The Supreme Court targets the regulatory state – expect it to grow anyway

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Recently, the Supreme Court limited the Environmental Protection Agency’s (EPA) ability to regulate greenhouse gas emissions from power plants. In a 6-3 decision, the court found the EPA cannot force electric utilities to close coal-fired power plants and shift to renewables.

Writing for the majority, Chief Justice John Roberts invoked “the major questions” doctrine, which says Congress must speak clearly when authorizing an agency’s action on significant issues.  Neither the EPA nor any other executive agency can adopt rules that are significant to the economy – unless Congress specifically authorized the rule. 

In this case, Congress, in The Clean Air Act – passed more than a half-century ago, well before climate change, did not give the EPA the authority to issue such sweeping carbon regulations on the energy sector. Roberts said the court was simply reluctant to interpret the ambiguous statutory text. Rather, the Court requires from any agency a “clear congressional authorization for the power it claims.” 

The Target

Climate advocates and policymakers quickly denounced the Court’s decision. Ginger Cassady, executive director of Rainforest Action Network, said “to deny the urgency and the stakes of the climate crisis is to condemn everyone alive today and generations to come to life in a sick and impoverished world.”  Nancy Pelosi labeled the court a “radical, pro-pollution Supreme Court” that “bowed to polluters who seek to poison the air our children breathe & the water they drink with impunity.”  House member Ro Khanna referenced the court’s sagging legitimacy and suggested it was time to term limit the justices.

Despite the harsh rhetoric, the Court’s target is not climate policies. It is the regulatory state. Yes, the decision slows Biden’s climate plans. But it does not take away state powers to shift toward green energy. And the Court’s ruling still allows the EPA to regulate power plants – the EPA just cannot force utilities to shift from coal to renewables.      

By directly invoking the major questions doctrine, the Court invites more challenges to other regulators – not just the EPA. The decision in fact lines up well with several previous cases that limited agency discretion.

Prior Decisions

For example, in Alabama Association of Realtors v HHS (2021), the Court deployed the major questions doctrine to block the Center for Disease Control’s nationwide eviction moratorium.  Recall the CDC issued the moratorium as a measure to prevent the transmission of COVID-19 across the country. The Court correctly ruled the CDC’s actions were of major national significance and therefore required a clear statutory basis. The CDC’s authority “to prevent the introduction, transmission, or spread of communicable diseases” does not imply a moratorium on evictions.   

Similarly, in the National Federation of Independent Business v. OSHA (2022) the Court blocked enforcement of the Occupational Safety and Health Administration (OSHA’s) COVID-19 vaccination and testing requirements on a significant portion of the national workforce.  The Court considered the national significance of the requirements and determined OSHA lacked clear ‘textual authority.

In each case, federal agencies did not have the authority to write the regulations because Congress had not given them express, unequivocal permission.

The Rise In Regulations

When Congress is clear, the implementation of laws is straightforward. Executive agencies write rules that reflect the law.  Later, Courts discern Congressional intent and assess whether the agency followed the text.        

However, what happens when factions in Congress disagree about the intent or interpretation of the law?  Or, what if the relevant law is ambiguous – Congress delegated the responsibility of rulemaking generally but did not properly specify its intent?  Or as is often the case today, Congress cannot agree to pass legislation?  

In these instances, agencies are tempted to use their discretion.  And that discretion is strongly influenced by the president. 

Given the historically tight margins in Congress – and the strong party polarization and widespread dysfunction – presidents increasingly turn to agency rulemaking to meet campaign goals and address emerging issues.

For example, the Reagan administration averaged only 20 economically significant regulations per year – defined as those rules that impacted at least $100 million in economic activity.  However, each of the next three administrations doubled that average. The Obama and Trump administrations then added another 20 per year, and now Biden topped them all with well over 60 economically significant regulations per year. These numbers do not include some of the most divisive regulations, including the increasingly popular tactic of overturning prior administration’s regulations.      

Given this trend, it’s not surprising that Courts have begun to push back against the growing power of the presidency. 

Bottom Line

Ultimately Congress bears the responsibility for confronting questions of national significance.  When it does, statutory language must be transparent. Executive agencies can then implement laws as Congress intended.  

If not, and Congress refuses to act, or passes ill-defined laws, expect presidents to encourage agencies to interpret laws in ways that promote their political interests. 

Why should a president confront a Congress unwilling to compromise, legislate, and delegate with purpose and clear intention?  Directing an agency to act on the president’s behalf appears to be the wiser path.  Court challenges will undoubtedly occur, and court decisions may curb the president’s powers and an agency’s discretion.  However, courts adjudicate only after an aggrieved party decides to pursue a legal remedy and then demonstrates standing.  In the meantime, presidents can act swiftly using agency rulemaking.  When judges do scrutinize the action, the President can attack the Court as “radical” and blame the opposition party.     

An adverse court decision certainly presents an obstacle, but it does not stop the president from taking immediate action.  And, in many instances, a Court challenge never arises.   

This is how presidents win second terms and drive an agenda. Their actions are aggressive and timely, and they defend the interests of key electoral constituencies.

Regardless of the party in power, and regardless of the Court’s recent discovery of the major questions doctrine, anticipate an increase in agency rulemaking and therefore an increase in the power of the presidency.        

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