Investigating the Constitutionality of EPA
’
s Clean Power Plan
CEI Working Paper Syllabus
I.
Introduction: Prognosticating the Constitutionality of EPA
’
s Options in the Face of States That
“
Just Say No
”
to the Clean Power Plan II.
SCOTUS Federalism Jurisprudence Primer A.
Commerce Clause B.
Spending Power Clause C.
10
th
Amendment III.
Thought
Experiment: What Can EPA Do in Face of a “Just Say No” State?
A.
EPA Option 1: Incenting States To Act with Sanctions 1.
Highway Sanctions Likely Unconstitutional 2.
Offset Sanctions Likely Constitutional B.
EPA Option 2: Directly Imposing the Clean Power Plan on “Just Say No” States
1.
What Would a Federal Implementation Plan Look Like? 2.
Is a “beyond the Fence” Federal Implementation Plan Constitutional?
a.
The $64,000 Question: Does Indirect Commandeering Exist? b.
Is the Clean Power Plan the Byproduct of a Defect in the Political Process? IV.
Three Concluding Thoughts A.
No Article III Court Is Likely To Consider the Clean Power Plan on Its Constitutional Merits B.
EPA Is Evidently Confused C.
This Is the Next President’s Problem
Contact information: William Yeatman Senior Fellow, Competitive Enterprise Institute wyeatman@cei.org
I.
Introduction:
Prognosticating the Constitutionality of EPA’s Options in Face of a State That
Refuses to Comply with the Clean Power Plan The generation and retail provision of electricity has been the exclusive prerogative of state governments since the New Deal.
1
In 1935, Congress passed the Federal Power Act, which established a
“bright line” between state and federal jurisdiction
over the electricity sector that remains in force
1
Sen. Burton Wheeler of Montana aptly summed the progressive logic behind the Federal Power Act when he declared of the statute (of which he was a primary sponsor)
that electric utilities are a “local institution” that should be “locally controlled.”
Richard Cudahy & William Henderson, From Insull to Enron: Corporate (Re)Regulation after the Rise and Fall of Two Energy Icons,26 Energy Law Journal, 35 (2005) at 77
today: It’s
the Federal Energy Regulatory Commission
’s
2
duty to regulate interstate wholesale power sales, while States are left to oversee retail electricity markets as they see fit.
’s Clean Power Plan
(79 FR 34830) threatens to swallow this
“bright line.”
By its very terms, the rule would require system-wide compliance by the electricity industry.
3
As such, the regulation necessarily expands EPA
’s
regulatory purview into discrete spheres of influence that heretofore had been the province of sister federal agencies
4
and State governments. To date, th
e agency’s source
-specific emissions limitations have been bounded by actions that could be taken by the source
—
i.e.
, measures that can be
adopted “inside the fence line.” The unprecedented
Clean Power Plan, by contrast, requires the implementation of policies like increased renewable energy generation and end-user energy efficiency mandates, over which the regulated entity possess little to no control. Thus, the Clean Power Plan
goes “beyond the fence
line.”
It is incontrovertible that
EPA’s Clean Power Plan would increase the federal government’s po
wer over the electricity sector
at the expense of the States’ existing authority.
As a result
, EPA’s interpretation of
the Clean Air Act
—
as embodied in the Clean Power Plan
—
raises obvious 10
th
Amendment implications. These federalism concerns, moreover, are heightened by the fact that a number of States are giving serious thought to refusing to implement the rule altogether, a scenario that sets up a possible showdown between non-compliant States and the EPA.
5
Without a doubt,
many States will seek judicial review of EPA’s
Clean Power Plan on the grounds (
inter alia
)
that EPA’s interpretation of its own statutory authority contravenes affirmative constitutional limitations on the Congress’s exercise of its delegated powers.
Alas, prognosticating federalism jurisprudence in Article III Courts is no easy task. The State-Federal balance of power has shifted much during U.S. history; the courts have adapted accordingly. As a result, the line dividing the co-
sovereigns’ power has proven fluid, entailing “undoubte[d] . . .
gray
areas.”
, 421 U. S. 542, 558 (1975) (dissenting opinion). Indeed, the Court has conceded that its cases interpreting 10
th
Amendment limitations on federal authority
at 160. The purpose of this working paper is to investigate the balance of power questions that will be raised by
EPA’s Clean Power Plan
during judicial review. As I note above, the federalism tensions engendered by
2
Or its predecessor agency, the Federal Power Commission
3
See 79 FR 34881:
“
[I]
n the U.S. electricity system, demand for electricity services is met…though integrated
consideration of a wide variety of possible options, coordinated by some combination of utilities, regulators, system operators, and market mechanisms. The EPA believes that the [Clean Power Plan targets] should reflect
this integrated character.”
4
Primarily the Federal Energy Regulatory Commission, but also the Department of Energy
5
On March 19, Senate Majority Leader Mitch McConnell sent a letter to all fifty state governors, urging them to
refuse to comply with the Clean Power Plan because
“
the proposed plan is already on shaky legal ground, will be extremely burdensome and costly, and will not seriously address the global environmental concerns that are frequently raised to justify it.
”
EPA’s Clean Power Plan are most taut in the
incidence of States threatening to resist implementation of
the rule. It follows that the interaction between “just say no” States and EPA presents
these difficult constitutional matters in their starkest relief. And by extension, their most understandable light, it is hoped. Therefore, in order to investigate the crucial federalism concerns
broached by EPA’s Clean Power Plan,
this paper performs a thought experiment regarding how the agency could address a noncompliant State. In this manner,
EPA’s range of options
in the face of a
“just say no” State provides the medium by which I address the regulation’s constitutional consequences.
Th
is brief proceeds thusly. First, I provide an introduction to the Supreme Court’s
federalism j
urisprudence. Against this background, the paper then analyzes the constitutionality of EPA’s options in
response to States that refuse to comply with the Clean Power Plan. I conclude with three thoughts that lend context to the analysis performed by this paper. II.
SCOTUS Federalism Jurisprudence Primer Of course, those present at the Constitutional Convention would not recognize the modern federal regulatory state and the power this leviathan wields over local decision-making. It is no less obvious that the expansion of federal power at the expense of state authority has been made possible by the broad language employed by the founding fathers in delegating powers to the Congress. Two such enumerated powers concern us here: the commerce and spending power clauses. These delegations and their constitutional bounds are described immediately below, after which the 10
th
amendment is discussed.
6
A.
Commerce Clause
First, t
he Constitution authorizes Congress to “regulate Commerce…among the several States.”
Art. 1, §8, cl.3.
“It is established beyond peradventure that the Commerce Clause of Art. 1 of the
Constitution is a grant of p
, 26 U.S. 833, 840 (1976).
While undoubtedly broad, the Congress’s Commerce Clause authority is nonetheless subject to “limitations…prescribed in
the
constitution” (
s’s commerce c
lause authority is constitutionally limited by either the 10th Amendment or principles of federalism inherent to American government.
“Garcia holds that the
limits are structural, not substantive
—
i.e., that States must find their protection from congressional regulation through the national political process, not
, 485
6
To be sure, these are not the only constitutional provisions that structure the balance of power between State and Federal Governments. For example, once federal power has been validly exercised, it is accorded primacy over state a
uthority pursuant to the Supremacy Clause. Art. VI cl. 2. And “the court’s broad construction of Congress’s power under the Commerce and Spending Clauses has of course been guided…by the Constitution’s Necessary and
Proposer Clause. Art. I, §8, cl. 18.
New York v. U.S.
at 159.