Over the last few years, the United States has led the world in the fight against climate change by passing some of the most impactful and largest investments in infrastructure and related regulatory reforms ever. Together, the Inflation Reduction Act and the Bipartisan Infrastructure Law seek to deploy nearly $1 trillion in climate positive infrastructure investment over the next decade. At the same time, however, the U.S. Supreme Court has issued a series of decisions that together significantly curtail the authority of executive agencies charged with implementing and defending legislation passed by Congress and signed by the President. In its most recent term, the Court issued four such decisions including Loper Bright Enterprises v. Raimondo, which overturns a 40-year precedent and ensures the courts will have a commanding voice over climate policy and regulation for the foreseeable future. In this episode, Chad Reed unpacks the details and implications of Loper Bright and related Court decisions with Kevin Poloncarz, a partner with Covington & Burling and one of the top climate change attorneys in the United States.
Over the last few years, the United States has led the world in the fight against climate change by passing some of the most impactful and largest investments in infrastructure and related regulatory reforms ever. Together, the Inflation Reduction Act and the Bipartisan Infrastructure Law seek to deploy nearly $1 trillion in climate positive infrastructure investment over the next decade.
At the same time, however, the U.S. Supreme Court has issued a series of decisions that together significantly curtail the authority of executive agencies charged with implementing and defending legislation passed by Congress and signed by the President. In its most recent term, the Court issued four such decisions including Loper Bright Enterprises v. Raimondo, which overturns a 40-year precedent and ensures the courts will have a commanding voice over climate policy and regulation for the foreseeable future.
In this episode, Chad Reed unpacks the details and implications of Loper Bright and related Court decisions with Kevin Poloncarz, a partner with Covington & Burling and one of the top climate change attorneys in the United States.
Links:
Supreme Court strikes down Chevron, curtailing power of federal agencies (SCOTUSblog, July 2024)
CleanLaw – Suite of Supreme Court Decisions Undermine Administrative Law
Episode recorded September 12, 2024
Chad Reed: I'm Chad Reed.
Hillary Langer: I'm Hillary Langer.
Gil Jenkins: I'm Gil Jenkins.
Chad: This is Climate Positive.
Kevin Poloncarz: Creative lawyers are always going to find ways to deliver the hand that's dealt us by the Court to argue our side, but it's just important to recognize that what's been put out in the press as death of administrative state is really just a rethinking of how we're going to go about doing the work that needs to get done by agencies within the constructs of what Congress has enacted.
Chad: Over the last few years, the United States has led the world in the fight against climate change by passing some of the most impactful and largest investments in infrastructure and related regulatory reforms ever. Together, the Inflation Reduction Act and the Bipartisan Infrastructure Law seek to deploy nearly $1 trillion in climate positive infrastructure investment over the next decade.
At the same time, however, the U.S. Supreme Court has issued a series of decisions that together significantly curtail the authority of executive agencies charged with implementing and defending legislation passed by Congress and signed by the President. In its most recent term, the Court issued four such decisions including Loper Bright Enterprises v. Raimondo, which overturns a 40-year precedent and ensures the courts will have a commanding voice over climate policy and regulation for the foreseeable future.
In this episode, I unpack the details and implications of Loper Bright and related decisions with Kevin Poloncarz, a partner with Covington & Burling and one of the top climate change attorneys in the United States.
Chad: Kevin, thank you so much for joining us today.
Kevin: Pleasure to be here.
Chad: Kevin, you grew up in Buffalo, New York, the son of a union steelworker and a Catholic hospital nurse, and you are now ranked among the top five climate change lawyers in the U.S. Could you tell us a little bit about your impressive career path?
Kevin: Well, it's funny you should mention my father being a steelworker because it's very rooted in why I do the work I do. I grew up not actually in Buffalo. We call it Buffalo. If you put 14218, the ZIP Code, in, it says Buffalo, but it's Lackawanna. It's the steel city where Bethlehem Steel had its largest steel mill during World War II. My dad was a steelworker there. There were more than 20,000 jobs. When I was growing up, there were strikes, there were layoffs, and ultimately the plant closed. The narrative that at least was sold to my father and the union guys and that trickled down to me was that it was environmental regulation, in part, that killed U.S. steel. It was really foreign competition, Japanese subsidies at that time, but that was the narrative that was in my head.
