Supreme Court to hear 2 major regulatory cases next week

By Sean Reilly, Pamela King | 02/16/2024 01:30 PM EST

After considering a plea to open old rules to new legal challenges, the justices will weigh arguments against EPA’s “good neighbor” requirements.

The U.S. Supreme Court.

The U.S. Supreme Court. Francis Chung/POLITICO | Francis Chung/E&E News

The Supreme Court next week will hear a pair of cases that have the potential to upend EPA air pollution rules and disrupt regulations across a spectrum of other federal agencies.

In hearings Tuesday and Wednesday, the justices will consider whether parties should have more time to sue over federal rules and hear from Republican-led states and industry groups that want to stop EPA limits on smog-forming pollution that drifts across state lines.

On Tuesday, the Supreme Court will hear arguments in a case that has the potential to open old federal rules to new legal challenges.


The case — Corner Post v. Board of Governors of the Federal Reserve System — stems from a legal challenge brought by a North Dakota convenience store and truck stop against a 2011 federal rule governing debit card transaction fees. Because Corner Post did not open until 2018 — a year after the statute of limitations for lawsuits against the rule expired — a lower court found that the store could not challenge the regulation.

Corner Post argues that a six-year statute of limitations that has been imposed for Administrative Procedure Act lawsuits should begin not when a rule is finalized but — as other federal appeals courts have found — when an entity first suffers harm from a regulation.

“That’s when the timer should start ticking,” said Devin Watkins, an attorney with the Competitive Enterprise Institute. “There should never be a case where someone is harmed, but they don’t have a chance to go to court to challenge that harm.”

A win for Corner Post could mean that any new company or organization could sue against an old federal rule.

“What if a new business pops up that wasn’t in a position to challenge the rule in the first seven years?” said Josh Galperin, an assistant law professor at Pace University.

He added: “And that could be a new political entity that is formed for the purpose of challenging that rule.”

A ruling in favor of Corner Post could be an extra blow to agency powers if the Supreme Court also sides with conservative lawyers in a pair of cases this term that seek to overturn or diminish the Chevron doctrine.

For 40 years, Chevron has helped agencies like EPA defend their reasonable interpretations of their regulatory authority under federal laws like the Clean Air Act. While the doctrine has recently fallen out of favor at the Supreme Court, lower benches still use it to uphold regulations.

During oral arguments in the Chevron cases — Loper Bright Enterprises v. Raimondo and Relentless v. Commerce — justices raised questions about whether a ruling to overturn the doctrine would reopen decades of settled legal challenges.

Lawyers challenging the doctrine told the justices that removing the tool that prior courts used to decide those cases would not change the outcome.

But court-watchers see an avenue for Corner Post and this term’s Chevron cases to combine to create powerful new arguments for critics of federal regulation — both past and present.

“It’s like a one-two punch for agencies,” said Robert Percival, director of the University of Maryland, Baltimore’s environmental law program. “Nothing will ever be final.”

Good neighbors

The Wednesday argument — a consolidated case titled Ohio v. EPA — marks the second time in a decade that the high court has scrutinized an EPA “good neighbor” rule.

In this round, however, the justices won’t be tackling the merits of the agency’s latest crackdown on interstate air pollution. Instead, they will weigh three states’ bid to block the rule from taking effect nationally while the U.S. Court of Appeals for the District of Columbia Circuit continues to sift the pros and cons of the regulation.

Undergirding the challengers’ strategy is a bid to pivot off an earlier wave of legal attacks. After an initial round of lawsuits forced EPA to freeze implementation in 12 of the 23 states originally covered by the good neighbor rule, Ohio, Indiana and West Virginia now say the agency’s pollution control requirements for industries in the remaining 11 states should be paused as well.

The plan is now “but a shell of its original self,” they wrote in an application seeking an emergency stay. While the agency conceived of the plan as a linked whole, it now regulates only about 11 percent of the power-sector emissions originally covered and just 40 percent of the pollution from natural gas pipelines and other industrial sources, according to their application.

Not so, Solicitor General Elizabeth Prelogar replied in a brief urging the court to reject the nationwide freeze request. Even with the requirements blocked in some parts of the country, EPA’s “original rationales for regulating emissions sources in the 11 states currently subject to the rule continue to apply with full force,” she said.

The high-stakes clash is the latest in a series dating back to the late 1990s over the scope of the Clean Air Act’s good neighbor provision, which bars states from allowing industrial pollution that makes it harder for downwind areas outside of their borders to meet EPA air quality standards.

The regulations, released last March, aim to bring the nation into compliance with the agency’s latest threshold for ground-level ozone, a lung-damaging compound that is the main ingredient in smog. Almost nine years after adoption of the 70 parts per billion threshold, about 115 million people live in areas that are still flunking it. EPA launched the federal crackdown after finding that the 23 upwind states hadn’t turned in acceptable compliance plans.

In a particularly convoluted legal scrum, however, the agency’s air office then had to halt implementation in the 12 states after various federal appeals courts blocked the earlier compliance plan disapprovals, which were an essential prelude to imposition of the federal alternative.

It’s unusual for the Supreme Court to hold oral arguments on a stay request, according to legal experts. Red states and industry groups initially submitted their plea through the court’s emergency docket — or “shadow docket,” as it is sometimes called. In recent years, the justices have agreed to hear arguments on high-profile emergency requests.

The Supreme Court has instructed attorneys in the good neighbor case to be ready to discuss whether the required emission controls “are reasonable regardless of the number of states subject to the rule.”

Also potentially in play, however, are health concerns and “whether the justices will reconcile the needs of the states that are the victims of pollution that they can’t do anything about,” said Mary Nichols, who served as EPA air chief during the Clinton administration and is now a distinguished counsel at UCLA’s law school.

Joining Wednesday’s argument on EPA’s side will be a coalition made up of New York and eight other downwind states that say a stay would delay “critical relief” from dangerous upwind air pollution.

Justice Brett Kavanaugh will be watched closely.

In 2012, as a D.C. Circuit judge, Kavanaugh was the author of a 2-1 majority opinion throwing out an earlier good neighbor plan, partly on the grounds that EPA had failed to give states a fair shot at first addressing the problem.

Two years later, in a 6-2 decision written by then-Justice Ruth Bader Ginsburg, the Supreme Court largely reversed Kavanaugh’s opinion, salvaging the emissions-trading framework for the power sector that is also embedded in the latest rule.

Kavanaugh joined the Supreme Court in 2018, and he is expected to play a prominent role in Wednesday’s arguments.

With more experience than his colleagues on Clean Air Act litigation, “other court members can look to [Kavanaugh] for some leadership on what this means in the context of the big picture,” said Victor Flatt, a law professor at Case Western Reserve University.

Should the court grant the stay, Flatt said, it could stymie the rule’s implementation for several years.

Arguments in Corner Post begin at 10 a.m. Tuesday. Ohio v. EPA is scheduled for 10 a.m. Wednesday.