February 11, 2016

Is the Coal Industry Too Big to Regulate?

Clean Power Plan, Justin Pidot

by Justin Pidot, Associate Professor of Law, University of Denver Sturm College of Law

The U.S. Supreme Court this week issued an order staying implementation of the Clean Power Plan (“CPP”) -- the Obama administration’s signature action to address climate change -- until the courts decide the merits of challenges to the plan brought by industry groups and states.  It’s quite a surprise. The Supreme Court very rarely stays a regulation while it remains before a court of appeals. 

Granting a stay is not the same as deciding the case, but the order suggests that five justices have serious concerns about the CPP.  I suspect those concerns may boil down to this: The coal industry, likely the primary target of state implementation of the CPP, is too big for EPA to regulate absent an express congressional directive.

Where would this notion of too big to regulate come from?  The Court has signaled increasing skepticism of agency interpretations of statutes that the justices believe construe agency authority too expansively or in a way that may be of economic significance.  The Court has invoked this mood—even if I can’t quite call it a principle—in at least three recent decisions.

In Utility Air Regulatory Group v. EPA, the Court held that EPA lacked authority to regulate certain sources of greenhouse gases under a Clean Air Act program because it would involve a “transformative expansion” in the agency’s authority.  In Michigan v. EPA, the Court invalidated another Clean Air Act rule at least in part out of concern for the costs the rule would impose.  And in King v. Burwell, the Court declined to defer to an agency’s interpretation of the Affordable Care Act because the issue was one of “economic and political significance.”  (I have previously discussed this trend here and here.)

These cases suggest a new rule of administrative law that inhibits big agency actions that tackle big problems. Under such a rule, the CPP may fall because climate change is a global problem with many contributors and EPA is attempting to engage in relatively significant action in response.  In other words, the Court could hold that EPA can only tinker around the edges of climate change unless Congress clearly says otherwise, a holding that would be particularly ironic since the Court’s decision in Massachusetts v. EPA forced the agency to get into the climate change business in the first place. 

I think such a clear-statement rule is a mistake, and I hope the Court reverses course. Rather than stacking the deck against regulations that target emerging and broad problems or economically important sectors, judges should stick to ordinary principles of deference under the Chevron framework, asking only is the statute ambiguous and, if so, is the agency’s interpretation reasonable. Deference makes sense because judges aren’t well situated to decide when an economic sector is too big to regulate, or when an agency’s authority is too broad. 

Instead, the executive branch and Congress should resolve these issues. Congress passes laws and executive branch agencies interpret those laws.  If an agency interprets an ambiguous statutory provision in a way that Congress doesn’t like, well, Congress can clarify that provision.  This dialogue between the political branches of the federal government is the right forum for resolving ambiguous statutory language. We don’t need judges interfering whenever they think the coal industry, or some other sector of the economy, is simply too big to regulate.