Supreme Court wrestles with EPA power to regulate climate change

The Supreme Court on Monday struggled with how to define the reach of the Environmental Protection Agency (EPA) in a case with profound implications for the agency’s power to address a main contributor to climate change.

At issue during Monday’s argument was the scope of the EPA’s authority to regulate air pollution from power plants and whether it extends beyond the confines of plant sites to encompass broader aspects of the U.S. energy sector.

The 6-3 conservative majority court did not clearly telegraph an outcome in the case, but several of the court’s conservative justices seemed concerned about whether the more sweeping interpretation of EPA authority went beyond the power granted to it by Congress. 

Some conservatives, including Justice Samuel Alito, raised the so-called major questions doctrine, a judicial interpretative method which holds that agency actions with transformative political or economic effects require a clear delegation of power by Congress — with some conservatives seeming to indicate that such an explicit statement from lawmakers was absent in the case.

Alito suggested that if the EPA were deemed authorized to regulate climate change writ large, it would be difficult to conceive of any limit to its power. 

“This statute requires EPA to take into account several factors … and they are incommensurable [with climate change],” Alito said to U.S. Solicitor General Elizabeth Prelogar. “What weight do you assign to the effects on climate change, which some people believe is a matter of civilizational survival, and the cost and the effect on jobs?”

The court’s liberal justices appeared generally skeptical of arguments for a narrower reading of EPA authority that were advanced by a number of states, led by West Virginia, as well as the coal industry.

The state and companies argued that since the statute directs the EPA to issue performance standards for pollution sources, it is limited to only regulating within the power plants themselves — so-called inside the fence measures — rather than reshaping the entire power sector and promoting a shift toward cleaner energy sources. 

Justice Elena Kagan countered that regulations within the power plant could very well have the same effect of changing the makeup of our power system by making coal generation too expensive or otherwise unfeasible.

“If that’s what EPA wanted to do, I have a basket full of source-by-source regulations that would allow them to get their way on all of those questions. It just has no necessary relationship to this fence, non-fence way of thinking of things,” Kagan said. 

Although the court’s liberals seemed to lean in favor of a broad reading of EPA power, some also posed tough questions to the government about its power to set in motion an industry shift to cleaner sources of power generation.

“I think what’s the major issue that might trouble me is the claim that the emission standards that you’ve set force states to do generation shifting — it’s not giving them options not to generation shift. You list out a whole bunch of options, but I thought one of their claims was that no matter what they did, they still had to generation shift,” Justice Sonia Sotomayor said.

The power plant industry was on the side of the government in the case — and argued that it would have more flexibility from a system where some plants could pay others for credits for reducing emissions on their behalf — something that was in the plan advanced by the Obama administration but absent from the Trump administration’s plan. 

One conservative justice, Brett Kavanaugh, gave credence to this. He said that electric industry arguments that a cap-and-trade system is better are “solid arguments that we need to consider.”

The Clean Air Act gives the EPA the authority to regulate power plant pollution. The law calls on the EPA to examine the best methods for regulating the release of air pollutants — which the court has also interpreted to include climate-warming gases like carbon dioxide — from sources like power plants. It also has the authority to set emissions benchmarks that reflect those methods.

Industry players and states are then charged with jointly developing plans to meet these benchmarks. The groups are free to heed or ignore EPA’s suggested approach, so long as their emissions goals are on target to meet the standard set by the federal agency.

Under former President Obama, the EPA adopted the 2015 Clean Power Plan, which took a far broader approach to the methods it suggested for reducing emissions. The policy took into account so-called outside-the-fence considerations that encompassed much more than the traditional approach, which had looked only at emissions emanating directly from power plant sites.

Obama’s EPA advised that energy companies consider reducing their plants’ reliance on high-emission sources like coal in favor of lower-emission sources like natural gas, or even renewable energy sources that produce no greenhouse gas. It also suggested that states could meet their goals through what amounted to a cap-and-trade program involving credits for emission reductions. 

Like previous plans, the Obama-era policy also proposed more traditional methods, including technology improvements at coal-fired plants. But it was the EPA’s suggestion of off-site solutions, like switching power sources — so-called generation shifting — that stirred controversy and sparked litigation.

The lawsuit was essentially on hold in a Washington, D.C., federal appeals court when the Trump administration overhauled the EPA’s approach. In 2019, the EPA repealed the Obama-era plan, arguing that federal law “unambiguously” restricted the EPA to wielding its emissions-reduction power onsite at a power plant. 

The Trump EPA then enacted the Affordable Clean Energy (ACE) rule, which pointed to efficiency improvements at coal-fired power plants as its only suggestion for reducing emissions — an extreme narrowing of the approach put forth by the Obama administration. Trump’s EPA also weakened the force of its emissions targets, providing only loose, nonbinding guidelines for states and industry players to consider when devising joint plans. 

The Trump-era plan also would have been less effective at cutting climate pollution — reducing less than 3 percent of the amount of short tons of carbon dioxide that the Obama-era plan would have reduced by 2030, according to EPA estimates put out under each administration. The Trump EPA also acknowledged that its plan might even have led to a net increase in greenhouse gas emissions as a result of incentivizing greater use of coal-fired energy production.

A group of Democratic-led states and private parties sued to challenge Trump’s move. This prompted a separate group of litigants to intervene on behalf of the Trump EPA. 

In January 2021, the U.S. Court of Appeals for the D.C. Circuit invalidated the Trump EPA rule, finding that his administration’s basis for the repeal of Obama’s Clean Power Plan and creation of the ACE rule was unlawful. 

The court agreed to a Biden administration delay of enforcement of its order while the new administration undertook a review. Meanwhile, a wide range of parties appealed the D.C. Circuit Court’s ruling to the Supreme Court for a clear resolution on the scope of the EPA’s authority to regulate energy sector emissions.

Part of Monday’s argument turned on the question of what the D.C. Circuit’s ruling said about the fate of the Obama-era rule: namely, whether the court intended to revive the rule after striking the Trump EPA rule that replaced it, or simply leave a regulatory vacuum while the Biden administration undertook a review.   

Prelogar, who argued for the Biden administration, argued that the court had not intended to reinstate the Obama-era rule, and that subsequent events had rendered it moot irrespective of the D.C. Circuit’s decision. She told the justices that this removed the constitutional requirement that a party can bring a lawsuit only if it suffers from a legal injury that courts can relieve. 

Prelogar said that the EPA expects to issue a proposed rule by the end of the year. Previously, the administration had indicated in its regulatory agenda that it expected to put forward a proposal in July. 

“Petitioners aren’t harmed by the status quo and can’t establish (legal) injury from the DC Circuit’s judgment,” she said. “Instead, what they seek from this court is a decision to constrain EPA’s authority in the upcoming rulemaking. That is the very definition of an advisory opinion, which the court should decline to issue.”

A decision in the case, West Virginia v. EPA, is expected this summer.