•  
  •  
 
Brooklyn Law Review

Abstract

In West Virginia v. EPA, the Supreme Court elevated the major questions doctrine to new heights by reframing it as a substantive canon and clear statement rule rooted in the separation of powers. The academic response has missed two unanswered questions that will determine the extent of the doctrine’s domain. First, how will the Court apply the doctrine to a range of different regulatory schemes? The doctrine has so far only been applied to nationwide legislative rules that are both (1) economically or politically significant and (2) transformative. It is unclear whether the doctrine applies to alternative modes of regulation like judicial enforcement actions (agencies’ attempts to enforce the law case by case in federal court), Second, may the major questions doctrine oust or require reconsideration of judicial precedents? These problems will arise when agencies or courts reach “major” results or decisions by applying flexible judicial standards. These are not idle questions. Both will impact a range of agencies. To pick a pressing example, both questions are implicated by arguments that the judiciary should apply the major questions doctrine to the Securities and Exchange Commission’s efforts to claim jurisdiction over crypto assets. For years, the SEC has brought enforcement actions on the premise that crypto assets are “securities.” This trend continues a typical pattern. Since the 1940s, the SEC has avoided defining “investment contract”—one type of asset that statutes deem securities—through rulemaking, instead relying on the Supreme Court’s test from SEC v. W.J. Howey Co. For decades, the SEC and the judiciary have decided whether contracts are investment contracts based on the lines established by Howey. Despite the tenure of this mode of regulation, some have asserted that the SEC’s enforcement actions flout the major questions doctrine. To exemplify the boundaries of the major questions doctrine, this article shows that calls for the courts to apply it against the SEC here are ill-conceived. The SEC’s critics are exploiting the major questions doctrine’s hazy edges in a move that we call “doctrinal drift.” This article shows that the doctrine (1) is inapplicable to judicial enforcement actions brought before Article III courts and (2) cannot displace or constrain prior judicial precedent like Howey. The major questions doctrine is inapplicable because the SEC is not doing anything “extraordinary” in its enforcement actions and the alternatives highlighted by the SEC’s antagonists would be more “major.” By holding that the major questions doctrine is inapplicable along these lines, the courts can stem calls for doctrinal drift and maintain the heartland of the major questions doctrine’s domain.

Download

Share

COinS