The EPA Before the Supreme Court...Again

This past week, the United States heard oral argument in a case challenging the EPA’s authority to regulate carbon dioxide emissions from stationary sources- in this case, power plants.  Much has been written about these regulations as they represent the Obama administration’s celebrated “war on coal.”  The purpose of the regulations is to decrease the amount of these emissions in order to lessen the impact of global climate change.

The History:  In 2007, the Supreme Court ruled that the EPA had the authority to regulate greenhouse gases from moving sources, mainly motor vehicles, under the Clean Air Act (CAA).  That case, decided 5-4 with Justice Kennedy casting the deciding vote, was Massachusetts vs. EPA.  Massachusetts had sought to force the EPA to regulate in this area, but the lower courts ruled that the EPA may not have that authority under the CAA.  The Supreme Court decided otherwise noting that although greenhouse gases were not mentioned as a pollutant in the original CAA or any of its amending laws over the years, there were other cases where they had done so.  Probably the best example was that of their making regulations regarding fluorocarbons which were alleged to damage the ozone layer of the atmosphere.

However, the EPA cannot just make up regulations regarding just any environmental pollutant or chemical.  First, they must determine whether it is dangerous to the environment or public health through an “endangerment finding.”  Once this is completed, they then must determine what a safe level is (if any) and then tailor the resulting regulations to create the most benefit with the least amount of harm although there is no cost/benefit analysis in envoronmental regulation.  This is called the “tailoring rule” which mandates that the regulation be narrowly tailored to meet the requirements.

Once it was determined the EPA had the authority, under Obama they declared an endangerment finding noting that increased carbon dioxide emissions from vehicles had an effect on regional environments by increasing smog in the case of vehicles.  Furthermore, by stretching the definition of “public health” beyond the vernacular and stating that the Al Gore-like apocalyptic version of events would be a threat to public health, they then moved onto stationary sources.  In fact, usually once this finding is issued, the EPA starts with the lower-level sources (vehicles) before moving onto bigger sources.  This is called the “triggering mechanism.”

To Recap:  Once the EPA published the regulations regarding stationary sources, several industries, trade councils and other parties brought suit against the EPA challenging their authority to do so.  In fact, the case heard this past week was actually a consolidated case involving eight petitioners positing various theories as to why the EPA exceeded their authority under the CAA.  As will be explained later, this could be a potential downfall of their overall case.  Suffice to say, all these petitioners lost their cases in the lower appellate courts.

The Supreme Court, however, granted review regarding only one issue: the overall authority of the EPA to prescribe certain regulatory limits on the emissions of carbon dioxide that differed from those written into the law by Congress with regards to “other air pollutants.”  By streamlining the many questions into basically one, they adopted the key question which the government asked to be reviewed by the Court.  In a sense, this is a clue as to their general thinking in resolving the case.

The Oral Argument:  It became clear early in the oral argument that this case would be decided 5-4 (or possibly 6-3 at best).  On the side of the EPA were the usual liberal Justices- Ginsburg, Sotomayor, Kagan, and Breyer.  On the side of industry was Scalia, Alito, Thomas (by proxy),  and probably Roberts.  As is usual in 5-4 cases, Kennedy holds the key and his performance during oral argument gives one the impression his mind is made up and that only the means of getting to the desired result may be the gist of the resolution in this case.

While Ginsburg, Sotomayor and Kagan led the questioning on the petitioners, Roberts reminded everyone that he was in the dissent in the Massachusetts case and that he may be bound by stare decisis.  Still, he left one with the impression that in that case the EPA may have been given a grant by the Supreme Court to exceed their authority without Congressional “approval.”  For example, as was noted by Alito and him, in the case of “other pollutants” not specifically written into the law like fluorocarbons, Congress later did include them through subsequent amendments to the CAA.  In the case of carbon dioxide emissions, no such grant of congressional approval is present and Congress can at any time grant the EPA that power.

When the government presented their case, it was Alito who posed the toughest questioning as to where the EPA finds in the CAA the right to rewrite established thresholds.  Kennedy then, possibly in a nod to Roberts, asked where at any time in Supreme Court history the Court granted any regulatory agency such power.  The best Solicitor General Donald Verrilli could do was cite an unrelated case involving the FDA and nicotine.  Alito and Scalia noted the unambiguous huge differences between that case and the present one.

