An environmental reporter last week asked for CEI’s thoughts on University of California, Berkley law professor Dan Farber’s article on the Inflation Reduction Act’s (IRA) implications for the Supreme Court’s decision in West Virginia v. Environmental Protection Agency. This post expands on my comments to the reporter.
In West Virginia v. EPA, decided June 30 by 6-3, the Court vacated a core Obama administration climate policy, the so-called Clean Power Plan. The CPP was a regulatory framework for herding States and fossil-fuel power plants into greenhouse gas (GHG) cap-and-trade programs—policies of the same type Congress repeatedly debated and declined to enact during the 2000s.
The Court leaned heavily on the “major questions doctrine,” which counsels judicial skepticism when an agency purports to find, in a long-extant statute, an unheralded power to reshape a significant portion of the U.S. economy without clear congressional authorization. The Court found no clear statement in Section 111 of Clean Air Act (CAA), the CPP’s putative statutory basis, authorizing the EPA to wield the powers of an industrial policy czar or override States’ traditional authority over electricity fuel mix within their borders.
Passed in the House and Senate on strict party-line votes, and signed into law by President Biden on August 16, the IRA’s spending and tax increases are more likely to produce stagflation than reduce inflation.
Drawing on interviews with IRA drafter Sen. Tom Carper (D-DE, Harvard law professor Jody Freeman, and other experts, the New York Times on August 22 called the IRA a “game changer.” In a nutshell, by describing GHGs as “air pollutants” in provisions amending the CAA, the IRA supplied the missing clear legislative authority for transformational regulatory policies like the CPP.
Farber mostly rejects such reasoning, especially the innuendo that the Court vacated the CPP because CAA § 111 does not mention GHGs. Referring to the Court’s decision in Massachusetts v. Environmental Protection Agency (2007), he explains:
The Court ruled in 2007 that greenhouse gases are pollutants and that EPA has authority to regulate them. It seems very unlikely that the Court would actually overrule the 2007 decision anyway. Not a single Justice in West Virginia v. EPA called for reconsidering that decision. What the majority did say is that a specific EPA regulation went too far, which has nothing to do with whether EPA has jurisdiction over greenhouse gases.
“However,” Farber opines, “some IRA provisions will help lawyers defend certain regulatory actions. IRA may also have an important framing effect when courts are considering the reasonableness of agency actions. Finally, it could help California’s claim of authority to phase out gas and diesel.”
Sen. Carper undoubtedly inserted CAA- and GHG-language in the IRA to provide specious talking points for pushback against West Virginia in the court of public opinion. After all, progressives never accepted the Court’s ruling that CAA § 111 provides no authority to transform the nation’s electric grid.
Accordingly, the remainder of this post addresses only the IRA’s inherent effects on the EPA’s powers under the CAA, not the law’s potential influence on future litigation.
Does the IRA Change the Legal Status of GHGs under the CAA?
Professor Farber believes it does. He quotes a line of text from the IRA section establishing a Low Emissions Electricity Program:
Moreover, IRA § 60107 provides EPA with $87 million “to ensure that reductions in greenhouse gas emissions are achieved through use of existing authorities of [the Clean Air Act].” Which pretty clearly says that EPA has existing authority.
I respectfully disagree. The text—IRA § 60107(a)(6)—directs the EPA “to ensure that reductions in greenhouse gas emissions are achieved through use of existing authorities of this Act.” [Emphasis added] Farber assumes “this Act” refers to the CAA but it almost certainly refers to the IRA.
The phrase “this Act” occurs 73 times in the IRA. In 69 instances, “this Act” unmistakably refers to the IRA. In three instances, “this Act” is text from the Minerals Leasing Act that IRA conforming amendments delete (§ 50262).
That leaves IRA § 60107(a)(6) as the only instance out of 73 where “this Act” might possibly refer to the CAA. However, that possibility is precluded by textual and contextual evidence.
Section 60107 is one of seven sections—the others being 60101, 60102, 60103, 60113, 60114, and 60201—where the IRA amends the CAA. In each section, the first sentence uses the phrase “such Act” to refer to the CAA. In six of those sections, the opening sentence refers both to the IRA and the CAA. In each case, the sentence distinguishes between the IRA and the CAA as “this Act” and “such Act,” respectively. For example, IRA § 60107 begins: “The Clean Air Act is amended by inserting after section 134 of such Act, as added by section 60103 of this Act, the following . . .” [Emphasis added]
Consistent with that usage pattern, the phrase “such Act” occurs 27 times in the IRA. In no case does “such Act” refer to the IRA, always to another statute (CAA, Social Security Act, Energy Independence and Security Act, etc.). More importantly, except when “this Act” is text to be deleted by conforming amendments, the IRA never refers to another statute as “this Act,” only as “such Act.”
To assume “this Act” refers to the CAA in § 60107(a)(6) would be inconsistent with the usage patterns found throughout the IRA, including the pattern in IRA sections that specifically amend the CAA.
Professor Farber writes as if all $87 million appropriated for the Low Emission Electricity Program (LEEP) is to “ensure reductions.” In fact, LEEP is an “educational outreach and technical assistance” program targeted at four interest groups: households, low-income communities, industries, and State and Tribal governments. Each of the first four paragraphs of § 60107(a) appropriates $17 million to one of the four groups. Paragraph 5 appropriates $1 million to monitor GHG reductions related to those expenditures. Paragraph 6 appropriates $18 million to ensure reductions “through use of the existing authorities of this Act, incorporating the assessment under paragraph (5).”
