Predictable Fault-Lines in EPA’s Green House Gas Case: Is a 5-4 Decision in the Works?

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.

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About Luke Wake

Luke A. Wake is a senior staff attorney at the NFIB Small Business Legal Center. Wake has particular expertise on environmental and land use issues, and has worked on numerous other constitutional issues and matters of importance to small business owners. He is an ardent defender of private property rights, which he believes are essential to the free enterprise system and the foundation of American liberty. As a strong advocate of individual rights and economic liberties, he has built his career defending small business interests. Since joining the NFIB Legal Center, Wake has focused on a whole host of issues, from employment law matters to regulatory compliance. In addition to serving as a resource for small business owners, Wake remains committed to the Legal Center’s pledge to ensure that the voice of small business is heard in the nation’s courts. He is also working to advance small business interests in law review articles, including publications in the Berkeley Journal of Law & Ecology, the Texas Journal of Law and Politics, and Competition Magazine. See R.S. Radford & Luke A. Wake, Deciphering and Extrapolating: Searching for Sense in Penn Central, 38 Ecology L.Q. 731, 746-747 (2011); Damien M. Schiff, Luke A. Wake, Leveling the Playing Field in David v. Goliath: Remedies to Agency Overreach, 17 Tex. L. Rev. & Pol. 97 (2012); Jarod M. Bona and Luke A. Wake, The Market-Participant Exception to State-Action Immunity From Antitrust Liability, J. of Antitrust and Unfair Competition of the State Bar of Ca., Vol. 23, No. 1, 156 (Spring 2014); James S. Burling and Luke A. Wake, Takings and Torts: The Role of Intention and Foreseeability in Assessing Takings Damages, in Condemnation 101: Making the Complex Simple in Eminent Domain 449-51 (ALI-ABA Committee on Continuing Professional Education eds. 2011). Before joining the Legal Center’s team, Wake completed a prestigious two-year fellowship as an attorney in the Pacific Legal Foundation’s (PLF) College of Public Interest Law. Wake is a graduate of Case Western Reserve University School of Law in Cleveland Ohio. He is a member of the California Bar, the District of Columbia Bar, and the U.S. Supreme Court Bar. He completed his undergraduate studies at Elon University in North Carolina in 2006 where he focused on political theory and corporate communications.
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