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Supreme Court sharply limits EPA power plant authority » Yale Climate Connections

The Supreme Court’s closely watched decision in West Virginia v. EPA held that the EPA exceeded its statutory authority in attempting to regulate greenhouse gases under the Clean Air Act through the Obama-era Clean Power Plan. The six conservative justices ruled against EPA, the three liberal justices dissented.

While the six conservatives framed the decision as the natural consequence of long-standing legal principles, the three liberals suggested that the majority departed from normal principles and precedents, upending settled doctrines without acknowledging that they were doing so. More on this below.

The decision, announced June 30, is sparking widespread backlash from environmentalists and supporters of federal agency authority fearful the Court’s reasoning will have ripple effects not only in the environmental area, but across numerous federal agencies.

What was the court majority’s reasoning to limit EPA’s authority?

As anticipated in earlier coverage, Chief Justice Roberts’ majority opinion focused on three main arguments: the major questions doctrine; the text of the Clean Air Act; and standing.

The ‘major questions’ doctrine

The major questions doctrine suggests that courts should presume that Congress wants to make the most important policy decisions itself, rather than delegating them to Executive branch agencies. In other words, Congress must clearly state if it wishes to delegate authority to an agency on an issue of major “economic and political significance.” Otherwise, the majority opinion holds, the courts will presume that such congressional authority was not delegated.

The Court turned to the major questions doctrine to assess whether the Obama administration’s Clean Power Plan exceeded the EPA’s statutory authority under the Clean Air Act. The majority suggested that Section 111(d) of the Clean Air Act, the provision on which the Clean Power Plan was based, did not clearly delegate authority to the EPA to shift energy generation. (The Court uses “shifting energy generation” to mean shifting away from the most greenhouse gas-intensive sources like coal and toward renewables).

Chief Justice Roberts characterized Section 111(d) as “ancillary” and a “backwater.” Roberts emphasized that the section had not been used to justify sweeping regulatory programs prior to the Clean Power Plan and should not be read to implicitly grant EPA broad authority to “balanc[e] the many vital considerations of national policy implicated in deciding how Americans will get their energy.” He concluded that the court should approach “assertions of extravagant statutory power over the national economy with skepticism.”

To show how broad the Clean Power Plan’s effect on the national economy would be, the majority looked to projections from when the plan was initially put forward, predicting compliance costs and resulting lost jobs. (These figures did not translate to real-world costs or job losses because the Clean Power Plan was never implemented, and market forces alone accomplished the plan’s emission reduction goals).

The majority also analogized this case to other recent decisions made on major questions doctrine grounds. The Court used the doctrine to strike down an eviction moratorium created by the Centers for Disease Control and Prevention during the pandemic, writing that “[w]e expect Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.” Similarly, the Court struck down a workplace COVID vaccine mandate by the Occupational Health and Safety Administration on major questions grounds.

The text of the Clean Air Act

The majority spent less time on text of the actual statute than might be expected, given the conservative-leaning Justices’ proclaimed textualist philosophy of statutory interpretation. One of the main debates in the parties’ briefing and oral argument concerned the scope of EPA’s textual authority under Section 111(d) of the Clean Air Act: Did the statute authorize emission reduction programs that worked across different sources of pollution, such as the emissions trading system created by the Clean Power Plan; Or did it limit reduction programs to technological measures implemented at individual power plants?

In other words:

– Could EPA try to shift energy generation away from heavy polluters like coal plants?

– Or was EPA restricted to measures that cleaned up each individual plant without changing how much each plant was used?

The majority side-stepped this question. Chief Justice Roberts wrote that the court “had no occasion to decide whether the statutory phrase ‘system of emission reduction’ [in Section 111(d)] refers exclusively to measures that improve the pollution performance of individual sources.” Instead, the court asked more narrowly whether the “the ‘best system of emission reduction’ identified by EPA in the Clean Power Plan [namely generation shifting] was within the authority granted to the agency in Section 111(d) of the Clean Air Act.”

The Court concluded that it was not. The majority distinguished between the use of the word “system” in Section 111(d) versus other areas of the Clean Air Act that allow broader regulatory power, such as the cap-and-trade program used to reduce acid rain under the Clean Air Act.