Meanwhile, I was the third of three sons, and my brothers were both virile and healthy and playing sports. My dad coached teams. I was this sickly kid who they actually thought I might have cystic fibrosis until I was three or four because I had bad lungs. When the mill closed, obviously the town was decimated economically you take away that many jobs. My dad had a job because he was a union steward doing closed-down operations for more than a decade. The town was pretty much decimated, but suddenly I got healthy. I outgrew my asthma, they said.
We were living downwind of the mill, and it was really filthy air. I would later learn that it was like New York State's most toxic air. That stuck with me. Then I got to law school at the University of Chicago, where, for better or for worse, they try to analyze every problem through the framework of law and economics. I took environmental law and was told that this is just application of the Coase Theorem to an environmental problem. What that basically means, dumbing it down, is that if it weren't for transaction costs, it wouldn't matter whether you give the right to the polluter to pollute or the right to the citizen to breathe air because they would bargain for the optimal outcome.
Chad: Yes. Certainly, same power level, right? No power differential there.
Kevin: Sure, of course. None. Then the more normative theories were trying to figure out how do we deal with that power differential or whatnot. That just didn't resonate with me. That was like, no, this is about something deeper than that. Of course, it was all about the Clean Air Act, and Bethlehem Steel was one of the early litigants. They were challenging most of EPA's initial regulations.
Then when I got into private practice, it was like all those issues about government agency action and who has a right to breathe clean air versus what is the right to support industry just really resonated with me, and so I became a Clean Air Act lawyer. I'm in California, and here the state invested the California Air Resources Board with producing an overall strategy for achieving climate reductions. Also, we, as you may know, have been trying for decades to regulate carbon pollution under the Clean Air Act, and so it just became a really fertile place to think about these issues.
That's how I ended up doing what I'm doing. I was a Clean Air Act lawyer until climate became a thing, which was probably a decade after I was practicing. There was no such thing as a climate lawyer when I came out of law school. Now I represent lots of different companies who have largely been defending EPA's authority to establish pollution standards for power plants, for cars and trucks. We're learning a lot more, as you probably know, about tax law these days as environmental lawyers because of the Inflation Reduction Act, which is finally the way we're trying to crack this nut.
Chad: Excellent. Your background is interesting. I'm actually from a small town in Western Pennsylvania outside of Pittsburgh. My great-grandfather was a coal miner, and he was actually alive for the first decade or more of my life. I saw his health problems as a result of being in the mines for as long a period as he was. It certainly was an impetus for me to explore how to create clean energy jobs.
Kevin: At this stage of my dad's life, he's 81, he worked in what was known as the benzene plant. Benzene is this highly carcinogenic substance. He's had friends who worked in the plant with him die of brain cancer decades ago, and he would say that he has all these basal cell carcinomas on his face. He said when you'd leave the plant, you'd go shower, it would just stink. It was just a different world. All of that, certainly, as you understand from your great-grandfather's experience, leaves an impression upon why we do what we do.
Chad: Today we're here to discuss a pretty important term of the Supreme Court that ended in July. In the final three days of this 2024 term, the Court issued four blockbuster administrative law decisions, mostly split down ideological lines with most of the right-of-center justices in the majority and all of the left-of-center justices in the minority in each of the decisions. These decisions signal a major shift in climate law, both on the energy and the environmental fronts.
There is one particular case and decision that I want to focus on in this discussion, and that is Loper Bright Enterprises v. Raimondo. Before we jump into the specific facts of the case, I want to talk about the 40-year precedent that the decision in Loper Bright actually overturns, and that is the Chevron v. NRDC decision, or what has come to [be] known as the Chevron Deference. Could you walk us through Chevron and its significance over the last 40 or so years?
Kevin: The interesting thing is that when Chevron was decided in '84, it was actually considered an anti-regulatory decision. It was considered business-friendly. The case actually concerned what constitutes a stationary source under the Clean Air Act. Was it the entirety of a petroleum refinery, or was it each and every one of the hundreds of units that comprise a refinery? The upshot was if it's the entirety of the refinery, then increases at one of those individual sources wouldn't need to use the best new technology if those increases were offset by reductions elsewhere. That was known as like EPA had this bubble concept. It was viewed as widely industry-friendly. What the Court did, in sum, they upheld EPA's bubble concept interpretation of what's a stationary source.
