BEHIND THE NOISE: WHAT THE GREENHOUSE-GAS CASE MEANS FOR REGULATED BUSINESSES

The U.S. Supreme Court’s recent decision on greenhouse-gas regulations will occasion a chuckle from observers of the mainstream press.  Republican-leaning newspapers criticized the Court for upholding most of the current administration’s new greenhouse-gas rules.  Democrat-leaning ones upbraided it for striking downthe EPA’s rule book on the topic.  As often, both positions are exaggerated.

The Court held that when a facility is already regulated by the EPA, the Agency could also regulate its emission of greenhouse gases and mandate the use of the most efficient technology to reduce those emissions.  However, facilities not otherwise regulated could not now come under the EPA’s jurisdiction on the basis of greenhouse gases alone.  That is because it would expand the EPA’s reach so much that this could not lawfully be achieved by a mere change in agency regulations; Congress would need to change the law.

Beyond the political posturing around this year’s “big case” in administrative law, there is a lesson there for lawyers practicing in this area and their clients.  When a business needs to fight a government agency in hearings and the courts, it is usually because the agency, applying its own rules, made a decision adverse to the business.

Most often, the argument between the regulated company and the regulating agency will revolve around the rules’ interpretation and how to apply them.  But the greenhouse-gas case is a reminder that the rules themselves can be challenged.  The EPA there argued it could unilaterally multiply its jurisdiction through rule-making.  It ultimately lost on that argument.  Those rules were struck down.  A regulation’s illegality, let alone unconstitutionality, is not a strategy to be overused, but it is one that thoughtful attorneys will keep in mind.