Is Regulation or Legislation More Durable? With Climate Policy, the Answer Is Not So Simple

The societal changes and investments that are necessary to address climate change will last for decades. Consequently, durability is a criterion many look for in climate policy to provide a stable business environment that promotes risk-taking in search of innovation and long-run payoffs. If policy whipsaws—as has the US position regarding the Paris climate accord, for instance—long-lived investments of all types will be undermined, and the US economy is likely to suffer.

In this context, many supporters of ambitious policies around climate change see legislation as the ideal solution. Because regulations are more transient and more dependent on support from executive agencies, some contend that legislation is necessarily more durable than rules would be.

In one sense, this argument is true. The breadth and scope of legislation is relatively unbounded compared to a regulatory strategy because legislation can set new obligations, incentives, ambitions, and regulatory boundaries. Meanwhile, regulation must fit within the authority that’s been established by previous legislation. Consequently, ambitious, cost-effective, and comprehensive climate policy is likely to require legislation; all these attributes probably cannot be achieved with regulation under existing authorities. If I were developing an ideal suite of policies to address climate change, legislation certainly would be my preference.

From a practical perspective, however, legislative approaches seem unlikely to achieve the desired outcome, regardless of who controls the Senate. Given the current landscape for federal policymaking around climate policy and the judicial system, regulatory strategies under previously exercised existing authority may do just as well as legislative strategies.

Except where legislation is very specific, it faces judicial review, and even highly specific legislation comes with its own downsides. A fundamental characteristic of the climate challenge is the uncertainty inherent to the related science, technology, and economics. Very specific legislation may lack the ability to adapt to new information, which undermines its durability. In the face of uncertainty, specifically directed legislation may have less success than delegating authority to an expert agency, which itself would develop and update the regulations that can achieve well-defined goals. In this sense, the roles of legislation and regulation can complement each other, wherein legislation gives expert agencies authority over rulemaking. However, new legislation that grants authority to expert agencies would almost certainly face legal challenges—a major risk, especially given the Supreme Court’s current conservative tilt. In contrast, where possible, regulation under existing authority typically follows a pathway that has faced and overcome that legal test already.

The issue of judicial review plays a key role in examining the trade-off between legislation and regulation. A summer workshop this year, sponsored by Resources for the Future (RFF) and the UCLA School of Law’s Emmett Institute on Climate Change & the Environment, examined the prospect for climate policy, given the expectation of judicial review of new regulations and the growing interest of the court in the nondelegation and major questions doctrines. The nondelegation doctrine would apply limits on the ability of Congress to delegate regulatory authority to executive agencies, while the major questions doctrine would restrict agencies from applying rules to major new questions that didn’t appear in the original legislation. The current Supreme Court will show stronger support for employing these doctrines, and Congress needs to anticipate the potential for judicial backlash against legislative initiatives.

At the workshop, we aligned around the following advice for policymakers as they work around the expected judicial constraints:

• Delegate authority to agencies in similar ways as existing statutory authority that’s already been upheld in court.

• Model new policy to look like existing regulatory structures (whether through new legislation or regulations under existing authority).

• Avoid ambiguity in legislation.

• Do not sacrifice ambition in the face of legal risks (because judicial opposition is likely to hinge on regulatory authority more than on stringency), and hedge against risk by deploying multiple regulations.

• Create severability, so that if one part of a regulation is overturned, other parts can survive.

• Create a backstop, specific and minimally open to interpretation, that’s triggered if other parts of a regulation get overturned.

• Engage in open and inclusive policy debate, which yields higher-quality outcomes and makes policy resilient to legal challenges.

Key to the implementation of any regulation is the legal process. Under the Clean Air Act, this process involves expert panels, fact-finding, notice and comment, the possibility of citizen lawsuits, and other features that indeed make regulation slow to take shape. Crucially, however, these trusted processes make environmental rules harder to reverse. Relying on the regulatory process might end up as the only path forward for a Biden administration if Congress remains averse to passing new legislation around climate change. The opportunities and benefits of implementing new rules within existing laws merit close consideration by the incoming administration.