Vol. 53-2 Federal Casenote

Federal Casenote

West Virginia—Emissions Controls and the Major Questions Doctrine

In West Virginia v. EPA, the United States Supreme Court struck down the Environmental Protection Agency’s (EPA) “Clean Power Plan” (CPP) regulations using the “major questions doctrine.”[1] This decision will significantly impact environmental and executive-power law in the coming years.

The Clean Power Plan and the Affordable Clean Energy Rule

Normal The CPP was promulgated in 2015 by the Obama-era EPA with the goal of reducing greenhouse gases.[2] However, the CPP was never implemented because of court challenges and changing administrations.[3] EPA’s claimed authority for the CPP was § 111(d) of the Clean Air Act (CAA), which regulates emissions from existing pollution sources.[4] The Court asserted that EPA had only promulgated regulations under 111(d) “a handful of times since the enactment of the [CAA] in 1970.”[5] The CPP would have power plant owners limit greenhouse gas emissions from existing plants using three possible “best systems of emissions reductions” (BSERs): (1) “‘heat rate improvements’ at coal-fired plants—essentially practices such plants could undertake to burn coal more cleanly”; (2) “generation shifting” from coal-fired generation to lower-emitting sources like natural gas; or (3) “generation shifting” from natural gas and coal to renewables, including through a cap-and-trade system where utilities could buy greenhouse gas allowances.[6] Unlike traditional BSERs—which require that producers change production technology on a plant-by-plant basis—generation-shifting BSERs require that producers change the fuel source itself or make utility-wide emissions reductions.[7]

Various parties immediately challenged the CPP, seeking a stay in the U.S. Court of Appeals for the D.C. Circuit.[8] The D.C. Circuit denied the petitioners’ request for a stay pending resolution of the case, but the Supreme Court granted the stay.[9] The D.C. Circuit later agreed to hold the matter in abeyance while the new Trump administration worked on a replacement for the CPP.[10]

The Trump Administration in 2019 then replaced the CPP and enacted the “Affordable Clean Energy” (ACE) Rule.[11] The Trump EPA justified its replacement of the CPP by asserting that the Obama Administration had lacked a “clear statement” of authority from Congress to implement generation shifting.[12] The EPA further explained that the CPP implicated the major questions doctrine, under which courts “expect Congress to speak clearly if it wishes to assign to an agency decisions of vast economic and political significance.”[13] The ACE Rule accordingly removed generation-shifting expectations for operational and technological BSERs.[14]

Numerous parties then challenged the ACE Rule in the D.C. Circuit, while other parties, the state of West Virginia among them, intervened to defend it.[15] The D.C. Circuit ruled in favor of the ACE Rule challengers in January 2021, holding that § 111(d) “could reasonably be read to encompass generation shifting[,]” and that the EPA had misinterpreted its authority under the CAA.[16] The petitioners appealed this decision to the U.S. Supreme Court, and the Court granted certiorari.

Majority Opinion

Chief Justice Roberts, writing for a majority that included Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett, reversed the D.C. Circuit’s opinion and ruled in favor of West Virginia and the other petitioners.[17] The majority addressed the issues of standing, the merits of the claims, and the major questions doctrine.

The Court first held that states such as West Virginia had Article III standing to sue. The Court concluded that the D.C. Circuit’s repeal of the ACE Rule purportedly brought the CPP “back into legal effect,” and the state was an object of the CPP’s “requirement that they more stringently regulate power plant emissions within their borders.”[18] Thus, they had a redressable injury caused by the EPA.

The Biden Administration contended that the Court lacked jurisdiction because no case or controversy existed.[19] Roberts rejected the claim that the case was moot because EPA did not intend to enforce the ACE Rule.[20] Roberts invoked the principle that “voluntary cessation does not moot a case unless it is absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.”[21] The Biden Administration’s vigorous defense of the legality of generation shifting inferred a reasonable expectation that the behavior would recur, and thus, the Court concluded, the case was not moot.[22]

The majority then turned to the merits of the challengers’ claims. The Court agreed that EPA had overstepped its authority in adopting the CPP.[23] The majority questioned “whether restructuring the Nation’s overall mix of electricity generation, to transition from 38% coal to 27% coal by 2030, can be the BSER within the meaning of Section 111.”[24] Roberts concluded that, in pursuing generation-shifting methods of emissions reductions, the EPA had “‘claim[ed] to discover in a long-extant statute an unheralded power’ representing a ‘transformative expansion in [its] regulatory authority.’”[25] The majority took issue with EPA’s interpretation of § 111(a)(1)’s “best system of emission reduction [. . .] adequately demonstrated”[26] and rejected the notion that it was a clear authorization by Congress to the EPA to make systemic changes to power generation.[27]

