by Jurry Bajwah, Staff Writer
In West Virginia v. EPA, the Supreme Court of the United States held that the Environmental Protection Agency (“EPA”) did not have clear authority to devise carbon emissions caps based on a generation shifting approach.[1] Generation shifting is defined as the shift in electricity production from a high emission source to a lower emission source.[2] The regulatory authority granted to the EPA in Section 111(d) of the Clean Air Act was found to be lacking clear congressional authorization for the EPA to regulate and implement a generation shifting approach due to economic and social implications.[3]
Generation shifting would lead to a transition from coal and natural gas plants to renewable sources, resulting in billions of dollars in compliance costs.[4] The Federal Government argued that the case was moot and therefore not justiciable because the EPA did not intend to implement the generation shifting proposal.[5] However, the Supreme Court rejected that argument, holding that the case remains justiciable because the voluntary cessation of an implementation of a rule does not moot a case.[6] The Court’s decision in West Virginia v. EPA has implications for all federal regulatory agencies, especially where a federal agency is involved in regulating a novel industry.
One such industry is the digital asset and crypto currency space. There is no specific federal law governing digital currencies; however, the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission oversee crypto regulations.[7] The implication of West Virginia v. EPA may be that federal agencies refrain from drawing their own jurisdictional boundaries beyond what Congress clearly intended.[8] Crypto investors and startups have been watching regulatory decisions with increased interest because of the trillions of dollars that have been generated in a largely unregulated space.[9] Crypto currency regulation will lead to a more stable crypto market, with less speculation and volatility, which has the potential of increasing the confidence of long term investors.[10] Presently, the unregulated crypto market makes it easier for scammers to fraudulently create “get rich quick” schemes and take advantage of investors that have limited knowledge.[11]
Crypto currencies are not protected assets in the market.[12] Platforms like Coinbase and Gemini comply with federal and state regulations, but regulations for public stock exchanges are largely absent.[13] Congress is showing an increased interest in digital asset bills, as 2021 saw the largest number of senate bills addressing the issue.[14] The increased interest by Congress is a welcome sign for investors and the digital asset space in general. One such benefit of Congress’s increased interest is exemplified by the Anti-Money Laundering Act of 2020, which included digital assets in its definition, making all transactions of “value that substitutes for currency” subject to reporting requirements.[15]The standard set forth in West Virginia v. EPA will require federal agencies such as the EPA to operate squarely within the jurisdictional realm that Congress has defined. Therefore, Congress will have to pass new legislation for the SEC to regulate digital assets.
[1] West Virginia v. EPA, 142 S. Ct. 2587, 2592 (2022).
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] https://www.whitecase.com/insight-alert/supreme-court-rules-epa-cannot-require-existing-fossil-fuel-power-facilities-shift#:~:text=Generation%20shifting%20was%20a%20measure,that%20emit%20less%20carbon%20dioxide.
[7] https://www.nbcnews.com/tech/crypto/crypto-regulation-faces-even-steeper-climb-supreme-court-epa-decision-rcna36059
[8] Id.
[9] Id.
[10] https://time.com/nextadvisor/investing/cryptocurrency/why-crypto-regulation-is-good-for-investors/
[11] Id.
[12] Id.
[13] Id.
[14] https://pro.bloomberglaw.com/brief/cryptocurrency-laws-and-regulations-by-state/
[15] Id.
