The Inflation Reduction Act: A New Take On Environmental Law?

The Environmental Protection Agency (“EPA”), founded in 1970, is an independent executive agency helping to enforce environmental regulations and protect human health from dangerous risks such as pollution and global warming. Some of its primary contributions have come from the Clean Air Act (“CAA”) and the Clean Water Act (“CWA”), both of which aim to implement personal and industry-wide pollution control. Recently, the 2022 Inflation Reduction Act (“IRA”), passed by the Biden administration, is the “...most aggressive action to combat the climate crisis and improve American energy security in our nation's history.”¹ Its primary target is tackling the social cost of carbon — in other words, the economic damage caused by an increase in one ton of carbon emissions. Predictions from the Biden Administration anticipate cutting $1.9 trillion in potential losses by 2050.² Although global warming and climate change initiatives are often associated with economic downturns and disruption, Biden’s approach emphasizes that a clean economy and jobs do go together. His perspective underscores the opportunity to revitalize the US energy sector, boost growth productivity, and more. Although recent Supreme Court cases have restricted the EPA’s scope of power, thus indicating potential judicial and legislative obstacles, the economic incentives of the IRA increase its chances of success — namely, the reduction in carbon emissions.

Congressional authorization for executive agencies like the EPA to pursue environmental regulation poses a significant barrier: sidestepping permission from Congress incurs costly backlash. The Supreme Court’s ruling against the EPA in West Virginia v. EPA (2022) significantly limited the EPA’s scope of power and jurisdiction. To decrease energy consumption, the EPA drastically overstepped its authority to impose regulations on power plants by cutting electricity and forcing utility companies to transition from coal to renewable energy.³ The lack of congressional approval for large-scale emission limits overlooks the need for jurisdiction. The ruling represents a single battle in the more significant fight between conservative lawmakers and Biden’s environmental agenda. Furthermore, Chief Justice John G. Roberts Jr. expressed his opinion in a recent piece, citing the EPA’s requirement to obtain explicit congressional authorization, something it has continually failed to provide.⁴ Despite certain states pledging to cut greenhouse gas emissions in half by 2030, uncertainty from federal bureaucrats and a lack of Congress authorization make delays inevitable. The primary pushback comes from the major questions doctrine, imposing the need for executive agencies to seek Congressional permission such as FDA v. Brown & Williamson (1999) when the Court denied the FDA’s authority to regulate tobacco products and devices.⁵ Of course, the Supreme Court’s decision has been an initial step to restrict the EPA’s ability to impose changes to the power sector, and “...by resorting to the major questions doctrine, it tightened the reins on regulatory action by all federal agencies.”⁶ Conservative lawmakers point to the major questions doctrine, holding that extraordinary cases with economic and political significance must have a “clear statement” from Congress to authorize action.⁷

Besides lack of jurisdiction, the fine lines between national and personal property also pose issues for agencies to exercise power and their abilities to leverage the Court’s support. In October 2022, the ongoing lawsuit of Sackett v. Environmental Protection Agency further challenged the federal government’s reach of power on environmental regulation. The EPA argued that Michael and Chantall Sackett were pursuing construction on “navigable waters” and “wetlands of the US,” infringing upon the CWA. More specifically, the EPA was concerned with a large influx of concrete, dirt, and other pollution damaging the existing marine environment and water quality. However, the CWA highlights its jurisdiction on national waterways, and unfortunately, the distinction between what counts as personal property and national waterways was found to be too blurry, causing the EPA to withdraw its compliance order regarding construction on the waterway.⁸ Similar cases have reflected the lack of clear and distinguishable boundaries that cause American representatives to hesitate, particularly with regard to aggressive environmental regulation by independent organizations like the EPA. Despite favorable outcomes in cases such as Rapanos v. US (2022), “The District Court rejected Rapanos's argument and upheld the Corps's regulations, including the wetlands as "waters of the United States.”⁹ Even so, the distinction of what falls underneath jurisdiction is unstandardized, causing difficulty for consistent application. A stance by the Pacific Legal Foundation argued that neither the lower courts, agencies, nor the public could agree on the rule of Rapanos, highlighting the lack of a clear, easily administered, and constitutionally sound direction.¹⁰

