Climate Change, the Sequel: How the Supreme Court Created Free-Form Government

Having been a tad remiss in my blogging obligations, I’ll try to compensate by letting patient readers in on an elaborate political joke, involving the planet and the U.S. economy. Getting the joke demands familiarity with messy statutes and a keen appreciation of institutional incentives. That’s why we Washingtonians are rich and you people are a laugh a minute.

(Disclosures: I provided advice and assistance on some on the briefs discussed in this post, and I serve on the Board of the Competitive Enterprise Institute.)

The Supreme Court Acts

In Massachusetts v. EPA (2007), the Supreme Court held that carbon dioxide and other greenhouse gases fit within the “capacious” definition of “air pollutants” of the Clean Air Act. It also held that there wouldn’t be anything “counterintuitive” about regulating GHG emissions from automobiles. That brilliant ruling was bound to cause a mess. The CAA was built for conventional pollutants—the stuff you breathe in, not out; the stuff that fouls up the local air; not the global climate. Try to make it work for GHGs: it’s free-form improvisation, 24/7. Predictably, the problem has returned to the Court. Petitioners’ opening briefs (there are six of them) and supporting amicus briefs are here.

On remand after Mass v. EPA, EPA (1) issued an “endangerment finding,” saying that GHGs are about to wreck the planet, and (2) a rule imposing GHG emission standards for automobiles. It said (3) that GHG regulation under one part of the act (mobile sources) “triggers” regulation under other parts of the act, including stationary sources. That includes the so-called “PSD” program. Created by federal courts and later written into the CAA by Congress, PSD is the single most prescriptive command-and-control program in the entire CAA. Basically, every covered “source” needs a permit, which in turn requires application of the “best available control technology” (BACT) for every piece of equipment, from boilers to light bulbs.

By its terms, the PSD program applies only to “major” sources that (could) emit more than 250 tpy (tons per year) of some pollutant. With respect to conventional pollutants, that means a few thousand big factories, refineries, and power plants. With respect to CO2, it means 6 million-plus sources—hospitals, farms, large apartment buildings, Al Gore’s mansion. That’s “absurd,” said EPA. So it multiplied 250 by 400 and said that that’s the regulatory threshold for CO2. Why? Because 100,000 is as good a number as any. Because we can always ratchet it down. And because when we encounter an “absurdity” that was produced by our interpretation of the statute, we get to rewrite the statute. (Not a joke or exaggeration: Fed.Reg. cites available in briefs, or upon request.)

In a hair-raising decision, the D.C. Circuit upheld EPA’s first three rules. And it held that no state or industry petitioner had standing to challenge EPA’s “Tailoring Rule” (i.e., the statutory rewrite). The court denied en banc review; the Supreme Court granted cert.

What Next?

Start with the narrow cert grant: the only question the Court agreed to review is EPA’s step (3)—that is, whether EPA correctly interpreted the CAA (sections 165 and 169, if you have to know) in insisting that automobile regulation “triggers” the PSD program. Translation: we don’t want to revisit Mass v. EPA; inquire whether EPA should have considered the predicted absurdity at steps (1) or (2); or go near the D.C. Circuit’s curious determination that no regulated party can have standing to challenge EPA’s rules (while parties demanding more regulation always have standing). We’re just going to interpret one or two clauses of the CAA.

Good luck with that. The CAA is an intricate regime of interlocking pieces, grown over four decades. You can’t just feed CO2 into the system and hope it can be regulated like sulfur or soot: for proof, see PSD, absurdity, and statutory rewrite. So it’ll be interesting to see what the justices deem to be “fairly comprehended” under the grant. To be more blunt about it: like Mass v. EPA itself, the limited cert grant betrays a blindness to reality. Given the horrendous mismatch between GHGs and an act designed for conventional pollutants, if EPA is going to regulate it has to make it up and periodically “tailor”/rewrite the statute—or else, lay waste to the U.S. economy. Thank you, Supreme Court.

