RUTHFULLY YOURS

In his final book, economist Mancur Olson wrote of the profound and crucial connection between representative government and the property and contract rights important for economic progress. Olson quoted James Madison: “Just as a man may be said to have a right to his property, so he has a property in his rights.” The rule of law is therefore essential for the preservation of constitutional government and for economic growth. In no country have the economic fruits of the rule of law been more plentiful than the United States.

Today there is no greater threat to the rule of law and the right to the peaceful enjoyment of property than the Environmental Protection Agency (EPA), in the course of prosecuting its ostensible mission to clean the air and the water. Under the guise of the Clean Air Act, the agency’s Clean Power Plan will take control of America’s electrical-power infrastructure.

Yet Congress did not envisage that the 1970 legislation would be used to regulate greenhouse-gas emissions. To get around the inconveniently precise wording Congress provided in the statute, EPA resorted to rewriting the provision of the Clean Air Act that didn’t fit with its regulatory plans — a gambit that has had ups and downs in the Supreme Court, which will soon address the legality of the Clean Power Plan. Until Monday, the timetable was well advanced, with states being required to submit compliance plans this summer. Then, on Tuesday, the Supreme Court in a 5–4 decision agreed to freeze its implementation, showing that the plan’s opponents have a reasonable prospect of persuading the courts to throw out the plan.

Later this month, the Supreme Court will decide whether to hear a case, American Farm Bureau Federation v. EPA, under the Clean Water Act, a statute Congress passed two years after its clean-air sibling. As with EPA’s regulation of greenhouse-gas emissions, the case involves a massive extension of EPA authority. Without Supreme Court scrutiny, EPA would acquire powers that it had first sought, but had been partially checked, in what has become known as the Waters of the U.S. (WOTUS).

WOTUS derives from wording in the 1972 Clean Water Act that states that the federal government has jurisdiction over navigable waters, which are further defined as the “waters of the United States, including the territorial seas.” Over many years, EPA rule-making expanded its definition of WOTUS far beyond anything a riverboat could navigate, to rivulets, ditches, and potholes. Supreme Court rulings in 2001 and 2006 drew limits on the Clean Water Act’s WOTUS.

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In the 2006 decision, Justice Kennedy had introduced a “significant nexus” test to assess whether specific wetlands should be defined as part of WOTUS if they were linked ecologically or in some other significant way to a stretch of navigable water. Where Justice Kennedy offered a gap an inch wide, EPA widened it by a mile. It took the significant-nexus test and used it to reach wet patches anywhere, in a revised rule that has prompted multiple legal and political challenges. Just last month, President Obama vetoed a congressional joint resolution (S.J.Res. 22) disapproving of the rule.

But, to borrow President Obama’s phrase after he’d given up on getting Congress to pass cap-and-trade, there is more than one way to skin a cat. Whatever the legal and legislative fate of the Clean Water WOTUS rule, EPA has also developed a toolkit to regulate the land over which and through which water flows into WOTUS. Less than four months after taking office, President Obama issued an executive order instructing EPA “to make full use of its powers” to regulate the Chesapeake Bay watershed in a manner that “can be replicated through the nation.” The aim of these watershed-based frameworks, the executive order states, is to “assign pollution reduction responsibilities to pollution sources.” It’s not hard to see how from this source springs a highly intrusive and granular form of federal regulation.

At the end of 2010, EPA produced a blueprint for regulating the Chesapeake Bay watershed. The Chesapeake Bay TMDL (Total Maximum Daily Load) document asserts federal authority not just over the Bay but also over its tributaries upstream all the way to drainage ditches and — most expansively — all land from which rainfall runoff might find its way downstream. A petition concerning this plan is the subject of the case that the Supreme Court is now considering. A suit was originally filed in January 2011, decided in favor of EPA in September 2013, and subsequently upheld by the Third Circuit last July.

According to petitioners and the 22 states that filed a friend-of-the-court brief, the Chesapeake TMDL, which encompasses six states and the District of Columbia, will cost “tens of billions of dollars” to implement. A feature of the plan is EPA’s lack of regard to efficiency. A 2012 report by the Maryland School of Public Policy estimated total implementation costs across all jurisdictions in the range of $50 billion between 2010 and 2025 — but going perhaps as high as $80 billion. A 2013 study for the U.S. Department of Agriculture found that alternative ways of achieving the same water quality — which anyway has already improved by 40 percent since the early 1980s — would cost Delaware, Maryland, New York, and West Virginia 82 to 86 percent less than the EPA price tag.

