Supreme Court Limits EPA Authority to Regulate Power Plant Emissions

Credit to Author: Darrell Proctor| Date: Thu, 30 Jun 2022 14:13:41 +0000

The U.S. Supreme Court has curbed the Environmental Protection Agency’s (EPA’s) options for limiting emissions of greenhouse gases (GHG) from power plants, an important environmental decision that could impact the federal government’s authority to enforce other regulations.

The court in a 6-3 vote, with conservatives in the majority, on June 30 said the EPA does not have broad authority to shift U.S. electricity production away from coal-fired power plants toward cleaner energy sources, including solar and wind power. The court said future measures to address pollution must be limited to restrictions imposed on specific coal-fired plants, instead of pushing utilities to shift from coal toward renewable energy resources.

“Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible ‘solution to the crisis of the day.’ But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme,” Chief Justice John Roberts wrote in the majority opinion. “A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.”

Justice Elena Kagan, joined in dissent by justices Stephen Breyer and Sonia Sotomayor, wrote that the court’s ruling “strips the Environmental Protection Agency of the power Congress gave it to respond to ‘the most pressing environmental challenge of our time’.”

The case, West Virginia vs. EPA, has been considered important not just for the power generation industry, but for the nation as a whole, as it has been seen as a bellwether for how much authority federal agencies should have to enforce all kinds of regulations. Environmental activists and legal experts have said a ruling that curbs the EPA’s authority to limit emissions from the power sector and other industries will hamper efforts to reduce the negative impacts of climate change.

“Over the past four months, there has been a lot of doom and gloom circulating among lawyers and the press about what the resolution of this case might mean more broadly for our administrative state,” said Jared Wigginton, founding attorney with Montana-based Good Steward Legal. Wigginton told POWER, “Based on the court’s decision, these concerns were legitimate—the court not only kneecapped EPA’s ability to address climate change under the Clean Air Act [CAA] but also has laid the groundwork to hamstring other agencies going forward.”

“In a decision that broke on party lines, the Supreme Court delivered a stinging rebuke to the more expansive approach to regulating greenhouse gas emissions that had been laid out during the Obama administration in the Clean Power Plan [CPP],” said Allison Wood, environmental partner for McGuireWoods. “This rejection will limit what the Biden administration can do to regulate greenhouse gas emissions not just from existing power plants but also from existing sources in other industries as well.”

The impact of the ruling for the power generation sector, which has invested billions of dollars in emissions-control technologies at coal-fired power plants, remains to be seen, but some in the industry have said it will help promote power reliability and affordability.

“Today’s ruling clearly acknowledges that EPA overstepped its regulatory authority in the Clean Power Plan,” said Jim Matheson, CEO of the National Rural Electric Cooperative Association, referring to the Obama-era strategy that was never enacted after legal challenges from several states. “The court’s decision resets the agency to its appropriate regulatory path, requiring it to set achievable emissions guidelines that can be accomplished at existing power plants while also allowing states to consider local factors and have the final say on compliance options.”

Matheson added, “The energy decisions we make today will determine whether there are sufficient resources for the lights to come on tomorrow … As our nation depends on electricity to power more of the economy, policymakers must recognize the need for time, technology development and the importance of always available energy sources to maintain reliability and affordability. That’s particularly true in light of recent warnings that dozens of states may struggle with rolling blackouts this summer due to policies that promote the disorderly retirement of existing generation resources.”

Suit Filed on Behalf of Coal Companies

The case stems from disagreement over what level of authority the EPA has to mandate that power plants reduce their emissions of GHG, with West Virginia’s attorney general suing on behalf of coal companies who have argued the federal government doesn’t have the authority to regulate GHG. The core of the lawsuit involves the CAA, an environmental law that outlines the EPA’s responsibility to protect the nation’s air quality by regulating pollution. Though the case has hinged on a technical provision of the CAA, much of the argument has focused on broader issues, including whether the Supreme Court has jurisdiction to resolve the dispute at all.

In addition, it has looked at whether a lower court’s decision violates the “major questions” doctrine, which is the idea that if Congress wants to give a federal administrative agency the power to make “decisions of vast economic and political significance,” that must be clearly indicated. A ruling that supports an expansive interpretation of the major-questions doctrine, which is what some conservative groups have advocated,  could be used to justify limiting the regulatory powers of not just the EPA, but also other federal agencies.

“Consistent with what the justices telegraphed during arguments, one clear purpose in granting certiorari in this case was to have an opportunity to clarify the scope and application of the major questions doctrine,” said Wigginton. “Justice Roberts writing for the majority has done just that, laying out the framework of factors for determining whether an agency action involves a major question and also delineating considerations for determining whether ‘a clear congressional statement authorizing’ that action exists in the relevant statute.”

EPA’s actions under the CAA over the past several years have significantly reduced emissions of pollutants such as nitrogen oxides, or NOx, and particulate matter from power plants.

Clean Power Plan

President Barack Obama in 2015 used the CAA to establish new regulations under the CPP, which in particular called for new guidelines for emissions of carbon dioxide (CO2), which is considered the primary driver of climate change. The CPP was designed to regulate CO2 emissions and move states toward utilization of cleaner energy resources, such as solar and wind power.