The issue of standing

One of the major issues in the case involved whether West Virginia and the other challengers had standing to bring this suit to court in the first place. The court concluded that they did have standing.

In order to get into court, litigants must prove they have standing. Standing requires that litigants show they have been injured; that the person or institution they are suing caused the injury; and that the courts can redress the injury.

The parties in this case debated whether the challengers have standing because the Clean Power Plan is no longer in effect. The Trump administration had repealed it and then replaced it with the Alternative Clean Energy rule. That rule was struck down by the D.C. Circuit Court of Appeals. In short, no regulation currently is doing what the challengers oppose, namely using the relevant section of the Clean Air Act to regulate greenhouse gas emissions from power plants.

The challengers successfully argued that they had standing because when the Trump administration’s Alternative Clean Energy rule was struck down by the D.C. Circuit Court of Appeals, that court opened the door for the Obama administration’s Clean Power Plan to be reinstated, even if the Biden administration had not actually reinstated it or an alternative rule.

The Court also found that the case was not moot. Since the regulation of greenhouse gases under the relevant provision of the Clean Air Act could recur, the Court found the case to be justiciable, i.e., appropriate for judicial consideration.

How would Justices Gorsuch and Alito take the major questions doctrine further?

Justice Gorsuch, joined by Justice Alito, concurred with the majority but wrote separately to argue that the major questions doctrine embodies constitutional principles, not just principles of statutory interpretation. In his view, the major questions doctrine protects the constitutional principle that legislative power rests with Congress and not with the executive branch, meaning Congress cannot delegate authority too broadly to federal agencies.

Anticipating counterarguments that Congress lacks the time and the capacity to take over the federal agencies’ often highly technical regulatory work, he responded: “Admittedly, lawmaking under our Constitution can be difficult. But that is nothing particular to our time nor any accident. The framers believed that the power to make new laws regulating private conduct was a grave one that could, if not properly checked, pose a serious threat to individual liberty . . . By effectively requiring a broad consensus to pass legislation, the Constitution sought to ensure that any new laws would enjoy wide social acceptance, profit from input by an array of different perspectives during their consideration, and thanks to all this prove stable over time.” In other words, Justice Gorsuch views the gridlock of Congress not as an obstacle that requires gap-filling by federal agencies, but rather as a feature of our constitutional system that prevents government overreach.

If Justices Gorsuch and Alito’s views gain traction over time, we may see the revival of the nondelegation doctrine, which would make it unconstitutional for Congress to delegate broad authority to agencies. The majority opinion in this case merely held that Congress did not delegate authority to the EPA to shift energy generation away from fossil fuels. But if Justices Gorsuch and Alito’s views prevail in the long run, the court eventually could Congress cannot delegate such authority under constitutional principles.

How did the dissenters respond?

Justice Kagan’s dissent, joined by Justices Sotomayor and Breyer, opposed the majority’s decisions on the major questions doctrine (MQD), the text of the Clean Air Act, and standing.

With respect to the major questions doctrine, Kagan argued that the majority used the doctrine in a novel and unwarranted way. In past MQD cases, she argued, the Court simply used “common sense” with regard to agencies working outside their usual area of expertise and authority. But here, she argued, the EPA is operating clearly within its wheelhouse under the statutory design that Congress intended. Justice Kagan also expressed concern that the majority did not clearly define what constitutes a “major question,” meaning this ruling creates uncertainty for the future of federal regulation.

In discussing the text of the Clean Air Act, the dissent emphasized that a textualist approach to interpreting the phrase “best system of emission reduction” would focus on the definition of “system,” which encompasses almost any regulatory program aimed at reducing emissions, including cap-and-trade. Kagan accused the current court of being “textualist only when being so suits it. When that method would frustrate broader goals, special canons like the ‘major questions doctrine’ magically appear as get-out-of-text-free cards.”

Finally, the dissent vehemently disagreed with the majority about whether the challengers had standing. She called the majority’s ruling an “advisory opinion,” which is another way of saying it exceeded the court’s constitutional authority by ruling on a matter that was speculative rather than a concrete controversy. Past standing cases have repeatedly held that speculative harms are not sufficient to sustain a litigant’s case. She suggested that “this Court could not wait – even to see what the new rule says – to constrain EPA’s efforts to address climate change.”

