SCOTUS Stifles EPA, House Hustles for Chevron Verdict

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Today’s Key Takeaway:  “The 5-4 ruling comes as the Supreme Court’s conservative majority has taken a more skeptical view of the discretion that administrative agencies should have on the rulemaking process, including regulations related to matters on climate and the environment.”   Chevron deference decision pending. (What the downfall of Chevron deference would mean for energy and climate regulations)

OHIO VS EPA DECISION: In the first of two consequential decisions with ramifications for environmental and energy policy this morning, the Supreme Court this blocked the Environmental Protection Agency’s “good neighbor” plan, which would have strictly limited ozone pollution from power plants and other industrial sources in 11 states, as well as air pollutants that the agency said can drift downwind into other states and cause additional harm.

Justices Sonia Sotomayor, Elena Kagan, Amy Coney Barrett, and Ketanji Brown Jackson dissented.

Why this is important: The 5-4 ruling comes as the Supreme Court’s conservative majority has taken a more skeptical view of the discretion that administrative agencies should have on the rulemaking process, including regulations related to matters on climate and the environment.

The backstory: In September 2023, Ohio, Indiana, and West Virginia filed an emergency request to the Supreme Court, arguing that the EPA had overstepped its authority in imposing the plan and that it imposed costly and ineffective burdens on their states.

Plaintiffs further argued that the EPA rule should not be enforceable because it relied on the assumption that all 23 states the rule would apply to would participate in the “good neighbor” plan. Read more from Breanne here. 

The fallout: Green groups were furious at the high court’s decision, stating the ruling “shows just how radical this court has become.” 

“The court is meddling with a rule that would prevent 1,300 Americans from dying prematurely every year from pollution that crosses state borders,” Charles Harper, Evergreen Action’s senior power sector policy lead, said in a written statement. “While we ultimately expect EPA to prevail in court, today’s stay order is a temporary step in the wrong direction.”

On the flipside: Fossil fuel groups cheered the ruling. The American Petroleum Institute released a statement in which Senior Vice President and General Counsel Ryan Meyers called the EPA rule “flawed” and said that the ruling “prevents the risk of electric power outages and crippling delays to industrial supply chains for now.” 

Read on for more from the court this morning, and for what is still to come…

ANOTHER MAJOR SCOTUS DECISIONS IMPLICATIONS FOR REGULATORS: The high court ruled this morning in another case with major implications for the EPA and other agencies, issuing a decision that limits the power of agencies to punish law violators via in-house proceedings. 

The case, SEC v. Jarkesy, involved a trader accused by the Securities and Exchange Committee of fraud whose case was adjudicated by an administrative law judge. The plaintiff said his 7th Amendment right to a jury trial was violated. 

The conservative majority ruled that the agency does not have the right to impose civil penalties without a jury trial. Read more on the decision from our Kaelan Deese here

What it means: The decision has implications for other agencies that use administrative law judges, such as the EPA and USDA, although the exact ramifications will have to be seen. The majority opinion steered clear of addressing other issues regarding the constitutional limits on ALJs. 

In a dissent that was co-signed by the two other liberals on the court, Sotomayor wrote that the decision would entail “chaos” for the government. 

For the agencies that rely on ALJs to resolve business, “all the majority can say is tough luck; get a new statute from Congress,” Sotomayor wrote. 

STILL TO COME – A CHEVRON DECISION: Still to come from SCOTUS is the highly anticipated case relating to Chevron deference. That could come tomorrow or next week. 

House Republicans game out response: A memo sent out Tuesday to members of the Republican Study Committee outlines the congressional implications of a  Supreme Court decision to scale back, or even overturn, Chevron deference. Republicans have been steadfast in their advocacy to overturn the doctrine, arguing that it blurs the line on a separation of powers between the branches, and gives agencies the ability to “over-regulate.” 

Notable quotable: “Chevron deference has given agencies the ability to regulate on matters where Congress is silent or ambiguous,” the memo reads. “Allowing the agencies to engage in rulemaking beyond Congress’s clear direction conflicts with Article I of the Constitution.” 

What their game plan is: If Chevron is weakened or overturned, House Republicans are proposing to reverse the doctrine completely through legislation – a bill from GOP Rep. Scott Fitzgerald, labeled the “Separation of Powers Act.” The bill would codify a post-Chevron doctrine by requiring federal courts to conduct a “de novo review” of any agency action.

House committees are also being ordered to review the Biden administration’s regulations and “highlight any that should be considered for judicial review post-Chevron.” 

“House conservative should seek opportunities to advocate for Congress to repeal or defund such regulations,” the memo reads.

The memo also suggests a number of bills that would enact bold regulatory reforms over the executive branch and further clamp down on agencies’ powers. For example, a bill from GOP Rep. Kat Cammack, which had passed the House last year, would require Congress to approve any regulations that have an annual economic impact of $100 million or more. 

Reality check: Many of these bills would be, or are already, stalled in the Democratic Senate. Any chance of movement would be predicated on Republicans maintaining the House majority and winning back the Senate and White House. 

From the Washington Examiner Daily on Energy, June 27, 2024