The framework they laid out, this two-step framework we call Chevron, basically provides at step one; if a statute is clear on its face, then the court upholds the meaning that Congress provided to a term; but at step two, if Congress hasn't filled in the details or if it's not clear on its face, then the court should defer to the agency's interpretation so long as it's a permissible construction of the statute, and the really important point is even if the court might think a different interpretation might be better. That's the Chevron two-step framework, which has evolved into what folks view is a highly deferential standard that gives agencies free rein to take congressional statutes and interpret them to their liking.
Chad: I think it's important to note that these executive agencies, in this case, the EPA, obviously a part of the executive branch of government under-- ultimately, the EPA Administrator is appointed by the president, and so as administrations change, the views of these agencies can change as well. Under the Chevron Deference, there was democratic accountability. We elect the president and the president appoints the head of the EPA or whatever agency we're talking about. Then those agencies interpret the statutes and try to implement the statutes as their leaders who are appointed by the president think are best.
Sometimes you have a Democratic administration and then the interpretation is one way. Sometimes you have a Republican administration, the interpretation is maybe a little different, but it's not some sort of fixed item where you have this imperial executive agency of the EPA just doing whatever it wants. The head of the EPA is appointed by the president and can be fired at the will of the president at any point in time. I just think that's an important point to make in this regard because the last 40 years, that's what we had. This was the precedent under which EPA and a lot of other executive agencies were operating.
Kevin: More importantly, as Kagan would say in her dissent in the case, which we'll get to later, but this is the backdrop against which Congress has been legislating or not legislating. Meaning, Congress delivered some really big statutes like the Clean Air Act that could do really big things and have been viewed by economists as incredibly successful at cleaning up the air, but they didn't tinker with it constantly and address every problem and every nuance. Instead, it allowed the agency to take that statute, that bedrock, and use it to address new situations. It's an important thing to think about. Not only is the agency and the executive ultimately accountable, but Congress was acting against this notion that agencies have some authority to do what they need to do with congressional delegations previously provided.
Chad: With this context in mind, let's turn specifically to the Loper Bright decision. What was actually at issue in this case?
Kevin: It deals with a rule that was adopted by the National Marine Fisheries Service, which authorized these regional councils to require fishermen to pay for observers on their fishing vessels. This was estimated that it could cost up to about $710 a day and that was seen as highly intrusive. Never mind that the fishermen never got charged the fee because the agency said we're not going to let it be charged.
You really don't really need to worry much about what the statute provides, like what its authority, because this case was basically handpicked by a bunch of conservative legal scholars to be the perfect vehicle to test Chevron and to really seek to overturn it. The Court doesn't spend much time talking about the Magnuson-Stevens Act or the particular interpretation at issue. It's really just about this ultimate question that if Congress doesn't speak to something in a particular part of a statute, can that be viewed as an implied delegation to the agency to fill in the details and do something like create a requirement for fishermen to have these paid observers on their boats for the obvious reason of assuring that overfishing doesn't occur?
Chad: Right. The Court ruled that the fisheries agency could not require that these observers be on the vessels, at least paid for by the industry themselves. Then not just narrowly decided this case, but in the course of doing so, overturned this 40-year precedent. Could you talk to us a little bit about the reasoning of the majority in this case?
Kevin: Yes, it's interesting. Really, the immediate holding about overturning this particular agency formulation of what was required for fishermen, they blew by that. This was all about saying Chevron is dead. We're going to kill Chevron and overrule 40 years of precedent. The way the decision starts, like in the case of West Virginia, which was issued on the last day of the term in 2022 and deals with similar issues we can talk about later, the chief kind of rooted this analysis in the separation of powers. They talk about Alexander Hamilton's Federalist Papers. They talk about the seminal case Marbury v. Madison, which says courts, in our three-part governmental system, decide what the law is. Then they turn to focus on the Administrative Procedure Act. That's an act legislated by Congress in 1946, and it has a provision, at 706, that provides for judicial review of agency actions, and it provides that courts decide "all relevant questions of law."
