The Obama administration is coming off its most successful term at the Supreme Court in several years with one notable exception: environmental and property rights cases.
In the term that ended last week, Solicitor General Donald Verrilli and his team secured wins in most of the year’s highest-profile cases, including preserving the president’s health care reform and securing a constitutional right to same-sex marriage.
But environmental cases produced the one noticeable blemish on the administration’s record for the year — a reversal from a year ago when the Justice Department largely prevailed in environmental cases but lost other closely watched decisions (Greenwire, July 7, 2014).
On the last day of the term, the high court in a 5-4 vote said U.S. EPA should have considered the $9.6 billion price tag of its landmark Mercury and Air Toxics Standards for power plants before moving forward with the regulations.
The decision, by the court’s conservative wing, was considered narrow in scope because nearly 70 percent of the industry is already in compliance with the mercury rule and the court did not completely invalidate the regulations. But the decision was nevertheless a setback for the agency, which must now reconsider the regulation’s costs.
It also signaled a willingness by at least a majority on the court to wade into complex air standards and examine whether EPA sufficiently justified a regulation with significant costs.
"What we’re seeing is this thematic, increased attention on the economic ramifications of these rulemakings," said Roger Martella, a former EPA general counsel now at the firm Sidley Austin. The court, he said, "is looking at EPA more under a microscope than it had in the past."
Of the 66 cases argued at the Supreme Court last term, the Obama administration was either party to or took a side in 48. It won 28 of those, losing 20. In addition to the same-sex marriage and health care cases, the Obama administration also prevailed in a case concerning whether Congress or the president sets Israeli foreign policy.
Aside from the mercury case, the Supreme Court also ruled against the Obama administration in a challenge to an Agriculture Department program designed to stabilize the price of raisins. The court, in an 8-1 decision hailed by property rights advocates, sided with a California farmer who claimed his constitutional rights were violated when he was required to turn over raisins without being compensated for them (Greenwire, June 22).
The court similarly ruled against the administration and for a Florida fisherman who was prosecuted under the 2002 Sarbanes-Oxley Act — a law designed to penalize evidence destruction in corporate investigations — for allegedly tossing three undersized grouper overboard (Greenwire, Feb. 25).
And it sided with a former air marshall in a retaliation lawsuit against the government in a case that could have major implications for whistleblower protections (Greenwire, Jan. 21).
The administration’s biggest win in the administrative arena came in a Labor Department case. In two consolidated cases concerning an exemption to minimum wage and overtime payments for mortgage brokers, the high court ruled that revising so-called interpretive rules does not require a public notice-and-comment period.
EPA and other agencies have increasingly relied on interpretive rules, including in supplementing its major Waters of the United States jurisdictional regulation. The high court’s decision, which reversed a landmark federal appeals court decision from 1997, allows agencies to move more swiftly in promulgating those types of rules (Greenwire, March 9).
Given the mercury case’s limited scope, most court watchers at the end of the term were more focused on what it — along with the health care decision — could mean for future challenges to EPA’s forthcoming greenhouse gas standards for existing coal-fired power plants.
And many saw bad omens for the agency.
In both the mercury case, Michigan v. EPA, and the health care case, King v. Burwell, a majority found ways to either use the precedent set in the court’s 1984 Chevron v. Natural Resources Defense Council decision against EPA or to sidestep it entirely. In that ruling, the court held that if statutory language is unclear, the court must defer to an agency’s interpretation if it is reasonable.
And in both the mercury and health care cases, the court seemed to carve out exceptions to the Chevron rule if the regulation at issue has major economic ramifications (Greenwire, June 25).
"The agency is always going to have to be looking over its shoulder now when it’s looking at fundamental issues of statutory interpretation," said Thomas Lorenzen, a former Justice Department environmental attorney now at the firm Crowell & Moring. "The next big test will be the Clean Power Plan."
Similarly, Harvard Law School professor Jody Freeman, a former EPA climate official, said in a blog post that this term could be "annus horribilus" for Chevron deference.
"[T]his will not stop litigants from claiming that their case is ‘extraordinary’ and involves agency regulation of matters of such grave economic and social importance that courts should decide for themselves, with no deference to the agency," Freeman wrote. "At a minimum, this will add an extra step and an extra hurdle to the government’s defense of every regulation with an arguably significant impact on the economy. And at worst, it will mean that more policy decisions fall outside the Chevron framework, and that agency regulations that might once have received deference will be struck down more of the time."
Martella, the former EPA counsel, said he would expect both the mercury and health care cases to be cited in the early challenges to the Clean Power Plan, due to be finalized in August. They may also be used in litigation against EPA’s new standard for ozone, the main component of smog, due in October.
"It will be a proposition that I imagine challengers of the greenhouse gas rule will look to," Martella said.
David Doniger of the Natural Resources Defense Council countered that the mercury case still fell within the Chevron framework, and EPA lost because it did not justify why it didn’t consider costs.
"EPA can still lose under Chevron," he wrote in a blog post. "But if EPA presents a clear and persuasive argument for its statutory interpretations in the final Clean Power Plan rule, the agency will prevail."
And Sean Donahue, an attorney who frequently represents environmental groups, noted that the Supreme Court has reviewed three major Clean Air Act cases in the last two terms. In two of them — a case concerning cross-state pollution and another on EPA’s first round of climate change regulations — EPA won either entirely or got most of what it wanted, as in the greenhouse gas case last term.
The mercury case, he said, doesn’t represent a major shift because of its limited focus and failure to vacate the mercury rules.
"The court didn’t say that toxic emissions are not a problem for health, or EPA is exaggerating the harm. They just said EPA has to better explain its decision to proceed when it has discretion," he said. "I don’t think the opinion represents a new direction."