February 23, 2016

Supreme Court Stays CO2 Rule


  • On February 9, the Supreme Court ordered a stay of the Obama administration’s rule governing carbon dioxide emissions from existing power plants.

  • Countries gathering on April 22 to sign the Paris climate agreement should worry that this means the president will fail to deliver on his promises.

  • The stay ensures the rule cannot be carried out by this president.


On February 9, the Supreme Court voted 5-4 to stay the Obama administration’s rule governing carbon dioxide emissions from existing power plants. The order prohibits the Environmental Protection Agency from implementing the rule while the federal courts review it. A final decision on the rule’s legality is expected to be rendered by the Supreme Court no earlier than mid-2017. Even if the rule is upheld as legal, the next president will be in charge of implementing it.

HALTING THE PRESIDENT'S PARIS AGREEMENT

On April 22, countries will gather in New York City to begin signing the international climate agreement reached in Paris last December. The court’s stay of the CO2 rule should make those countries think twice about relying on the Obama administration’s promises. The administration pledged to cut U.S. greenhouse gas emissions by as much as 28 percent by 2025. Under current policies, it will fail to deliver 45 percent of promised emissions reductions. If the federal courts strike down the CO2 rule, or if the next president decides not to fully implement it, that number will grow to 60 percent.

Obama promises on emissions cuts may come crashing down

Obama emissions cuts

E&E reported on February 11 that foreign diplomats who negotiated the Paris agreement “reacted to news of the stay with concern.” The New York Times reported the same day that in the capitals of India and China, the court’s decision “threw the United States’ commitment into question, and possibly New Delhi’s and Beijing’s.” The administration’s claim that it could implement the CO2 rule was key to its negotiating position.

European leaders are publicly expressing optimism that the administration can deliver on its promises, according to the February 11 E&E article. But privately, they are demanding answers from their American counterparts. 

AN UNPRECEDENTED LEGAL STAY

Never before had the Supreme Court stayed a federal regulation in advance of a lower court reviewing the merits of the case. The court’s willingness to do so in this case demonstrated its extraordinary concern about the legality of the rule and the immediate harm it may cause.

The court did not offer any legal reasoning for the stay, but its skepticism of the CO2 rule can be discerned from the legal test the court applied. The court had to find that, if the lower court upheld the rule on the merits, there would be: (1) a reasonable probability that the Supreme Court would grant certiorari to hear the legal challenge; (2) a fair prospect that the Supreme Court would reverse the lower court’s judgment; and (3) a likelihood that petitioners would suffer irreparable harm from denial of a stay. The court was also required to balance the pros and cons for the petitioners and the administration.   

In their application for a stay of the CO2 rule, 26 states argued that the previous case of Michigan v. EPA illustrated the need for a stay. These states – along with energy producers, consumers, and others – had already sustained irreparable damage by the time the court struck down the administration’s rule on mercury and air toxics. Power plants had been forced to shut down to comply with the rule while legal challenges against it worked their way through the courts. Even the EPA conceded this when it gloated that the MATS rule was “issued more than three years ago, investments have been made and most plants are already well on their way to compliance.” The 26 states summarized: “In short, EPA extracted ‘nearly $10 billion a year’ in compliance from power plants before this Court could even review” the legality of the rule. A 27th state separately applied for a stay of the rule.

Many legal analysts believe that the Michigan v. EPA case was in the front of the court’s mind when it ordered the unprecedented stay of the CO2 rule. The court protected the petitioners from incurring enormous costs to comply with a rule that the court may decide is illegal.

SCALIA NOT ENTIRELY ABSENT FROM THE COURT

Justice Antonin Scalia wrote the majority opinion for the court in the Michigan v. EPA case last year. He died a few days after voting with the majority to grant the stay of the CO2 rule at the beginning of February. Supporters of the rule believe that his absence will improve the rule’s prospects, but Justice Scalia will not be entirely absent from the case.

Importantly, Justice Scalia wrote the majority opinion in the case Utility Air Regulatory Group v. EPA in 2014. His opinion emphasized that federal agencies must not exceed their congressionally delegated authority in rulemakings.

“When an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,’ we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’” – Justice Antonin Scalia, Utility Air Regulatory Group v. EPA, 06-23-2014

Federal courts tend to defer to federal agency interpretations of statutes that Congress has tasked the agency with implementing. Justice Scalia’s opinion empowered federal courts to reduce their deference in cases regarding economically and politically significant rules. The Supreme Court and the U.S. Court of Appeals for the Fifth Circuit have already relied on the opinion when deciding not to defer to claims of authority by the Internal Revenue Service and Department of Homeland Security regarding Obamacare and immigration rules. The Supreme Court will not be able to ignore Justice Scalia’s opinion when deciding whether EPA’s CO2 rule warrants deference or is otherwise authorized by law.

THE PATH FORWARD

The U.S. Court of Appeals for the D.C. Circuit will hear arguments regarding legal challenges to the CO2 rule on June 2. The three-judge panel reviewing the rule is viewed as favorable to the administration. The same panel refused to stay the rule’s implementation in January. Even if the full D.C. Circuit rehears the three-judge panel’s ruling, many of those judges are likely favorable to the rule as well. President Obama, with the help of Democrats who controlled the Senate in the 113th Congress, packed the D.C. Circuit with liberal appointees.

By the time legal challenges regarding the CO2 rule reach the Supreme Court next year, the next president will have nominated, and the next Senate will have confirmed, a new justice. If there is a Democrat president or Senate, this justice will likely support upholding the rule.

If a new justice has not been sworn-in by the time the CO2 rule makes its way to the court, and if the court decides to consider an appeal with only eight justices, and assuming the D.C. Circuit votes to uphold the rule, three outcomes are possible.

  • First, a majority of the court could vote to affirm the D.C. Circuit’s decision and uphold the rule. The decision would be final and would bind lower courts.
  • Second, a majority could overturn the D.C. Circuit’s decision and strike down the rule or remand it to the lower court for reconsideration. The decision would be final and would bind lower courts.
  • Third, the justices could split 4-4, which would affirm the D.C. Circuit’s decision and uphold the rule. The decision would not bind lower courts. The court would retain the option to reconsider the case once a ninth justice is confirmed – an option the court would likely exercise according to a February 14 SCOTUSblog analysis.

The 5-4 vote to stay the CO2 rule suggests that today’s court would vote 4-4 to uphold the rule. But it is possible that some of the four dissenting justices thought that the case did not meet the standards for a stay, even though the rule itself is legally unsound.

Another unknown is what shape the CO2 rule is in when it leaves the D.C. Circuit. That court could affirm one part of the rule and reject another. That would change the legal question presented to the Supreme Court, and also change the ideological breakdown of the justices.

Even if the CO2 rule ultimately survives judicial review, the stay ensured that it will not be implemented by President Obama, and the next president could scale it back. The stay also established a new precedent that can be used to protect Americans from similarly problematic rules promulgated by an out-of-control Washington bureaucracy in the future. 

Issue Tag: Energy