The U.S. Supreme Court on June 30 reversed a U.S. Court of Appeals for District of Columbia Circuit ruling striking down the Trump administration's Affordable Clean Energy rule, which repealed the Obama-era Clean Power Plan (CPP) and replaced it with more limited regulations of carbon dioxide emissions from existing power plants.
In a 6-3 opinion (West Virginia v. EPA), the majority objected to the Environmental Protection Agency (EPA) using the CPP to give states the option to promulgate regulations that would encourage "generation shifting," or moving away from sources, such as coal, to cleaner sources of generation, such as natural gas or renewables.
The majority opinion, which was written by Chief Justice John Roberts, held that EPA’s use of generation-shifting as a system of emission reduction under section 111 of the Clean Air Act required clear congressional authorization under the major questions doctrine and found Congress had not given such clear authorization.
Role of Congress
On EPA’s view of Section 111(d), “Congress implicitly tasked it, and it alone, with balancing the many vital considerations of national policy implicated in deciding how Americans will get their energy,” the opinion stated. “EPA decides, for instance, how much of a switch from coal to natural gas is practically feasible by 2020, 2025, and 2030 before the grid collapses, and how high energy prices can go as a result before they become unreasonably ‘exorbitant.’”
The majority argues that “there is little reason to think Congress assigned such decisions to the Agency,” adding that they also find it highly unlikely that Congress would leave to agency discretion the decision of how much coal-based generation there should be over the coming decades.
“The basic and consequential tradeoffs involved in such a choice are ones that Congress would likely have intended for itself,” the majority said. “Congress certainly has not conferred a like authority upon EPA anywhere else in the Clean Air Act. The last place one would expect to find it is in the previously little-used backwater of Section 111(d).”
Carbon Emissions Caps
The Supreme Court’s precedent “counsels’ skepticism toward EPA’s claim that Section 111 empowers it to devise carbon emissions caps based on a generation shifting approach,” the opinion said. To overcome that skepticism, the government must “point to ‘clear congressional authorization’ to regulate in that manner.”
The government “looks to other provisions of the Clean Air Act for support. It points out that the Act elsewhere uses the word ‘system’ or ‘similar words’ to describe cap-and-trade schemes or other sector-wide mechanisms for reducing pollution.”
But the court said that “just because a cap-and-trade ‘system’ can be used to reduce emissions does not mean that it is the kind of ‘system of emission reduction’ referred to in Section 111. Indeed, the Government’s examples demonstrate why it is not.”
The majority went on to say 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,
but “it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d).”
While the court noted that its decision was limited to whether the generation-shifting measures EPA identified as the “best system of emission reduction” are within the authority Congress granted under section 111. It did not discuss on what other measures EPA might take, beyond stressing the importance of EPA’s more limited, historical view of its authority under section 111.
The court said that a “decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body. The judgment of the Court of Appeals for the District of Columbia Circuit is reversed, and the cases are remanded for further proceedings consistent with this opinion.”
President Biden Directs Legal Team to Work With DOJ To Review Decision
In response to the decision, President Biden on June 30 said that he has directed his legal team to work with the Department of Justice and affected agencies “to review this decision carefully and find ways that we can, under federal law, continue protecting Americans from harmful pollution, including pollution that causes climate change.”
The court’s decision made clear that it is not saying that EPA lacks authority to regulate greenhouse gases under the CAA. In fact, according to the White House Office of Management and Budget’s Spring Unified Agenda EPA is working to develop new rules to regulate GHG emissions from existing and new sources which will be informed by this court ruling.
In 2015, the Obama Administration, through the CPP, adopted a broad view of EPA’s section 111(d) authority, requiring the electric power sector to shift generation away from fossil fuels to renewables.
The CPP was stayed by the Supreme Court in 2016 and never went into effect.
In June 2019, then-EPA Administrator Andrew Wheeler signed the final Affordable Clean Energy (ACE) Rule, replacing the CPP. The ACE Rule adopted a narrow view of section 111(d), seeking to curtail greenhouse gas emissions based only on pollution control measures applied at or to the source.
More recently, in January 2021, the U.S. Court of Appeals for the District of Columbia Circuit moved to vacate and remand the ACE Rule.
The appeals court found that section 111(d) of the Clean Air Act does not require the best system of emission reduction to be limited to only those measures that can be applied at and to an individual source.
Because the Trump Administration’s EPA expressly based its repeal of the CPP and its promulgation of the ACE Rule on the premise that section 111(d) limits best system of emission reductionto such “behind-the-fenceline” measures, the D.C. Circuit held that the repeal of the CPP and ACE Rule must be vacated.
On October 29, 2021, the U.S. Supreme Court granted a review of the case, specifically agreeing to hear the parties’ arguments on whether EPA’s section 111(d) authority allows the agency to regulate the power generation industry in a manner as broad as the CPP.