Nor is “tailoring” merely a regulatory exercise. As an amicus brief by political economists points out, what EPA is actually “tailoring” is the size of the political coalition that might demand congressional intervention. That is the policy of EPA’s “Tailoring Rule”: Hammer the big guys first. That done, they’ll affirmatively demand that EPA hammer the smaller guys, too. Congress won’t intervene because it can’t. Courts won’t intervene because there’s no standing. What EPA’s approach has unleashed, then, is (1) an agency that’s completely left to its own devices and imagination and (2) a rent-seeking festival of fantastic proportions, involving everyone who consumes energy and thus produces CO2. At the time of Mass v. EPA, industry groups still hung together. Then, the auto guys threw themselves under the bus. Now, everyone is trying to throw everyone else under the bus. Thank you, Supreme Court.

Is There a Way Out?

A solution (of sorts) is presented in its most accessible version in an amicus brief by Administrative Law professors. Mass v. EPA, the profs explain, simply held that GHGs are “air pollutants” under the CAA’s statute-wide definition of that term (section 302(g)). But that doesn’t mean that they’re air pollutants for every part and purpose of the act—and certainly not when that classification would by the agency’s own lights produce “absurdity.” As a matter of AdLaw doctrine, that’s entirely right. As a practical matter, it’s the road the Court will take, in one form or another. But it does leave a bad taste, for three reasons.

First, “in one form or another” in this case means billions of dollars and the welfare or ruin of entire industries. Unless Mass v. EPA is gutted, there’s no way to write a “reverse and remand” opinion in a way that’s neutral across the hundreds of industries and thousands of firms whose fate depends on what precisely EPA can and can’t do. And the opinion will be written by jurists who have a stake in pretending that this is all just statutory pereat mundus interpretation—and who don’t have the foggiest notion of the real-world consequences. (If they had any such notion, that would be worse: the justices are no better at industrial policy than the actual policymakers.)

Second, let’s assume GHGs are “air pollutants” for mobile sources (we already know that from Mass v. EPA) but, per petitioners and amici, not for the PSD program. That program is singularly unsuited to GHGs. As meticulously documented in the Competitive Enterprise Institute’s amicus brief, Congress has periodically noodled over climate legislation but never, ever contemplated a PSD-style command-and-control regime. But what of all the other EPA clean air programs? Should, could, or must EPA set a NAAQS for GHGs (that would be a National Ambient Air Quality Standard)? A NESHAP, perhaps (a National Emission Standard for Hazardous Air Pollutants)? Regulate GHGs under Title V? Under provisions mandating regulation for air pollutants on which we have international treaties (as we do for GHGs)? Good questions—especially since rulemaking petitions for several such initiatives have been pending for some time, to be acted upon in case the Supreme Court dings the PSD program. We’ll be litigating greenhouse gases one program at a time, from here to eternity.

Third, and to my mind most important, Mass v. EPA is the Supreme Court’s version of the Affordable Care Act. It was a brutal 5-4 cramdown, complete with a “states’ rights“ kickback from the liberal contingent to Justice Kennedy. (To get to the merits, the Court ruled that states deserve “special solicitude” for standing purposes. I’ve taught that in ConLaw and AdLaw and will again teach it in FedCourts, hoping that one of these days I’ll comprehend it.) It was written in defiance of any legal canon that anyone had ever heard of and handed down at the initiative of officials (Justice Stevens, Justice Breyer) who should have known and in fact did know what this would mean. On the CAA as on the ACA, no responsible liberal could be found. Here as there, we’re playing with the entire U.S. economy. Here as there, government agencies are fumbling and improvising their way through the mess. Rules? What rules?

The Diff, and the Joke

The architects of the ACA are paying the price. The judicial instigators of global warming and energy policy by decree likely won’t. In the first place (they say), they didn’t do it: the statute did. That, they say, is the holding of Mass v. EPA. In the second place, they didn’t create the PSD disaster: EPA did. That’ll be the holding of this case. EPA isn’t looking to win the case (it can’t); it’s looking for guideposts and signals. It will get them, hidden in oblique half-sentences and footnotes: we (justices) granted you (EPA) the power to run the U.S. economy. Let’s all make sure the consequences don’t end up at our doorstep, shall we? We’ll give you all the tools to ensure that; don’t mess it up.

