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The Ramifications of EPA v. EME Homer City Generation, L.P.

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Vinny Sidhu
Legal Intern, Manhattan Institute's Center for Legal Policy

For much of the 20th century, the steady growth of the administrative state led to increased calls for the codification of a legal and regulatory framework through which people and industries could be provided a degree of certainty in the course of their day-to-day activities. In the past few years, the scope of change in this field has accelerated, with executive aggrandizement at the center of the discussion. From a constitutional standpoint, the ongoing question remains to what extent the executive branch can increase its power while remaining within the strictures of the separation of powers.

To that end, the Supreme Court recently held 6-2 in Environmental Protection Agency v. EME Homer City Generation, L.P. that the EPA's Cross-State Pollution Rule as interpreted was valid, overturning the D.C. Court of Appeals.

Legally speaking, the reach of the EPA under the Rule turned on the meaning of the phrase "contribute significantly." Section 110(a)(2)(D)(i)(I), dubbed the "good neighbor" provision, says that states must prohibit emissions in amounts that "contribute significantly to nonattainment, or interfere with maintenance by, any other State with respect to any such national primary or secondary ambient air quality standard."

The EPA claimed that, because the statute was ambiguous as to what factors could be used to determine what constitutes "significant," the EPA should have the right to fill the gap with their own cost-benefit analysis; specifically, they wished to use the nature of the technology a given state employed to determine whether the state is meeting its obligations under the good neighbor provision. For example, if a state was using EPA-approved technology to mitigate its pollution, it would be more likely to be deemed to be complying with the good neighbor provision.

The petitioners, which included states and some private companies, claimed that "significant" could not be interpreted this way, because the Clean Air Act only mandates that emissions are to not interfere with other states, and says nothing about the means used to achieve that goal. Therefore, the Rule allowing the EPA to factor in the technological means of emissions reduction would stretch agency authority in violation of the language of the statute.

From a policy perspective, the Court siding with the EPA on a statutory vagueness issue portends other potentially nefarious applications of agency aggrandizement. As the Wall Street Journal notes, the case deals with a novel approach to administrative regulation:

No one disputes the EPA's authority to regulate air pollution across state lines, but for the first time the EPA imposed its standards without giving states a chance to offer their own plans. Also for the first time, the agency imposed a uniform compliance standard regardless of an individual state's contribution to cross-state pollution. This is aimed at Texas and other states that have large coal-fired electric plants and forces higher reductions in emissions than states might otherwise have to implement. It is part of the Administration's agenda of imposing via regulation what it can't get through Congress, even a Democratic Senate.

By favoring certain types of emissions-prevention technologies, the EPA would be able to impose politically-favored regulations on the states in circumvention of individual state legislatures and principles of federalism, all under the guise of an "ambiguity" in a statute when the agency does not agree with the statutorily-stated words. The danger ultimately lies in the precedent being laid out; namely, that an agency is presumptively deemed to be in the best position to resolve statutory ambiguities, and should be allowed to proffer rules to resolve those ambiguities. The safer presumption would lie in placing the benefit of the doubt with the politically-accountable Congress, i.e. assuming that Congress did not include the technology analysis in the statute because it did not wish to do so. Within this approach, Congress could change the statute if it so chose, and the nexus of the policy-making decision would still remain in its rightful place. Moreover, it would prevent agency aggrandizement from potentially spreading to other agencies and becoming a systemic problem.

If the country is to retain its constitutional balance, the separation-of-powers doctrine must be respected as a guiding force, even in the midst of the changing needs and obligations of a modern government.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.