Looking to the future of climate regulation

Perhaps most obviously, this decision sharply curtails EPA’s authority to regulate greenhouse gas emissions from power plants. While the opinion is technically limited to Section 111(d) of the Clean Air Act, the logic of the major questions doctrine may prevent EPA from using any of the major environmental statutes to promote energy generation shifting. Most of the nation’s environmental laws were passed before climate change was a widespread public concern. Any attempt to use those older laws to promote generation shifting may run into the same argument: That Congress in those laws did not clearly delegate the authority to create regulations of major “economic and political significance” in the energy sector in the face of climate change.

However, certain avenues remain open for environmental regulation. EPA still can implement restrictions at individual power plants. It still can use the Clean Air Act to limit greenhouse gas emissions from motor vehicles and oil and gas. And it can target other pollutants that directly harm human health and often co-occur with greenhouse gas emissions. State and local climate efforts will also become increasingly important tools. It’s important to acknowledge that most of those alternative approaches involve prospects of time-consuming rule-makings and of likely litigation.

On the legal side, the court’s ruling on standing may or may not unsettle long-standing principles regarding speculative harm. The ruling may open the door for anti-regulation advocates to challenge rules before they go into effect, so long as they are similar to defunct rules that the Court deems illegal. But the ruling might also be limited to the strange procedural elements of this case, in which the D.C. Circuit Court of Appeals in some sense reinstated the Clean Power Plan, and only the Executive branch’s voluntary decision to pursue a new rule prevented the plan from going back into effect.

Finally, it is worth noting how little the Court discussed two of its past decisions that are closely related to this case: Massachusetts v. EPA and American Electric Power v. Connecticut.

In Massachusetts v. EPA, the Supreme Court on 2007 had held 5-4 that EPA has authority to regulate greenhouse gases under the Clean Air Act. That power was not overturned in West Virginia v. EPA, given the other avenues still available discussed above. But it did sharply curtail the EPA’s authority.

 In American Electric Power v. Connecticut, the Court in 2011 heard a public nuisance challenge to greenhouse gas pollution. Public nuisances are acts, conditions, or conduct that interfere with the rights of the public generally. Connecticut’s nuisance claim rested on federal common law, a form of judge-made law. Judge-made law can be displaced by laws passed by Congress. The Supreme Court decided that because Congress had already granted EPA authority to regulate greenhouse gases under the Clean Air Act, Congress had displaced judge-made law in this area.

In West Virginia v. EPA, the Court did not overrule either precedent, but it is noteworthy that the majority and concurrence did not mention Massachusetts v. EPA at all. And Chief Justice Roberts mentioned American Electric Power v. Connecticut only briefly, distinguishing it from this case. He characterized American Electric Power as a decision that acknowledged that Section 111(d) displaced federal nuisance suits regarding climate change, but said that in that decision, “we said nothing about the ways in which Congress intended EPA to exercise its power under that provision.”

What does the court’s ruling mean for federal agencies writ large?

The expansion of the major questions doctrine in this case may have an impact across the federal government. If Justice Kagan is correct, this case is the first time the major questions doctrine has been used to stop an agency from taking action that was, she argued, clearly within its wheelhouse and authorized by statutory text. In effect, she fears the door has been opened for the court to limit any federal agency power not clearly and explicitly delegated on questions of major “economic and political significance.” Lots of agencies rely on older statutes to regulate modern problems, particularly in arenas that are fast-changing, like environment, health, public safety, finance, technology, and more. The court’s logic in this case could be used to curtail many of these regulations.

As Justice Kagan put it, “In all times, but ever more in our increasingly complex society, the legislature simply cannot do its job absent an ability to delegate power under broad general directives . . . First, Members of Congress often don’t know enough – and know they don’t know enough – to regulate sensibly on an issue . . . Second and relatedly, Members of Congress often can’t know enough – and again, know they can’t – to keep regulatory schemes working across time.” If the Court requires Congress to take on the work of modern regulatory agencies, she wrote, many key governmental functions will be affected.

Lexi Smith is a third-year student at Yale Law School. She studied environmental science and public policy as an undergraduate at Harvard, and she worked as an advisor to the Mayor of Boston on climate policy before enrolling in law school.

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