Judicial Limits of Federal and State Regulation
The last session of the United States Supreme Court ended with two successful cases in the field of administrative law: Loper Bright Enterprises v. Raimondo (discussed here) And Corner Post v. Board of Governors of the Federal Reserve (discussed here). These decisions illustrate the current Court’s strong positions on the policy-making process. Loper BrilliantThe Court annulled “Chevron “deference,” under which courts deferred to agencies’ interpretations of their own statutory mandates. Instead, the Court established a framework for courts to “defer” to agency rulemaking, so long as the agency’s decision presents a compelling rationale for the “better” interpretation of the relevant statute. Corner postThe Court expressed openness to commercial challenges against the “old” regulations if a new party was harmed.
Loper Brilliant And Corner post could address lower court decisions that address hot-button issues such as environmental, social and governance (ESG), with the Fifth Circuit remanding Utah v. Su — involving the Biden administration’s efforts to allow ESG factors in investment decisions — to a lower court for review Loper Brilliantthe impact of. (For more information on Utah v. Susee here.) Loper Brilliant is also beginning to impact the energy sector. In a case titled Edison Electric Institute v. Federal Energy Regulatory Commission (FERC), the Supreme Court orders D.C. Circuit to reconsider his decision of 2023 in Solar Energy Industry Association v. FERCwhich approved the connection of a Montana solar energy facility to the electric grid. In that case, the manner in which the Public Utilities Regulatory Policy Act defined “small generating facility” was determinative, and the court found that FERC’s definition was overly broad and out of step with the statutory scheme. Without “Chevron “out of deference,” the court chose to follow its best interpretation of the law instead of simply deferring to FERC’s interpretation.
Moreover, courts will continue to determine the constitutional limits on state efforts that may impact environmental space. An example of this trend is the August 14 decision by a Missouri federal court in Securities Industries and Financial Markets Association v. Ashcroftthat barred, on preemption grounds, a Missouri state regulator’s “anti-ESG” rules requiring investment advisers to obtain written consent from clients to “incorporate a social or other non-financial objective” into investment decisions. The decision rejects the Missouri rule on the grounds that it is preempted by preexisting federal laws, which are likely to remain in effect regardless of who wins the election.
Increased emphasis on public participation
Many people feel excluded from regulatory processes. The Biden administration has made efforts ranging from Grant programs related to “environmental justice” has changes to the format in which regulatory comments may be receivedall aimed at filling these gaps.
Last week, the Environmental Protection Agency (EPA) continued that effort by issuing its final decision. Ensuring Health and Environmental Protection Through EPA’s Meaningful Engagement Policy. This policy, which aims to “(r)affirm EPA’s commitment to early and frequent outreach, accessibility, and meaningful engagement”; to “(e)nsure that EPA makes decisions with an understanding of the interests and concerns” of the public; and to “(i)mprove the effectiveness, fairness, and transparency of EPA’s decisions,” formalizes processes to enhance public participation, provides a public participation model, and proposes self-assessment tools that regulators can use to evaluate their public participation efforts.
Although the policy states that it does not add “new legal requirements or mandatory obligations”, rolling back advocacy commitments is unlikely to be politically feasible at a time when commentary on issues that have local impact – from hazardous waste dumping to the construction of renewable energy facilities – has become increasingly apolitical in communities across the United States.
ESG declines as ‘sustainability’ rises
As ESG has become a political issue, non-ESG related “sustainable development” efforts, ranging from building codes aimed at limiting the carbon impact of buildings State and local efforts to limit the use of single-use plastic products continue to grow. State and local governments also continue to attempt to address climate issues through tort litigation. Given the increased attention paid to issues such as climate issues and the potential health risks posed by microplastics, local policy efforts to address them are unlikely to abate.
Legal “balkanization” linked to product regulation
Building on the above theme, our latest ““Year in Review” article related to the environment wondered whether decisions related to the “tsunami” such as Loper Brilliant And Corner postthat limit the ability of the federal government’s executive branch to address new problems, could “erase sea change” (i.e., the increased importance of environmental issues to politicians at all levels of government).
It seems that this is not the case. In last year’s decision, National Pork Producers Council v. RossThe Supreme Court has allowed state regulations that could affect broader national markets to remain in effect, despite challenges from companies operating in other states. Ross The affected trade groups challenged California’s Proposition 12, which prohibits the sale in the state of hogs from pigs confined in cruel conditions. The trade groups argued that Proposition 12 violated the dormant Commerce Clause by having impermissible extraterritorial effects and creating an undue burden on interstate commerce. Because most of California’s pork is imported from other states, most pork producers doing business there—in order to remain competitive—do not comply with the requirements. Implementing changes to confinement and monitoring practices would be prohibitively costly.
Given the public’s concern about health issues, states will likely continue to regulate products containing substances such as per- and polyfluoroalkyl substances, which are perceived to be associated with health risks. (For an example, see here.) Without federal judicial or legislative action, manufacturers and retailers are likely to face increasing product and distribution challenges from a hodgepodge of potentially applicable regulations and varying sales methods, regardless of who wins the next election.
Increase in equity
Finally, the concepts of “generational equity” – that is, the obligation of older generations to protect the environment on behalf of younger generations – are gaining increasing importance in public opinion. Last year, Young plaintiffs in states like Hawaii and Montana are winning victories in the form of settlements or establishing precedent protecting government environmental commitmentsLegal victories, combined with increased public attention to the harms caused by climate change, are likely to create a self-reinforcing dynamic that spawns efforts ranging from lobbying to litigation to address climate issues. (For more on types of lobbying campaigns, see here.)
