The Supreme Court’s ruling in (BEG ITALICS)West Virginia v. EPA(END ITALICS) will likely prompt industries aggrieved by agency regulations to petition courts to nullify those regulations under the major questions doctrine.
Last month, the U.S. Supreme Court issued its decision in West Virginia v. Environmental Protection Agency, limiting one of the EPA’s tools to regulate carbon dioxide emissions from fossil-fuel-fired power plants. The decision is likely to have broad ramifications.
During the Obama administration in 2015, the EPA adopted rules known as the Clean Power Plan (CPP) to reduce carbon dioxide emissions from existing power plants. The CPP consisted of three kinds of measures, which the EPA called “building blocks.”
Under the first building block, the EPA directed specific coal-fired plants to implement measures designed to reduce carbon dioxide emissions. The second two building blocks were more innovative, and therefore more controversial. They required a shift of electricity generation from coal-fired power plants to gas-fired plants that emit less carbon dioxide, and then to renewable energy such as wind and solar power.
To reach this goal, fossil fuel plant operators could reduce electricity generation, build or invest in cleaner energy production or participate in a cap-and-trade program involving the purchase or sale of emission allowances.
Majority Says EPA Overstepped Powers
The EPA claimed that the CPP was authorized by a rarely invoked 1970 amendment to the Clean Air Act, which allowed the EPA to impose on existing power plants the “best system of emission reduction … that has been adequately demonstrated.” The EPA predicted that its rule would require billions of dollars in compliance costs and higher energy prices, retirement of coal-fired plants and elimination of tens of thousands of jobs.
Congress itself had repeatedly declined to enact similar cap-and-trade limits on carbon dioxide emissions.
The U.S. Supreme Court issued an order in 2016, preventing the EPA’s rule from taking effect. In 2019, during the Trump administration, the EPA repealed the CPP, claiming that it exceeded the EPA’s authority under the Clean Air Act. The EPA determined that the generation-shifting rules fell under the “major questions doctrine,” which requires that agency decisions of major economic and political significance be clearly authorized by Congress.
A lawsuit followed, in which the D.C. Circuit of the Court of Appeals vacated the EPA’s repeal of the CPP. After another change of presidential administrations in 2021, the EPA returned to the Supreme Court to defend the CPP in West Virginia v. EPA.
Chief Justice Roberts, joined by five other justices, wrote the court’s decision, holding that the Clean Air Act did not authorize the EPA to devise the CPP program to shift electricity generation from fossil fuel plants to renewables. In reaching this decision, the court adopted the major questions doctrine, based on separation of powers principles and legislative intent. The court endorsed much of the reasoning of the Trump administration’s EPA that repealed the CPP in 2019.
Administrative Law Transformed
In applying the major questions doctrine to this case, the Supreme Court noted that before 2015, The EPA had only imposed caps on regulated sources of the emissions, instead of imposing a regulatory system to force a major shift in how electricity is generated on an industry-wide basis. The court also noted that the EPA’s asserted authority had broad economic and political significance. Therefore, according to the court, the EPA had to show “clear congressional authorization” to devise its generation-shifting approach to limiting carbon dioxide emissions.
The Supreme Court ruled that the EPA could not rely on the “vague statutory grant” in the Clean Air Act as authority for the CPP. While conceding that a nationwide transition away from coal-burning power plants may be sensible, the court found it implausible that Congress intended to confer so much authority on the EPA when it amended the Clean Air Act in 1970. The court reversed the Court of Appeals’ judgment against the Trump administration EPA’s decision to repeal the CPP.
Justice Elena Kagan and two other justices dissented, observing that the Supreme Court had never used the term “major questions doctrine” in prior opinions. The dissent would have upheld the CPP as being clearly within the EPA’s statutory authority. Although well-reasoned, the dissent may have overstated its arguments when it concluded that the decision effectively appointed the court, instead of Congress or the EPA, as the decision-maker on climate policy.
West Virginia v. EPA, will transform administrative law. Going forward, industries aggrieved by agency regulations are likely to petition courts to nullify those regulations under the major questions doctrine.
The Supreme Court’s decision also shifts the power to drive major policy changes away from executive branch agencies, and back to Congress. The question now is, will Congress quickly act to limit carbon dioxide emissions or to specifically authorize the EPA to do so? Given the partisan discord in Congress, that seems unlikely.
Christopher R. Vaccaro Esq. is a partner at Dalton & Finegold, L.L.P. in Andover. His email address is cvaccaro@dfllp.com.
