latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/supreme-court-s-review-of-epa-authority-carries-far-reaching-implication-67698325 content esgSubNav
In This List

Supreme Court's review of EPA authority carries far-reaching implication

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?

Blog

Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings

Blog

Insight Weekly: LNG exports surge; investors unfazed by inflation; neobanks drive VC funding


Supreme Court's review of EPA authority carries far-reaching implication

  • Author Zack Hale
  • Theme Energy

SNL Image

The U.S. Supreme Court building in Washington, D.C.
Source: Walter Bibikow/Getty Creative via Getty Images


The U.S. Supreme Court's review of the U.S. Environmental Protection Agency's authority to regulate power plant emissions could have implications that go far beyond the agency's ability to curb pollution from the electricity sector.

Specifically, the court's 6-3 conservative majority may be poised to use the case to effectively overturn or limit what is known as Chevron deference, which is the practice of federal courts deferring to an agency's expertise in writing rules where enabling statutes are written ambiguously.

Several of the court's newest conservative justices — including Brett Kavanaugh and Neil Gorsuch — have suggested the use of Chevron deference has gone too far. Clarence Thomas, Samuel Alito and other justices have similarly argued that the U.S. Constitution does not allow Congress to delegate its legislative power to other entities.

For clean power proponents, the worst possible outcome would be for the court to use the opportunity "to say the [Clean Air Act] itself delegates too much discretion to the EPA," Michael Gerrard, director of Columbia Law School's Sabin Center for Climate Change Law, said in an interview.

The case at hand

On Oct. 29, the high court announced that it will review the U.S. Court of Appeals for the D.C. Circuit's Jan. 19 ruling that the Trump administration's replacement for the Obama-era Clean Power Plan rested on an overly narrow reading of Section 111(d) of the Clean Air Act.

According to then-President Donald Trump's EPA, Section 111(d) prohibits "outside the fence line" measures, such as coal-to-gas generation shifting and renewable energy development, to control power plant emissions. Since such measures were the building blocks of the Clean Power Plan, the Trump EPA replaced that rule — which never went into effect due to a Supreme Court stay with the Affordable Clean Energy, or ACE, rule.

The ACE rule focused exclusively on controlling emissions through a limited menu of on-site efficiency upgrades known as heat-rate improvements for existing coal plants. But in vacating and remanding the ACE rule, the D.C. Circuit determined that the EPA may consider outside the fence line measures, and that the ACE rule would do little to reduce emissions. The EPA itself in 2019 found that emissions reduction under the ACE rule would be minuscule compared to those produced by the Clean Power Plan.

SNL Image

President Joe Biden's EPA has since begun to develop a replacement for both the ACE rule and Clean Power Plan. And while the Supreme Court's decision to review the D.C. Circuit ruling has sparked concern throughout the environmental law community, EPA Administrator Michael Regan has pledged that the agency will "continue to move forward" through its statutory authority under the Clean Air Act.

The powers at stake

Multiple sitting Supreme Court justices have warned about executive overreach and the danger posed by the growing power of the administrative state.

In the current case, West Virginia v. EPA (No. 20-1530), the judges may examine how much power federal agencies have under the so-called nondelegation doctrine. In the U.S. Constitution, nondelegation says that Congress cannot transfer its lawmaking powers to another authority.

But in practice, Congress often writes laws that ask federal agencies to fill in the specifics of how to regulate a given issue, in part because the agencies typically have the expertise needed to work out the relevant technical details.

And courts have allowed that practice. Falling in line with a 1984 Supreme Court decision — Chevron v. Natural Resources Defense Council — the court system has granted what is known as Chevron deference to agencies' "reasonable" interpretations of vague laws.

Westmoreland Mining Holdings LLC, in the current case, asked the court to address whether the Clean Air Act gives the EPA authority to "decide matters of vast economic and political significance as to whether and how to restructure the nation's energy system."

Kavanaugh — during his 12-year stint as a judge on the D.C. Circuit — insisted that an agency may not issue a rule that has great political and economic significance unless Congress clearly authorizes it to do so. Kavanaugh argued that a major rule is unlawful unless the statute explicitly authorizes it.

If the court decides to reinforce the nondelegation doctrine, federal agencies' abilities to write crucial rules that have historically produced important benefits may be hamstrung, said Nathan Richardson, a university fellow at Resources for the Future.

Possible ramifications

The first written briefs in the case are due Dec. 13, and Richardson suggested that they may offer some clues on whether the court will choose to address some of the broader issues.

"I'm not sure how much the briefing is going to tell us, but if there is one signal it's how much time is spent on in the weeds Clean Air Act stuff versus how much is spent on administrative and constitutional law issues," Richardson said.

The court may also be forced to reckon with previous rulings affirming the EPA's authority to regulate carbon dioxide following its 2007 Massachusetts v. EPA decision, which held that the EPA can regulate carbon dioxide and other greenhouse gas emissions under the Clean Air Act. A 2014 opinion written by the late conservative Justice Antonin Scalia, for example, slapped the EPA for overreach under the Clean Air Act but still affirmed the agency's authority to regulate power plants through the statute.

"Justice Scalia recognized that every time the court looks at an old statute, it's got to ask policy questions like, 'Is this too much of a delegation to an agency?'" Richardson said. "But a lot of people on the current court don't buy that, so they're wading into some deep waters if they do this, politically, and really putting their credibility on the line."

The Supreme Court might still punt

Since the Clean Power Plan never went into effect and the EPA has abandoned the ACE rule, a majority of justices on the court could still decide that the case West Virginia v. EPA is not yet ripe for review, Gerrard said.

"Since there's not really a regulation on the table right now to review, they should just wait until there is one," Gerrard opined. A more likely outcome would be for the high court to only address the question of the EPA's climate authority over existing power plants, Gerrard said.

Still, the court's decision to grant review in the midst of an ongoing EPA rulemaking shows that the court has taken a sharp interest in the scope of the agency's Clean Air Act authority, Megan Houdeshel of the law firm Dorsey & Whitney, said in an email.

Oral arguments in the case, brought by the coal-producing states of West Virginia and North Dakota, as well as two coal producers, The North American Coal Corp. and Westmoreland, are expected sometime in late February or early March of 2022.