OPINION:
Should a federal agency have the power to take and grant market share across a multibillion-dollar market for reasons of its own choosing?
Should an executive agency have the unfettered ability to pick winners and losers for a market that supplies products to nearly every building and vehicle?
If someone you have never had the opportunity to vote for has the power to make substantive laws that take away or limit your rights to give them to others — maybe in the name of “equity” — is that consistent with liberty?
America’s Founders didn’t think so, and neither does Choice Refrigerants, a small business in Georgia that makes refrigerants used in refrigerators, air conditioners and other cooling machines.
Choice Refrigerants has filed a petition for writ of certiorari asking the Supreme Court to take up its case and confirm that Congress gave away its rights-affecting legislative power and violated the nondelegation doctrine when it passed the American Innovation in Manufacturing Act of 2020.
The nondelegation doctrine theoretically prevents Congress from divesting itself of legislative power, but in practice, it has been a dead letter for roughly 90 years.
Recently, several justices have evinced an interest in resuscitating the doctrine and the liberty it is meant to protect. Doing so would be consistent with the Supreme Court’s current interest in originalism and textualism in administrative law.
Moreover, given some of the language in the high court’s recent Learning Resources case concerning tariffs and its Consumers’ Research v. FCC case about the universal service fund, Choice’s case presents an ideal vehicle. That’s because the case concerns a grant of pure legislative power that reorganized private rights across an entire industry.
What is the AIM Act? Well, for reasons that remain debatable, Congress decided that the market for certain refrigerants should be reduced by 85% over 15 years. Through the legislation, Congress gave the Environmental Protection Agency unfettered control over the related market allocation.
Congress troubled itself just enough to tell EPA to use a cap-and-trade scheme. As to which companies had to reduce their outputs or imports or by how much, that was up to the EPA.
So long as the EPA did not dole out more “allowances” than would exceed the national cap and so long as it prioritized the 2% of the market that represented “essential” uses (such as might impact the Department of Defense), the agency was free to divvy up the remaining 98% of the market however it chose.
The EPA chose to prioritize social justice and administrative ease over protecting the rights and reliance interests of existing market participants. First, it set aside millions of the “allowances” now required to participate in the market, citing its own criteria of “equity.”
It posited that historically disadvantaged entities may have been shut out of market participation. With its newfound power, the EPA decided to take market share from existing companies and give it to new market entrants, prioritizing racial minorities and women.
The EPA then chose to allocate the remaining market to those who had historically filed paperwork under its Greenhouse Gas Program.
Did the refrigerants belong to the company that filed the paperwork, or was that entity just an import agent? The EPA didn’t care. By being the EPA’s definition of a good citizen, you could earn the right to someone else’s patented product.
Was the paperwork filed by a foreign entity that violated anti-dumping laws or intellectual property rights? Again, the EPA didn’t care. It was more interested in the “administrative ease” of using the paperwork they mandated.
Naturally, the EPA’s picking of market winners and losers for reasons it created hurt some companies. One of those was Choice, which developed patents associated with products that the EPA now fully controls.
After serving “equity” and its own interests, the EPA had taken roughly one-third of Choice’s market share and given the associated allowances to other companies.
Choice is hopeful that the Supreme Court takes its case. If you are interested in liberty, congressional accountability or free markets, if you in any way depend on regulated products or services (and you do), you might hope so as well.
• Zhonette Brown is general counsel and senior litigation counsel at the New Civil Liberties Alliance, which represents the petitioner in Choice Refrigerants v. EPA.
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