At the end of June, the Supreme Court delivered what may prove its most consequential business law decision for many years.
The decision was the occasion for dramatic headlines. “Supreme Court Limits EPA’s Ability to Restrict Power Plant Emissions,” said The New York Times. The Los Angeles Times headlined its story: “Supreme Court rules for coal-producing states, limits EPA’s power to fight climate change.”
Such headlines were the equivalent of describing the Apollo 11 moonshot as a successful test of the Saturn V rocket. They weren’t wrong, exactly, but they missed the main point.
The case, West Virginia v. Environmental Protection Agency, was indeed concerned with the legality of clean-air regulations issued by the Obama administration. But the decision had no effect on the regulations themselves, since they never had any legal force.
The Supreme Court stopped them from going into effect in 2016. Then the Trump administration repealed them. The Biden administration has made no move to revive them. On the contrary, it announced that it would commence a new rulemaking process.
Moreover, the power generation industry has undergone a transformation since 2016. According to Justice Elena Kagan’s dissent, “market forces alone caused the power industry to meet [the regulations’] nationwide emissions target.” The regulations have become, “as a practical matter, obsolete.”
Which ought to make us ask why the Supreme Court took the trouble to rule on their validity. It wasn’t a casual effort, either: The court’s decision, which includes three separate opinions, sprawls over 83 typeset pages. Kagan accused the majority of issuing an advisory opinion, that is, opining abstractly about the law as opposed to deciding an actual case. The Constitution prohibits the court from doing so.
The majority opinion by Chief Justice John Roberts took several pages to argue that the case wasn’t moot. His point, boiled down, is that the Biden administration could change its mind.
But if the administration tried to bring the old regulations back from the dead, courts could rule on their validity then. So Roberts’ labored explanation doesn’t really tell us why the justices reached out to decide the case now.
I think those headlines provide a clue. I think the justices chose a hot-button issue because they anticipated the news coverage would focus on that issue, with all its culture war salience, distracting attention from the court’s assertion of a new power to control the executive branch.
The opinion affects the entire vast field of legal endeavor known as administrative law, which sounds dull (and is regarded that way by many lawyers) but impacts all 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 natural gas pipelines, the purity of food and water, the safety and effectiveness of pharmaceuticals, the consequences to depositors when a bank fails, and on and on.
In its new case, the court establishes a two-tier system for evaluating the validity of regulations issued by the entire alphabet soup of federal agencies. In ordinary cases, courts will continue to employ the ordinary canons of statutory construction to determine if the agency complied with Congress’s mandate.
But in “extraordinary cases,” different legal rules apply. A case is extraordinary if it has “economic and political significance.” Once a judge declares a case “extraordinary,” all challenged regulations are presumed invalid, shifting the burden of persuasion to the agency. “The agency … must point to ‘clear congressional authorization’ for the power it claims.”
But “clear” is no more a workable legal standard than “extraordinary” or “significant.” The court’s opinion gives no practical guidance as to how judges are supposed to apply such mushy standards in the context of a concrete challenge to a regulation’s validity.
All that uncertainty, of course, filters down to businesses confronted with a regulatory regime that may, or may not, establish the law governing their industry.
Given the extreme vagueness of the new standard, it’s difficult to predict exactly how this drastic change in the law will play out. It’s even possible that some judges might allow their personal political views to color their evaluation of the “political significance” of a challenged regulation.
A good guess is that, over the course of the coming years, the various federal courts of appeals 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 cycle of litigation will commence.
In the meantime, for lawyers representing companies with business before federal regulatory agencies, a West Virginia v. EPA analysis should become routine. An entire new field of litigation has suddenly opened up.
Joel Jacobsen is an author who in 2015 retired from a 29-year legal career. If there are topics you would like to see covered in future columns, please write him at legal.column.tips@gmail.com.
