Supreme Court Limits EPA’s Authority under the Clean Air Act

Margaret Anne HillFrank L. Tamulonis III, and Stephen C. Zumbrun 

After seven years, three presidential administrations, and two appearances before the Supreme Court, the Obama Administration’s “Clean Power Plan” (“CPP”)—a Clean Air Act regulation designed to limit carbon emissions from existing coal-fired power plants (and later revised by the Trump-era “Affordable Clean Energy” (“ACE”) rule)—was struck down by the Supreme Court on June 30, 2022. See West Virginia et al. v. Environmental Protection Agency et al., No. 20-1530.

Relying on Section 111(d) of the Clean Air Act (“CAA”), the Environmental Protection Agency’s (“EPA’s”) CPP set a carbon emission limit that was essentially unattainable for existing coal-fired power plants. Consequently, EPA determined that the “best system of emission reduction” for carbon from these plants was to cause a “generation shift” from higher carbon emitting coal-fired sources to lower-emitting sources, such as natural gas plants or wind or solar energy facilities. Compliance with the CPP would have required a plant operator to: (1) reduce the amount of electricity the plant generated to reduce the plant’s carbon emissions; (2) build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility and increase generation there; or (3) purchase emission allowances as part of a cap-and-trade regime. See West Virginia at 8.

According to the Supreme Court, Congress did not grant EPA the authority under Section 111(d) to establish such a broad-scale and nationally significant emissions reduction system with the limited language of this section. The 6-3 opinion, authored by Chief Justice Roberts, did not discredit the mechanics of the CPP, acknowledging that capping carbon dioxide emissions may be a “sensible solution” to climate change. However, by invoking the “major questions doctrine,” the Chief Justice observed that Congress did not delegate to EPA the authority to enact a regulatory program of such magnitude under Section 111(d). Rather, the Court reasoned, decisions of such magnitude lie with Congress, or an agency acting pursuant to an express Congressional delegation of power. Given the Supreme Court’s ruling, EPA does not have the authority to implement and enforce the CPP. Now the question to the industry and practitioners is: What happens next?

Congress could amend the Clean Air Act to specifically delegate the authority to EPA to implement and enforce the CPP or a similar plan. The likelihood of any Congressional action to amend the Clean Air Act is improbable given the existing divide between the two chambers, and the extensive staff cooperation that would be required to amend the Act for the first time in 32 years. The EPA, meanwhile, will likely try to find other ways to tackle climate change, including finding legal alternatives beyond the statutory language set forth in Section 111(d) to regulate greenhouse gases. Another possibility, however farfetched, is that the Biden Administration could seek to revive the ACE Rule, which was vacated by the D.C. Circuit in January 2021, based upon that court’s finding that the ACE Rule’s narrower interpretation of Section 111(d) misconstrued that section of the CAA. However, the EPA’s narrower interpretation of Section 111(d)—as established in the ACE Rule—is now more compatible with the Supreme Court’s recent decision in West Virginia.

This significant decision will no doubt invoke polarized responses. It will surely be praised by those who viewed the CPP as a dramatic overreach of EPA’s regulatory authority and as a costly and burdensome regulation to industry and the states. At the same time, it will be reviled by those who view climate change as the preeminent crisis of our time. The impact on administrative law, more generally, could be far reaching. Many other federal regulations are likely to be challenged by industry or states on similar grounds where there is no clear Congressional mandate. Federal agencies may also proactively review any recently promulgated regulations in an effort to ensure that an adequate legal foundation has been established to avoid any efforts to nullify the scope of a rule based upon the Court’s ruling in West Virginia. One thing is certain: the decision will have a monumental impact on the nation’s economic, energy, and environmental sectors that will take years to resolve.

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