On 28th June, the Department of Justice, Environmental Protection Agency, and Volkswagen proposed a judicial settlement to partially resolve the automaker’s Clean Air Act violations associated with the sale of almost 500,000 2.0 liter diesel engines that were equipped with “defeat devices.”

 

While no one—not even Volkswagen—disputes the company’s misdeeds, the proposed partial consent decree includes executive lawmaking in breach of the separation of powers. To be precise, serious constitutional concerns are raised by a stipulation in the consent decree for an EPA-approved plan to spend $1.2 billion over ten years “to support increased use of zero emission vehicle technology” (“National ZEV Investment Plan”).

 

For starters, the National ZEV Investment Plan is unrelated to the statute which gave rise to the settlement. There is no authority in the Clean Air Act for the EPA to oversee risky investments in nascent automotive technologies. Nor is the purpose of the ZEV plan rooted in the statute. According to the proposed partial consent decree, the impetus for the $1.2 investment in ZEVs is to address Volkswagen’s “deceptive marketing of the subject vehicles as ‘green.’” But the Clean Air Act doesn’t regulate false advertising.

 

Nor did Congress appropriate $1.2 billion for the EPA to invest in electric vehicle infrastructure and marketing. In fact, the National ZEV Investment Plan conflicts with Congress’s intent. In 2011, after promising to put one million electric cars on the road, the White House requested from Congress $300 million to spend on ZEV infrastructure. Congress demurred. And in 2016, the President once more sought federal spending to support increased usage of ZEVs through a program called the “21st Century Transportation Initiative.” Again, Congress refused.

 

Having failed to persuade Congress, the administration now seeks to co-opt the judiciary’s injunctive and contempt powers in order to advance the President’s failed legislative agenda. The proposed partial consent decree would give EPA control of $1.2 billion in ZEV investments, which is four times what the administration unsuccessfully sought from Congress for effectively the same purpose in 2011.

 

In light of the foregoing, the proposed partial consent decree entails usurpation of Congress’s lawmaking and appropriations power. If the Justice Department can negotiate a billion dollar industrial policy into a settlement agreement to enforce the Clean Air Act, it is fair to ask: Are there any limits on what a President could achieve through consent decree negotiations?

 

If allowed to stand, the National ZEV Investment Plan stipulation would provide the President with a template to create his or her own “power of the purse.” All a President would have to do is pour resources into regulatory enforcement, and then pursue settlements whereby the regulated target agrees to spend money in accordance with the President’s policy priorities. After all, any rational business would prefer to make an upfront payment when the alternative is an interminable battle with the vast resources and machinery of the federal government.

 

For more information:

• The proposed partial consent decree is now before the U.S. District Court, Northern District of California (In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, 3:15-md-02672-CRB).
• In comments to the Justice Department on the proposed partial consent decree, my colleagues Theodore Frank, Adam Schulman, and I argue that the National ZEV Investment Plan contravenes the Clean Air Act and common sense, in addition to raising serious constitutional concerns.
• In written testimony before a House Judiciary Subcommittee, I elaborate on the constitutional questions raised by the settlement.

William Yeatman is a senior fellow at the Competitive Enterprise Institute, a libertarian think tank in Washington, D.C., that focuses on the administrative state. During evenings, he pursues a JD at the Georgetown University Law Center