That ruling will be greeted with a “Conservative Court Slaps Down EPA” and “John Roberts, Climate Denier” chorus from a Supreme Court commentariat that can’t explain anything, let alone get to the bottom of a charade. What the case actually means is that EPA will regulate GHGs for zero environmental benefit (no one pretends otherwise); at exorbitant cost to the economy (ditto); to the huge benefit of D.C. lobbyists and lawyers (ditto); and under a regime that allows every actor to disclaim responsibility. Everyone within shouting distance of the case comprehends that; everyone understands that everyone else understands that; and everyone understands that you don’t want to push to the point where someone else has to bolt or take responsibility.

In short, we’re screwing around with the entire economy because we can, to no particular end except our rents and good feelings. No American citizen will ever know the cost or comprehend how it happened. They may even end up supporting a regulatory maze that every branch of government knows to be a costly exercise in futility. A grateful nation of sheep will send its wool to Washington. In the unlikely event that they discover the loss, they can’t do anything about it.

I think that’s funny. Don’t you?

Michael S. Greve is a professor at George Mason University School of Law. From 2000 to August, 2012, Professor Greve was the John G. Searle Scholar at the American Enterprise Institute, where he remains a visiting scholar. Before coming to AEI, Professor Greve cofounded and, from 1989 to 2000, directed the Center for Individual Rights, a public interest law firm. He holds a Ph.D. and M.A. in government from Cornell University, and completed his undergraduate studies at the University of Hamburg. Currently, Professor Greve also chairs the board of the Competitive Enterprise Institute and is a frequent contributor to the Liberty Law Blog. Professor Greve has written extensively on many aspects of the American legal system. His publications include numerous law review articles and books, including most recently The Upside-Down Constitution (Harvard University Press, 2012). He has also written The Demise of Environmentalism in American Law (1996); Real Federalism: Why It Matters, How It Could Happen (1999); and Harm-less Lawsuits? What's Wrong With Consumer Class Actions (2005). He is the coeditor, with Richard A. Epstein, of Competition Laws in Conflict: Antitrust Jurisdiction in the Global Economy (2004) and Federal Preemption: States' Powers, National Interests (2007); and, with Michael Zoeller, of Citizenship in America and Europe: Beyond the Nation-State? (2009).

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Comments

  1. gabe says

    it is rather funny – especially when you consider that the mere act of breathing by a single human being involves the discharge of tons of CO2 annually.
    why, if we were to apply this to the congress, where the rate of expelled air (hot, of course) is somewhat greater than the average citizen, perhaps we should shut it down. – never mind if we were to apply it to the EPA with its many thousands of apparatchiks – goodness we would certainly pass the threshold.
    I say apply it to everything – the heck with the Courts – maybe this way we can shut down this idiocy!

  2. says

    Extraordinary article! It connects with the broader theme of the general lawlessness of the current regime in Obamacare, or in the recent IRS proposal to use the tax laws to shut down the Tea Parties.

    What I cannot understand is the supine state of the ad law profession, and of the progressive justices, who are demolishing the very concept of principled control of the administrative state.

  3. Mike Greve says

    thx much, Jim–you nailed it on all counts. The AdLaw I teach has nothing to do with what’s going on here; the textbooks are completely oblivious; and the profession is clueless. And the progressive version of AdLaw as “reasoned deliberation” has completely collapsed: whatever it was worth in the first place, Breyer and Sunstein have decided it’s basically a joke.
    I’d add that the conservative version of AdLaw is also a joke: deference to the administrative state. REALLY???

  4. egoist says

    Depressing. It is the Obamacare of Industry. The NSA is the Obamacare of thought, as is the IRS. Green cronyism is the Obamacare of the market.
    When everything falls apart, everything falls apart.

  5. Richard S says

    The Court’s logic is interesting, to say the least. Why give deference to Congress when trying to decide whether a law is constitutional? Because it is an equal branch of government. That logic does not apply to law-making power delegated by Congress to the bureaucracy. Law writing by people other than the legislature is constitutionally problematic. That being the case, the Court needs to change here, and construe such delegated powers narrowly–if there’s a question, it ought to go against the bureaucrats, and the bureaucrats should have to go back to the people’s representatives to receive the power in question.

  6. Harry Taft says

    This nation is going to die. Not from a single wound, but from a thousand arrows. Each one the product of an out of control Legislature, Executive and, finally, Judiciary. The members of each will blame all the others. They are all to blame. Intelligent, educated,arrogant. Washington DC is full of them. The only things that are in scarce supply: humility, caution, and common sense.

