High Court Magnifies Biden’s Misery by Kneecapping Policy Agenda

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

By saying that regulators do not have the freedom to interpret the meaning of vague laws, the court made it difficult for the administration to defend regulations it issued in recent months to address climate change, forgive student debt, and combat so-called “junk fees.” All of these are among the main offers that Biden is making to voters in his re-election campaign.

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The decision overturned a 40-year-old judicial precedent known as Chevron Deference, based on a series of previous opinions that limited the policy-making power of the agencies. Many of Biden’s policy goals rely on executive branch interpretations under old laws, or rule-writing where Congress called for standards but left it up to agencies to create them.

“This is as extreme an overreach by Chevron as anyone could have predicted,” said Sharon Block, former head of Biden’s Office of Information and Regulatory Affairs, who is overseeing the rulemaking process at the White House. “I don’t really see any respect left for the expertise of agencies.”

The verdict came the morning after Biden repeatedly stumbled over his answers in the first presidential debate of the general election. The performance, punctuated by slurred lines and coughing, intensified allies’ fears 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 where Congress intended to make government work for the people, the Biden-Harris administration will not back away from our efforts to protect and serve every American,” press secretary Karine Jean-Pierre said in a statement.

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“The President has directed his legal team to work with the Department of Justice and other agency advisors to carefully review today’s decision and ensure that our administration does everything we can to continue to deploy the extraordinary expertise of the federal workforce to keep Americans safe and secure.” “Ensuring the prosperity of communities,” the statement said.

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

“The courts have been saying we need to follow express authorization language from Congress at a time when Congress is weaker and is not legislating or keeping the laws vague,” said Mark J. Shinnison, a partner at Alston & Bird LLP who represented the companies before the trial. The Food and Drug Administration said before making the decision.

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Climate change

The Environmental Protection Agency’s proposed rules to limit power plant emissions hinge on the agency’s authority to set pollution standards under the Clean Act. More than two dozen states have joined rural energy companies and coal advocates in challenging the rule, calling it an illegal attempt to reshape the nation’s electricity system.

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

The Environmental Protection Agency in January proposed charging energy producers $900 per ton of excess methane emitted this year, with the fee increasing to $1,500 per ton by 2026.

Senate Energy Committee Chairman Joe Manchin (D-Va.) said in March that the proposals “contrary to the intent of Congress” and called on the administration to make fees more flexible. The EPA has not yet completed the fees.

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Student Loans

Student debt relief is part of Biden’s pitch to young voters. He wants to leverage the Higher Education Act (Public Law 89-329) to cut student debt for up to 26 million Americans, after the Supreme Court in 2023 blocked his initial plan to use pandemic emergency powers to forgive loans for more borrowers.

Friday’s decision gives Republicans another tool to stop future rounds of debt cancellation by arguing that the measures exceed the authority Congress has granted the Education Department.

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

Judge Daniel D. Crabtree of the U.S. District Court for the District of Kansas wrote that the Biden administration does not have “clear congressional authorization” to implement the plan.

tax

The IRS is writing a proposal for an alternative minimum tax on corporations, known as CAMT. The plan will clarify how the tax will be calculated, after Congress directed the agency to make this decision.

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The law requires companies to pay tax at a rate of at least 15% of their financial statements’ income if they don’t already. The agency said in June it would offer an exemption from penalties for underpayments of the tax, after companies struggled to calculate their liability.

Taxpayers are waiting for more details.

unwanted fees

Lawyers for the agencies have cited years-old laws to justify efforts to eliminate junk fees, the term Biden uses for hidden fees, rather than waiting for Congress to pass bills targeting specific costs.

Bank overdraft fees would drop to $3 under a January proposal from the Consumer Financial Protection Bureau. The agency’s lawyers cited a 1978 law to protect the rights of customers who transfer money electronically. The banking industry responded with a 21-page letter arguing that Congress did not give the agency permission to force the sector to lower fees.

In the Supreme Court’s decision issued Friday, Associate Justice Neil Gorsuch repeated similar language, writing that the Biden administration cannot write the rules without express permission from Congress.

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Left-leaning administrative law lawyers said opponents of the regulatory action would have an easier time striking down rules not specifically spelled out in the law, forcing agencies to slow down and be more careful in crafting policy.

K said. “It gives a green light for any affected company to sue to get rid of inappropriate regulation,” said Sabeel Rahman, a professor at Cornell Law School and former leader of Biden’s OIRA.

—With assistance from Jennifer A. Dlohi and Caleb Harshberger

– With assistance from Caleb Harshberger.

To contact the reporter on this story: Courtney Rosen in Washington at crozen@bgov.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Cheryl Saenz at csaenz@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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