Enforcement and Inspection

U.S. Supreme Court’s Surprising Decision to Weigh in on EPA’s CAA Authority

Just as Present Joseph Biden Jr. was preparing for the global climate summit (COP26), the U.S. Supreme Court (SCOTUS) announced it will hear four cases, likely to be consolidated, to determine the EPA’s authority to regulate emissions from power plants under the Clean Air Act (CAA).

The October 29, 2021, announcement was the equivalent of a nuclear blast in climate change and legal circles.

“The court sent shock waves through the legal world when it agreed … to consider a consolidated challenge from Republican-led states and coal companies. The challenge stemmed from a federal court ruling that struck down a Trump-era regulation gutting EPA’s climate rule for power plants,” reports E&E News.

Case background

Authority to set power plant greenhouse gas (GHG) emissions limits was provided by the Obama administration’s Clean Power Plan to set “flexible and achievable standards to reduce carbon dioxide emissions” that included “carbon pollution reduction goals for power plants and [enabled] states to develop tailored implementation plans to meet those goals. …”

“Soon after, 18 of the 50 US [states] joined a legal challenge against the emissions limits,” reports Power Technology. “Led by West Virginia politicians, the legal case said that the Plan gave the EPA massive power to reshape the US economy.  Opposers often say that state governments should decide emissions limits, not federal agencies. … Under former President Donald Trump, these legal challenges paused enforcement of the Clean Power Plan. Trump then ordered a review of the Plan, removed funding for it, and later passed legislation undermining it. His Affordable Clean Energy rule gave priority to low-cost power generation, with significantly less emissions regulation.”

However, in January 2021, a divided D.C. Circuit Court of Appeals sent the Trump administration rule back to the EPA’s drawing board, stating the rule was devised through a “tortured series of misreadings” of the CAA, reports Grist. This left it up to the Biden administration to create a new rule.

SCOTUS’s changing climate

Trump and a Republican-majority Senate confirmed three conservative justices, which will provide a conservative majority within SCOTUS for some time to come, barring the passage of a law regulating more seats on the top bench in the nation.

“In 2007, the Supreme Court ruled that the EPA is required to regulate greenhouse gases under the [CAA]. Now, the manner in which the agency wields that authority, and possibly even the portion of the [CAA] that grants the EPA the power to regulate emissions, will be under scrutiny from the court,” Grist adds.

SCOTUS has agreed to review the EPA’s authority to regulate GHGs from power plants. The Court is expected to consolidate four similar cases into West Virginia v. EPA.

Richard Lazarus, a law professor at Harvard, “said the Supreme Court’s decision to hear the case threatened ‘to sharply cut back, if not eliminate altogether, the new administration’s ability to use the [CAA] to significantly limit greenhouse gas emissions from the nation’s power plants,’” The New York Times says.

Legal analysts are shocked that SCOTUS agreed to hear the case. Traditionally, courts would wait for a new administration to issue new regulations.

“How we respond to climate change is a pressing issue for our nation, yet some of the paths forward carry serious and disproportionate costs for states and countless other affected parties,” states a brief filed by West Virginia and joined by a dozen more states. “Continued uncertainty over the scope of EPA’s authority will impose costs we can never recoup because EPA, the state, and others will be forced to sink even more years and resources into an enterprise that is — at best — legally uncertain. The court should intervene now.”

Analyzing SCOTUS’s legal options

One path open for the High Court is the “major questions doctrine.” It is generally first traced to a SCOTUS decision in FDA v. Brown & Williamson Tobacco Corp. in 2000, when the Court stated that “given the economic and political significance of the tobacco industry … it is extremely unlikely that Congress could have intended to place tobacco within the ambit of the Food and Drug Administration’s regulatory jurisdiction.” In 2014, the Court expanded the doctrine in Utility Air Regulatory Group (UARG) v. EPA, stating it expects “Congress to speak clearly if it wishes to assign to an agency a decision of vast ‘economic and political significance.’”

Regarding the regulation of coal-fired power plants, the legal question is what the EPA’s regulated role is. Due to the economic and political significance of this power, the broader question becomes what Congress clearly stated in conferring these powers to the EPA.

“Section 111(d) of the Clean Air Act directs EPA to establish emissions standards for stationary sources of air pollution that ‘may reasonably be anticipated to endanger public health or welfare,’ such as coal plants,” Grist notes. “And it says the agency should do so through the ‘best system of emission reduction.’ But what qualifies as the ‘best system’? Section 111(d) doesn’t say.

“Trump’s EPA argued that Section 111(d) required the agency to only regulate greenhouse gas emissions right at their source by, for instance, requiring a coal plant to add carbon capture technology so that its emissions don’t float into the atmosphere. Requiring that kind of targeted intervention is called ‘regulating in the fenceline.’

“The D.C. District Court disagreed, ruling that EPA doesn’t have to take such a narrow approach to regulating emissions,” Grist continues. “That ruling left the door open for the agency to take a more holistic approach to greenhouse emissions by imposing measures ‘outside of the fenceline,’ such as potentially requiring electric utilities to include renewables in their power mix. That’s what Obama’s Clean Power Plan essentially did by requiring states to create their own plans to green their electricity mix. The Supreme Court blocked Obama’s plan not long after it was introduced in 2016 by putting a temporary stay on it before a federal appeals court could even review it — an unprecedented development. At the time, the court said the plan couldn’t move forward until all legal arguments had been heard, preventing the plan from being enforced.”

Another legal path the Court may consider is the “nondelegation doctrine,” which says that “Congress may not delegate its duties under the Constitution to other branches of government without violating the principle of separation of powers,” according to Merriam-Webster.

“The idea is that Section 111(d) of the [CAA] itself fails to give enough direction to the EPA,” Grist notes. “In other words, the issue at hand in this scenario is not what kind of authority EPA has over power plant emissions, but whether the statute that gives EPA that authority in the first place is even valid. If the Supreme Court goes after Section 111(d) directly, then Biden’s EPA may not have statutory authority to enact its own Clean Power Plan or otherwise regulate emissions from power plants.

“Michael Burger, executive director of the Sabin Center for Climate Change Law, said that the chances of the Supreme Court pursuing this course of action are slim, because it would set a legal precedent that could undermine the way Congress delegates power to federal agencies,” Grist continues.

The stakes are high.

“Section 111(d) is one of the most important tools under existing statutes to control emissions from coal-fired power plants,” Michael Gerrard, professor of environmental law at Columbia Law School and founder of Columbia University’s Sabin Center for Climate Change Law, says in the Grist article. “There’s a concern that EPA may take that tool out of the toolbox. There’s also a concern that the Supreme Court might go even further in reducing EPA’s powers.”

Analysts believe the Court will apply the major questions doctrine. The SCOTUS decision in the case will “require EPA to regulate in the fenceline instead of making rules that would force electric utilities to shift to greener sources of energy,” Burger says. “Or the court could affirm the D.C. Circuit’s position, which was that Section 111(d) does not require the EPA to limit its authority to the fenceline. The first outcome would close the door on sweeping emissions regulations for U.S. power plants, while the other would illuminate a path forward for the Biden administration to introduce a Clean Power Plan 2.0.”

A ruling requiring the EPA to contain its regulatory authority inside the fenceline would completely derail the Biden administration’s plans to tackle climate change.

SCOTUS is expected to review the case during spring and summer 2022.