Now what the Court says is when Chevron in 1984 was decided, it's really odd to them that the justices, which was just a bare quorum of them, they never even mentioned the APA. They never even attempted to reconcile their decision, saying we should defer to an agency's reasonable interpretation with Section 706, which they say just ends the question. It says courts decide all relevant questions of law. They essentially say this was a judicial invention, Chevron, that required judges to disregard the statutory authority under the APA. The majority basically says for four decades, we've had our whole analytical framework wrong, courts have not been doing their job, and now they're essentially restoring the role of the judiciary to its appropriate function.
Interestingly, while the Court says this is all about just interpreting Section 706 of the APA, the decision is suffused with these constitutional dimensions, all about the separation of powers, about who gets to decide questions of law, about who should be deciding these big policy questions. These were the same principles that animated the Court's West Virginia decision, which we can talk about later. They really suggest to me a hard-fought majority opinion, where some justices may have wanted to say this is merely rooted in the APA, this is about applying Section 706. Justice Gorsuch very likely was like, this is about what power Congress has qua the executive, qua the courts, and who gets to decide really difficult questions.
Chad: My next question was going to be, could Congress simply change the Administrative Procedures Act to basically legislate into law the Chevron precedent that we had for 40 years? What you seem to be suggesting to me is, well, they could try to do that, but there still may be a majority on the Court to overturn even that because they believe as a matter of constitutional separation of powers that it is not the executive branch that should be making these decisions. It is basically the judiciary.
When we talk about separation of powers, what's interesting here is the Supreme Court is saying, no, these powers actually belong to us. These powers belong to the judiciary. The judiciary should be more powerful, and we're going to take back that power. Is that an accurate reading, you think?
Kevin: Yes. This is a court that is willing to aggrandize its authority, as you suggest. This is a power grab in many respects. However, I think that there probably is a majority of the Court that would say, sure, if Congress wants to rewrite the 1946 law, the APA, and provide that courts don't have power to decide complex questions in the first instance, that should be up to agencies, we would step back and defer to that. The truth is that's not going to happen. They know they're playing in safe territory to say this is just a question of statutory interpretation, and with the upshot that the statute could potentially be revised.
Chad: Justice Kagan wrote the dissent for three of the justices. Can you tell us a little about her view and the primary arguments she's made?
Kevin: Well, she calls to task the Court for saying, since the early days, like the 1930s, courts were only deferring to agencies on factual questions, not on legal questions, like how to interpret statutes. Kagan essentially says that's not a fair characterization because it's always a mixed question as to is something a fact question or is it a legal question, particularly when you get into that gray area of what is policy. It's amazing how much time in the oral argument in this case was spent on trying to tease out, is that policy? Is that law? Facts somehow inform that.
What Justice Kagan ultimately says, she calls the majority to task in withering terms. She says a rule of humility, which courts exercising judicial humility, not stepping into second guess agencies, gives way to a rule of judicial hubris, meaning the courts assume they know better than expert agencies how to decide and decipher what Congress intended when they enact laws. She's very snarky, and she has this really good part where she says if opinions had titles, a good subtitle for today would be hubris squared. What she means by that is the hubris both of not deferring, not stepping back and saying the agency gets a chance to interpret this in the first instance, but also going to the extraordinary measure of overturning a 40-year precedent. The Supreme Court does not blithely overturn its precedents, and she's calling them to task on that. As you know, there are other cases in recent terms, Dobbs, for instance, in which this issue has come up. It really reflects her view that this majority is seeking to aggrandize power to themselves.
Chad: It's clearly evident from our conversation, nearly all legal experts acknowledge that this is a very sweeping decision. The implications are pretty vast. As we've been saying, instead of deferring to executive agency expertise on technical policy matters, justices and judges are now encouraged to weigh in on matters which they may have little expertise in. You, Kevin, have argued that the overturning of Chevron is likely to lead lower courts to aggressively police agency action and to result in less uniformity and regulatory uncertainty. Tell us why.
Kevin: Well, for the mere fact that you could have different judges, based on their ideological predispositions, deciding that the agency got it wrong and that there's a better interpretation of a statute than the one that the executive has offered. That leads to legal uncertainty, regulatory uncertainty, insofar as an agency doesn't know whether its interpretation is going to be upheld, and those who are obliged to comply with the agency's rules won't know whether it's possible that that agency can be second-guessed by some other judge somewhere else, particularly for those types of statutes that don't have exclusive jurisdiction in a single court, like many do. It will invariably lead to-- We'll see, actually.
