The Federal Court Role in Judging New Regulations

In “Who’s Regulating the Regulators?: Federal agencies like the EPA shouldn’t be able to issue expensive new rules without external checks and balances,” (July 6, 2015), the Mercatus Center’s Jerry Ellig concludes:

The issue is not whether the EPA’s regulation is a good idea. Rather, it is unconscionable that federal agencies can issue regulations that cost billions of dollars without any serious consideration of alternatives before making their decisions. For this reason, a priority of regulatory reformers should be legislation that establishes standards for agency economic analysis of regulations and instructs courts to enforce those standards.

Ellig reviews the Supreme Court’s discussion and debate over new EPA regulations on power plants. The regulations were to reduce hazardous air pollutants, but at costs by $10 billion a year. And EPA at first claimed costs were irrelevant.

The EPA’s subsequent analysis accompanying the regulation estimated that it would cost power producers $9.6 billion annually, but the reduction in hazardous air pollutants would generate health benefits of only $4 million to $6 million annually. The analysis also estimated that the regulation would produce “ancillary benefits” from reductions in sulfur dioxide and particulate emissions – emissions not covered under the hazardous air pollutants legislation – worth $37 billion to $90 billion annually.

Note that the claimed cost benefits come from emissions not within the power of EPA to regulate under the legislation for reducing hazardous air pollutants.

A New York Times story on the Supreme Court’s decision is here, noting:

The two sides had very different understandings of the costs and benefits involved. Industry groups said the government had imposed annual costs of $9.6 billion to achieve about $6 million in benefits. The agency said the costs yielded tens of billions of dollars in benefits.

 A key argument for reforming the EPA and other federal regulatory agencies is that bureaucrats are now legislating, not just carrying out legislation passed by Congress. EPA legislated as it expand regulatory powers and controls beyond those listed in originating legislation.

The EPA and Obama Administration want to regulate carbon dioxide emissions under the Clean Air Act.  But carbon dioxide, CO2, was not considered a pollutant when the Clean Air Act was debated and passed by Congress. No one considered CO2 a pollutant, since it is needed by all trees, crops and all other plants. Increasing CO2 concentrations are believed to be improving crop yields and plant growth around the world.

Environmentalists see CO2 emissions as a cause of significant future global warming. Most everyone agrees increased CO2 from industrial activity has contributed to mild warming over the last century (though no additional warming has been detected by satellites since 1998 even as atmospheric CO2 levels have continued to rise.) For more on this discussion and debate, see Judith Curry’s Congressional testimony, and a Judith Curry post on the debate over global warming issues among pro-market scholars and scientists: “What would it take to convince you about global warming?“

I mention the debate over EPA regulations of CO2 emissions mainly as background for the Supreme Court debate over EPA powers.

New federal government powers to reduce CO2 emissions (whether a good or bad idea), should come from Congress, after extensive discussion and debate, then be signed by the President, or not, and then tested by the Supreme Court for Constitutionality, when litigation arrives. EPA acting on its own, without new Congressional legislation, invites the Federal Courts to intervene.

New and costly regulations on CO2 emissions, or perhaps a tax on CO2 emissions, should come from the legislative branch of government rather than the executive branch. The EPA is a politicized agency controlled by the President’s appointees, staff, and supporters.

The Supreme Court has a role in maintaining the separation of powers, and being critical of regulations from EPA that are novel and actually new legislation, rather than within established legislation and regulation.

This January 12, 2015 Forbes post by Cameron Smith describes a proposed reform: “REINS Act would require Congress and the President to affirm major federal rules with an economic impact of $100 million or more“:

Most Americans see little difference between a federal law passed by Congress and a rule issued by a federal agency: Both are legally enforced mandates handed down from Washington. But increasingly—federal rules—not legislation, are serving as the law in America.

Americans rightfully want to know how the administrative state is able to place such burdens in the face of congressional inaction. The Constitution is abundantly clear about which branch is responsible for crafting laws: “All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” Now, in many instances, congressional members conveniently shirk responsibility by simply telling Americans that the regulatory issues they face are the fault of the President or executive branch bureaucrats. These members fail to mention that it was Congress that delegated much of its power to the President over the last several decades.

Over time, the constant delegations of authority have created extremely powerful federal agencies able to effectively create law without further congressional authorization or accountability. Recent presidents have argued that they are simply using the full extent of their power to respond to the issues of the day. 

The EPA’s website explains new “Regulatory Initiatives” to set “common-sense approach” of “developing standards for greenhouse gas emissions.” But skeptics argue the EPA lacks statutory authority under the Clean Air Act to regulate a gas (CO2) that has nothing to do with clean air. Air with slightly more CO2 is just as clean and safe as air with less. But the EPA website explains its new and expanded agenda:

EPA is taking a common-sense approach to developing standards for greenhouse gas emissions from mobile and stationary sources under the Clean Air Act. Below are the key proposed or completed actions taken to implement Clean Air Act requirements for carbon pollution and other greenhouse gases.

This 2008 Heritage Foundation study is critical of EPA regulations to reduce CO2 emissions, “CO2-Emission Cuts: The Economic Costs of the EPA’s ANPR Regulations.”

Marlo Lewis of the Competitive Enterprise Institute is also critical: “How Unlawful Is EPA’s Clean Power Plan?” The Federal Courts opened the door to new EPA regulations in 2007.

Ever since Massachusetts v. EPA (April 2007), when the Supreme Court set the stage for EPA’s transformation into a Super Legislature dictating national policy on climate change, litigation to rein in the agency has generated more billable hours for lawyers than regulatory relief for their clients.

Consider Utility Air Regulatory Group v. EPA (June 2014), in which petitioners challenged EPA’s application of Clean Air Act (CAA) permitting requirements to stationary emitters of greenhouse gases. The absence of anything resembling congressional intent for EPA’s policy was breathtaking. Out of 692 bills containing the term “greenhouse gas” during 1990-2011, none specifically provided authority to apply CAA permitting requirements to greenhouse gas emitters. The only regulatory climate bill ever to pass a chamber of Congress — H.R. 2454, the Waxman-Markey cap-and-trade bill — explicitly exempted stationary sources from permitting requirements based on their greenhouse gas emissions. 

Students researching and debating the federal court reform topic can propose closing that door on the EPA.