U.S. Supreme Court Limits EPA’s Authority to Regulate Greenhouse Gas Emissions

In West Virginia v. Environmental Protection Agency, the court invalidated an Obama administration rule that had addressed greenhouse gas emissions from coal- and gas-fired power plants. This decision weakens the EPA’s rulemaking authority.

In 2015, the EPA promulgated the Clean Power Plan, 80 Fed. Reg. 64,662 (the “CPP”), which limited greenhouse gas emissions from power plants. Citing language in section 111(d) of the Clean Air Act, 42 U.S.C. § 7401 et seq., the CPP set forth each state’s emissions goals for existing power plants. For instance, Nebraska’s 2030 reduction target under the CPP was 40% below 2012 emissions. The EPA projected that the CPP’s implementation could reduce the U.S.’s use of coal by 11%.

The CPP set forth options to reach the state-level reduction targets. It advised (1) improving heat-rate efficiency at coal-fired power plants, (2) replacing coal-fired power plants with gas-fired ones, and (3) replacing coal- and gas-fired plants with renewable ones. 80 Fed. Reg. 64,731-64,732.  If a state did not make adequate progress towards its targeted reduction, the EPA would directly regulate that state’s power plants.  

Various states and private parties filed suit, and the U.S. Supreme Court stayed the CPP pending its review. West Virginia v. Env’t Prot. Agency, 577 U.S. 1126 (2016). Then, once President Donald Trump took office, the EPA stopped defending the CPP. It instead repealed and replaced the CPP with the Affordable Clean Energy Rule, 84 Fed. Reg. 32,520 (the “ACE”). The ACE relaxed many of the CPP’s requirements for existing power plants. As justification for this change in policy, the ACE alleged that the CPP had “significantly exceeded” the EPA’s statutory authority.

States and private parties again filed suit. But the U.S. Court of Appeals for the D.C. Circuit disagreed that the CPP had exceeded statutory authority. Since that had been the ACE’s lone justification, the court also vacated the ACE. Am. Lung Ass’n v. Env’t Prot. Agency, 985 F.3d 914 (D.C. Cir. 2021). The U.S. Supreme Court granted review.

In an article we published after oral arguments, we summarized the case and predicted the court would side with the CPP’s challengers. Indeed, by a 6-3 vote, the court on June 30, 2022, invalidated the CPP. West Virginia v. Env’t Protection Agency, 597 U.S. __ (2022). The opinion, authored by Chief Justice John Roberts, is available here.

First, the court addressed whether the case was moot. Mootness generally means an issue has already been resolved. An exception applies, however, if the issue could reasonably be expected to recur. Parents Involved in Community Schools v. Seattle School Dist. No. 1, 551 U.S. 701, 707 (2007). In this case, although neither the CPP nor ACE were presently in effect, the court concluded the EPA would likely reinstate one or the other absent a final decision on the merits. Mootness thus did not apply.

Next, the court considered the underlying statute. The EPA had argued the CPP’s generation-shifting regime found support in the Clean Air Act’s directive to set “standards of performance,” 42 U.S.C. § 7411(d), meaning emissions caps at a level reflecting “the application of the best system of emission reduction … adequately demonstrated.” § 7411(a)(1). But the court disagreed.

Because the CPP had pushed a shift from coal- and gas-fired power to renewable sources, the court held it was a question of major economic and political significance. Under the major-questions doctrine, the relevant statute must provide “clear congressional authorization” to prove this authority was delegated to the EPA by Congress. Utility Air Regulatory Group v. EPA, 573 U. S. 302, 324 (2014). The Clean Air Act’s “best system of emission reduction” language was, by contrast, vague and ambiguous.

The court held the CPP was beyond the scope of the Clean Air Act, reasoning that the sections at issue had been “designed as a gap filler and had rarely been used in the preceding decade.” The CPP, by contrast, assumed “unprecedented power over American industry.” It required certain coal- and gas-fired power plants to retire or shift to renewable sources. Consequently, only Congress and not the EPA could enact that policy, the court held. The court thus invalidated the CPP (and the ACE with it) and remanded to the EPA for further consideration.

Justice Elena Kagan, joined by Justices Stephen Breyer and Sonia Sotomayor, dissented. They argued the CPP was, in fact, a reasonable application of the Clean Air Act’s mandate to reduce pollution. They criticized the major-questions doctrine and alleged the majority had “strip[ped] the [EPA] of the power Congress gave it to respond to the most pressing environmental challenge of our time.” (internal quotations omitted).

This decision is a temporary victory, at least, for coal- and gas-fired power plants. Still, the EPA has already indicated it will move forward with related regulations. In a statement following the court’s decision, EPA Administrator Michael Regan expressed “disappoint[ment] by the Supreme Court’s decision” but reiterated his commitment to “using the full scope of EPA’s authorities to protect communities and reduce the pollution that is driving climate change.”

Examples of this include the EPA’s latest Ozone Transport Rule, 87 F.R. 20036, which would impose across-the-board retrofit requirements by 2026 for certain coal- and gas-fired power plants, and a likely replacement of the ACE and CPP by March 2023. A recent draft whitepaper also suggests the EPA will encourage technologies like post-combustion carbon capture and renewable-energy colocation at coal- and gas-fired power plants

Attorneys at Baird Holm LLP specialize in energy law. Please do not hesitate to contact us if you have questions about this case or any related matter.