In a perfect world, the theory of the majority is that judges will get it right and they will decide and they will prevent agencies from doing the kind of flip-flopping between administrations that we've seen and that they see as the worst of Chevron. There's a case, Brand X, where it totally was a flip-flop, was poorly justified, and they said, well, we have to defer to it. The agency has the interpretive authority. Their view is that that provides regulatory uncertainty, and there's some truth to that.
Chad: What about the prior decisions over the last 40 years that have relied on Chevron? Are they now at risk of being overturned?
Kevin: To some extent, yes. The Court employs this notion. They provide some, no, no, we're not going to do that. That all those decisions that relied upon the Chevron framework, there's some kind of conceptualization of statutory stare decisis. That the outcome is still good law despite the fact that its underpinnings are no longer good law. It's unclear how this is going to play out because any single time an agency relies upon that earlier interpretation to act again, it could be subject to challenge. There are some examples we've been thinking specifically about, like in the Supreme Court and the Cross-State Air Pollution Rule. That was a 2014 decision that was upheld specifically on a Chevron Step 2 analysis, and it's a really arcane statutory or regulatory framework based upon some very narrow words in the statute. Would the agency be willing to proffer that interpretation again? It's unclear.
Chad: You just gave one concrete example, but are there any others, whether in the energy space, perhaps actions by the Federal Energy Regulatory Commission (FERC) or by the EPA, the Environmental Protection Agency, concrete examples of how this ruling could impact energy and environmental, climate regulation?
Kevin: Well, here's one. It's a FERC case. It concerns-- you may have heard of this Broadview case, concerning Broadview. It was a solar and battery storage system. The DC Circuit applied Chevron to resolve the question of what constitutes a qualifying facility under PURPA. Qualifying facilities, they have a mandatory purchase obligation, meaning the investor-owned utilities need to buy power from them. It's a device to ensure and to promote small power production facilities. It has been used, prior to things like the Inflation Reduction Act and tax credits, to really catalyze renewable generation.
It's a really complex case. Basically, Broadview has this solar array that's 150 megawatts. They have a battery storage facility of like 50 megawatts. The statutory threshold is 80 megawatts for what qualifies as a small power production facility. FERC had denied Broadview's application, saying you're above 80 megawatts because you have 150 or 160 megawatts of solar generation capacity. They said, well, this really differs from what we previously decided. It was always based on how much power you could send to the grid. Is it above 80 megawatts or not? Then in 2021, FERC switched sides and they basically said, we're granting Broadview's application. They did this saying that the statute was ambiguous as to what's the proper measure. Is it DC? Is it AC? Is it the amount of power that the solar array can generate at any second, or is it the amount that it can deliver to the grid?
The DC Circuit deferred to FERC's interpretation at a Chevron Step 2 analysis, saying the statute is ambiguous as to what power production facility is, and we're just going to say the agency gets it right. They have a reasonable interpretation. It's consistent with the statute, which was intended to promote small power production facilities, they said. They said the fact that Broadview has more than 80 megawatts and it has this storage facility, that means that it can deliver 80 megawatts to the grid while it's charging its battery. Then when the sun sets, it can discharge that battery to the grid. They said that's a feature, not a bug, and they said that's consistent with the purpose, so we're going to say they get Chevron deference.
On the same day that the Court decided Loper Bright, they vacated that decision of the DC Circuit. They remanded to the DC Circuit and they said, reconsider your decision in light of Loper Bright v. Raimondo. Meaning, did the agency decide properly what is a small power production facility and how to apply this? Is it the AC? Is it the DC? Or not?
That's the kind of new territory we're in. It really brings to bear some of the really big issues. It's like, should judges really be the ones who are deciding how you measure the alternating current versus the direct current, the limitations from the inverters, or should that be something that the agency gets to decide first? On the other hand, it also illustrates that the agency shifted sides over administrations. Again, it's an independent agency. It's FERC, so there should be more certainty there, but it really shows us the best and the worst of how Chevron played out, and it's uncertain how we're going to go forward.
Chad: Wow, that is a very relevant case, especially in our industry. I guess that is my question is, how do you anticipate judicial review of agency action will actually work in practice going forward? In Loper Bright, the Chief Justice wrote [for] the majority, and did lay out some framework for how this should work going forward. What is your interpretation of how it actually will work in practice now?
