In State Farm v. Environmental Protection Agency (EPA), the U.S. Supreme Court has heard oral argument from three Justices. Writing for the majority, the Court has refused to hear a landmark case challenging the EPA’s ability to regulate greenhouse gas emissions, effectively preventing the Clean Air Act from fulfilling its full purpose. The State Farm suit was led by Democratic Senator John Kerry and was supported by many prominent environmental organizations. Kerry stated that there was ample evidence that greenhouse gas emissions were “polluting our atmosphere.” According to the United States Supreme Court’s ruling in this case, any law that bans carbon dioxide emissions from the use of existing power plants is unlawful, regardless of whether or not it is passed by a legislature.

State Farm Lawsuit

The court did not deny that the EPA has the power to regulate greenhouse gases, but declined to hear the case on the basis of the fact that Congress has the power to regulate interstate commerce under the power of the Constitution. The Court also refused to hear arguments by environmental organizations claiming that the EPA’s decision to de-tailor the Clean Air Act to appease the White House was based on political considerations rather than an appropriate application of the law.

Among the arguments advanced by the Supreme Court Justices in their denial of the request to review the case, were the statements by EPA Administrator, Lisa Jackson, that the agency’s actions regarding enforcement of the greenhouse gas regulations were based on a “back-door” approach, which allowed industry to ignore the federal regulations.

Further, in rejecting the argument that the EPA exceeded its power in establishing a regulating order, the Court rejected the contention that the EPA has a legitimate reason to ban a substance if it can demonstrate that no other federal law could prevent it from doing so. This represents the worst decision the Supreme Court has made in recent history and further jeopardizes the chances for meaningful review by lower courts of agency regulatory action.

The State Farm lawsuit was filed by the Estate of Mark Holloway, claiming that the federal Farm Management Practices Act (FMPA) and its companion legislative acts, like the Flood Insurance Reform Act, violates the Supremacy Clause of the United States Constitution.

As noted by the Court, it is beyond doubt that Congress intended that the federal government will control all activities related to interstate commerce, including those that impact the states. The Supremacy Clause expressly forbids the states from interfering with federal action.

The Court has repeatedly held that Congress has the power to enact laws governing interstate commerce even when a state has an interest unrelated to the federal interest. In this instance, it was determined that the FTC was not within its jurisdiction because the state had a valid claim that the FTC’s regulation of its insured mortgage lenders was unreasonably restrictive and arbitrary.

The Court further stated that the Congress has the power to regulate commerce in two distinct but interconnected ways.

First, it may regulate for the protection of the general welfare of the people, and second, it may exercise exclusive legislation among the States. The Court further stated that the Power of Congress included the power to control foreign trade, but only for the purpose of promoting the general welfare. It was obviously unwilling to undertake such activity when it conflicted with the sovereign status of the States.

The plaintiffs in this case hoped that the federal court exceeded the boundaries of the Supremacy Clause and granted summary judgment to the FTC. This they failed to achieve.

The Eleventh Circuit panel of the Court of Appeals for the District of Columbia Circuit refused to disturb the District Court’s order granting summary judgment. This was based on the fact that Congress, by approving the FTC’s act, clearly indicated that it was exercising powers conferred upon it by the Supremacy Clause. Further, it was contended that Congress never has power to restrict state action under the Commerce Clause, nor did it ever have the power to interfere with state regulation of foreign trade.

The Court of Appeals therefore overruled the defendant state.

However, the state’s petition for rehearing was denied by the full court, on the basis that the record did not demonstrate that either Congress or the courts have any restraint or ability to prevent state officials from regulating mortgage lenders on the basis of their performance in the marketplace. The Court of Appeals also stated that the plaintiffs had waived their right to raise the question of Congress’ power to control interstate commerce by filing the state Farm lawsuit. However, the court declined to allow the case to move forward for a declaratory judgment that Congress had no power over state farm policies as implied in the clauses of the Supremacy Clause. The court therefore affirmed the district court’s finding that the plaintiffs had waived their right to recovery.

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