Analysis by Energy Workforce President Tim Tarpley
It has been an active past week in the courts with two major rulings that we believe are beneficial for US energy production in the long term. In the first, the Supreme Court, in a 6-3 ruling, overturned the 40-year-old “Chevron Doctrine.” The Doctrine was a principle that allowed federal agencies to fill in the details when their regulatory authority is not crystal clear by their authorizing statutes. In other words, agencies could use the principle to regulate areas they were not specifically authorized to as long as there was no specific language forbidding them from doing so. Opponents of this doctrine argued that it had been expanded over the years to allow agencies to regulate in areas that Congress never intended, essentially taking on the role of a legislature. As this principle expanded over the years, bureaucrats in regulatory agencies became flush with tremendous power to promulgate impactful regulations with little check on their powers. It has become increasingly important in recent years as Congress has been passing fewer impactful pieces of legislation and often punts on a yearly budget in favor of a continuing resolution. The practical implications of this mean that agencies are getting less regulatory language from Congress to direct their activities, leaving a void for them to fill.
The new ruling pulls back this power significantly and directs agencies to stay within their clear regulatory authorization. However, the court stopped short of directing that prior cases that relied on the doctrine would now be reviewed. Speaking for the majority, Chief Justice Robers wrote: “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”
The implications of this ruling will be significant to our sector. Many of the legal challenges to the EPA’s methane regulation and the SEC’s ESG regulation have relied on the argument that the agencies were acting outside of their statutory authority when issuing these regulations, which appear to go beyond their original authority. Additionally, much of the Biden Administration’s “whole of government” approach to climate issues uses questionable regulatory authorities in agencies that have never regulated in those areas that could now face challenges.
While we should not assume that this new ruling guarantees that all of these regulations will now be successfully overturned in the courts, it certainly would be safe to assume that post-Chevron decision, there is a greater likelihood of at least some of them to be tossed out or limited in the coming months. The SEC ESG rule appears to me to be one of the most vulnerable to such a challenge. We will continue to follow these legal developments and impacts on our sector closely at EWTC.
LNG “pause” tossed out
In another bit of excellent legal news for American energy, a federal judge in Louisiana put the Energy Department’s pause on LNG on hold, striking a significant blow in the Biden Administration’s energy policy. Judge James Cain of the Western District of Louisiana granted a request for a stay from 16 states that had challenged the “pause.”
The Judge ruled that DOE failed to adequately justify why it needed to pause approvals to review the permitting process. Of particular note is that the judge found that a review of a permitting process can continue without having to completely pause the process. “Past precedent, which the applicants relied upon, allowed the approval of the applications to proceed when updates were made.” In addition, Cain felt that the DOE had not fully considered the “impact on national security, state revenues, employment opportunities, funding for schools and charities, and pollution allegedly caused by increased reliance on foreign energy sources.” These arguments echo many arguments against the pause made by many opponents of the pause.
What are the practical implications of this ruling? The most important thing is that the “pause” is thrown out. DOE must immediately begin working on pending applications and cannot use the pause to justify putting them on hold. What the ruling does not do, however, is direct DOE to act on any specific permits in any given time period. DOE still has the authority to conduct a “public interest determination” on each individual application. It is still possible that DOE could use procedural delays and slow walking to throttle these applications. However, the ruling clearly gives the applicants greater legal standing to challenge individual instances where applications are unduly delayed and takes away the ability of DOE to use the “pause” as an excuse.
The White House issued tepid support for the ban and opposed the ruling, stating, “We remain committed to informing our decisions with the best available economic and environmental analysis underpinned by sound science.” There has been no word yet on whether or not the Administration will appeal the ruling, given the tepid support for the ban, even within their own party. While it was anticipated that the LNG ban may be a topic of focus during the first Presidental debate, President Biden’s poor overall performance quickly became the primary subject for most commentators. However, we can expect energy issues and the LNG “pause” specifically to play a more prominent role in the debate going forward in the coming weeks.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