Kevin: If I were like Kagan, to try to apply labels to like subtitles for a decision, it would be the death of the administrative state, maybe. This is a case in which the Court took the occasion to kill Chevron, put the nail in its coffin, but it did it in a way that actually may still leave a lot of room for agencies to do things. They basically say, look, there's this theory of implied delegations. If the statute says nothing, you don't get a green light, agency. That's what they're saying very clearly. However, they say that where the statute delegates decision-making authority to an agency or the authority or discretion to the agency to fill in the details, courts should exercise, always have to exercise their independent judgment, but they will recognize that Congress delegated to the agency some discretion. They use examples from the Clean Water Act about whether it's reasonable to regulate water discharges, or whether it's appropriate and necessary under the Clean Water Act to regulate hazardous air pollution. Those broad terms, appropriate, necessary, reasonableness; giving the authority to the agency to decide that, they're willing to say that could be the best interpretation of the statute, that the statute actually authorizes the agency to do that.
Interestingly, since the decision in Loper Bright has come down, we've actually had supplemental briefing in some cases where we've all been proceeding for several years as though Chevron is dead. Agencies aren't going to get deference. Now there's like this window that's open to go back to the Court and say, actually, this specific statute here-- and in one case, we're dealing with Section 202 of the Clean Air Act, which says the agency shall prescribe, by regulations, standards to regulate tailpipe emissions to address any pollutant that endangers human health of the environment, that administrator finds in its judgment endangers human health of the environment. That seems like the quintessential type of statute that delegates to the agency some decision-making authority.
When the court in the DC Circuit called for supplemental briefing in the case challenging EPA's tailpipe standards, saying just like in West Virginia where the Court said EPA can't use the Clean Air Act to force a shift away from fossil generation, so too EPA can't use the Clean Air Act to force a shift away from the internal combustion engine; we're saying in our supplemental briefing, actually, this is the type of statute that allows the agency to do things like averaging, which they have long done.
Moreover, there's this other principle in Loper Bright – Skidmore deference – that says if the agency has a long-held interpretation, this is an 80-year-old case, that that may be worthy of some consideration by a court, even in exercising its independent judgment, particularly if it's issued contemporaneously with the statute. You might consider the agency- we're not going to defer to it, but you might give their view some extra credit, perhaps. Think of it that way. There, we said every single time, across administrations, Obama, Trump, Biden, since the Supreme Court decided Massachusetts v. EPA and said you need to regulate tailpipe emissions if they cause an endangerment, EPA has regulated greenhouse gas emissions in a way that allows for averaging of electric vehicles into the standard. That might be worthy of some Skidmore deference, according to Loper Bright.
Creative lawyers are always going to find ways to deliver the hand that's dealt us by the Court to argue our side, but it's just important to recognize that what's been put out in the press as death of administrative state is really just a rethinking of how we're going to go about doing the work that needs to get done by agencies within the constructs of what Congress has enacted.
Gil: Climate Positive is produced by HASI, a leading climate investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. To learn more, please visit HASI.com
Chad: In the renewable energy space, the challenge we have now is how do we build these new generation and storage facilities as quickly as we need to? How do we support the growth of these industries as quickly as we need to, to decarbonize our economy, to mitigate the worst impacts of climate change? There are certain existing statutes, whether it's the National Environmental Policy Act, well-intentioned law in many respects, that and others that result in enormous delays to project development and enormous, often, litigation time and costs. Could Loper Bright be used by developers to, in some ways, reduce the regulatory burden they face today from building new projects?
Kevin: Yes and no. Yes, insofar as when the CEQ, the Council on Environmental Quality, promulgates rules to decide how agencies in making decisions should assess the environmental impacts of projects, those rules are more susceptible to challenge. Filling in the details as to how do you consider the indirect greenhouse gas emissions associated with an LNG facility, for instance. Those type of rules, when CEQ promulgates them, are now subject, possibly, to a higher degree of judicial scrutiny because the Court is not going to give CEQ a free pass and say, oh, you're the one who knows how to assess greenhouse gas emissions. You're the expert agency. You get a free pass.
