EPA ruling is milestone in long pushback to regulation of business

The Supreme Court ruling in the Environmental Protection Agency case Thursday was a substantial victory for libertarian-minded conservatives who have worked for decades to curtail or dismantle modern-style government regulation of the economy.

In striking down an EPA plan to reduce carbon emissions from power plants, the court issued a decision whose implications go beyond hobbling the government’s ability to fight climate change. Many other types of regulations might now be harder to defend.

The ruling widens an opening to attack a government structure that, in the 20th century, became the way American society imposes rules on businesses: Agencies set up by Congress come up with the specific methods of ensuring that the air and water are clean; that food, drugs, vehicles and consumer products are safe; and that financial firms follow the rules.

Such regulations may benefit the public as a whole but can also cut into the profits of corporations and affect other narrow interests. For decades, wealthy conservatives have been funding a long-game effort to hobble that system, often referred to as the administrative state.

“This is an intentional fight on the administrative state that is the same fight that goes back to the New Deal and even before it to the progressive era; we’re just seeing its replaying and its resurfacing,” said Gillian Metzger, a Columbia University professor who wrote a Harvard Law Review article called “1930s Redux: The Administrative State Under Siege.”

In a ruling that will undermine Joe Biden’s plans to tackle climate change, the U.S. Supreme Court restricted the EPA’s authority to regulate greenhouse-gas emissions from existing power plants under the landmark Clean Air Act anti-pollution law https://t.co/W0auHcXkLP pic.twitter.com/EiCpffwsfQ

— Reuters (@Reuters) July 1, 2022

When the United States was younger and the economy was simple, it generally took an act of Congress to impose a new, legally binding rule addressing a problem involving industry. But as complexity arose — the Industrial Revolution, banking crises, telecommunications and broadcast technology, and much more — this system began to fail.

Congress came to recognise that it lacked the knowledge, time and nimbleness to set myriad, intricate technical standards across a broad and expanding range of issues. So it created specialised regulatory agencies to study and address various types of problems.

While there were earlier examples, many of the agencies Congress established were part of President Franklin D. Roosevelt’s New Deal program. Wealthy business owners loathed the limits. But with mass unemployment causing suffering, the political power of elite business interests was at an ebb.

The Eisenhower-style Republicans who returned to power in the 1950s largely accepted the existence of the administrative state. Over time, however, a new backlash began to emerge from the business community, especially in reaction to the consumer safety and environmental movements of the 1960s. Critics argued that government functionaries who were not accountable to voters were issuing regulations whose costs outweighed their benefits.

Associate Justice Brett Kavanaugh, Associate Justice Elena Kagan, Associate Justice Neil Gorsuch, Associate Justice Amy Coney Barrett, Associate Justice Samuel Alito, Associate Justice Clarence Thomas, Chief Justice John Roberts, Associate Justice Stephen Breyer and Associate Justice Sonia Sotomayor pose for a group photo at the Supreme Court in Washington, US, April 23, 2021. (Reuters)

In 1971, a lawyer who had represented the tobacco industry named Lewis F Powell Jr — whom President Richard M Nixon would soon put on the Supreme Court — wrote a confidential memo for the US Chamber of Commerce titled “Attack on American Free Enterprise System.” It is seen as an early call to action by corporate America and its ideological allies.

Powell acknowledged that “the needs and complexities of a vast urban society require types of regulation and control that were quite unnecessary in earlier times.” But he declared that the United States had “moved very far indeed toward some aspects of state socialism” and that “business and the enterprise system are in deep trouble, and the hour is late.”

His memo set out a blueprint to fund a movement to turn public opinion against regulation by equating “economic freedom” for business with individual freedom. In line with that vision, wealthy elites financed a program to build political influence, including steering funding to organisations that develop and promote conservative policies like the American Enterprise Institute and the Heritage Foundation.

In 1980, billionaire David H Koch ran a quixotic campaign as the Libertarian Party’s nominee for vice president on a platform that included abolishing the range of agencies whose regulations protect the environment and ensure that food, drugs and consumer products are safe.

The Fayette Power Project, a coal-fired power plant, near La Grange, Texas, April 13, 2021. (Tamir Kalifa/The New York Times)

His ticket failed to win many votes. But with his brother Charles G Koch, he would become a major funder of like-minded conservatives causes and candidates and built a campaign funding network that pushed the Republican Party further in a direction it had already started to move with the election in 1980 of President Ronald Reagan.

The “Reagan Revolution” included appointing officials to run agencies with a tacit mission of suppressing new regulations and scaling back existing ones — like Anne Gorsuch Burford, the mother of Justice Neil M Gorsuch, whom critics accused of trying to gut the EPA when she ran it.

In parallel, the conservative legal movement, whose origins also trace back to the 1970s and spread with the growth of the Federalist Society in the 1980s, has focused its long game as much on a deregulatory agenda as on higher-profile goals like ending abortion rights.

That movement has now largely taken control of the federal judiciary after President Donald Trump appointed three Supreme Court justices. The chief architect of Trump’s judicial appointments, Donald F McGahn II, the first Trump White House counsel and a Federalist Society stalwart, made scepticism about the administrative state a key criterion in picking judges.

