By Kevin S. O’Scannlain, Founder and President of Reservoir Strategies LLC.

Given the Environmental Protection Agency’s recent track record in court, it is understandable that it backed down from its latest regulatory overreach.  Beginning in October 2022, despite stinging rebukes from the Supreme Court on its unauthorized regulations on waters¹ and power plants,² the EPA made an ill-fated attempt to impose an unprecedented environmental justice policy on the State of Louisiana, ignoring clear principles enunciated by the Court on the major questions doctrine³ and the Civil Rights Act of 1964.⁴  On June 27, 2023, shortly after Louisiana filed a Complaint and Motion for Preliminary Injunction,⁵ the EPA abruptly dropped its civil rights investigation into two pending complaints filed by environmental groups.

That EPA even attempted to exercise authority which Congress repeatedly declined to grant lends some validity to continuing concerns about the overreach of the modern administrative state.⁶  EPA’s termination of its unlawful investigations of the two complaints indicates that perhaps it may be finally getting the message.  But since the EPA has yet to fully disavow its policy, and thus the Complaint may still proceed, it is worth reviewing what has transpired thus far in this matter.

The separation of powers principles implicated by the EPA’s misguided policy effort date to the nation’s founding.  The Constitution, seeking to prevent inordinate power in any one branch, imposed limitations on each branch’s authority.  The Vesting Clause granted all “legislative power” to Congress.⁷  Frustrated progressives have challenged such limitations over the centuries,⁸ seeking to circumvent the legislative process, and that continues today.  While the Court’s formulation of the limits on the executive branch’s power has evolved, the most recent judicial directives should leave no doubt that agencies should refrain from imposing controversial policies through novel statutory interpretations that ignore context and legislative intent.

This Legal Backgrounder analyzes the EPA’s attempt to exert regulatory power it does not possess.  It first provides an analysis of EPA’s now partially withdrawn policy as articulated in its “Letter of Concern” and subsequent negotiation with Louisiana.  Next is a brief history of the “disparate impact” theory.  Then it analyzes the Court’s separation of powers jurisprudence concerning executive branch overreach.  Finally, the Backgrounder concludes that, when one considers the Court’s latest cases, the EPA saved itself from an immediate judicial reprimand of its unauthorized mandates by closing the current complaints.  It must, however, also disavow further application of its policy.

EPA’s Environmental Justice Policy

President Biden made no secret that Environmental Justice (EJ) would be a top priority for his administration.  Executive Order 13985, issued on his first day in office, requires executive agencies and departments to “recognize and work to redress inequities in the policies and programs that serve as barriers to equal opportunity.”⁹  On October 1, 2021, EPA released its draft 2022-2026 Strategic Plan to “embed [EJ] and civil rights in the Agency’s core work; and strengthen civil right enforcement in communities overburdened by pollution.”¹⁰  In this plan, the EPA noted that “[a]dvocates have … called for strengthening enforcement of Title VI of the Civil Rights Act to address claims that siting numerous facilities in communities of color imposes disparate pollution impacts.”¹¹

EPA subsequently issued its “Equity Action Plan” in April 2022, which called for development of “a cumulative impacts assessment”¹² in EPA decision making, and further asserts that “EPA’s nondiscrimination regulation prohibits recipients of EPA financial assistance from taking actions in their programs or activities that are intentionally discriminatory and/or have a discriminatory effect.”¹³  In this document, EPA announces its intention to “[c]onduct … investigations and informal resolution agreements that effectively address adverse disparate impacts.”¹⁴ On June 2, 2022, EPA published draft guidance asserting that it intends to integrate EJ in “all the Agency’s work.”¹⁵

EPA’s Attempt to Enforce Disparate Impact Policy

On October 12, 2022, EPA acted on this policy by sending a “Letter of Concern” (Letter) to the Louisiana Department of Environmental Quality (LDEQ) and Department of Health (LDH) claiming that “significant evidence suggest[s] that [LDEQ’s and LDH’s] actions or inactions have resulted and continue to result in disparate adverse impacts on Black residents.”¹⁶  The Letter noted that its investigation was triggered by complaints filed in April by environmental groups in St. James and St. John the Baptist parishes (the Parishes).  These complaints concerned chloroprene emissions from Denka Performance Elastomers (Denka) and ethylene oxide emissions from the proposed Formosa Plastics manufacturing facility (Formosa).  The Letter indicated that EPA’s investigation “raises concerns that [LDEQ’s and LDH’s] methods…may have an adverse and disparate impact on Black residents who live and/or attend school near Denka, [Formosa], and those who live in the industrial corridor.”¹⁷

