The Supreme Court’s decision in West Virginia v. EPA: the good, the bad, and the ugly
The Supreme Court issued its West Virginia v. EPA opinion yesterday. In an opinion written by Chief Justice Roberts for a six Justice majority, the Court held that the best system of emission reduction underlying the Clean Power Plan (shifting generation from higher emitting sources to lower emitting sources, including sources technically outside the regulated industry, like solar and wind on the grid) is not within the authority Congress granted EPA in Section 111(d) of the Clean Air Act. The decision blunts a key tool in EPA’s toolbox, but multiple pathways remain for the agency to address the significant climate change impact from coal and gas-fired electric generating units.
The Good: Multiple promising paths remain for stringent carbon pollution standards under the Act. The Clean Air Act continues to provide EPA with ample authority to set stringent standards based on pollution control technologies such as carbon capture and sequestration and gas and hydrogen co-firing and the Court did not preclude them from being paired with trading and other market mechanisms both in setting the standard and in complying with it.
In the aftermath of West Virginia several paths remain for EPA to establish stringent emission guidelines for carbon pollution from power plants – and CATF’s work in advancing technological and zero-carbon fuels-based solutions is more important than ever.
The Clean Air Act continues to provide EPA with ample authority to set stringent existing source standards based on directly applied pollution control technologies and techniques, such as carbon capture and sequestration and co-firing with zero-carbon fuels – both which CATF is deeply engaged in exploring and deploying. These technologies can reduce emissions to near zero and would put the costs of pollution cleanup on industry instead of public health and the environment as the law requires. In addition, the Court did not preclude the use of market mechanisms, such as emission trading, in both setting the standard and complying with it, as long as the trading is between power plants in the source category (i.e., fossil-fired electric generating units). We will continue to urge EPA to act swiftly under its remaining authority to establish stringent emission guidelines for fossil fuel-fired power plants.
The Trump EPA and coal interests not only urged the Court to determine that the plain language of the Clean Air Act limits EPA’s choice of the best system of emission reduction for any pollutant or source under Section 111 to one that is “applied to or at the source,” but that generation shifting, emissions trading, averaging, and credits were also off the table as a means of complying with a standard. In large part due to our arguments against that extreme reading, the Court limited itself to the narrower issue of whether the Clean Power Plan system was permissible as the basis for standards. While the opinion speaks negatively about cap-and-trade systems and fuel switching, the central holding of the case strikes down only the Clean Power Plan system, which was a trading regime based on generation shifting including to zero-emitting sources on the grid, but outside the regulated industry.
While CATF attorneys were confident that Massachusetts v. EPA (confirming that greenhouse gases are air pollutants within the meaning of the Clean Air Act) and the Endangerment Finding (an EPA rule finding that these emissions “cause or contribute to air pollution that may reasonably be anticipated to endanger public health of welfare”) were not at serious risk in this decision, it is worth emphasizing that Massachusetts remains good law after yesterday’s decision, and the finding that greenhouse gases endanger public health and the environment was not undermined. If anything, Massachusetts and the Endangerment Finding are strengthened, as the Court yesterday affirmed its holding in American Electric Power v. Connecticut, that EPA has authority to regulate carbon dioxide from power plants under section 111(d) of the Act. The Court thus limited its decision in West Virginia to the question of how that authority can be exercised, and specifically whether the Clean Power Plan went too far.
The Bad: The Court took the most efficient and cost-effective carbon emission reduction measure off the table.
The Clean Power Plan built on demonstrated state programs to effectively reduce emissions from power plants and leveraged the exact means by which the sector is already reducing its emissions – shifting electricity generation from higher emitting sources to lower and zero-emitting sources. In fact, even though the Clean Power Plan never went into effect, by 2019 annual power sector emissions were already lower than EPA’s 2030 goal. Nonetheless, the Court took this most efficient and cost-effective emissions reduction measure off the table as the basis for existing source standards, instead requiring the agency to base rules on pollution control investments within the fossil fuel-fired power fleet.
The Ugly: The Court further expanded the “major questions doctrine” casting doubt over any agency’s ability to address new and important problems using statutes providing general direction from Congress.
Congress writes laws addressing major policy questions, and then historically has relied on the technical experts at agencies to apply the law to evolving problems and solutions. An agency acting within its expertise and authority has been deferred to by the Court when it crafts rules under such general direction from Congress. That framework has been in flux recently, and West Virginia further upsets that balance. The Court told us yesterday that they will look skeptically at regulations that protect public health, safety, and the environment if they seem too important, novel, or costly, and if they are based on a general directive, even where the agency involved has primary responsibility over the subject matter area.
The West Virginia majority determined that the Clean Power Plan was a “major rule” falling into its “major questions” frame and that it would look at the rule with skepticism. The only way a rule could overcome that skepticism would be if EPA could “point to clear congressional authorization to regulate in that manner.” This is an exceptionally high bar, especially because Congress generally writes laws in broad terms such that they can be adapted to changing problems and solutions by the technical experts working at agencies to address public health, safety, the environment, and the like. The West Virginia majority characterized the Clean Power Plan as “requir[ing] that …[fossil fuel-fired power plants] reduce their own production of electricity, or subsidize increased generation by natural gas, wind or solar sources.” Six Justices found no support for that in the Act, despite the statutory language that asks EPA to find the best system for emission reduction – which certainly should include the system the market already uses – namely, generation shifting from more emitting to less-emitting sources on the grid.
Justice Kagan, in her dissent, noted that the language of the Act is not, in fact, so general as to preclude including emission trading and generation shifting in the “best system” of emission reduction underpinning federal existing source standards. She sums the Court’s opposing “major questions” approach beautifully:
“The current Court is textualist only when being so suits it. When that method would frustrate broader goals, special canons like the ‘major questions doctrine’ magically appear as get-out-of-text-free cards. Today, one of those broader goals makes itself clear: Prevent agencies from doing important work, even though that is what Congress directed.”
Looking forward: Paths remain to regulate carbon emissions from power plants, and EPA must take them now. And a multi-pollutant strategy utilizing all the tools available to the EPA to assure cleaner and more public health-protecting electricity generation is now even more important. Specific legislation supporting energy decarbonization, such as the clean energy tax credit package under consideration as part of the budget reconciliation package, has also become that much more critical. CATF experts are moving ahead on all paths.