The Northern District of Texas has received a lot of attention lately. But one recent ruling out of that court seems to be getting little notice: Utah v. Walsh. The decision is admittedly dry—it rejected a challenge brought by 26 states’ attorneys general to the Department of Labor’s 2022 Investment Duties Rule, which clarified the duties of fiduciaries to Employment Retirement Income Security Act (ERISA) benefit plans concerning the selection of investments. But it is noteworthy for at least one reason: Judge Matthew Kacsmaryk crisply and correctly rejected the plaintiffs’ farfetched attempt to rely on the major questions doctrine.
As many readers know, since the Supreme Court expressly used the phrase “major questions doctrine” for the first time in West Virginia v. EPA last year, references to the doctrine in court filings have exploded. It is now so commonplace in challenges to agency actions that I have heard several people quip that it would be malpractice for an attorney not to invoke the doctrine when challenging any agency action. But the vast majority of these challengers do only that—invoke the doctrine—while providing little else in the way of analysis, much less analysis that tracks the Supreme Court’s reasoning in West Virginia or its other recent cases relying on the doctrine. It seems many challengers view the major questions doctrine as akin to an incantation—something that if uttered enough times will ensure a favorable ruling.
Unfortunately, many courts are invoking the doctrine in similarly undisciplined ways. As Natasha Brunstein pointed out earlier this year, lower courts are all over the place in their applications of the doctrine. Many lower courts, she noted, incorrectly read West Virginia “as providing vast discretion in applying the doctrine,” often in ways “that at least appear to align with the partisan preferences of the judge’s appointing president.” Others have made similar observations.
So it was refreshing to see Judge Kacsmaryk buck the trend. In Walsh, the plaintiffs argued in their motion for a preliminary injunction that the 2022 Investment Duties Rule “fails under the major questions doctrine” primarily because the rule applied (as many if not most ERISA-related rules do) to trillions of dollars of retirement savings. Ergo, they argued, the rule was of such “vast economic and political significance” that it triggered the major questions doctrine. The plaintiffs went so far as to argue that “past practice . . . does nothing to change the primary considerations of ‘vast economic and political significance.’” In other words, economic significance sufficed to trigger the major questions doctrine even though the rule marked a return to the status quo that had long existed before the previous administration.
As Brunstein and I explained in an article published after West Virginia but before Biden v. Nebraska, the plaintiffs’ arguments reflect a fundamental misunderstanding of the doctrine. Although the Supreme Court often mentions economic and political significance in its major questions opinions, neither consideration has sufficed on its own to trigger the doctrine. (Others have noted this fact, too.) The Supreme Court has instead also looked to whether the agency action was “unheralded” or “transformative,” i.e., it has also looked to the history and the breadth of the authority asserted. Nebraska is in accord.
True, the Nebraska Court repeatedly referenced the economic significance of the action at issue, which canceled $430 billion of federal student-loan balances. But in the part of its opinion devoted to the major questions doctrine, the Court did not just cite this large dollar figure and call it a day.
Rather, quoting West Virginia, the Court explained that, “[g]iven ‘the history and the breadth of the authority that [the agency] ha[d] asserted, and the economic and political significance of that assertion,’ . . . there was ‘reason to hesitate before concluding that Congress meant to confer such authority.’” In the next paragraph, the Court first addressed history, noting the Secretary of Education “ha[d] never previously claimed powers of this magnitude.” It proceeded from there to breadth, noting that, “[u]nder the Government’s reading of the” statute, “the Secretary would enjoy virtually unlimited power to rewrite the Education Act.” It next addressed economic significance, explaining the student-loan plan would be “ten times the ‘economic impact’ that [it] found significant in” Alabama Association of Realtors v. HHS. And it concluded by referencing indicators of political significance, including comparable proposals “considered by Congress.” In short, and as Brunstein and I noted was also true in West Virginia, Nebraska’s analysis suggests a conjunctive set of factors must be present to trigger the major questions doctrine—history and breadth and economic and political significance. Thus, if, for example, history or breadth does not provide a “reason to hesitate,” the doctrine does not apply.
Judge Kacsmaryk appears to have carefully read West Virginia, which, as just noted, follows the same reasoning as Nebraska. Early in his opinion, he explained that, “[f]or nearly three decades, DOL has posited that ERISA’s obligations do not forbid consideration of collateral or non-financial benefits in the selection of competing investments that serve the plan’s economic interests equally.” And in his footnote summarily dispensing with the major questions doctrine, he drew on this history, noting that the 2022 Investment Duties Rule at issue was analogous to previous ones in this key respect, including one in 2008 that similarly permitted plan fiduciaries to rely on non-financial factors in certain similar circumstances. “For these reasons,” Judge Kacsmaryk, quoting West Virginia, concluded that the major questions doctrine did not apply to the rule because “the ‘history and the breadth of the authority that [the agency] has asserted’ does not provide a ‘reason to hesitate before concluding that Congress’ meant to confer such authority.” He said nothing about economic or political significance. Rather, he correctly concluded that the major questions doctrine did not apply because, regardless of what one may say about the rule’s economic significance, it was analogous to past exercises of the agency’s authority.
Hopefully other lower courts will follow suit and apply the major questions doctrine only as set forth in the Supreme Court’s opinions (as Judge Pitman just did in another case), not as poorly summarized by litigants looking for an easy victory. Doing so should have the result the Supreme Court intended of applying the doctrine only in “extraordinary cases,” not in every run-of-the-mill challenge to federal agency action—even if that challenge is filed in the Northern District of Texas.
Donald L. R. Goodson is a Senior Attorney at The Institute for Policy Integrity at New York University School of Law. This article does not purport to represent the views, if any, of New York University.