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“Major Questions” Doctrine threatens future regulatory power of federal agencies
On June 30, the U.S. Supreme Court issued a ruling in the West Virginia v. Environmental Protection Agency (EPA) case, which questioned the EPA’s authority to limit carbon dioxide emissions from existing power plants under the Clean Air Act. The Supreme Court sided with states who brought the case and limited the EPA’s ability to regulate greenhouse gas (GHG) emissions in certain instances.
West Virginia v. EPA Background
The case stems from the 2015 Clean Power Plan (CPP), proposed by the EPA under the Obama administration, which was meant to limit carbon dioxide emissions from electricity generation under the authority of the Clean Air Act. The CPP was challenged in court, with opponents stating that the EPA overreached its authority by setting fleet-wide standards. In February 2016, the Supreme Court issued a stay on the implementation of the Clean Power Plan until the legal challenges were heard. Although the case was set to go before the D.C. Circuit Court, that changed after the 2016 election, when the Trump administration announced that it would repeal the CPP, rendering the case moot.
The Trump administration’s replacement rule, known as the Affordable Clean Energy (ACE) rule, was later issued, challenged in D.C. Circuit Court, and ultimately vacated in January 2021. This resulted in the CPP being placed back into enforcement.
West Virginia and 18 other states filed petitions asking the Supreme Court to review the case that repealed the ACE and to rule on the interpretation of the EPA’s authority around the Clean Air Act. The Biden administration urged the Supreme Court not to take the case, as the EPA was already developing new regulations to replace the CPP. The Supreme Court agreed to take the case in October 2021, resulting in the EPA holding off on the release of new regulations until after the case was decided.
The Supreme Court issued a 6-3 ruling limiting the EPA’s authority to set a fleet-wide GHG emissions cap for existing power plants that would require “generation shifting” from fossil fuels to renewable energy sources. The decision argues that Congress did not explicitly authorize the EPA to gain this level of control under the Clean Air Act. Chief Justice John Roberts wrote in the decision that “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…”
The decision was largely based on the “major questions” doctrine, which relies on explicit congressional authorization for actions that impact issues of broad importance and have reaching impact. The major questions doctrine has been referenced in other cases by the Supreme Court to limit the authority of federal agencies, such as COVID vaccine requirements for businesses originally required by the Occupational Safety and Health Administration (OSHA).
Impact to EPA Authority
While the Supreme Court’s decision is a loss for the EPA, it does not completely limit its ability to regulate power plant emissions. Although the EPA is restricted from implementing fleet-wide regulations that require generation shifting, the decision does not explicitly limit the agency to “inside the fenceline” regulations, or those that only limit emissions from individual power plants.
The EPA can craft new regulations that do not require generation shifting, but can still limit emissions through other means, such as individual plant efficiency requirements or new technologies such as carbon capture. This also could come in the form of regulations around other pollutants from existing plants that are not carbon dioxide or greenhouse gases, such as coal ash or water discharge. In addition, the ruling does not impact the EPA’s ability to regulate new emissions sources, such as new power plants or other generation sources.
According to the current EPA regulatory agenda, a new GHG emissions proposal for existing power plants is expected in March 2023.
This ruling, however, could result in some coal generation staying in service longer than it otherwise would have under the previous regulations. However, even without stricter regulations, it is unlikely to completely derail efforts to move utilities away from coal and other fossil fuels. Many power generators already have plans to retire coal facilities as economics have shifted to favor renewable energy, and this ruling is unlikely to drastically change these plans.
Use of the Major Questions Doctrine
The ruling’s dependence on the major questions doctrine also poses potential problems for future regulations from EPA, as well as other agencies. Even without the decision explicitly ruling on the “inside vs. outside the fenceline” question, the EPA might intentionally limit future GHG regulations at the individual power plant level to avoid additional legal challenges. Other EPA regulations, such as vehicle emissions, might also be vulnerable if the major questions doctrine continues to be invoked.
There are growing concerns that the major questions doctrine could also be used to limit regulatory authority of other government agencies. Both the Federal Energy Regulatory Commission’s (FERC) plans to consider climate impacts when approving natural gas pipeline permits and the Securities and Exchange Commission’s (SEC) proposal for GHG disclosure requirements could potentially be thwarted if the major questions doctrine is applied to legal challenges elicited by these regulations.
Who Will Pick up the Slack?
Limiting the federal government’s regulatory control under the major questions doctrine will require more action from Congress to appropriately authorize its power. In an increasingly partisan political environment, this creates obvious challenges.
If federal agencies are going to be limited and likely require bipartisan congressional action in the future, decarbonization efforts will be further dependent on state actions. On July 5, New York Gov. Kathy Hochul signed new climate legislation into law, specifically referencing the Supreme Court’s decision in the announcement. Other states may look to follow a similar path and enact more legislation addressing climate change to fill the void left at the federal level.
This decision also places increased importance on the voluntary actions of corporations, higher education institutions, and local governments who are pledging to net zero emissions and accelerating their GHG reductions. Their increased investment in clean energy will drive market development and push utilities to maintain plans for phaseout of coal generation.
Edison Energy advises companies on their voluntary decarbonization efforts. Contact us to learn how we can help you set and achieve your energy and sustainability goals.
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