Despite the obvious high profile of last week’s decisions in King v. Burwell and Obergefell v. Hodges, today saw another huge decision in Michigan v. EPA that could signal serious repercussions for the regulatory state. Scalia’s majority opinion was significant primarily because it invalidated a regulation that would have cost nearly $10 billion. But Justice Thomas’s concurring opinion may indicate even more momentous change percolating at the Court. By my count it is at least his fourth opinion this Term calling for the Court to rethink legislative delegations to administrative agencies. He goes so far as to question not only the wisdom but also the constitutionality of administrative deference under Chevron v. Natural Resources Defense Council.
Today’s case turned on the question of whether EPA could determine that it was “appropriate and necessary” to regulate certain power plants without even considering the cost of that regulation. This is a recurring question for the EPA, which is at the center of a long-running series of cases examining the often-questionable links between the agency’s regulations and the actual language of the Clean Air Act.
It seems clear that the regulations at issue were not cost-effective. Even by EPA’s own estimates, the benefits were worth $4 – $6 million annually, while they would cost the power plants $9.6 billion per year. Can it ever be “appropriate” to impose costs that are thousands of times higher than the anticipated benefit? Amazingly, that’s a question EPA didn’t even consider, as they considered cost completely irrelevant to their decision. EPA claimed that its interpretation of “appropriate” didn’t take cost into account. And the deferential review given to agencies interpreting the statutes they administer under Chevron actually made the question a close one.
The classic Chevron two-step asks first whether the statute in question is ambiguous, and if so asks whether the agency’s interpretation is reasonable. If an agency is giving a reasonable interpretation of an ambiguous statute, then the courts leave it at that, even if they think there are better interpretations of the statute out there.
Justice Scalia, joined by Justice Kennedy and the conservative members of the Court, held that it is flatly unreasonable to think it “appropriate” to promulgate a regulation that does significantly more harm than good. He used context to bolster his conclusion. To cite but one example, the subsection following the one at issue requires EPA to carry out studies of mercury emissions from power plants and other sources, and also consider “technologies which are available to control such emissions, and the costs of such technologies.” (emphasis added). EPA justified its decision to regulate by citing to that study, but decided it was only relevant insofar as it considered environmental effects, not costs. As Justice Scalia put it,
Chevron allows agencies to choose among competing reasonable interpretations of a statute; it does not license interpretive gerrymanders under which an agency keeps parts of statutory context it likes while throwing away parts it does not.
Having decided that the agency’s interpretation of the law was unreasonable, the Court essentially skipped the question of whether “appropriate” was ambiguous, but it is clear at least that the Clean Air Act doesn’t unambiguously state EPA can ignore cost when deciding if it will regulate power plants.
Justice Thomas’s concurrence points out the constitutional tensions inherent in Chevron deference. Article III of the Constitution vests judicial power in the courts, and to exercise that power the courts – not administrative agencies – must be the ones interpreting the law. If one assumes that the ambiguities in the law are really a delegation of rulemaking authority to the agency by Congress, then we run into the problem of whether that exercise is valid under Article I of the Constitution, which vests “all legislative Powers herein granted” in Congress.
That problem raises another question: Are courts really doing anything other than ratifying lawlessness when they defer under Chevron? As Justice Scalia points out in his opinion, the law requires courts to evaluate the actual reason for administrative action, not some other reason that might have justified it in theory. But the dissent was willing to uphold the regulations on the grounds that EPA did consider cost at other parts of the regulatory process, even though EPA admitted that it didn’t at the beginning (which is where the statute requires it). I’m not prepared to say that every invocation of Chevron is lawless, but the dissent’s version of Chevron deference gets pretty close. If the dissent’s view ever becomes the law, we’ll have the worst parts of the administrative state – vast power and inefficiency – with none of the constraints that are supposed to ensure that agencies engage in “reasoned decisionmaking” under the Administrative Procedure Act. It’s worrisome that four Supreme Court justices bought that argument.
Justice Thomas puts it better than I could:
Although we hold today that EPA exceeded even the extremely permissive limits on agency power set by our precedents, we should be alarmed that it felt sufficiently emboldened by those precedents to make the bid for deference that it did here. As in other areas of our jurisprudence concerning administrative agencies, we seem to be straying further and further from the Constitution without so much as pausing to ask why. We should stop to consider that document before blithely giving the force of law to any other agency “interpretations” of federal statutes.