Rather than industry regulation, the IRA highlights economic incentives from individual American families, fueling a unique angle in the fight for bipartisan support for active climate change initiatives. The IRA’s primary target is lowering the “social cost of carbon” — the real-world financial impact of climate change — through economic incentives such as tax credits and subsidies for more efficient appliances, electric vehicles, and more. However recent cases, a shadow of the fractured political and legislative landscape, have caused setbacks. Specifically, in the case, State of Louisiana et al v. Joseph R. Biden Jr. et al (2022), a Louisiana federal judge blocked the administration from using high estimates for damages incurred by the social cost of carbon.¹¹ Moreover, a coalition of “...10 Republican attorneys sued over the presidential directive, arguing that Biden lacked the authority to raise the climate metric under the Constitution, which gives that power solely to Congress.”¹² As Biden continues to leverage executive authority without congressional support, environmental regulations continue to hit brick walls, repeatedly silenced by a lack of foundation. However, the administration continues its efforts, despite facing ongoing pushback. More specifically, Texas Attorney General Ken Paxton has led a coalition of 15 other Republican-majority states to sue Biden’s administration over its recent ruling surrounding tailpipe emissions — an attack against vehicle-based carbon emissions.¹³ Most unrest has come from automotive industry manufacturers, emphasizing a severe hit to sales in an already unstable economic environment. However, Biden continues to accelerate quickly towards decreased fossil fuel-dependent systems, and the new IRA just might be it. Rather than focusing on the intricacies of jurisdiction boundaries, leveraging environmental agencies, or heading to Congress, the Biden administration focuses on the individual American. No longer about sweeping state-wide regulations, the IRA stresses gradual shifts in consumer behavior, fueled by economic incentives, to turn the tide in the fight against climate change.

If recent Supreme Court cases provide any insight, Biden’s aggressive Inflation Reduction Act will have various obstacles to overcome. However, his economic standpoint offers prominent potential. The Office of Management and Budget (OMB) has posed promising analysis regarding the amount that could be saved by the average American household and cuts to social costs, highlighting a “...$7,500 in tax credits” to purchase more efficient appliances and electric vehicles.¹⁴ Most importantly, the new IRA emphasizes not industry management but individual benefit. Its focus on the American family, such as credits for energy-efficient home improvements, underlines core values of sustainability for the future. At the current rate, the federal government would have to provide an additional $25 billion to $128 billion to tackle the devastating impacts of strengthened climate disasters.¹⁵ Rather than taking away or cracking down, Biden’s new IRA hopes to uplift and offer economic incentives, positioning himself to reduce climate change dramatically. Time will tell with how people respond to these new opportunities –– hopefully, not before it’s too late.

References

1. Candace Vahlsing, “New OMB Analysis: The Inflation Reduction Act Will Significantly Cut the Social Costs of Climate Change - OMB,” The White House, August 23, 2022. ↩

2. Ibid. ↩

3. Maxine Joselow, “Supreme Court’s EPA Ruling Upends Biden’s Environmental Agenda,” The Washington Post, June 30, 2022. ↩

4. Ibid. ↩

5. Oyez, Food and Drug Administration v. Brown & Williamson Tobacco Corporation (United States Court of Appeals for the Fourth Circuit 1999). ↩

6. Alice Hill, “What Does the Supreme Court’s Decision in West Virginia v. EPA Mean for U.S. Action on Climate?,” Council on Foreign Relations, July 19, 2022. ↩

7. Ibid ↩

8. Oyez, Sackett v. Environmental Protection Agency (United States Court of Appeals for the Ninth Circuit 2022). ↩

9. Oyez, Rapanos v. United States (United States Court of Appeals for the Sixth Circuit 2006). ↩

10. Robert Barnes, “Supreme Court Takes EPA Case That Could Narrow Clean Water Act,” The Washington Post, January 24, 2022. ↩

11. Maxine Joselow, “Court Ruling on Social Cost of Carbon Upends Biden’s Climate Plans,” The Washington Post, February 21, 2022. ↩

12. Ibid. ↩

13. Maxine Joselow, “Supreme Court’s EPA Ruling Upends Biden’s Environmental Agenda,” The Washington Post, June 30, 2022. ↩

14. Candace Vahlsing, “New OMB Analysis: The Inflation Reduction Act Will Significantly Cut the Social Costs of Climate Change - OMB,” The White House, August 23, 2022. ↩

15. Ibid. ↩