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Supreme Court Limits EPA Options in Power Plant Emissions Fight

July 1, 2022, 9:30 AM

A blockbuster Supreme Court ruling limiting the EPA’s authority to regulate greenhouse gasses handcuffs the Biden administration on emission mitigation options, but it doesn’t make future climate efforts impossible.

Justices decided in West Virginia v. EPA on Thursday that the Environmental Protection Agency is limited to what Congress specifically says is possible under the Clean Air Act. While the ruling constrains the agency’s power, EPA still retains the authority to regulate emissions from coal and gas power plants. That gives President Joe Biden’s administration some options, including the use of Section 115 of the Clean Air Act, which governs international pollution.

When it comes to greenhouse gas mitigation, the EPA is faced with the challenge of treading more lightly on carbon rules with a limited set of tools. The prospect of what’s left to work with is “sobering,” according to Loyola University New Orleans law professor Karen Sokol.

The court majority’s opinion said Congress must specifically give agencies authority to regulate “major questions,” but Congress has not made additions to the Clean Air Act since the 1990s and isn’t poised to do so again due to a deep partisan divide.

The decision drew bold lines around what can be considered a “major question” in the first place—and thus make all kinds of essential policy-making ripe for litigation, Sokol said.

“We need a court who understands the nature of what policymakers have to do and this court essentially doesn’t,” Sokol said.

The EPA still has authority to regulate greenhouse gases for plants, the question is how nimble it can be with those regulations.

‘Open Question”

The decision seems to be saying EPA can regulate greenhouse gases from electric power plants under section 111, but it has to interpret and apply the language “best system of emission reduction” in a more targeted way than it had in the now-defunct, Obama-era Clean Power Plan, according to Jonathan Wiener, an environmental law professor at Duke.

“Even though EPA lost this case today, it lost it in a more limited way. It lost less today than many had speculated,” he said on Thursday.

EPA Administrator Michael Regan said in a statement on the ruling that though he is “disappointed,” the agency is still “committed to using the full scope of EPA’s authorities to protect communities and reduce the pollution that is driving climate change.”

As to how regulation will look moving forward on climate, Crowell & Moring partner Tom Lorenzen said that’s “an open question,” since the only thing expressly forbidden by the ruling is the type of generation shifting proposed by the Clean Power Plan under section 111.

“One of the things the dissent criticizes the majority for is, we don’t know the boundaries of the major questions doctrine,” Lorenzen said. “So the agency will want to think carefully as it looks at its other tools, but it certainly has a lot of options open to it.”

Natural Resources Defense Council senior strategic director of the Climate & Clean Energy Program David Doniger expects new rules to be based on technology that can be achieved by coal and gas plants, if such a move happens to prompt a market switch to cleaner operations that’s still within EPA’s bounds.

Contingency Plans

Looking beyond section 111, there are other areas within the Clean Air Act that the EPA can work with.

One such provision is section 115, which authorizes the EPA to regulate domestic pollution that harms the welfare of other countries.

Under section 115, the EPA could, in theory, give guidance to governors in states where air pollution originates to update State Implementation Plans, or SIPs, which are already in place for rules like National Ambient Air Quality Standards.

Other air quality laws are also still on the table.

The Clean Air Act provides “EPA with ample authority to set stringent standards based on pollution control technologies such as carbon scrubbers and gas, hydrogen co-firing, and heat rate improvements,” Clean Air Task Force attorney Jay Duffy—who represented respondents in West Virginia vs. EPA—said in a statement.

The decision limits federal action, but a lot of options on a regional and state level remain, according to Akshaya Jha, assistant professor of economics and public policy at Carnegie Mellon University. Stricter emission thresholds for states under National Ambient Air Quality Standards is one way forward, he noted.

“Tighten the standards associated with SO2, NO2, PM 2.5, and that go that will, by nature, place tighter standards on coal fired power plants and make it tougher for them to be economic,” Jha said, referring to types of common pollutants.

With such a long runway leading up to Thursday’s decision, the EPA could have been thinking ahead to alternative plans for power plant regulation in anticipation for an adverse result at the High Court. The agency now plans to release existing power plant carbon rules by March 2023.

Alston & Bird Environment, Land Use & Natural Resources partner Kevin Minoli speculates that the agency should be able to take the decision “in stride.”

“Recent changes to EPA’s agenda suggest that the agency was prepared for an adverse decision, but if EPA was somehow caught off guard, then today’s decision has the potential to significantly derail EPA’s regulatory efforts—and a major piece of the President’s climate strategy—while the agency figures out what to do next,” he said in an email.

To contact the reporter on this story: Jennifer Hijazi in Washington at jhijazi@bloombergindustry.com

To contact the editor responsible for this story: Zachary Sherwood at zsherwood@bloombergindustry.com