A lot of the oral argument came down to some arcane language and parts of the CAA like “ambient air quality standards” which are usually applied locally.  In the case of greenhouse gases, there are no “local” effects per se of their emissions as they are diffused throughout the world’s atmosphere which supposedly leads to the calamities of the global warming crowd.  In fact, Verrilli tried to cite the examples of localized flooding and droughts that would be an inevitability should these regulations not go into effect.

On rebuttal, the petitioners were questioned about how far the decision, if in their favor, they should go.  That question came from Kennedy.  This left the impression that he may be willing to strike these particular regulations promulgated under this particular section of the EPA, but not greenhouse gas regulation in general.  Put another way, the EPA has the right to make these regulations; they just used the incorrect process.  As Verrilli said on his side, there other parts of the CAA that would apply.  As the petitioners said on their side, they are not disputing global climate change per se, or the “science” behind it.

Analysis:  There is a fairly clear history here of deference to regulatory agencies.  This is the toughest part of the case to get beyond as the liberal Justices tried to illustrate.  The conservatives were left to convince the others that it was (1) done incorrectly, (2) too broadly, or (3) without a subsequent express congressional stamp of approval.  Roberts focused on (2) above noting that the regulations were the difference between regulating 83% versus 86% of the alleged problem.  That extra 3% would regulate apartment buildings and college football games.  Lacking that, he seemed to use option (1) as a back-up to strike the regulations.  Alito and Scalia focused on option (3) citing past precedent in this area, thwarting the government’s attempts to find a broad rationale and focusing on the explicit wording of the CAA as a guide.   Should Kennedy side with the conservatives in this case in an effort to uphold the basic premises of the Massachusetts decision without upsetting the concept of “triggering mechanisms” and such, it will most likely be under option (1).  In short, should Kennedy side with the conservatives, the EPA will go back to the drawing board and the decision would likely delay the process a few years.  Potentially damaging for the petitioners here is a point made by Kagan: why should they side with the petitioners who could not coordinate their challenges thus resulting in the consolidation of eight cases?  Counsel noted the problem and his particular difficulties further stating that he was arguing on the question presented by the Court using perhaps the most moderate position possible.

And this is the key: a few years.  These regulations were promulgated by the Obama administration which is using regulatory agencies to accomplish what he cannot do legislatively.  In 2011, at least three bills passed the US House denying the EPA the right to regulate greenhouse gases.  At least three similar bills or amendments were offered in the Senate doing the same.  All three bills in the House passed with varying degrees of bipartisan support.  All three Senate bills are tied up or died in committee.  All six bills languished in the Democratic-controlled Senate in what amounted to a stare-off between the two sides with the EPA finally acting.  Verrilli said the EPA had to act given congressional delay here and the supposed dire effects of climate change should Congress not act.

There is a false narrative that the Roberts Court is pro-business and, by extension, anti-environmental.  However, several academic studies have failed to empirically confirm these perceptions.  While business, for example, has had a few high-profile victories, they have also suffered some stinging defeats.  Most analysis indicates that although they are not pro-business nor anti-environmental, the Roberts Court does tend to be pro-government or state interest.  Unfortunately, the EPA is part of “the government.”  And while it is true that the EPA itself has suffered some serious defeats under Roberts, on balance it more a 50/50 proposition.

My educated guess is that this case will end up in a 5-4 decision with Kennedy the swing vote.  If Kennedy sides with the conservatives and says the EPA over-reached here, it will likely simply delay everything.  Remember it took the EPA more than three years to come up with these regulations.  Starting from scratch using other parts of the CAA to justify the regulations- a view some expressed including the government- may provide just enough time to get a more anti-EPA Congress and President.  Conversely, should Kennedy side with the liberals, then the wording of the opinion and the appeal to a 34-year history of “triggering mechanisms” and such coupled with a reverence for precedent in this area has about a 40% of pulling Roberts into the majority making it a 6-3 decision.  However, I doubt that since Roberts noted his inclusion in the dissent in the Massachusetts case and it is doubtful his judicial philosophy changed much in seven years.

In either case, it is incumbent upon the electorate to become involved politically here.  The best and most long-lasting way to reign in the EPA is by voting in legislators who will do so.  Besides the IRS, the EPA is one of the strongest government regulatory agencies in business with the most potential to wreak economic damage on a large scale in the shortest period of time.  This way, industry and the American economy and everyone who pays an electric bill will not have to wait on a Supreme Court decision to know their fate.