LDEQ and LDH agreed to informal resolution negotiations, during which EPA allegedly admitted that LDEQ was compliant with environmental law, but refused to specify what it believed they were doing wrong.¹⁸  An EPA official asserted during these negotiations that Louisiana “may need to go beyond [environmental statutory] authorities,” and specifically cited the need for a “cumulative impacts assessment.”¹⁹  When it became clear that EPA would not stand down from its alleged unlawful enforcement, Louisiana filed its Complaint against EPA and certain federal government officials on May 24, 2023, followed by its preliminary injunction motion (Motion for PI) on June 22, 2023.

Just five days after Louisiana filed its PI Motion, the EPA abruptly announced in a letter to LDEQ and LDH that it was “closing its investigation and no further action will be taken.”²⁰  EPA said it “will not initiate under Title VI or any other civil rights laws any further action, enforcement or otherwise.”  Though EPA cited “information now available including multiple significant developments”²¹ as justification for this closure, these developments only include actions “[s]eparate and apart from its Title VI authorities.”  EPA indicated that it would pursue a voluntary “cumulative impacts analysis [CIA]” which “would not impose any obligations on [LDEQ and LDH].”²²  EPA said the State agencies’ participation in this CIA is “not required.”²³

On July 7, 2023, in response to the court’s order asking Louisiana what if any claims remain from its Complaint, Louisiana said that while it is dropping its PI Motion involving the closed complaints,²⁴ it believes that “all of its claims continue to present justiciable controversies,”²⁵ since “[i]t appears that [EPA] intends to impose their disparate impact and cumulative-impact mandates for most or all of the permits that [LDEQ] issues during the pendency of the suit.”  The State seeks an EPA disavowal of such intention, including in another EPA Title VI complaint filed on May 31, 2023, challenging LDEQ’s administration of the Clean Air Act.

Louisiana’s Complaint and Motion for Preliminary Injunction

The State’s complaint challenges what it deems as “the Executive’s fundamental transgressions of the Constitution, the Clean Air Act (CAA), and the Civil Rights Act of 1964 (CRA).”²⁶  Louisiana alleged three sets of violations:

• The private non-delegation doctrine, by delegating sovereign governmental powers to private environmental organizations;
• Title VI of the Civil Rights Act, by trying to impose disparate impact and cumulative impact requirements in excess of EPA’s authority; and
• Title VI of the Civil Rights Act, by trying to adopt a new mandate without ratification by the President.²⁷

The complaint recounts the EPA’s November 2021 “Journey to Justice Tour,” wherein Administrator Michael Regan met with various environmental activists and groups.²⁸  Shortly after the tour, according to the Complaint, these same groups filed with EPA complaints (Environmentalists’ Complaints) against LDEQ and LDH alleging adverse and disparate impact.  The State contended that the Environmentalists’ Complaints were untimely because EPA regulations require that they “must be filed within 180 calendar days of the alleged discriminatory acts,” unless the EPA waives this period “for good cause.”²⁹

Louisiana then details the informal resolution negotiations that began in November 2022, in which the EPA recurrently recited its inability to toll the 180-day timeframe based on a Northern District of California judgment that applied to one of the complainants.³⁰ On April 26, 2023, an EPA official reportedly informed the LDEQ that “EPA must continue its fact-finding on a parallel track with the [informal resolution process].”³¹

Finally, the Complaint seeks numerous types of relief, including declaring as unlawful the EPA’s: (1) delegation of governmental power to private groups; (2) attempt to impose disparate impact mandates; and (3) attempt to impose extra-regulatory requirements.³²  The State’s Memorandum in Support of Motion for Preliminary Injunction further details the legal basis for Louisiana’s claims, which the next section will analyze.