Obama’s proposal, though, was not implemented, as several states—including West Virginia, a major coal and natural gas producer—sued the EPA, and the Supreme Court put the CPP on hold as the legal challenges played out.

The Trump administration in 2018 announced the Affordable Clean Energy rule, which in 2019 replaced the CPP with its own GHG regulations. Trump’s EPA decided the Obama administration had gone too far in using the CAA to push for GHG emissions cuts across the entire power sector. The ACE rule said the EPA’s authority to regulate pollution was limited to what a power plant could do within its immediate vicinity, what it called the “fenceline.”

The Trump administration in effect interpreted the CAA as saying the EPA could call for a power plant to install pollution controls, which could capture CO2 and other emissions at the plant site, but it was up to state governments to decide whether that was necessary. It also said the federal agency could not push states to close coal- or natural gas-fired power plants in favor of renewable energy installations.

Michelle Bloodworth, president and CEO of America’s Power, a coal advocacy group, in a statement Thursday said, “We are pleased the Supreme Court issued a decision that restricts the Environmental Protection Agency [EPA] from setting carbon dioxide standards for coal-fired power plants based on outside-the-fence measures. The issue is not whether EPA can regulate carbon dioxide emissions under section 111(d) of the Clean Air Act, but rather what kind of standards the agency is allowed to set. We are pleased the court agreed with us that EPA does not have unlimited authority to do anything it wants to do. Over the coming days, we will be studying the opinion closely to better understand its implications.” 

Devin Hartman, director of the R Street Institute’s energy and environmental policy, in comments shared with POWER acknowledged Thursday’s ruling could impact future federal government regulatory moves, but said it may not have a major impact on climate initiatives. R Street is a Washington, D.C.-based think-tank that it says “engages in policy research and outreach to promote free markets and limited, effective government.”

West Virginia v. Environmental Protection Agency may have major legal ramifications but minimal climate impact. Conventional regulation under the Clean Air Act could reduce emissions incrementally, but it is not effective for driving transformative change,” Hartman said. “Keep in mind, market forces caused the power industry to hit the emissions target of President Obama’s Clean Power Plan a decade early. To reduce future emissions, we should focus on modernizing regulations that prevent clean technology deployment rather than micromanaging the existing fossil fleet.”

Hartman added that “Government no longer needs to force private capital markets to address climate change. The private sector needs the ability to deploy capital swiftly and with the best emissions information. The Environmental Protection Agency’s best climate role may be to enhance emissions transparency, which is currently subpar.”

Arguments Over Federal Authority

Oral arguments in the West Virginia vs. EPA case took place in February of this year, after EPA during the Trump administration decided to repeal the CPP and issue the ACE rule, which brought a court challenge by a different plaintiffs. The U.S. Court of Appeals for the District of Columbia Circuit in January 2021 vacated the repeal of the CPP, and also vacated the ACE rule, sending the matter back to the EPA. The Supreme Court then granted a request by Republican-led states and coal companies to review that ruling. In the midst of ongoing court proceedings, the Biden administration’s EPA has indicated it will not bring back the CPP, and will instead draft its own rules on GHG emissions from power plants.

The Biden administration has committed the U.S. to reduce levels of GHG emissions by at least 50% by 2030, compared to 2005 levels. The administration also has said it wants the U.S. power sector to eliminate harmful emissions, and be carbon-free, by 2035. Energy legal and industry experts said Thursday’s ruling likely will make those goals more difficult to achieve.

“The American Clean Power Association [ACP] is deeply disappointed that the Supreme Court has hamstrung EPA’s power to reduce the country’s greenhouse gas emissions and help fight climate change,” said Heather Zichal, CEO of ACP, in a statement. “At a time when we can least afford it, this decision constrains EPA’s ability to put meaningful limits on carbon from power plants—the nation’s largest industrial source of such pollution. In passing the Clean Air Act with overwhelming bipartisan support, Congress established a national program intended to curb pollution and protect human health and welfare. The court’s decision turns the clock backwards by curtailing EPA’s ability to do that job.”

Other analysts for the energy industry said Congress should take the lead when it comes to climate policy and initiatives.

“The pathway to emission mitigation is through Congress setting policies and defining the authority of the executive branch to meet them, not a shotgun approach to regulation where both policymakers and industry have to try and guess what the courts will say,” said Philip Rossetti, an R Street resident fellow in energy policy. “The real environmental issue here is not the court’s decision, but an understanding of what durable climate policy looks like. For this administration, there always was and will be a risk that big, transformative climate rules that test the limits of their authority would get shot down by the Supreme Court.”

Zichal agreed that congressional action is needed to address climate issues. “The court’s constrained view of the Clean Air Act prevents EPA from using what has long been recognized as the easiest, cheapest, and best way to reduce pollution in the power sector: switching from higher emitting plants to affordable, reliable clean power,” said Zichal. “By weakening one of the administration’s chief tools to reduce the damage from greenhouse gases, the court’s decision highlights the need for swift congressional action on passing the climate provisions in the reconciliation package—which will move the nation forward on the path to cutting emissions in half by 2030 while achieving real energy independence, building good jobs, and lowering energy costs for consumers.”

Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).

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