A setback for affordable energy

In a closely divided Supreme Court, the replacement of one “conservative” justice with a reliable “liberal” could – and depending on who is chosen to fill the vacancy created by the death of Justice Antonin Scalia may – change many judicial outcomes. Here’s a before and after example involving energy/environmental cases.

MATS - In Michigan v. EPA, 6/29/15, the Court decided that the Environmental Protection Agency (EPA) had not considered the cost of its Mercury and Air Toxic Standards (MATS) in the manner required by statute. Accordingly, this and several companion cases were remanded to the Court of Appeals, D.C. Circuit “for further proceedings consistent with this opinion.” Justice Scalia wrote the majority opinion; the four consistently liberal justices dissented.

Some observers saw Michigan v. EPA as a big victory for conservatives, but to us it seemed equivalent to “locking the barn door after the horse was stolen.” The EPA had begun enforcing MATS while it’s legality was being challenged and many power producers had already made costly changes to and/or closed coal-fired power plants that were not compliant. The legal reasoning was narrowly technical, moreover, and would not necessarily apply in other cases. EPA stumbles but will keep moving,
7/6/15.

There has been no stay in enforcement of MATS, nor is there anything to prevent the EPA from reopening the rulemaking process in some fashion and purporting to cure the procedural defect that Justice Scalia had hung his hat on. Indeed, it appears that the EPA will seek to do just that. As for other regulations in the pipeline, namely the Clean Power Plan [slated to be challenged as soon as the final rule was officially published], they were said to fall under a different statutory provision that the EPA had traditionally applied in a different fashion.

CPP – The EPA’s Clean Power Plan is designed to force reductions in carbon emissions from existing fossil fuel power plants. The stated purpose is to combat global warming, which is supposedly being caused by rising levels of carbon dioxide (now about .04% of the Earth’s atmosphere). Some critics suggest, however, that a hidden agenda is involved. Last-gasp assaults on affordable energy, Paul Driessen, townhall.com, 3/5/16.

[Renewable energy mandates] reward political cronies. They put unelected, unaccountable activists and bureaucrats in charge of our energy decisions and living standards. They redistribute wealth: from taxpayers to politicians, bureaucrats, lobbyists, wealthy investors, and workers and senior management in lucky greenback green industries and corporations. By virtue of their wealth, political power, or employment by government agencies that operate under different rules than those they enforce on citizens and businesses, these chosen few are also shielded from the consequences of policies and decisions they impose on the rest of us.

The CPP would cost a bundle, in our view, and its effects on the Earth’s climate would be negligible. We have so stated repeatedly. See, e.g. SAFE’s comments to the EPA, 11/26/14.

Finalized after a review of public comments (ours were apparently ignored) and cleared by the White House last summer, the CPP was published in the Federal Register in late October (the publication delay was said to be unprecedented). Several legal challenges were promptly filed, including suits by a consortium of states and by the coal industry. Among other things, the parties sought a stay of the CPP until such time as there is a final determination of its legality. 24 states [now 29] suing EPA over climate rules, John Siciliano, Washington Examiner,
10/23/15.

A determination on the merits was to be pursued on an expedited basis (arguments scheduled for June 2016), but the DC Circuit Court of Appeals denied a stay. The plaintiffs appealed this ruling. To their delight, the Supreme Court granted a stay. This meant that enforcement of the CPP would be blocked until the cases were decided. Chief Justice John Roberts could have ruled on the stay request, but he chose to refer it to the full Court. Supreme Court halts key Obama climate rule, Kyle Feldscher, Washington Examiner,
2/9/16.

The Court’s order identified four dissenting justices (Breyer, Ginsburg, Kagan, Sotomayor), which meant the other five justices had voted for a stay. It was speculated that Justice Scalia (a fierce critic of the EPA) had played a leading role in this matter. Carbon pollution controls put on hold, Lyle Denniston, scotusblog.com,
2/9/16.

The fact that the ambitious carbon control plan had been developed by the U.S. Environmental Protection Agency may well have contributed to skepticism among some of the Justices about that agency’s arguments for avoiding a delay. Justice Scalia is a particularly strong critic of the EPA. The strong states’ rights arguments put before the Court by the twenty-nine states probably attracted the support of Justice Kennedy, a champion of the dignity of state governments.