Chesapeake is only the beginning; an EPA appetizer, so to speak. The 64,000-square-mile Chesapeake Bay watershed is equivalent to little more than 5 percent of the 1,245,000 square miles of the Mississippi River Basin, spanning 31 states and producing 92 percent of America’s agricultural exports. As the petitioners note, with the powers asserted in the Bay blueprint, “EPA could control — and potentially debilitate — an area where more than half the goods and services consumed by United States citizens are produced.”

EPA’s plan to become, in effect, America’s land-planning czar is part of a pattern of aggressive overreach going to the outer limits of the law and beyond into lawlessness. Only two months ago, the General Accountability Office found that EPA had violated federal law by engaging in covert propaganda supporting its own proposed rules. In a separate incident, despite strenuous denials, EPA covertly conspired with three environmental pressure groups to bring about the regulation of power-station emissions, in a contrived sue-and-settle suit designed to make decarbonizing electricity generation a done deal before the end of President Obama’s first term. Writing for the Court in the 2014 Clean Air Act case, Utility Air Regulatory Group v. EPA, Justice Scalia declared EPA’s interpretation unreasonable because it would bring about an enormous and transformative expansion in EPA’s regulatory authority without clear congressional authorization. “We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance,’” he wrote.

In that case, to keep annual permit applications from jumping from 800 to nearly 82,000, EPA decided to override the stipulations for the quantity of greenhouse gases that could be emitted from a stationary source, permitting quantities that were orders of magnitude greater than the threshold quantity of air pollutants specified in the act. Because of the ubiquity of carbon dioxide emissions, the number of businesses requiring burdensome permitting would have exploded way beyond EPA’s target of electric utilities. EPA’s concern about the effects of widening its net is noteworthy by its absence in its policing of the Clean Water Act. In 2012, the Supreme Court unanimously upheld the right of an Idaho couple to sue EPA after the agency claimed they had violated the Clean Water Act by building a house on wetlands that EPA asserted were part of WOTUS and threatened them with fines of up to $75,000 a day for non-compliance.

Land-use and development decisions would fall ever farther under the suzerainty of EPA if the Supreme Court declined to hear American Farm Bureau Federation v. EPA. With respect to land use, it would turn the U.S. from a republic of laws into a permit state, an EPA fiefdom in which opaque blueprints emanate from computer models and unaccountable bureaucrats, with little or no regard to their impact on economic activity and none at all for the rights of property. There is a precedent for the deleterious economic impact of shackling an economy in regulation. For its first 50 years after independence, the private sector in India was subjected to the licensing requirements of the Permit Raj and the economy experienced what became known as a Hindu rate of growth.

RELATED: Obama’s Environmental Agency Protects Itself More than the Environment

In Federalist 17, Publius (in this instance, Alexander Hamilton) argued that there was little danger that the supervision of agriculture “and of other concerns of a similar nature” would be usurped by the federal government because

the attempt to exercise those powers would be as troublesome as it would be nugatory; and the possession of them, for that reason, would contribute nothing to the importance, or to the splendor of the national government.

Clearly such arguments fail in the face of a predatory regulator like EPA. Instead, states must rely on the protection afforded by the Tenth Amendment and the intention of Congress expressed in the relevant statute. Here the Clean Water Act is categorical. “It is the policy of the Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution,” the Act states (1251(b)). And if that isn’t clear enough, Congress instructs federal agencies to “co-operate with State and local agencies to develop comprehensive solutions to prevent, reduce, and eliminate pollution” (1251(g)). In other words, EPA should be a facilitator, not an instructor. The Chesapeake TMDL turns this around: States are required to cooperate with EPA in developing Watershed Implementation Plans. The executive summary speaks of provision for federal backstops, enhanced oversight, and “contingency actions to ensure progress.”

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Only the courts — in this instance, the Supreme Court — have the capacity to act to protect the rule of law, for the expansion of the powers of the administrative state shrinks the domain of the rule of law. In Taming the Prince, Harvey Mansfield suggests that modern totalitarian regimes show executive formalism and informality at their worst:

The formalism is in a numbing, careless bureaucracy, which might at first seem rule-bound for no reason and no discernible end, in a way reminiscent of Kafka — but which after some experience proves to be oppression in the interest of a very obvious ruling party.

This risk is especially elevated in EPA. The agency was a product not of statute but of the executive branch under the terms of the Nixon administration’s Reorganization Plan No. 3. The nature of the “numbing, careless bureaucracy” was on display last August in EPA’s culpability in discharging three million gallons of mine waste into Colorado’s Animas River, which EPA administrator Gina McCarthy said was mainly due to the cautious nature of the government’s efforts. So the final question: Which is the “very obvious ruling party?” The most powerful ideology in America today: Environmentalism. Let’s hope the Supreme Court does not fall under the sway of this party but instead confines EPA within the rule of law.

— Rupert Darwall is the author of The Age of Global Warming: A History.