Supreme Court Accepts Two Significant Cases for the October 2024 Term

The Supreme Court has agreed to hear two cases with potentially far-reaching implications for church-state relations and the ability of parties to challenge administrative agency actions in federal court. The first case, Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission, delves into the intersection of religious freedom and state tax exemptions. Catholic Charities, affiliated with the Diocese of Superior, was denied a state unemployment tax exemption because the Wisconsin Supreme Court determined its activities, while charitable, were not "primarily religious." The Wisconsin court reasoned that Catholic Charities served and employed individuals outside the Catholic faith, did not actively proselytize, and provided services that could also be offered by secular organizations. This ruling raises the crucial question of whether a state can impose its own definition of religious behavior as a prerequisite for granting a tax exemption to a religious organization, potentially violating the First Amendment’s Religion Clauses. Further, the case challenges the Wisconsin Supreme Court’s application of a "beyond a reasonable doubt" standard of proof in assessing the constitutional claims, a standard typically reserved for criminal proceedings. The Supreme Court’s decision will clarify the boundaries between religious freedom and state regulatory authority, particularly in the context of tax exemptions.

The second case, Diamond Alternative Energy LLC v. Environmental Protection Agency, focuses on Article III standing, a critical doctrine governing who can bring a lawsuit in federal court. This case arises from the EPA’s waiver granted to California, allowing the state to set its own stricter vehicle emission standards, including a zero-emission vehicle mandate. Fuel producers challenged the waiver, arguing it exceeded the EPA’s authority under the Clean Air Act, which generally preempts state-level emission standards. However, the D.C. Circuit Court of Appeals dismissed the fuel producers’ lawsuit, finding they lacked standing because they could not demonstrate that vacating the waiver would directly impact automakers’ behavior and thus redress their alleged injuries. This decision hinges on the crucial question of whether a party can establish standing by relying on the predictable, coercive effects of a regulation on third parties (in this case, automakers). The Supreme Court will determine whether the fuel producers have a sufficient stake in the outcome to challenge the EPA’s action, even if the direct impact of the regulation falls upon a different entity.

The Catholic Charities case revolves around the interpretation of the First Amendment’s Religion Clauses in the context of state tax exemptions. The central issue is whether a state can deny a religious organization an otherwise available tax exemption based on its assessment of the organization’s activities and whether those activities align with the state’s definition of “primarily religious.” Catholic Charities argues that the Wisconsin Supreme Court’s decision impermissibly burdens its religious exercise by requiring it to conform to a secular definition of religious behavior. The state, on the other hand, likely argues that it has a legitimate interest in ensuring that tax exemptions are granted only to organizations genuinely engaged in religious activities, and not simply using religion as a pretext for other purposes. The Supreme Court’s decision will have significant implications for religious organizations nationwide, clarifying the extent to which states can regulate or scrutinize their activities when determining eligibility for tax benefits.

Further complicating the Catholic Charities case is the Wisconsin Supreme Court’s application of the "beyond a reasonable doubt" standard of proof. This standard, typically reserved for criminal cases, raises the bar significantly higher for challenging the constitutionality of a state action. Critics argue that this heightened standard of proof makes it unduly difficult to vindicate constitutional rights. The Supreme Court’s review will address whether such a high standard is appropriate in the context of civil constitutional challenges, potentially impacting the landscape of constitutional litigation more broadly. The Court’s decision in this case could affect religious organizations across the country seeking tax exemptions and clarify the appropriate standard of review for constitutional challenges in state courts.

The Diamond Alternative Energy case delves into the complexities of Article III standing, a foundational principle of the U.S. legal system. Article III of the Constitution limits the jurisdiction of federal courts to “cases” and “controversies,” requiring a plaintiff to demonstrate a concrete and particularized injury that is fairly traceable to the defendant’s conduct and likely to be redressed by a favorable court decision. This case presents the specific question of whether a party can satisfy the redressability requirement by relying on the coercive effects of a regulation on a third party. The fuel producers argue that the EPA’s waiver will inevitably lead automakers to produce more fuel-efficient vehicles, thereby reducing fuel consumption and harming their business. The EPA, conversely, contends that the connection between the waiver and the fuel producers’ alleged injuries is too speculative to establish standing.

The Supreme Court’s decision in Diamond Alternative Energy will have significant implications for administrative law and the ability of parties to challenge agency actions. A ruling in favor of the fuel producers could broaden the scope of Article III standing, making it easier for parties to challenge regulations even when the direct effects are felt by another entity. Conversely, a ruling against the fuel producers could reinforce a stricter interpretation of standing, potentially limiting the ability of individuals and businesses to challenge agency decisions in federal court. This case could significantly impact how future legal challenges to environmental regulations and other administrative actions are brought, potentially affecting the balance of power between regulatory agencies and the entities they regulate. It could potentially create a ripple effect on future waiver grants, including a possible forthcoming waiver that may effectively authorize California to ban the sale of gasoline-powered vehicles by 2035. Ultimately, the Court’s decision will shape the future of environmental regulation and the ability of affected parties to seek judicial review.