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?