The Court thus reversed and remanded the D.C. Circuit’s opinion, explicitly relying on the major questions doctrine.[28] The Court relied on a number of recent Supreme Court cases, including the 2021 Alabama Association of Realtors decision prohibiting the Centers for Disease Control and Prevention from ordering a nationwide eviction moratorium during the COVID-19 crisis, as well as the 2014 Utility Air decision that had also limited the EPA’s authority under the CAA.[29] The Court held in Utility Air that EPA could not regulate greenhouse gases as “air pollutants” under permitting provisions of the CAA; doing so could have allowed the agency to regulate millions of small sources that had not previously been regulated under the provisions at issue.[30] While the EPA’s interpretation of the CAA “had a colorable textual basis,” the Court refused to give the EPA “‘unheralded’ authority over ‘a significant portion of the economy.’”[31] The majority summed up its analysis by noting that—however sensible generation shifting might be—the power to mandate it must come from Congress itself or an agency with a “clear delegation” from Congress.[32]

Dissent

Justice Kagan, joined by Justices Breyer and Sotomayor, authored a lengthy dissent challenging the majority’s use of the major questions doctrine and the extent to which Congress granted clear authority to the EPA to prescribe systems of emissions reductions like generation-shifting.[33] Kagan argued that the CAA intentionally granted broad—not vague—powers to the EPA in § 111 so that the agency could meet new or complex challenges over the years.[34] The dissent framed the majority’s use of the major questions doctrine as unprecedented because the decisions referenced were instances in which “the agency had strayed out of its lane, to an area where it had neither expertise nor experience.”[35] In the dissent’s view, the CPP was plainly within EPA’s delegated authority.[36]

Lastly, Kagan invoked a long-standing tradition of delegation by Congress to agencies with the institutional knowledge and expertise to regulate issues about which Congress has comparatively little.[37] To Kagan, the major questions doctrine substituted the will of Congress and the expertise of agencies for the limited subject-matter expertise of the judiciary to ostensibly maintain the balance of power between the legislative and executive branches.[38] In effect, this use of the major questions doctrine aggrandized the power of the judiciary without providing the functional benefit that arises out of a delegation from the legislative branch to the executive.

Impact of the Decision

Since West Virginia, commentary has primarily focused on the (grim) future of emissions reductions through administrative action. However, the Court’s invocation of the major questions doctrine may be the most lasting takeaway.

Both Supreme Court precedent[39] and the Inflation Reduction Act of 2022[40] recognize the EPA’s authority to regulate greenhouse gases under the CAA—but neither authorizes the “generation shifting” proposed as part of the CPP. As Justice Kagan noted, reducing the nation’s fossil fuel consumption through generation shifting is “a necessary part of any effective approach for addressing climate change.”[41] Without a clear direction from Congress on generation shifting, the EPA may be forced to mandate less-effective measures of greenhouse gas control, such as efficiency improvements for existing technology. This constraint could make it more difficult for the Biden Administration to achieve its goal of reducing greenhouse gas emissions from a 2005 baseline by 50% by 2030.[42]

The West Virginia holding, however, is not limited to the EPA’s regulation of greenhouse gases. The major questions doctrine will have broad implications for new regulations across various industries. For example, litigants and commentators are citing West Virginia to challenge or question the Securities and Exchange Commission’s authority to require climate disclosures,[43] the Nuclear Regulatory Commission’s ability to license the storage of nuclear waste,[44] and the Department of Energy’s right to forgive student loans.[45] It is not yet clear exactly how these cases will be decided. The courts must develop a coherent analytical framework for construing the “power claimed” in an administrative rule. Right now, West Virginia is an invitation for lower courts to test the boundaries of administrative law. Going forward, advocates should be wary of broad pronouncements of the effects of a given rule or practice. Until the Court has an opportunity to revisit West Virginia, a vigorous examination of this new rule will occur at all levels of the court system.

Amy Rodriguez is an attorney at Montage Legal. She primarily handles civil litigation and her previous work centered on advancing environmental goals through negotiation and administrative hearings. She is a 2017 graduate of the University of Texas School of Law.

Evan Morsch is a 3L from Chicago, Illinois. He will be working as commercial litigator after graduation. He has long had an interest in environmental law and policy, and he hopes that his practice will involve some environmental litigation.