By the way, I agree with your formulation completely. I've gotten on my soapbox at private convenings and told my E-NGO friends I love them, but they have to stop challenging every project because we need to build our way out of this climate crisis, particularly given the gift of the Inflation Reduction Act and the way it works. Most of those decisions and most of the litigation there, they're very fact-bound. There's a big difference between deference when it comes to like capital-D deference that's dead in Chevron, how an agency interprets a statute, versus the little-D deference about how an agency goes about deciding the facts on the ground. Agencies have always been given some degree of terrain to make those factual judgments, and I don't see courts, Loper Bright, necessarily indicating that they're going to step out and just say agencies never get even to decide the facts.
So, yes and no. I think we'll see how it affects the ability to get things built. I am sure Loper Bright will be raised as a basis for not only challenging agencies' decisions to issue regulations, but also challenging agencies' decisions to issue permits for projects too, saying, the statute doesn't afford us stability to think that development on solar land is a good thing unless Congress says so. Lots of different ways in which this could come up and play out.
Chad: This decision is obviously not the only decision that the Court issued that's relevant here this term. There are a few others: Jarkesy, Corner Post, Ohio v. EPA. You mentioned earlier the decision a couple of years ago, and we had an episode on this as well, West Virginia v. EPA. Could you talk us through, just at a high level and quickly, how these decisions weave together to create a new regime for climate law and regulation going forward?
Kevin: Yes. Well, I will start very quickly with West Virginia. That was the biggest loss of my career. I argued the main statutory point in the DC Circuit below, which found that the statute wasn't unambiguous, that perhaps EPA could decide that the best system of emission reduction for power plants consisted of the way the power grid operates to shift generation from the higher-emitting units to the lower-emitting units, economic dispatch, et cetera. We've known since that decision was issued on the last day of the term in 2022 that the administrative state was imperiled.
This decision in Loper Bright v. Raimondo is a continuation of that, very much so, and very much indicates the Court essentially saying, no, agencies. You aren't going to get the ability to call the question when the question is particularly big now in Loper Bright as well, even if it's not particularly big. The other decisions are all fairly much consistent with this narrative of the Court eroding the administrative state, the power of agencies to do the work they need to do.
The first one, Jarkesy, that's a really complex case that deals with the SEC, the Securities and Exchange Commission. They have their own adjudicatory process for imposing penalties. It gets really complicated really quickly, but the Court essentially says that it's only Article III judges who should be imposing penalties like that. Even when Congress might attempt to delegate authority to an agency to set up some internal tribunal, it calls it into question. There's all these questions. I've even heard questions from folks saying, "Can agencies even issue administrative orders on consent, espousing some regulatory, some disciplinary authority, or is it only the courts who can do that?" That's a really interesting case.
Then there's this other case of Corner Post, and that concerns the Federal Reserve Board of Governors. There was a question just like, when does the ability to sue first accrue under the Administrative Procedure Act? The Court says it's not when the agency takes the action; it's when you are first harmed by that action. You, person who owns a grocery store, a gas station, you're harmed because of the agency's rule about calculating debit card fees. You didn't exist when the agency promulgated that rule, but you came into existence later. You get six years to challenge it from the time you came into existence. That leaves open agency interpretations to challenge long after they are initially promulgated. Now that deals very much with the Administrative Procedures Act judicial review and statute of limitations. A lot of statutes have very prescriptive ones. Like under the Clean Air Act, you need to file suit within 60 days in the DC Circuit, so that's not affected. For these statutes that don't, Endangered Species Act, otherwise and rely upon the Administrative Procedure Act, it's feasible or thinkable that folks may say, "I didn't exist. I'm a new corporation," to get a second bite at the apple to challenge agency rules long after they've been promulgated.
The last rule I'll touch on really quickly, it's decision of Ohio v. EPA. In some ways, it may be the sleeper, but it's very significant. Basically, there the DC Circuit had denied stays-- It's a very complex case concerning EPA's good neighbor rule, which regulates power plant pollution. The DC Circuit had denied stays that were requested by various industry applicants. Then just like recently, there were emergency applications filed with the Supreme Court and the Supreme Court granted them, basically having this exacting standard for how the agency should have responded to comments.