The most natural reading of §60107(a)(6) is as follows. The “existing authorities of this Act” are the authorized appropriations in paragraphs 1-4, totaling $68 million in all. The EPA may spend $18 million to ensure the authorized grants and assistance actually reduce electricity-related emissions, informed by the monitoring system authorized at $1 million in paragraph 5. A role for CAA regulatory authorities is neither specified nor implied.
As a substantive matter, it is hard to imagine how an $18 million appropriation for an “outreach and technical assistance” program could create or expand any CAA regulatory authority.
Even assuming, arguendo, that “existing authorities under this Act” refer to CAA authorities, that would not invalidate any premise on which the Court decided West Virginia v. EPA. It would simply raise the same question the Court addressed: Does CAA § 111 authorize the EPA to set emission standards stationary sources cannot meet except by curbing output, investing in renewables, or simply shutting down? Nothing in the IRA should, on the merits, flip the Court’s answer from no to yes.
Does the IRA Increase States’ Power to Regulate Motor Vehicle Emissions?
Prof. Farber thinks so:
There’s one important area where IRA may indirectly increase state regulatory power. IRA § 60105(g) gives states funding to “adopt and implement greenhouse gas and zero-emission standards for mobile sources pursuant to section 177 of the Clean Air Act.” If you turn to section 177, you’ll find that it allows other states to adopt California emissions standards. By implication, Congress seems to be endorsing California’s power to adopt greenhouse gas standards and require zero-emission vehicles.
Farber acknowledges § 60105(g) does “not completely blow . . . out of the water” the Trump administration’s position that California lacks authority to adopt motor vehicle GHG standards. However, he argues, the appropriation “makes it harder to argue that EPA approval of California’s standards ‘triggers the ‘major question doctrine,’ which requires that an agency have exceptionally clear statutory authority.”
As an aside, § 60105(g) authorizes a token appropriation—$5 million or 0.1 percent of the IRA’s $369 billion in “clean energy” tax credits and spending. Whether § 60105(g) will make any discernible difference in the pace or scale of vehicle electrification between now and September 30, 2031, when IRA authority expires, is doubtful. Can a clear statement simultaneously be a weak statement?
The chief problem, though, is that IRA authorities are fiscal, not regulatory. The IRA cannot create new regulatory authorities or strengthen existing ones. At most, it can increase funding for regulations authorized under existing statutes.
Section 60105(g) assumes the California waiver provision, CAA § 209(b), and the State opt-in provision, CAA § 177, lawfully apply to motor vehicle GHG emissions. But that can only be determined by a review of those statutes, not inferred from an appropriation.
The current litigation over California’s motor vehicle program, Ohio v. EPA, has not yet been briefed. Reportedly, petitioners will argue that CAA § 209(b), which authorizes the EPA to exempt California from federal preemption of State motor vehicle emission standards, is unconstitutional, because it violates other States’ equal sovereignty under the Constitution. Whatever one may think of that argument, the IRA has no bearing on its merits.
Ohio or subsequent litigation may also challenge California’s motor vehicle GHG and ZEV policies on statutory grounds. Under CAA § 209(b), no waiver may be granted unless California needs “such standards” to meet “extraordinary conditions.” There is disagreement on whether “such standards” refer to California’s separate motor vehicle program or the particular standards for which the State requests a waiver. There is also disagreement on whether California is “extraordinary” with respect to global climate change.
In my view, “such standards” refer to those specified in each waiver request, and California is not extraordinary with respect to either the causes or effects of global climate change. Whatever one may think about those issues, the IRA has no bearing on the merits. Appropriating $5 million for State policies predicated on an invalid waiver does not legalize them.
Subsequent litigation may also invoke Section 32919(a) of the Energy Policy and Conservation Act (EPCA), which prohibits States from adopting or enforcing laws or regulations “related to” fuel economy standards. Tailpipe carbon dioxide (CO2) standards are directly related to fuel economy standards, because an automobile’s CO2 emissions per mile are proportional to its fuel consumption per mile. If an agency regulates tailpipe CO2 emissions, it also regulates fuel economy, and vice versa.
ZEV mandates are substantially related to fuel economy standards, because as ZEV mandates tighten, they eventually increase fleet-average fuel economy, and as fuel economy standards tighten, they eventually require ZEV sales for compliance.
Thus, in my view, EPCA preempts California’s tailpipe CO2 and ZEV standards, which also means other States have no CAA § 177 authority to adopt those policies. Whatever one may think about EPCA preemption, the IRA has no bearing on the merits. Granting $5 million for policies already voided by EPCA does not legalize them.
Finally, CAA § 177 is a Title I (stationary source) program specifically addressing State planning for non-attainment areas. There are no national ambient air quality standards (NAAQS) for CO2 and other GHGs. Consequently, CAA § 177 authority does not extend to motor vehicle standards regulating or prohibiting GHG emissions. Again, the IRA has no bearing on the merits of that issue.
Winston Churchill once said that “No one can guarantee success in war, only deserve it.” The same holds for legal battles. The merits of the case do not always carry the day. However, the merits deserve victory only if clearly explained and defended. I have tried to do that here.