On Climate Policy, the D.C. Circuit Rendered the 117th Congress Irrelevant (Unless the Supreme Court Acts)


Congressional Democrats have included a “clean electricity standard“—basically, a green energy production quota—as part of a proposed multi‐​trillion dollar spending package for “infrastructure.“ Under a clean electricity standard (CES), utilities would be required to switch fuels from coal and natural gas to climate‐​friendly sources. Compliant utilities would receive subsidies; non‐​compliant utilities would get fined.

There are, however, two big roadblocks. The first is procedural. To avoid the filibuster, congressional Democrats are using a process known as reconciliation to pass the partisan $3.5 trillion spending measure. But to be part of reconciliation, a legislative proposal must relate to budgeting or spending, and it’s unclear whether a CES shares such a nexus with Congress’s power of the purse.

The second roadblock is West Virginia Senator Joe Manchin. He’s the majority’s 50th vote in the Senate, but he represents a coal‐​mining state that voted for Trump by 40 points in 2020. Any Democrat‐​only spending package will be only as green as Sen. Manchin allows, which isn’t very green at all. So that bodes poorly for the legislative prospects of a meaningful CES policy.

For these reasons, a clean electricity standard faces an uphill climb to become law. But if Congress doesn’t act, then the Biden administration is prepared to go it alone. Bloomberg’s Jennifer Dlouhy reports:

Congress should enact a clean‐​electricity standard that forces utilities to pare greenhouse gas emissions, but if lawmakers fail to deliver, the administration is prepared to act on its own, President Joe Biden’s climate chief told Bloomberg. …

“I don’t want to say that anything is a red line, because, frankly, a lot of the work that went into the bipartisan infrastructure plan was really building a tremendous foundation for us to grow on,” McCarthy said. “We have lots of regulatory authority that we intend to use regardless, and we will move forward with those efforts to try to tackle the climate crisis.” …

McCarthy stressed the importance of Congress advancing an array of climate policies — including longer‐​lasting and more‐​effective renewable tax credits that complement a utility‐​focused mandate. Expanded tax incentives “just means we have businesses ready,” McCarthy said. “What the clean‐​electricity standard says is ‘Go — don’t wait, go — because we are going to put you on a schedule that says you get out of the gate and run, and you keep running.”

“Without that, there’s going to have be a regulatory strategy to move that forward,” McCarthy said, “and I think we all can agree that a clean‐​electricity standard can actually be that motivator out of the gate that will allow us to get the kind of impacts at scale that we really need to have now.” (formatting added)

Got that? America’s climate czar says the executive branch can unilaterally impose a (Soviet‐​suitable) green energy production quota.

Alas, there is (for now) a judicial basis to support McCarthy’s sweeping assertion of executive power. In fact, her claims are rooted directly in a recent decision handed down by the D.C. Circuit only days before Biden took office. In that case, American Lung Association v. EPA, the D.C. Circuit found “ample discretion” in the “gaps” of the Clean Air Act to authorize a nationwide cap‐​and‐​trade for the electricity grid—even though the 111th Congress already had rejected this same policy.

On its face, the D.C. Circuit’s decision contravenes common sense. After all, how is it that a regulatory agency—based on its existing ambiguous authority—can achieve the same policy that Congress refused? The American Lung Association decision further contravenes guidance from the Supreme Court, which has previously warned the EPA against basing “major” climate policy on an uncertain statutory foundation.

Importantly, the D.C. Circuit’s decision is not the final word on the matter, at least not yet. Various states and companies have sought Supreme Court review of the D.C. Circuit’s legal reasoning. Last week, the Cato Institute filed a brief in support of the petitioners, urging the Court to take the case and rein in the EPA. If the Court declines to review the D.C. Circuit’s flawed decision, then the Biden administration would have a green light to pursue climate policy that is indistinguishable from failed legislation.

Used with permission. Cato Institute / CC BY-NC-SA 4.0

William Yeatman is a research fellow in the Cato Institute’s Robert A. Levy Center for Constitutional Studies, where he works on administrative law, constitutional structure, and regulatory reform. His work has appeared in academic journals like the Georgetown Law Journal and Appalachian Natural Resources Law Journal.