The Supreme Court Regulates the Regulators

The call to end “big government” got a boost from the Supreme Court this past June in the case West Virginia v. EPA. This case severely limits the tools EPA can use to control greenhouse gas emissions from coal-fired power plants. In the future, the Court will likely apply the same reasoning to other EPA decisions and other regulatory agencies, including those impacting agriculture. There’s a long list of acronyms to choose from when pondering what ramifications this decision could have: will the IRS, DOL, USDA, NRCS, FSA, or FDA be curtailed next?

There are plenty of farmers who will be excited by this development. The Farm Bureau has long advocated for reform to address “regulatory agencies increasingly exercising legislative functions.” The Attorney General of West Virginia says this decision isn’t about climate change but “playing by the rules” and respecting the separation of powers.

Before addressing the policy implications, let’s first review what happened in this particular case.

Through an Obama-era rule called the Clean Power Plan (CPP), the EPA lowered targets for national greenhouse gas emissions requiring coal-fired power plants to shift some power generation from coal to natural gas and/or renewable sources (e.g., solar or wind). Even though this rule is no longer in effect (more on that in a moment), the Court held that it overstepped EPA’s Congressionally granted authority.

Admittedly, the EPA’s CPP was more extensive than historical EPA greenhouse gas emission regulations; it didn’t only require that plants burn coal more efficiently, but it went on to demand a shift away from coal energy generation altogether. It was estimated that EPA’s policy would reduce coal usage 11% by 2030.

This was a bold move by the EPA. However, we were never to see the ramifications of the EPA’s action because the Supreme Court made its own bold move in stopping the rule from taking effect in 2016. The Trump-era EPA doubled down and repealed the rule altogether. Neither rule-killing action had much impact because “market forces alone caused the power industry to meet CPP’s nationwide emissions target,” as Justice Kagan points out in her dissent. The CPP was “obsolete” before the Court took up the controversy.

This begs the question of why the Supreme Court even agreed to hear this case. There’s a plausible argument that the Court wanted to hear this case to establish a framework for limiting regulatory agency power. Making its debut in a majority opinion, the Court adopted the “major questions doctrine” as the litmus test for when an agency oversteps its bounds.

Essentially, the doctrine states that “major questions,” those of vast economic and political significance, should be left to Congress to decide. In this case, the court decided that the EPA could not answer the “major question” of when a shift from coal to renewable energy was appropriate.

So, what exactly is a “major question”? We didn’t get a clear answer to that in this case, and we in agriculture are left to wonder. As wars disrupt our global food supply, pandemics interrupt supply chains, farmworker labor shortages climb, climate change threatens production, and water supplies dwindle, our food supply becomes a more critical economic concern. Could this doctrine be used to require Congress alone to enact disaster relief, loan programs, farm subsidies, and labor policies? Will the USDA and other agencies that agriculture depends on lose some regulatory power?

Again, some tempering of the bureaucratic regulatory maze of the U.S. government might be appropriate. But we shouldn’t overlook that regulatory agencies enable many services for all aspects of life, including many parts of farming. Furthermore, the regulatory rulemaking process is arguably more democratic than legislative development.

Congress delegates to regulatory agencies because, ostensibly, agencies are staffed by experts whose specific scientific, legal, or other experience exceeds that of a legislator. When developing rules, regulatory agencies are required to have public comment periods and must be responsive to these comments. This process is not enacted perfectly but is more transparent than Congress’ lawmaking.

The FDA’s FSMA water rule is an example of this rulemaking process being responsive to farmers; here the FDA revoked an overburdensome rule in response to public comments and reinstated a rule giving farmers flexibility and decision-making power over their water quality controls. Even though it took four years, a Congressional law would have never been altered so quickly and with so much direct farmer feedback.

This case marks a shift in our understanding of administrative law. How much impact it will have remains to be seen, as commentators range from declaring the decision cataclysmic (“the court’s pointedly vague invocation of the major questions doctrine casts a long shadow over the future of regulation”) to the unbothered (the doctrine doesn’t pose “any serious threat to the potency of American regulation”). Like so many things these days, we will wait and see.