This week, in the U.S. Supreme Court, NFIB and various other industry groups took the Environmental Protection Agency (EPA) to task over its decision to begin regulating greenhouse gas emissions (GHGs) from stationary sources (i.e. buildings, and standing structures). Although the agency seeks to justify its GHG regulations under the Clean Air Act (CAA), we maintain that Congress never authorized EPA to regulate GHGs in this manner. In previous posts I’ve outlined the basic arguments, and explained the problem with EPA’s boot-strapping rationale.
The big picture problem with EPA’s argument is that it would allow federal agencies to essentially rewrite statutes as they like, and in a manner that would allow them to regulate subjects that Congress never intended. That would mean carte blanche regulatory power for the agencies, and the prospect of unfettered regulation for the rest of us. Of course, that is a concern for small business owners who are already struggling to deal with an over-regulation problem in America.
But, the issue at hand—regulation of GHGs—is of immediate concern to the small business community. Prior to the argument, NFIB issued a statement emphasizing the importance of this case for small business. As Karen Harned, Executive Director of the NFIB Small Business Legal Center explains: “For the small business community complex environmental regulations, like the CAA, only create new burdens. These burdens come from new federal permitting requirements, higher fuel costs, restrictions on fuel choices and energy use, higher electricity costs, and requirements for installation of new energy efficient equipment. And if [EPA’s] rule is allowed to stand, small business owners such as ranchers, farmers, manufacturers, restaurant owners, and others will be subject to even more paperwork, oversight and big time fines.”
Perhaps not surprisingly, the Court offered only mixed signals as to how the case will be decided. As one might well expect, the liberal wing of the court seemed inclined to affirm the D.C. Circuit’s decision, which upheld EPA’s GHG regulation of stationary sources last year. Justice Kagan went so far as to suggest that EPA’s approach to GHG regulations “should be [viewed as] the apex of Chevron deference.” This refers to the so-called “Chevron doctrine,” which holds that the courts must generally defer to an agency’s interpretation of its own regulations because the agency has special expertise.
But, the more conservative wing of the court was much more skeptical—perhaps a sign that there may be enough votes to strike-down EPA’s GHG regulations. That is what NFIB thinks should happen because agencies should not have deference to rewrite statutes. As NFIB argued, along with the other industry groups in this case, the first rule of the Chevron doctrine is that an agency should only get deference where its interpretation is consistent with the actual text of the statute conferring its authority. And this is ultimately EPA’s problem here.
Justices Ailito seemed to be among those most skeptical of EPA’s position. He noted at one point that EPA’s arguments seem to be in tension with each other. And several of the justices seemed concerned about the principles—or lack thereof—guiding EPA’s approach to GHG regulation. But, as always, it is reading tea leafs when trying to count votes in the Supreme Court. For now, we will keep our fingers crossed. But, conventional wisdom would be that this is likely to be a 5-4 decision—with Justice Kennedy being the crucial fifth vote.