Supreme Court Limits EPA’s Authority to Regulate Carbon Emissions

By Gabriel Weil
June 30, 2022

The Supreme Court’s ruling on Thursday limiting the Environmental Protection Agency’s power to regulate greenhouse gas emissions from power plants underscores the need for Congress to step in and pass a national climate strategy.

Writing for the 6-3 majority, Chief Justice John Roberts concluded that Congress never gave the EPA the authority to require so-called generation shifting—switching from coal to natural gas or fossil fuel generation to renewables—in setting carbon dioxide emissions caps for power plants.

Due to its reliance on the so-called major questions doctrine, this ruling is likely to broadly curtail regulatory agencies’ power to shape policy. As articulated in the majority opinion, the doctrine requires clear Congressional authorization for agencies to assert broad new authorities that have great economic and political significance. The ruling’s embrace of the doctrine suggests the high court will be skeptical of new agency claims of authority in long-standing statutes in a wide range of areas, including climate regulations by other agencies like the Federal Energy Regulatory Commission and the Securities and Exchange Commission.

The case, West Virginia v. Environmental Protection Agency, involved the Obama administration’s Clean Power Plan, which never went into effect and was replaced by a Trump administration regulation in 2019. Under the Trump administration, the EPA had interpreted the Clean Air Act to limit the agency to regulations based on efficiency improvements at coal-fired power plants. The D.C. Circuit declared this interpretation erroneous but declined to reinstate the Clean Power Plan.

In its ruling Thursday, the high court stopped short of embracing the Trump administration’s narrower interpretation of the Clean Air Act. Instead, it deferred to another day the question of whether EPA’s authority is strictly limited to regulations aimed at limiting pollution from individual sources, commonly referred to as “inside the fenceline” regulations.

In theory, the high court also left the door open to strong EPA regulations that operate “inside the fenceline” of individual power plants. One approach might be to require all fossil fuel-fired plants to meet emissions performance standards that are only attainable by gas-fired or coal plants that capture and store some of their carbon emissions. This move would have the effect of accelerating the retirement of coal-fired power plants. In the future, once the technology is “adequately demonstrated,” regulators could also directly require fossil fuel-fired power plants to be retrofitted with carbon capture and storage systems.

Yet the high court’s formulation of the major questions doctrine gives substantial reason for caution regarding such creative approaches. The implication of this ruling is that the path forward for climate change regulation under the Clean Air Act is littered with obstacles. Our best hope for meaningful national action to address climate lies with Congress.

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