.@SenMarkey: “West Virginia v. EPA decision slashed the EPA’s long-standing life-saving ability to regulate greenhouse gasses from fossil fuels was made by a far-right, stolen, illegitimate Supreme Court.” https://t.co/RCzSou3uVw pic.twitter.com/i4G9SHraAR

— The Hill (@thehill) July 1, 2022

Adherents of the movement have revived old theories and developed new ones aimed at curbing the administrative state.

To give (usually Republican) presidents more power to push deregulatory agendas in the face of bureaucratic resistance, they have put forward the “unitary executive theory” under which it ought to be unconstitutional for Congress to give agencies independence from the White House’s political control — even though the Supreme Court upheld that arrangement in 1935.

A 2020 ruling by the five Republican appointees then on the Supreme Court was a step toward that goal. They struck down a provision of the law Congress enacted to create the Consumer Financial Protection Bureau that had protected its head from being fired by a president without a good cause, like misconduct.

And to invalidate regulations even when (usually Democratic) presidents support them, movement conservatives have argued for narrowly interpreting the power Congress has given or may give to agencies.

Some of those theories have to do with how to interpret statutes. The EPA ruling, for example, entrenched and strengthened a doctrine that courts should strike down regulations that raise “major questions” if Congress was not explicit enough in authorising such actions.

“In certain extraordinary cases,” Chief Justice John G. Roberts Jr wrote, the court needed “something more than a merely plausible textual basis” to convince it that an agency has the legal ability to issue specific regulations. “The agency,” he wrote, “instead must point to ‘clear congressional authorisation’ for the power it claims.”

The strict version of that doctrine signalled by the ruling will give businesses a powerful weapon with which to attack other regulations.

The ruling was foreshadowed by short, unsigned rulings last year in which the court blocked the Centers for Disease Control and Prevention’s moratorium on evictions to prevent overcrowding during the coronavirus pandemic, and the Occupational Safety and Health Administration’s requirement that large employers get workers vaccinated or provide testing.

But both of those decisions involved tangential exercises of authority by agencies trying to address the pandemic emergency: The CDC, a public health agency, was getting into housing policy, and OSHA, a workplace safety agency, was getting into public health policy.

The ruling Thursday involved the EPA’s primary mission: to curb pollution of harmful substances, which the court previously ruled included carbon dioxide emissions. Moreover, the text of the Clean Air Act empowers the agency to devise the “best system of emission reduction.” Even so, the majority ruled that the agency lacked authorisation for its Clean Power Plan.

In dissent, one of the court’s three remaining Democratic appointees, Justice Elena Kagan — who once wrote a scholarly treatise about the administrative state — accused the majority of having discarded the conservative principle of interpreting laws based closely on their text to serve its “anti-administrative state” agenda.

“The current court is textualist only when being so suits it,” she wrote. “When that method would frustrate broader goals, special canons like the ‘major questions doctrine’ magically appear as get-out-of-text-free cards. Today, one of those broader goals makes itself clear: Prevent agencies from doing important work, even though that is what Congress directed.”

Conservatives have also developed other legal theories for attacking the administrative state.

They have argued, for example, that the Supreme Court should end so-called Chevron deference, named for the case that established it. Under that doctrine, judges defer to agencies’ interpretations of the authority that Congress gave them in situations where the text of a law is ambiguous and the agency’s interpretation is reasonable.

Conservatives have also argued for a more robust version of the so-called nondelegation doctrine, under which the Constitution can bar Congress from giving regulatory power to agencies at all — even if lawmakers unambiguously sought to do so.

Roberts’ majority opinion, in keeping with his preference for incremental approaches to major issues, left those other theories and arguments for another day. But a concurring opinion by Gorsuch, joined by Justice Samuel A Alito Jr, discussed the nondelegation doctrine with apparent relish.

“While we all agree that administrative agencies have important roles to play in a modern nation, surely none of us wishes to abandon our Republic’s promise that the people and their representatives should have a meaningful say in the laws that govern them,” Gorsuch wrote.

In theory, undercutting the administrative state does not necessarily subtract from the government’s ability to act when a new problem — or a better way of solving an old one — arises. Rather, it shifts some of the power and responsibility from the agencies to Congress.

A coal-fired power plant in Huntingtown, Utah, on February 7, 2019. (Brandon Thibodeaux/The New York Times)

For example, lawmakers could theoretically enact a law explicitly declaring that the EPA’s power to curb air pollution under the Clean Air Act includes regulating carbon dioxide pollution from power plants in the way the agency had proposed. Congress could even pass a law directly requiring the detailed system for reducing emissions.

As a matter of political reality, however, agencies’ issuing of new rules based on old laws is often the only way the government remains capable of acting.

Congress is increasingly polarised and dysfunctional, sometimes too paralysed to pass even basic spending bills to keep the government operating. And the ideology of the contemporary Republican Party, combined with the Senate’s filibuster rule, which allows a minority of senators to block votes on substantive legislation, means that it is unlikely that Congress will enact new laws expanding regulations.

The prospect that the Republican-appointed supermajority on the court may be just getting started in assaulting the administrative state over the coming years is alarming those who say the United States needs regulations to have a civilised society.

“If you don’t have regulations, then the only people who will benefit will be those who, with no rules, will make more money,” said Marietta Robinson, a former Obama appointee on the Consumer Product Safety Commission who teaches about administrative agencies at George Washington University’s law school. “But it will be to the great detriment to the rest of us.”