The most interesting thing about it is all the other three cases were 6-3: the six conservative justices, the three liberal justices. In this one, Justice Barrett wrote a blistering dissent. She joined the three liberal justices and wrote this blistering dissent basically saying that this is the Court getting out ahead of itself. That here had the Court just waited for the ordinary process to play itself out at the DC Circuit, that case is still being litigated on the merits, that there would have been no error for the Court to find that now holds up this whole federal rule that's regulating pollution from power plants. She warns the majority. She says, we really should be careful and cautious before we dive into these cases with voluminous records on an emergency application. Emergency application, the colloquial term for that is shadow docket.
It's a really interesting case, but it goes to the point that this, again, is a court that is willing to aggrandize their authority. They're not going to stand back and wait for the DC Circuit to do its work and figure out the problem and then decide whether to grant cert. They're going to jump ahead even if it means that they get in front of both the DC Circuit and the agency. It's a really interesting case. The four of them together, when you layer that on top of West Virginia, do indicate what many folks would say is an erosion of administrative power.
Chad: And an aggrandizement of judicial power.
Kevin: Correct.
Chad: Well, on that not so cheery ending, Kevin, we're going to go to the hot seat where we're going to ask for your immediate reactions to the following statements and questions. One thing I've changed my mind on is--
Kevin: The role of regulation. I used to think that it was either regulation or it was tax incentives. It was either regulation or economy-wide carbon tax. Now I realize that they're two sides of the same coin, they're complementary, and they need to work in tandem, and I think the Inflation Reduction Act does that. There are so many examples I could tell you about. We won't get into it.
Chad: Excellent. The key ingredient to my productivity is--
Kevin: I think it's about having a long view of what I should be spending my time on at any given moment. I teach students at Stanford Law School. I put so much effort into that and it's not a billable hour. My dad asked me, "They must pay you a lot to do it if you don't get time off from work." I'm like, "No, dad. They barely pay me anything." It's about having a long view about where you want to put your time and viewing it all as a virtuous circle. That if you're doing pro bono work for the Nature Conservancy on Paris Agreement Article 6, if I'm teaching students, if I'm working for clients, if I'm recording podcasts, it's all about how you're engaging with these issues, and you need to view it with that long view in mind.
Chad: Excellent. Well, thank you for spending the time on this podcast. To recharge, I--
Kevin: I garden, and I spend time with my goats and my chickens.
Chad: Nice.
Chad: I want the next generation to know--
Kevin: Oh, this one. Some of us out there like me, Gen X person, 50 years old, we tried hard. We've been at this for years, banging our heads against the wall on trying to get carbon pollution regulated under the existing tools. A lot of this young generation, I'm not putting my students in this camp, they tend to villainize all of us for bequeathing to them a world that's burning. I see this-- like there's a lawsuit that's filed by Our Children's Earth. They're the ones who have the youth climate suit you may have heard about. This one accuses EPA of violating their constitutional rights as children, which are distinct from adults, to a safe climate system.
Really? Do you think that the Biden-administration EPA is really violating your constitutional rights? There's some of this rhetoric that goes through some of the Climate Defiance movement and otherwise, where they're villainizing those who are really trying hard to solve the problem.
Chad: That's unfortunate. I know that you live in Napa. The best hidden gem winery in your area is--
Kevin: It's the end of my street. It's Palmaz Vineyard. It's a guy who invented the heart stent, which means he has a lot of money. He built this six-level winery in the mountain. It's 13-stories tall, where it's all gravity fed. The guy who invented a heart stent, about pumping blood through the body, has this thing that when you get in it, you realize you're like in the heart of this winery where everything is gravity flow. The grapes go in on the top level, they get crushed, they go down, they finally end up in the barrels on the lowest level. It's really cool. It's right at the end of my street.
Chad: Awesome. I’ll have to check it out. To me, finally, climate positive means--
Kevin: Remaining hopeful. Even when the work is hard, even when you get knocked down, even when you've been trying to get climate pollution power plants regulated for over a decade, keep going.
Chad: Well, thank you very much, Kevin. Thank you for all the work you do for climate and our country, and really learned a lot in this discussion. Appreciate it.
Kevin: My pleasure. Thank you so much for having me.
Chad: If you enjoyed this week’s episode, please leave us a leave a rating and review on Apple and Spotify. This really helps us reach more listeners.
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I'm Chad Reed.
And this is Climate Positive.