Disparate Impact and the Major Questions Doctrine

The crux of the Complaint is the EPA’s pursuit of disparate impact and cumulative impact requirements.  The EPA understands how aggressively it has attempted to impose a CRA Title VI disparate impact policy.  The limits to the use of Title VI have been debated for decades.³³  In Alexander v. Sandoval,³⁴ the Court found that “it is beyond dispute” and that “no party disagrees” that section 601³⁵ of Title VI of the CRA prohibits only intentional discrimination and does not prohibit activities with a disparate impact on race.³⁶  Left open was whether section 602’s authority to “effectuate” section 601 allows agencies to impose disparate impact regulations.³⁷  As Louisiana cites in its PI Motion, the Fifth Circuit cast doubt on whether such regulation are permissible: “When Congress wants to allow disparate impacts claims, it uses particular language.”³⁸  Indeed, as the Sandoval court held, Title VI only prohibits intentional discrimination, leading several Fifth Circuit judges to conclude that such regulations are unlawful.³⁹

Louisiana argued that EPA cannot “effectuate” a provision by altering its scope by adding disparate impact where it does not exist.  Further, Louisiana contended that the statutory context and applicable canons of construction all weigh strongly in support of the interpretation that disparate impact regulations are not permitted under Title VI.⁴⁰  Still further, the State argues, Title VII explicitly permits disparate impact claims, unlike Title VI.  Thus, to suggest that Title VI somehow permits disparate impact claims, the State said, is “an act of mythological alchemy, not interpretation or effectuation.”⁴¹

The State further maintains that the Constitution’s Spending Clause prohibits imposition of disparate impact regulations because Title VI does not provide clear notice that accepting federal funds binds states to disparate-impact-based mandates.⁴²  Louisiana cites several Supreme Court Title VI cases, including Cummings v. Premier Rehab Keller, P.L.L.C., where the Court held that “if Congress intends to impose a condition on the grant of federal moneys, it must do so unambiguously.”⁴³

The State includes an Administrative Procedure Act (APA) claim as well, alleging the adoption of a “cumulative impact assessment” requirement was not subjected to the APA’s notice-and-comment procedure.  The fact that the EPA is now proceeding with just such an assessment—but without imposing any obligations on the State—tells you all you need to know about how it viewed its chances on this issue.

In addition to each of the foregoing claims,⁴⁴ the State asserts that the major questions doctrine claim is “the final nail in the disparate-impact regulations’ coffin.”⁴⁵  West Virginia is the latest and most explicit formulation of this doctrine.  There, the Court deemed the EPA’s forced “generation shifting” regulations to be a major question that exceeded the authority granted by the Clean Air Act.  Discussing the background of the doctrine, the Court said:

“[O]ur precedent teaches that there are ‘extraordinary cases’…in which the ‘history and breadth of the authority that [the agency] has asserted,’ and the ‘economic and political significance’ of that assertion, provide a ‘reason to hesitate before concluding that Congress’ meant to confer such authority.”⁴⁶

The major questions doctrine “took hold,” the Court added,

“[B]ecause it refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”⁴⁷

In assessing the vast scope of the EPA’s generation shifting regulation, the Court found “[t]here is little reason to think Congress assigned such decisions to [the EPA].”  Further, the Court, citing Kisor v. Wilkie, said that “[w]hen an agency has no comparative expertise in making certain policy judgments, we have said, ‘Congress presumably would not’ task it with doing so.”⁴⁸  As in West Virginia, the EPA, an environmental agency, would seem to lack “comparative expertise” when addressing alleged racial impacts as well.

To underscore the point, investigative journalist James Varney cites a medical journal article finding “almost no evidence that the incidence of cancer was higher in the River Parishes than in the rest of the United States.”⁴⁹  Other EPA critics, he notes, cite “poverty, smoking, obesity, and other factors as likely culprits among the River Parishes, not chloroprene.”⁵⁰

Justice Gorsuch’s concurrence (joined by Justice Alito) in West Virginia offers further guidance as to when the major questions doctrine applies, and they each favor invocation of the doctrine to EPA’s disparate impact regulation.  His formulation includes examining when an agency:

• “[C]laims power to resolve questions of great political significance” or “end an ‘earnest and profound debate across the country’”;
• “[S]eeks to regulate ‘a significant portion of the American economy’”; and
• “[S]eeks to intrude into an area that is the particular domain of state law”⁵¹

