High Court Magnifies Biden’s Misery by Kneecapping Policy Agenda

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

By saying that regulatory agencies don’t have leeway to interpret the meaning of ambiguous laws, the court made it tougher for the administration to defend regulations it issued in recent months to tackle climate change, forgive student debt, and crack down on so-called “junk fees.” All are among Biden’s key pitches to voters in his re-election campaign.

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The decision eliminated a 40-year-old court precedent known as Chevron deference, building on a series of earlier opinions limiting agencies’ policymaking power. Many of Biden’s policy aims depend on interpretations of executive power under older laws, or writing rules where Congress called for standards but left it up to agencies to create them.

“This is as extreme an overruling of Chevron as anybody could have anticipated,” said Sharon Block, a former leader of Biden’s Office of Information and Regulatory Affairs, which oversees the White House’s rulemaking process. “I don’t see really any remaining respect for the expertise of agencies.”

The ruling came the morning after Biden repeatedly stumbled through his responses in the first presidential debate of the general election. The performance, punctuated by flubbed lines and coughing, intensified allies’ worries that he will lose to former President Donald Trump in November and sparked some calls for him not to run again.

“While this decision undermines the ability of federal agencies to use their expertise as Congress intended to make government 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.

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“The President has directed his legal team to work with the Department of Justice and other agency counsel to review today’s decision carefully and ensure that our administration is doing everything we can to continue to deploy the extraordinary expertise of the federal workforce to keep Americans safe and ensure communities thrive,” 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 finalize, according to Bloomberg Government’s analysis of the list.

“The courts have been saying we need to follow express congressional authorization language at a time when Congress is the weakest and is either not legislating or keeping statutes ambiguous,” said Marc J. Scheineson, a partner at Alston & Bird LLP that represents companies before the Food and Drug Administration, said ahead of the decision.

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Climate Change

The Environmental Protection Agency’s proposed rules cracking down on power-plant emissions hinge on the extent of its authority to set pollution standards under the Clean Act. More than two dozen states joined rural power companies and coal advocates in challenging the rule, calling it an unlawful effort to remake the nation’s electricity system.

Biden’s signature climate law, 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 the penalties and what companies can do to avert charges. Methane is the second-largest contributor to global warming after carbon dioxide.

The EPA in January proposed charging energy producers $900 per ton of excess methane emitted this year, with fees rising to $1,500 per ton by 2026.

Senate Energy Committee Chair Joe Manchin (D-W.Va.) said in March that the proposals are “inconsistent with congressional intent” and called on the administration to make the charges more flexible. The EPA has yet to finalize the fees.

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Student Loans

Alleviating student debt is part of Biden’s pitch to younger voters. He wants to leverage the Higher Education Act (Public Law 89-329) to slash student debt for as many as 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 actions overstep the authority Congress gave to the Education Department.

Two federal judges on Monday temporarily halted Biden’s plan to quicken forgiveness for certain borrowers, one of the administration’s most recent moves to cut down on student debt.

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

Tax

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

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The law requires companies to pay tax at a rate of at least 15% of their financial-statement income if they aren’t already doing so. The agency said in June it would provide a waiver for penalties for underpayments of the tax, after companies struggled to calculate their liability.

Taxpayers are waiting on more details.

Junk Fees

Agency attorneys have cited years-old laws to justify the effort to eliminate junk fees, Biden’s term for hidden charges,rather than waiting for Congress to pass bills targeting specific costs.

Bank overdraft fees would drop to as low as $3 under a January proposal from the Consumer Financial Protection Bureau. Agency attorneys invoked a 1978 law to protect the rights of customers that transfer money electronically. The banking industry responded with a 21-page letter arguing that Congress didn’t give the agency permission to force the sector to cut fees.

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

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Opponents of regulatory action will have an easier time overturning rules not specifically mandated in law, forcing agencies to slow down and be more cautious in formulating policy, left-leaning administrative law attorneys said.

“It’s creating a green light for any aggrieved corporation to bring a suit to get rid of an inconvenient regulation,” said K. Sabeel Rahman, a professor at Cornell Law School and also 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 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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