent on restoring rules to stop ISPs from blocking web content, slowing it down or demanding pay for prioritizing it — at least if Democrats can fill the fifth seat on the commission and actually take over the majority. But Szoka’s group has long maintained such rules constitute a major question beyond the remit of the statutes the FCC applies — a stance that Justice Brett Kavanaugh seemed to agree with when he was an appeals court judge.

In fact, Roberts, in his EPA decision, quoted Kavanaugh’s earlier writings on net neutrality. Matt Schettenhelm, a litigation and policy analyst at Bloomberg Intelligence who focuses on telecom, called the citation “devastating to the FCC, federal broadband regulation, and net neutrality.”

It may be what the decision doesn’t say that most threatens future regulations.

The Supreme Court decision stopped short of explicitly overturning the deference that courts are supposed to show to expert agencies when interpreting statutes the regulators oversee. The court also held back from the theory that, in many cases under the Constitution, Congress simply can’t delegate its powers to administrative agencies, whether lawmakers are clear or not. Such a holding would have reached back to a series of anti-New Deal rulings, and some liberal legal observers saw it as a possible worst-case scenario for the administrative state because it would have fundamentally crippled and remade the entire structure of the modern federal government.

Still, experts say the EPA ruling could act as something of a trapdoor, allowing the justices to reach similarly anti-regulatory conclusions in the future without having to tackle those larger questions. In his opinion, for instance, Roberts cast suspicion on agency powers that, like many of the authorities the FTC is trying to reclaim, “had rarely been used in the preceding decades.” He also suggested regulators’ new interpretation of a statute may just be a “discovery” of a power that doesn’t truly exist. In addition, he put a target on rules that accomplish things Congress has declined — or been unable — to achieve.

It may be what the decision doesn’t say, however, that most threatens future regulations, said Vagle. The decision failed to lay out some very basic definitions — for instance, failing to include how much economic significance is too much and how specific lawmakers’ permission for regulation needs to be. With few hints at how the court might define those issues, Vagle said, the decision leaves a lot of room for the justices to invoke the major questions doctrine in the future and strike down regulations simply because they dislike the rules.

“[Roberts] says, in effect, ‘We know it when we see it,’” Vagle said. “It’s really in the eye of the beholder.”


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Illustration: Christopher T. Fong/Protocol

When the SEC accused a former Coinbase employee of insider trading last month, it specifically named nine cryptocurrencies as securities, potentially opening the door to regulation for the rest of the industry.

If a judge agrees with the SEC’s argument, many other similar tokens could be deemed securities — and the companies that trade them could be forced to be regulated as securities exchanges. When Ripple was sued by the SEC last year, for example, Coinbase chose to suspend trading the token rather than risk drawing scrutiny from federal regulators. In this case, however, Coinbase says the nine tokens – seven of which trade on Coinbase — aren’t securities.

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