Congress’s repeated unsuccessful attempts to codify Title VI disparate impact authority clearly demonstrates the “political significance” of the policy.⁵²  Next, that the regulation seeks to cover “a significant portion of the American economy” is evident from the massive number of power plants, refineries, and other energy infrastructure facilities in the U.S.  Imposing a civil rights veto on all permitting nationwide could completely upend the U.S. energy industry.  Finally, the intrusion on a particular domain of state law is indisputable since the Clean Air Act is a model of “cooperative federalism,” whereby states are the primary regulators, consistent with federal standards.⁵³

Justice Barrett, in a recent concurrence in the student loan forgiveness case, underscores the importance of “context” in the major questions doctrine, which would further support deeming EPA’s disparate impact policy as subject to the doctrine.⁵⁴  She cites a “shared intuition” in major questions cases that “a reasonable speaker would not understand Congress to confer an unusual form of authority without saying more.”⁵⁵  EPA’s attempt to shoe-horn the controversial use of a civil rights law into an environmental statute would not strike a reasonable observer as an authority granted by Congress.  Similarly, the context of Title VI of the CRA would not lead one to believe it applies to disparate impacts when Title VII explicitly grants such authority and Title VI does not.

Facing what would seem to be a clear-cut loss in court, the EPA would be wise to follow its closure of the two pending disparate impact complaints in this case with an unequivocal disavowal of its unlawful authority.

Conclusion

It is in matters like this attempted agency overreach that some of the sharpest critics of the administrative state find justification.  While some aspects of the major questions doctrine may require further refinement in subsequent cases,⁵⁶ the direction from the Court is clear—agencies must have clear authorization when making controversial, unprecedented decisions of dubious authority.  The EPA lacks the power to impose this highly tendentious policy, no matter how noble it deems it to be.  Its decision to drop its Title VI policy with respect to the Environmentalists’ Complaints indicates that it understands the limits of its own authority—now it just needs to clarify that it will not commit the same violations going forward.