Administration officials characterized the decision as a procedural delay that would not change the outcome, but realistically the stay made it more likely that the next administration (if a Republican was elected president) would scrap the CPP on grounds that the EPA had exceeded its authority. White House defiant after Supreme Court halt of power plan, John Siciliano, Washington Examiner,
2/9/16.

Despite Tuesday's decision by the high court, the White House says it remains confident "we will prevail on the merits" when the litigation in argued in the D.C. Circuit Court of Appeals in June. A decision, however, may not come until President Obama has left office.

FERC – The Supreme Court recently upheld a Federal Electric Regulatory Commission rule designed to reward customers for reduced electric power usage during peak demand periods. Thus, in addition to not paying for power they didn’t use (or “negawatts”), qualifying customers could receive monetary credits.

The key legal issue was whether FERC, which is authorized to regulate wholesale electric power markets but is required to leave regulation of retail power distribution to the states, had exceeded its authority by giving consumers a right to be paid for negawatts. In a 6-2 decision (Justice Alioto recused himself), the Court overruled a lower court decision that had stricken FERC’s demand response rule.

According to the majority opinion (per Justice Kagan), the effect of FERC’s rule on retail markets for the electric power was merely incidental. Justices Scalia and Thomas dissented on grounds that the rule focused on power distribution to retail customers, not wholesale power distribution and the reliability of regional electric grids. Supreme Court upholds FERC’s demand response rule, Brent Kendall & Rebecca Smith, Wall Street Journal,
2/25/16.

As it happened, Justice Scalia’s opinion in this case would be the last of his many biting (and often brilliant) dissents. Justice Scalia’s final dissent, Daniel Horowitz, Conservative Review,
2/14/16.

While the majority would find every sale of electric energy to be within FERC’s authority to regulate unless the transaction is demonstrably a retail sale, the [Federal Power Act] actually excludes from FERC’s jurisdiction all sales of electric energy except those that are demonstrably sales at wholesale. *** No matter how many times the majority incants and italicizes the word “wholesale,” ante, at 19–20, nothing can change the fact that the vast majority of (and likely all) demand-response participants—“[a]ggregators of multiple users of electricity, as well as large-scale individual users like factories or big-box stores,” ante,at 7—do not resell electric energy; they consume it themselves. FERC’s own definition of demand response is aimed at energy consumers, not resellers.

KARMA – Appointed by Ronald Reagan, Justice Scalia had served as a Supreme Court justice since 1986. He died after retiring for the night on February 13, while staying at a posh West Texas ranch, and his body was discovered in his bed the next morning after he failed to show up for breakfast. The 79-year-old man’s demise was attributed to natural causes. Circle Creek Ranch owner recalls Scalia’s last hours in Texas, John MacCormack, mysanantonio.com, 2/15/16.

Given the obvious implications for future decisions of the Court, it didn’t take long for the subject of Scalia’s replacement to come up. Democrats envisioned that the president would nominate a candidate who, in the normal course, would be confirmed by the Senate within a month or two.

Most Republicans said Scalia’s replacement should be chosen by the next president, however, thus giving the American people a symbolic say in the decision. And both Senate Majority Leader Mitch McConnell and Judiciary Committee Chair Chuck Grassley have stated unequivocally that no nomination to fill the vacancy will be considered until the next president takes office, a position that Senate Republicans have the votes to maintain if they stick together.

Noting that the president is empowered by the Constitution to nominate a replacement for Justice Scalia, liberals shot back that a refusal by the Senate to review the nominee’s qualifications would be unprecedented and irresponsible. [Senator Tom] Carper: Don’t duck the Supreme Court, James Fisher, News Journal,
3/1/16A.

There is a certain amount of hypocrisy in this position, for prominent Democrats (e.g., Senators Joe Biden in 1992 and Chuck Schumer in 2007) have previously advocated blocking late term nominations of Supreme Court justices by Republican presidents. Also, one has to wonder why Senator Carper held a press conference about what is for now a hypothetical controversy.

