In a spirit similar to that of recent great posts in this forum, this blog post suggests yet another way agencies can preemptively insulate certain rules from Major Questions Doctrine (MQD) challenges. In particular, we focus on how overlapping federal, state and international regulatory regimes may reduce the incremental costs of rulemakings, and therefore weigh against a finding of “economic significance” in the MQD context—as, for example, in the case of the Federal Acquisition Regulatory (FAR) Council’s forthcoming rule on federal contractor climate emissions and risk disclosure. 

In the nearly two years since the Supreme Court upended administrative law with its formal introduction of the MQD in West Virginia, federal agencies, scholars, and advocates have been coming up with ways to shore up new regulations against potentially-heightened scrutiny. Often these recommendations come in the form of particular analyses that an agency could include in a regulatory preamble that rebuts claims that a regulation is novel, transformative, economically significant, or any of the Court’s other supposed markers of “majorness.” For example, alongside the Institute for Policy Integrity, our organization urged the Environmental Protection Agency (EPA) to include a detailed accounting of “regulatory antecedents” in its final clean car rule to help rebut claims that it was a “novel” or “unheralded” agency action; as Max recently detailed, the EPA thoroughly did so in its final regulation.

The FAR Council will soon release its final rule requiring certain federal contractors to inventory their greenhouse gas emissions, disclose climate-related risks, and set science-based targets for emissions reductions. Already, industry-aligned commenters have suggested that the rule should be subject to MQD scrutiny, and therefore ought to be struck down if it lacks “clear congressional authority” in statutory text.  

Alongside suggested ways that the FAR Council should rebut claims of novelty and transformativeness, our two comments to the FAR Council hone in on how the final regulation is not economically significant enough to raise a major question. 

In a recently submitted supplemental comment, we note that the proposed rule’s costs may be overestimated, due to developments that post-date the publication of the proposed rule. (Of course, as our initial comment documented, even the initial estimated costs are orders of magnitude lower than those of rules the Supreme Court has invalidated under the MQD.) Since the proposal was published, the European Union, the Securities and Exchange Commission (SEC), and the State of California have enacted or announced that they will enact policies that contain requirements for parties to inventory their emissions and, in some cases, set science-based targets similar to those required by the Proposed Rule. The emergence of these distinct emissions accounting and disclosure standards may well reduce the incremental implementation cost of the Proposed Rule’s requirements because regulated entities may already be subject to similar or identical requirements. 

As the SEC noted in the preamble to its own final rule on emissions disclosure, duplicated requirements could reduce the additional burden that the FAR Council rule creates for regulated entities by decreasing, for example, their “incremental information gathering costs” to the extent that there is overlap in the pieces of information requested by each governmental entity. Additionally, one of the California laws permits companies to satisfy state disclosure requirements even if the disclosure offered to California is prepared in a manner required by a different law or regulation. So even if the precise form of disclosures varied under the Proposed Rule, an entity subject to both regimes would not need to expend resources meeting two distinct standard processes. Taken together, such overlapping requirements on certain federal contractors could reduce the Proposed Rule’s overall economic impact and therefore weigh against any finding of “majorness.”

These examples in the FAR Council and SEC contexts help illustrate a broader point: where appropriate, agencies should consider including in their benefits-cost analyses a discussion of regulatory synergies (and, in some cases, pre-existing trends in the market) that might reduce the incremental economic impact of particular rules. This is yet another tool that agencies should keep in mind as they navigate an uncertain legal landscape.

Reed Shaw is a Policy Counsel at Governing for Impact.