Reining In the Agencies

 The Supreme Court saved a crucial decision for the last day of its term, ruling 6–3 in West Virginia v. Environmental Protection Agency that the Clean Air Act does not allow the EPA to move from regulating individual power plants to regulating regional emissions through its interpretation of the Clean Power Plan. The opinion, written by Chief Justice John Roberts, cited the major questions doctrine, according to which Congress must “speak clearly if it wishes to assign to an agency decisions of vast economic and political significance.”

“This decision properly keeps the EPA in its lane and rejects the agency’s efforts to usurp national energy policy from Congress,” Jones Day partner Yaakov Roth, who argued the case in front of the Supreme Court on behalf of the plaintiffs, told me. “It is a very important step toward political accountability and economic certainty” Indeed, the case has far-reaching implications for other agencies that could currently be exceeding their statutory remits. The Securities and Exchange Commission, for example, recently proposed requirements for companies to disclose their exposure to climate risk and to provide details about the climate effects of their operations. Meantime, the National Labor Relations Board is considering making franchise businesses such as McDonald’s accountable for the actions of local franchises. Such rules could find themselves on the wrong side of the Court’s approach, which found the EPA’s rulemaking to be an example of “agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”

The Clean Air Act allows the EPA to set maximum levels of new and existing emissions sources. However, the Clean Power Plan, proposed in 2015 under President Barack Obama, went further. If emissions exceeded the EPA’s requirements, a state, or group of states, would be required to shut down power plants or to install renewable energy sources. The plan was similar to the American Clean Energy and Security Act, introduced by Democratic congressmen Henry Waxman and Edward Markey in 2009, and the American Power Act, introduced by senators John Kerry and Joe Lieberman in 2010. Neither bill became law, despite sizeable Democratic majorities in both chambers.

Writing for the majority, Chief Justice Roberts argued that “EPA claimed to discover an unheralded power representing a transformative expansion of its regulatory authority in the vague language of a long-extant, but rarely used, statute designed as a gap filler. That discovery allowed it to adopt a regulatory program that Congress had conspicuously declined to enact itself.” The dissent, written by Justice Elena Kagan, parted ways on the grounds that “Congress . . . gives an expert agency the power to address issues—even significant ones—as and when they arise.” Given that climate change is such an issue, the dissent holds, the EPA has the authority to regulate carbon emissions and therefore reduce the environmental danger. But Justice Neil Gorsuch elaborated on the major-question doctrine in a concurring opinion, writing, “The framers believed that the power to make new laws regulating private conduct was a grave one that could, if not properly checked, pose a serious threat to individual liberty.”

Severe, government-imposed cuts in carbon emissions raise the cost of electricity and American-made goods. Under the Clean Power Plan, some states or groups of states would have had to meet EPA targets by ensuring plants cut emissions or by financing reductions in other ways, such as suppressing consumer demand or investing in more costly renewable energy. In any case, carbon emissions are declining naturally without the plan. Emissions of energy-related carbon dioxide declined by 14 percent from 2007 to 2019, according to the Energy Information Administration. Between 2014, when the Clean Power Plan was proposed, and 2019, two years after the Trump administration rescinded it, these emissions fell by 5 percent.

Cleaner air and efficient power generation are worthwhile goals. But so is the security that comes from the rule of law. The Supreme Court has just weighed in on that balance, and could weigh in further in the years ahead.

Diana Furchtgott-Roth, former acting assistant secretary for economic policy at the U.S. Treasury, is adjunct professor of economics at George Washington University.

https://www.city-journal.org/west-virginia-v-epa-ruling-analysis