Notes

1. See, e.g., Sackett v. EPA, 598 U.S. __ (2023) (aka Sackett II) (rejecting EPA’s definition of “waters of the United States” as beyond the authority granted in the Clean Air Act).
2. West Virginia v. EPA, 597 U.S. __ (2022) (rejecting EPA rule requiring existing coal-fired power plants to reduce their own electricity production, or subsidize lower emission sources, as beyond the authority granted in the Clean Air Act).
3. West Virginia v. EPA, supra at 19 (slip op.) (2022) (“[I]n certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us ‘reluctant to read into ambiguous statutory text’ the delegation claimed to be lurking there … [S]omething more than a merely plausible textual basis for the agency action is necessary.  The agency instead must point to ‘clear congressional authorization’ for the power it claims.”); see also FDA v. Brown & Williamson Tobacco Corp. 529 U.S. 120, 133 (2000) (“[W]e must be guided to a degree by common sense as to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency”).
4. The Civil Rights Act of 1964 (Pub. L. 88-352).
5. State of Louisiana v. U.S. Environmental Protection Agency, CA No. 2:2023cv00692 (W.D. La. May 24, 2023); and Memo. in Support of Mot. for Prelim. Injunct., Document 15 (June 22, 2023).
6. See, e.g., Philip Hamburger, Is Administrative Law Unlawful? (2014) (answering in the affirmative); John Marini, Unmasking of the Administrative State: The Crisis of American Politics in the Twenty-First Century, 8 (2019) (the administrative state “was meant to replace constitutionalism”); David Bernhardt, Your Report to Me: Accountability and the Failing Administrative State (2023) (enumerating problems arising from an “unaccountable bureaucracy” and “unelected rule makers”); and Chris DeMuth, Reviving Congress Would Revive Democracy, Wall St. J., June 9, 2023 (the administrative state is “a competing conception of democracy itself”); but see also Cass R. Sunstein & Adrian Vermuele, Law & Leviathan: Redeeming the Administrative State, 19, 2020 (a counterargument to the recent “fundamental assault on the legitimacy of the administrative state”).
7. “All legislative Powers herein granted shall be vested in a Congress of the United States,” U.S. Const., Art. I, Sec. 2, Cl. 1.
8. See e.g., Woodrow Wilson’s lament that the separation of powers is “a radical defect in our federal system,” and that “the only fruit of dividing power has been to make it irresponsible.” Woodrow Wilson, Congressional Government, 187.
9. Exec. Order No. 13895, 3 C.F.R. __ (2021) (https://tinyurl.com/CEPAR101).
10. Draft FY 2022-2026 EPA Strategic Plan, p. 20 (Oct. 1, 2021)  (https://tinyurl.com/CEPAR102).
11. Id. at 34 (emphasis added).
12. “EO 13895 Equity Action Plan,” EPA, p. 3 (Apr. 2022) (https://tinyurl.com/CEPAR103).
13. Id. at 20 (emphasis added).
14. Id. at 16 (emphasis added).
15. “Draft National Program Guidance: FY 2023-2024,” EPA Office of Environmental Justice and External Civil Rights Compliance Office, p. 12 (June 2, 2022) (https://tinyurl.com/CEPAR104).
16. EPA “Letter of Concern” to LDEQ and LDH, at 2, Oct. 12, 2022 (https://tinyurl.com/CEPAR106) (emphasis added).
17. Id. at 3 (emphasis added).
18. Louisiana v. EPA, supra, Motion for Prelim. Injunct., Document 15, p. 9.
19. Id. at 10.
20. EPA Letter “Re: Administrative Closure EPA Complaint Nos. 01R-22-R6 and 04R-22-R6” to LDEQ, June 27, 2023, at 5 (https://tinyurl.com/CEPAR105).
21. Id. at 1.
22. Id. at 4 (emphasis added).
23. Id.
24. “[W]ithout prejudice to renewal if circumstances change,” Louisiana v. EPA, supra, State’s Notice in Response to June 29 Order, Document 20, p. 2.
25. Id. at 1.
26. Louisiana v. EPA, supra, Complaint, at 2.
27. Id. at 5-19.
28. Id. at 31-32.
29. Id. at 33.
30. Id. at 44.
31. Id.
32. Id. at 55-56.
33. See Civil Rights at School: Agency Enforcement of Title VI of the Civil Rights Act of 1964, Congressional Research Service, Apr. 4, 2019, for a partial history of this issue.
34. Alexander v. Sandoval, 532 U.S. 275 (2001).
35. Section 601 provides that “no program or activity” that receives federal financial assistance may discriminate against a person “on the ground of race, color, or national origin.”
36. Id. at 280.
37. Id. at 281.
38. Kamps v. Baylor Univ., 592 F. App’x 282, 285 (5th Cir. 2014).
39. See Rollerson v. Brazos River Harbor Navigation Dist. of Brazoria Cnty. Texas, 6 F.4th 633, 647-50 (5th Cir. 2021) (Ho, J., concurral); id. At 647 (Jones, J., concurral).
40. Louisiana v. EPA, supra, Motion for Prelim. Injunct., Document 15, at 3, 20-32.
41. Id. at 3.
42. Id. at 32-33.
43. 142 S. Ct. 1562, 1569-70 (2022).
44. Not analyzed in this section is Louisiana’s private nondelegation claim with respect to the Environmentalists’ Complaints since it appears to be resolved by EPA’s closing of those complaints.
45. Louisiana v. EPA, supra, Memo. in Supp. of Mot. for Prelim. Injunct., Document 15, at 35.
46. West Virginia v. EPA, supra at 17 (slip op.).
47. Id. at 20 (slip op.).
48. Id. at 17 (slip op.) (citing 588 U.S. __, __ (2019)).
49. James Varney, Biden’s EPA is Lowering the Environmental Justice Boom on Louisiana’s Disputed ‘Cancer Alley,’ RealClearInvestigations, Mar. 23, 2023 (citing the Journal of the Louisiana Medical Society, 1997).
50. Id.
51. West Virginia v. EPA, supra at 9-11 (slip op.) (Gorsuch concurrence).
52. See, e.g., Is the Trump Administration Rethinking Title VI?, Congressional Research Service, Feb. 4, 2019, at 4 (noting the “long and continuing debate” in Congress re Title VI and disparate impact).
53. See, e.g., New York v. United States, 505 U.S. 144, 167 (1992).
54. Biden v. Nebraska, 600 U.S. __, 2023.
55. Id. (slip op. at 13).
56. See, e.g., Ronald M. Levin, The Major Questions Doctrine: Unfounded, Unbounded, Confounded, Center for the Study of the Administrative State Working Paper, Dec. 15, 2023 (the doctrine leaves unclear what constitutes “major questions,” among other concerns).