Supreme Court limits EPA's authority to regulate GHG emissions

5 July 2022

On June 30 the US Supreme Court issued a landmark decision in ‘West Virginia v EPA’. In a 6-3 opinion written by Justice Roberts, the Court held that Congress did not give the US Environmental Protection Agency the authority under Section 111 of the Clean Air Act to set emission standards for existing power plants that prescribe the market share of certain types of power generation. The following is extracted from analysis produced by Van Ness Feldman.

The Court reversed the DC Circuit ruling that struck down the Trump-era Affordable Clean Energy (ACE) Rule, which repealed the Obama-era Clean Power Plan and replaced it with more limited regulations of CO2 emissions from existing power plants. 

The Court applied the ‘Major Questions Doctrine,’ which applies a more sceptical review when an agency discovers in a ‘long-extant statute an unheralded power’ representing a ‘transformative expansion in its regulatory authority’ with substantial national impacts. Essentially, this is intended as a safeguard against unintended consequences of earlier legislation. In such cases, the Court has held, a general delegation of authority may not be enough; rather, the agency’s action must be supported by clear statutory authorisation. 

The majority opinion states:

‘Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible “solution to the crisis of the day”’ (quoting New York v United States, 1992). ‘But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.’

A dissent, written by Justice Kagan, argues that with the decision the Court ‘appoints itself—instead of Congress or the expert agency—the decision maker on climate policy.’ 

The Court remanded the case for further proceedings consistent with the opinion. Given that the Court’s opinion reversed the decision by the DC Circuit regarding the ACE Rule, the question is whether that rule now springs back to life. At a minimum, EPA will need to address this question through an administrative process, for example a stay or a rulemaking, while the Agency continues work on a replacement rule for the CPP and the ACE Rule consistent with the Court’s opinion in West Virginia. 

EPA is expected to issue its proposed rule under Clean Air Act section 111(d) in March 2023 and will likely finalise the regulation in 2024. The West Virginia decision will force the Biden administration to approach its development of regulations to implement greenhouse gas controls for power plants more narrowly than the Clean Power Plan.

Importantly, if EPA is constrained in what the replacement for CPP and ACE can achieve with regard to GHG reductions. This may mean that the power sector will see the Agency targeting more stringent regulation of non-greenhouse gas pollutants – such as NOx, particulate matter, and hazardous air pollutants – which could achieve climate mitigation co-benefits that the Agency cannot achieve through direct regulation.  

More broadly, the Court’s specific use of the Major Questions Doctrine is a significant development in the field of administrative law. Greater use of this doctrine could greatly curtail agency abilities to use existing statutory authority in new ways if the regulations have substantial impacts. This limit on agency regulatory powers could extend not just to the environment, but potentially to health care, telecommunications, the financial sector, and other areas.

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