EPA High Court ruling opens new field of litigation

At the end of June, the Supreme Court handed down what could prove to be its most significant business law decision in many years.

The decision was the occasion for dramatic headlines. “Supreme Court Limits EPA’s Ability to Limit Power Plant Emissions,” The New York Times said. The Los Angeles Times headlined its story: “Supreme Court rules for coal-producing states limit EPA’s power to fight climate change.

Such headlines were tantamount to describing the Apollo 11 lunar launch as a successful test of the Saturn V rocket. They weren’t wrong, exactly, but they missed the point.

The case, West Virginia v. Environmental Protection Agency, indeed concerned the legality of air quality regulations issued by the Obama administration. But the decision had no effect on the regulations themselves, since they never had the force of law.

The Supreme Court blocked them from taking effect in 2016. Then the Trump administration repealed them. The Biden administration has done nothing to revive them. On the contrary, he announced that he would begin a new rule-making process.

Additionally, the power generation industry has undergone a transformation since 2016. According to Justice Elena Kagan’s dissent, “market forces alone have brought the power industry together. [the regulations’] national emissions target. The regulations have become, “in practice, obsolete”.

Which should make us wonder why the Supreme Court bothered to rule on their validity. Nor was it a flippant effort: the court’s decision, which includes three separate opinions, spans 83 typed pages. Kagan accused the majority of issuing an advisory opinion, that is, issuing an abstract opinion on the law instead of deciding a real case. The Constitution prohibits the court from doing so.

The majority opinion of Chief Justice John Roberts took several pages to assert that the case was not moot. His argument, summarized, is that the Biden administration could change its mind.

But if the administration tried to bring the old regulations back from the dead, then the courts could rule on their validity. So Roberts’ painstaking explanation doesn’t really tell us why the judges have reached out to decide the case now.

I think these titles provide a clue. I think the judges chose a burning issue because they expected media coverage to focus on this issue, with all its culture war salience, distracting from the court’s assertion of a new power of control of the executive.

The opinion affects the whole broad area of ​​legal endeavor known as administrative law, which sounds boring (and is seen as such by many lawyers) but impacts all of our lives.

All federal agencies are subject to administrative law as they determine the safety of airliners and motor vehicles, the resilience of the electrical grid and gas pipelines, the purity of food and water, the safety and efficiency of pharmaceuticals, the consequences for depositors when a bank fails, and so on.

In its new case, the court establishes a two-tier system to assess the validity of regulations issued by the entire alphabet soup of federal agencies. In ordinary cases, the courts will continue to employ the ordinary canons of statutory interpretation to determine whether the agency has complied with the congressional mandate.

But in “extraordinary cases” different legal rules apply. A case is extraordinary if it has “economic and political significance”. Once a judge declares an “extraordinary” case, all disputed settlements are presumed invalid, shifting the burden of persuasion to the agency. “The agency … must indicate ‘clear congressional authorization’ for the power it claims.”

But “clear” is no more an applicable legal standard than “extraordinary” or “significant”. The Court’s opinion gives no practical guidance as to how judges are expected to apply such limp standards in the context of a practical challenge to the validity of a settlement.

All of this uncertainty, of course, trickles down to companies facing a regulatory regime that may or may not set the law governing their industry.

Given the extreme vagueness of the new standard, it is difficult to predict exactly how this sweeping change in the law will play out. It is even possible that some judges let their personal political views influence their assessment of the “political significance” of a contested settlement.

A good guess is that over the next few years, the various federal appeals courts will adopt inconsistent guidelines for determining when a case qualifies as extraordinary. Eventually, the Supreme Court will tell us which, if any, guessed correctly, and a new round of litigation will begin.

Meanwhile, for attorneys representing companies with cases before federal regulators, a West Virginia v. EPA should become routine. A whole new field of litigation has suddenly opened up.

Joel Jacobsen is an author who retired in 2015 after a 29-year legal career. If there are topics you would like to see covered in future columns, please write to him at [email protected].