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Power Plant Ruling Puts Legal Pin in Biden’s Climate Plans (1)

June 30, 2022, 7:08 PMUpdated: June 30, 2022, 8:24 PM

Supreme Court justices drew bright lines on Thursday around EPA authority to regulate one of the biggest sources of climate-warming emissions in the U.S., a move legal experts say will reverberate deeply in climate policy and environmental regulation more broadly.

The Environmental Protection Agency is limited in how it can act to stem emissions for coal and gas plants, according to a long-awaited ruling in West Virginia v. EPA, a petition brought by mining companies and Red states in response to a lower court decision scrapping less-stringent power plant rules.

The ruling wasn’t as sweeping as legal experts say it could have been, but the implications of the decision will still extend into climate, environmental, and broader executive policies.

“The only interpretive question before us, and the only one we answer, is more narrow: whether the ‘best system of emission reduction’ identified by EPA in the Clean Power Plan was within the authority granted to the Agency in Section 111(d) of the Clean Air Act,” Justice John Roberts wrote in the majority opinion. “The answer is no.”

The decision rests heavily on “major questions,” a doctrine that says Congress must specifically delegate authority to the executive branch when it comes to economically or politically significant issues.

That shrinks President Joe Biden’s regulatory options considerably, according to Sierra Club senior attorney Andres Restrepo.

“There’s no real way to spin it, it’s takes a major tool off the table at a time when we need all authorities at all levels of government to be able to take action against against climate change,” he told Bloomberg Law.

Major Cases Untouched

The ruling doesn’t strip the agency of all power to regulate greenhouse gases for coal-fired plants under section 111 of the Clean Air Act. The two major cases that set that precedent—AEP v. Connecticut and Massachusetts v. EPA—weren’t touched.

Some saw the decision as a check on broad agency power. Jeff Holmstead of Bracewell, a former EPA air lead, said the court had “no trouble” deeming this issue a major question.

“EPA can make such determinations only if there’s a clear statement that this is what Congress intended,” he said in a statement. “Since there is no such clear statement, EPA does not have this authority.”

The Greenberg Traurig LLP attorney representing North Dakota, Paul Seby, said the decision overturns an EPA overreach into state sovereignty over the dispatch of environmental law—namely, the ability to use EPA guidance in crafting state-specific emission limitations.

The states then apply “various local considerations, factors of age of the facility, remaining useful life, cost of additional controls, feasibility of controls, achievability of emission reductions, all of those things that Congress said the states are best to make those judgments, not EPA,” Seby said.

The ruling means a bold move against climate-warming emissions from a major source of greenhouse gases is now off the table for the EPA, which will need to find other ways to tackle carbon emissions.

Best System

The EPA will now be restricted to regulating greenhouse gas emissions within existing power plant fencelines, which means wide-reaching restrictions on planet-warming emissions will be next to impossible, at least through section 111 of the Clean Air Act.

“It’s going to be make it very difficult to regulate carbon dioxide emissions because of how the Court interpreted what types of regulations are or are not allowed under the Clean Air Act,” said Jonathan Masur, John P. Wilson Professor of Law at the University of Chicago Law School.

Facilities can be required to install control technology and can be subject to a credit and allowances trading program, but a sector-wide transition to cleaner energy can’t be on the list, according to the opinion.

That kind of major mitigation measure—a transition from higher emitting coal to lower emitting natural gas power as the “best system of emission reduction"—was proposed in the never-implemented Clean Power Plan proposed by the Obama administration. When lower courts struck down the Trump-era Affordable Clean Energy rule, which replaced the Clean Power Plan, they also struck down the basis for tossing the Obama rule.

Though the Clean Power Plan still never went into effect even after the decision, petitioners in West Virginia v. EPA wanted justices to quell any chance the strategy could return under Biden.

Regulations at Risk

The decision puts bigger legal crosshairs on environmental law, which is most often litigated as administrative law, since agencies—not Congress—are the bodies that most often hand down environmental directives.

And the current court seems willing to weigh-in on cases from critics of broad agency authority, according to court watchers.

“It’s going to make it quite challenging for all sorts of administrative agencies—whether it’s the Department of Transportation or the Occupational Safety and Health Administration, or the CDC or anyone else—to implement major regulations going forward,” Masur said.

Beyond implications for EPA, Loyola University New Orleans law professor Karen Sokol said this decision points to an even more sinister outlook on the governance more broadly—and a Supreme Court that is “out of control.”

“We need to be thinking about what sort of assertion of power the court is taking here,” Sokol said.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

The case is West Virginia v. EPA, U.S., No. 20-1530, 6/30/22

(Updated with comment from Paul Seby starting in 11th paragraph. )

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