The Supreme Court adds to Biden’s misfortune by limiting his political agenda

(Bloomberg Law) – The U.S. Supreme Court’s sweeping decision limiting the power of the executive branch, coming hours after President Joe Biden’s poor debate performance, makes it harder for his administration to pursue his biggest policy ambitions ahead of the November election.

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By finding that regulatory agencies have no discretion in interpreting the meaning of ambiguous regulations, the court has made it harder for the administration to defend regulations issued in recent months aimed at combating climate change, forgiving student debt and cracking down on so-called “garbage fees”. All of them are among Biden’s key words to voters in his re-election campaign.

The decision eliminated 40 years of court precedent known as the Chevron deference, drawing on a series of previous opinions that limited the agency’s policy-making power. Many of Biden’s policy goals are based on the executive branch’s interpretation of older laws or writing regulations in which Congress called for standards but left them to agencies to create.

“This is as extreme a repudiation of the Chevron decision as anyone could have expected,” said Sharon Block, former leader of the Biden Office of Information and Regulatory Affairs, which oversees the rulemaking process at the White House. “I don’t see any respect for the agency’s competence.”

The ruling came the morning after Biden repeatedly stumbled in his answers in the first presidential debate of the general election. The performance, punctuated by misspelled lines and coughing, intensified fears among allies that he would lose to former President Donald Trump in November and prompted some calls for him not to run again.

“While this decision undermines the ability of federal agencies to use their expertise in the way Congress intended for government to work for the people, the Biden-Harris Administration will not relent in our efforts to protect and serve every American,” press secretary Karine Jean-Pierre said in a statement.

“The President has directed his legal team to work with the Department of Justice and other legal counsel to carefully review today’s decision and ensure that our administration is doing everything in its power to continue to leverage the extraordinary expertise of federal employees to ensure Keep Americans safe and keep our communities thriving,” the statement said.

Biden has pursued an ambitious regulatory agenda throughout his presidency. His most recent to-do list, released in December, included 2,524 items—40% of which the administration expected to complete, according to an analysis of the list by Bloomberg Government.

“The courts are saying that we must follow the language of Congress’s express authority at a time when Congress is at its weakest and either fails to legislate or keeps statutes ambiguous,” said Marc J. Scheineson, a partner at Alston & Bird LLP, who represents companies in courts Food and Drug Administration, she announced before making the decision.

Climate change

The Environmental Protection Agency’s proposed rules to reduce emissions from power plants depend on the scope of its power to set pollution standards under the Clean Act. More than two dozen states have joined rural power companies and coal advocates in challenging the regulations, calling them an unlawful attempt to overhaul the nation’s power system.

Biden’s flagship climate law, the Inflation Reduction Act (Public Law 117-169), separately fines the oil and gas industry for methane emissions. Lawmakers left it up to the EPA to decide how to calculate the penalties and what companies can do to avoid the fees. Methane is the second-biggest contributor to global warming after carbon dioxide.

In January, the EPA proposed charging energy producers $900 per ton for excess methane emitted this year, with the fees increasing to $1,500 per ton by 2026.

Senate Energy Committee Chairman Joe Manchin (D-W.Va.) said in March that the proposals were “inconsistent with congressional intent” and urged the administration to make the fees more flexible. The EPA has not yet finalized the fees.

Student loans

Reducing student debt is part of Biden’s bid to appeal to younger voters. He wants to use the Higher Education Act (Public Law 89-329) to cut student debt for as many as 26 million Americans after the Supreme Court in 2023 blocked his initial plan to use emergency pandemic-related powers to forgive the loans of more borrowers.

Friday’s decision gives Republicans another tool to try to stop future rounds of debt relief, arguing that the actions exceed the authority Congress has granted to the Education Department.

Two federal judges on Monday temporarily halted Biden’s plan to accelerate debt forgiveness for some borrowers, one of the administration’s latest moves to reduce student debt.

The Biden administration lacks “express congressional authority” to implement the plan, wrote Judge Daniel D. Crabtree of the U.S. District Court for the District of Kansas.

Tax

The IRS is writing a proposal for the Corporate Alternative Minimum Tax, known as CAMT. The plan will specify how the tax will be calculated, after Congress ordered the agency to make that decision.

The law requires companies to pay tax of at least 15% of the income shown in their financial statements, if they do not already do so. The agency said in June it would waive penalties for tax underpayments after companies had problems calculating their liabilities.

Taxpayers are waiting for more details.

Garbage fees

Agency lawyers are citing years-old rules to justify taking action to eliminate unnecessary fees, as Biden calls hidden charges, rather than waiting for Congress to pass bills to address specific costs.

Under a January proposal from the Consumer Financial Protection Bureau, bank overdraft fees would drop to just $3. The Agency’s lawyers cited the 1978 Act, which protects the rights of customers making money transfers electronically. The banking industry responded with a 21-page letter arguing that Congress had not given the agency permission to force the industry to cut fees.

In Friday’s Supreme Court decision, Justice Neil Gorsuch repeated similar language, writing that the Biden administration cannot make regulations without express approval from Congress.

Opponents of regulatory action will have an easier time striking down rules that are not clearly spelled out in law, forcing agencies to slow down and be more careful in formulating policy, say left-leaning lawyers specializing in administrative law.

“This gives a green light to any aggrieved corporation to sue to get rid of an inconvenient rule,” said K. Sabeel Rahman, a professor at Cornell Law School and a former leader of Biden’s OIRA.

—With assistance from Jennifer A. Dlouhy and Caleb Harshberger

—With assistance from Caleb Harshberger.

To contact the reporter on this story: Courtney Rozen in Washington at [email protected]

To contact the editors responsible for this story: Bernie Kohn at [email protected]; Cheryl Saenz at [email protected]; Keith Perine at [email protected]