  7. askeptic says

    A rational person would call for, Nay-Demand, the repeal of CAA, just as the solution for the disruption in the Health-Care Insurance market is the repeal of PPACA.
    Are there any rational people in DC, the current history does not support the proposition.
    Who will drive the money-changers out of the temple?

  8. DocMerlin says

    The supreme court didn’t create it, its problem was failing to stop it. The things you are trying to point at as judicial activism are actually examples of judicial deference.

  9. Mike Greve says

    I disagree with DocMerlin. At the time of Mass v. EPA, the agency insisted that GHGs weren’t pollutants for the purposes of the CAA. The majority in the case declined to defer to the agency (as a Chevron Step One determination, no less). There wasn’t anything to stop, and nothing deferential about the Court’s decision.

  10. says

    Extremely erudite and sophisticated responses to a powerfully insightful article. The end game though MUST be to eradicate the EPA in its entirety, nothing less. Barring that, when the lynch mobs show up in DC, and they will, black robes will be no protection from and may even be among the principal targets of their wrath.

  11. Somebody says

    These “leaders” and “laws” are a satanic punishment on our nation for its unrighteousness and abandonment of God. We need to repent en masse to avoid destruction.

    Call me a religious nut if you want, but the sheer stupidity and self-destructive behavior exhibited by our establishment these days is too overwhelming to be explained by anything else other than dark supernatural power.

  12. Marlo Lewis says

    Masterful analysis, Michael. In Mass. v. EPA, the Court legislated from the bench so that EPA could legislate from the bureau. It was ridiculous to imply in Massachusetts — and assert in AEP v. Connecticut — that Congress “spoke directly” to the issue of greenhouse gases and global climate change in the 1970 Clean Air Act. Not only is the statute devoid of the terms “greenhouse gas” and “greenhouse effect,” it was enacted years before global warming emerged as a public policy concern.

    It was also shabby to belittle the language in Sections 103(g) and 602(e), added in the 1990 Clean Air Act Amendments, admonishing the EPA not to infer pollution control requirements or additional regulatory authority from the Act’s sole mentions of “carbon dioxide” and “global warming potential.”

    Judge Tatel’s dissent apparently persuaded the Court that such language merely indicated 103(g) and 602(e) did not give EPA any new powers to regulate carbon dioxide or other substances based on global warming potential. But what would be the point? The admonitions would have no practical effect if the EPA already had authority since 1970 to implement a greenhouse gas regulatory program under other parts of the Act. Congress should not be presumed to pad statutes with superfluous verbiage.

    Then there was the Court’s conversion of the Clean Air Act definition of “air pollutant” in Section 302(g) into a circular formalism, treating “air pollution agent” as a synonym for “air pollutant” rather than a qualifier for distinguishing “emitted” substances that are air pollutants from those that are not.

    The Court also simply ignored the second sentence of 302(g), according to which precursors of substances designated as “air pollutants” are also air pollutants. That sentence, too, would be superfluous if, as the Court concluded, the first sentence defines “air pollutant” as anything “emitted,” since precursors must first be emitted to form other pollutants.

    People in general, especially persons in authority, and above all those called “Supreme” are loath to acknowledge their mistakes in public. So, yes, even the dissenters in Mass. v. EPA have no interest in re-opening the case.

    Nonetheless, I suspect that some of the Justices granted cert because they realize Mass. v. EPA has teed up an enormous separation of powers problem. The Tailoring Rule is only the most visible outcropping of it. More important is the fact that if the EPA’s greenhouse gas regulations, whether individually or as a package, were introduced in Congress as legislation, they would be dead on arrival.

    I doubt the Court will simply uphold Coalition v. EPA. That would too nakedly assert the ‘progressive’ credo of bureaucratic supremacy and judicial infallibility. I fear the Court may split the baby and agree with petitioners that PSD for CO2 is not automatically triggered by the Tailpipe Rule but agree with respondents that nothing in the text, structure, or legislative history of the Act prohibits the EPA from applying PSD to CO2 at its discretion.

    I continue to hope, though, that at least some on the Court will be open to petitioners’ arguments that PSD/BACT regulation of greenhouse gases cannot reasonably be construed as a valid delegation of legislative authority from Congress to the agency.

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