Our initial thought was that senators on both sides should hold their fire until the president nominated a new justice, at which point they would have a clearer basis for deciding how to proceed. Scalia replacement: One step at a time, News Journal,
2/18/16.

There is a lot at stake, however, and the Republican position is arguably reasonable under the circumstances:

•Justice Scalia was a powerful presence on the Court, and his passing is mourned by those of the conservative persuasion. Witness this tribute, which was posted on the Conservative Caucus of Delaware website. Justice Scalia: We shall miss you,
2/21/16.

•The essence of Scalia’s judicial approach was his conviction that the words of the Constitution and other laws should not be reinterpreted to justify desired conclusions. Such an approach is “a recipe for failed government followed by tyranny, as our Founding Fathers knew well and feared.” Trust issues, James Thomen, News Journal,
3/1/16.

•Appointing a liberal justice to replace Scalia would shift the ideological balance of the Court. The resulting 5-justice liberal bloc could override the other justices whenever it chose, whereas the previous 4 liberals/ 3 conservatives/ 2 swing votes alignment produced some conservative victories. This could have a big impact on the outcome of energy/environmental litigation, such as the cases already discussed, and many other consequential matters.

•Republican leaders in Congress have often infuriated their political base by giving in to Democratic demands. Thus, despite a GOP majority in both houses of Congress, said leaders rammed through an omnibus spending/tax bill last December that belied Republican claims of being the fiscally responsible party. Some thoughts about the omnibus budget package,
1/11/16.

•This is an election year, and it has not escaped the attention of Senator McConnell, House Speaker Paul Ryan, and others that businessman Donald Trump has tapped into the anger of many working class Americans and could well be the Republican nominee for president.

•If Republicans took a “business as usual” approach, it’s been suggested, the president’s nominee would almost surely be confirmed. To have any chance of winning, the GOP should say “no way” and make it stick. Eight reasons why Senate Republicans need to stop all action to fill the Scalia vacancy, Michael Hammond, townhall.com,
2/23/16.

No doubt the administration will wage an all-out effort to overpower Republican resistance and get the president’s nominee confirmed. Most likely the president will refrain from nominating a controversial figure (e.g., Eric Holder), and whoever is nominated will be labeled as a moderate, eminently qualified jurist who was selected by the president without regard to partisan considerations. It will be claimed that the administration sought input on the nomination from all concerned, and that a refusal to consider the candidate would represent dereliction of the Senate’s constitutional duty. White House calls [all] 100 Senate offices on Supreme Court nominee, Nicole Duran, Washington Examiner,
3/4/16.

Who will win the battle? That’s hard to say, but we predict it will be a doozy – both in DC and on the campaign trail.

MATS II – Only eight months after the Supreme Court’s decision in Michigan v. EPA, the parties were back. The EPA still hadn’t finalized the study that should have been done before its Mercury and Air Toxic Standards were proposed in the first place, but some power plants were still not in compliance and it was itching to complete the implementation phase that had been so rudely interrupted. EPA asks Supreme Court to deny states’ motion to halt pollution rule, John Siciliano, Washington Examiner, 3/2/16.

"The requested stay would harm the public interest by undermining reliance interests and the public health and environmental benefits associated with the rule," the government argued in a response brief filed with the high court. "The application lacks merit and should be denied."

For their part, the states asked that a ruling be deferred until they could pursue a full appeal, which would among things “question the authority of a federal appeals court to return a case to a federal agency without postponing the underlying agency action, when that action has been ruled illegal by the Supreme Court.”

Pending completion and judicial approval of the EPA cost-benefit analysis, it seems to us, the Court should have sided with the states – if only out of respect for its own decision. But Chief Justice Roberts issued an order allowing MATS implementation to proceed, and he did so without referring the matter to the full Court. EPA’s mercury pollution rule remains in effect, Lyle Denniston, scotusblog.com,
3/3/16.

The answer is unknowable, but one can’t help wondering what Justice Scalia would have said about this turn of events. Also, in coming months, will the Supreme Court find some way to disable its stay in the CPP cases?
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