In a 6 to 3 vote, the U.S. Supreme Court’s decision in West Virginia v. EPA reduced the powers of the Environmental Protection Agency (EPA) to regulate without “clear congressional authorization.” With divided and often stalled government, what does this mean for environmental protections in the U.S. and climate change measures generally? Here, Stanford Law School Professor Deborah Sivas, an environmental law expert, discusses the implications of the decision.
Can you explain the key points of today’s ruling? I understand that the Court was considering powers granted to it by the Clean Air Act and adopted a narrow reading of it.
The Clean Air Act is the primary statutory authority under which EPA regulates greenhouse gas emissions, as the Supreme Court itself acknowledged in Massachusetts v. EPA. Power plants account for about one quarter of U.S. greenhouse gas emissions. In 2015, EPA exercised its authority under section 111 of the Clean Air Act to set performance standards for existing power plants, including coal-fired power plants. Those standards, which became known as the Clean Power Plan rule, involved both “heat rate improvements” to increase coal power plant efficiency (which does not actually achieve much emissions reduction) and “generation shifting” improvements (switching to natural gas or renewable production).
The coal industry sued, arguing that EPA does not have authority under section 111 of the Clean Air Act to regulate beyond the fenceline of a facility and thus cannot adopt a performance standard that involves shifting production to other types of electricity generation through, for instance, the kind of cap-and-trade program that California has. Before that case was decided, the incoming Trump Administration EPA revoked the Clean Power Plan rule and replaced it with the Affordable Clean Energy rule, which limited coal power plant standards to what was achievable at a particular facility, even though the agency admitted that these standards would not appreciably reduce greenhouse gas emissions from coal plants. The Affordable Clean Energy rule was challenged in court and the D.C. Circuit set aside both that rule and the Trump Administration’s revocation of the prior Clean Power Plan rule. The Biden EPA then told the court that it was developing a whole new rule and would not be adopting either of the two prior rules.
For this reason, the Supreme Court could have decided not to take up the case on the merits, as the Biden EPA requested. But with today’s decision, the Court chose to reach out and use the case, almost like an advisory decision, to expand the scope of something called the “major questions” doctrine. That judge-made doctrine, which locates its origins in separation-of-power principles, provides that where a regulation has “vast economic and political significance,” agency action must be authorized by a “clear congressional statement” for such authority. Here, the Court concluded that the Clean Power Plan rule’s generation shifting provisions ran afoul of the major questions doctrine.
The ruling said that an agency “can promulgate an important and significant climate rule only by showing ‘clear congressional authorization.’” What does that mean? And how challenging it is?
The generation-shifting provisions of the Clean Power Plan rule were tethered to section 111 of the Clean Air Act, which authorizes EPA to develop a standard of performance for harmful pollution sources like power plants that reflects the emissions reductions achievable through application of the “best system of emission reduction” that EPA determines has been adequately demonstrated, taking into account costs and non-air quality health and environmental impacts, and energy requirements. The Clean Power Plan rule determined that the “best system of emission reduction” language conveyed congressional authorization to incorporate generation-shifting provisions into the rule. The majority and concurring opinions disagreed.
This ruling makes future EPA regulation of existing power plants very challenging. Unlike toxic pollutants, for which some type of scrubber technology can be applied, carbon dioxide emissions from power plants cannot be significantly reduced, even with efficiency improvements. Carbon dioxide is the inevitable byproduct of burning fossil fuels. Thus, if EPA cannot impose performance standards that depend on some generators switching to lower emission technologies, particularly renewable energy technologies like solar and wind, then the agency seems to have very little room to maneuver. Consistent with the “within the fenceline” argument, EPA could, for instance, require carbon capture and sequestration at coal-fired power plants, but that approach is much more expensive than alternatives like wind and solar, which are cost competitive or actually out-compete coal in the present market. A carbon capture rule would likely put coal plants out of business, so I have a very hard time seeing the present Court allowing this approach, either.
What does the EPA have clear authority to do regarding climate change and environmental challenges? Are this agency’s hands tied?
Part of the reason that the Biden EPA did not intend to reinstitute the Clean Power Plant rule is that it is now obsolete, in the sense that the economy has already achieved the performance standards articulated when the rule was adopted back in 2015. I’m not sure whether the Biden EPA should spend a lot of time trying to regulate old coal-fired plants in light of the restrictive West Virginia decision. Resources might be more productively spent on climate policies that promote where the market is already headed – to renewables.
How will the ruling effect other governmental agencies?
In my view, this case really sets the table for the Court to use the “major questions” doctrine more systematically in the future. The handful of prior cases in which the Court invoked this concept were quite sui generis – for instance, where one agency asserted jurisdiction over an area outside its traditional expertise (the recent vaccine case) or where Congress had previously rejected an agency’s regulation in a particular arena (the tobacco case.) Here, the regulation of air pollutants from a major source (power plants) is squarely within EPA’s regulatory wheelhouse, expertise, and customary regulatory sphere. If the Court requires a clearer expression of congressional authority in this instance, all kinds of regulatory programs that broadly effect the economy might be at risk. Justice Gorsuch’s concurrence attempts to create some parameters for application of the doctrine going forward, but by harkening back to some 19th century cases, that discussion feels to me more like a call to go back to pre-New Deal regime where courts were much more skeptical of federal regulatory authority.
Is there anything else you’d like to add?
One interesting thing is that much ink and hand-wringing has been spent in recent years on the continuing viability of so-called Chervon-deference to an agency’s interpretation of the statute it implements. So far, the Supreme Court has picked at, but not outright overruled, Chevron. This decision seems to be another piece of that puzzle. Neither the majority opinion nor the concurrence even mention Chevron, but the Court is clearly using the “major questions” doctrine to override EPA’s interpretation of its statutory authority.
And one of my questions after today is where the Court will draw the line. There are already a variety of canons of statutory interpretation that can be applied to determine whether an agency exceeds its rulemaking authority. The “major questions” layer creates more uncertainty. Now, an agency has to think harder about whether its rules might be of “vast economic or political significance.” What does that mean? And how should that analysis proceed? Many modern rules have broad application and thus broad effect. Does every such rule now become vulnerable to a “major questions” challenge?
Deborah A. Sivas is the Luke W. Cole Professor of Environmental Law at Stanford, the founding director of its Environmental Law Clinic, director of its Environmental and Natural Resources Law and Policy Program, and a senior fellow at the Stanford Woods Institute for the Environment.