In a highly anticipated decision, the U.S. Supreme Court (Court) rejected U.S. EPA’s (EPA) Clean Power Plan in West Virginia v. EPA on June 30, 2022. Relying upon the “major questions doctrine,” the Court found that Congress had not intended to authorize EPA to regulate emissions using “generation shifting” (i.e., requirements that power production be transitioned from coal to gas and then from gas to renewables) as a “best system of emission reduction… that has been adequately demonstrated” under Section 111(d) of the Clean Air Act.
Writing for the majority, Chief Justice John Roberts concluded that the Clean Power Plan’s scheme, which would require a substantial shift in electricity generation from coal-fired power plants to natural gas-fired plants and renewables, was beyond the authority granted to EPA in Section 111(d). The Court read Section 111(d), its legislative history, and its past use as proof of Congress’s intent to limit Section 111(d) to the application of technological controls on individual facilities. The opinion characterized the generation-shifting aspects of the Clean Power Plan as making a “very different kind of policy judgment” – one that determined how much coal-based generation there should be in the U.S. over the coming decades. After further analysis, the Court found it was “not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d),” and overturned the rule.
In supporting its ruling, the Court attempted to identify the circumstances under which it would apply heightened scrutiny to regulatory action of the kind involved in this case. It collected a series of recent cases in which the Court had ruled that a regulatory agency had exceeded its authority by implementing “sweeping and consequential” regulations. It referred to this body of case law as the “major questions doctrine” (which the dissent noted was a term never before used in any Court decision). In such major cases, the agency must present more than a “merely plausible textual basis for the agency action” – instead, it must demonstrate “clear congressional authorization” for the power it claims.
The immediate impact of this ruling is limited, as EPA had already advised the Court and the regulated community that it intends to re-write the Clean Power Plan entirely. The Court also didn’t go as far as some had believed it might by potentially restricting EPA’s right to regulate greenhouse gas emissions altogether. What does seem clear from this decision, however, is that EPA will need to either closely tie any Section 111(d) limitations in its new Clean Power Plan to technology-based controls, or find new support in the Clean Air Act for its plan. The ruling also appears to have implications for various other environmental law matters, such as EPA’s proposed new source rule part OOOOc to apply to existing oil and gas sources. We will cover such impacts in future materials.