Energy and Environment Monitor
Supreme Court Hears Argument on Scope of EPA’s Authority Over Power Plant Emissions
March 4, 2022
Introduction
On Monday, February 28, 2022, the Supreme Court heard a challenge to EPA’s authority to regulate CO2 emissions from coal-fired power plants. The challenge was spearheaded by West Virginia’s Attorney General and his Solicitor General. If the Court rules on the merits, it will determine whether EPA’s authority to limit CO2 emissions from coal-fired power plants is limited to regulating “inside the fenceline” or whether EPA may view the sources of emissions more broadly and rely on “outside the fenceline” restrictions that effectively force shifting of power generation from coal to gas and other sources.
Background
At issue is §111(d) of the Clean Air Act. It allows EPA to establish emissions guidelines for existing “statutory sources of air pollutants” based on “the degree of emissions limitation achievable through application of the best system of emissions reductions” that has been “adequately demonstrated.”
By a 2015 rulemaking, the Obama EPA adopted a systemic view of CO2 emissions in announcing the Clean Power Plan. It did not restrict its emissions guidelines to emissions achievable at individual power plants. Rather, it construed the statute as allowing consideration of technologies that reduced CO2 emissions by shifting to alternative means of power generation. It then set state-specific goals for reductions that effectively would have required shifting to other means of generation.
West Virginia’s Attorney General, supported by other coal and Republican states, sued immediately. They were able to obtain a stay of the rule in the U. S. Supreme Court until the D.C. Circuit could hear the challenge. The issues were briefed and argued before the D.C. Circuit, but it agreed to stay (and later dismiss) the case when Trump was elected in 2016 and his EPA committed to reconsider the rule.
The Trump EPA issued a different rule—the Affordable Clean Energy (ACE) plan—which concluded that EPA lacked the authority under §111(d) to rely on “outside the fenceline” measures. The ACE rule instead mandated only affordable changes “inside” the fenceline to improve power plant efficiency. This time, Attorneys General from Democratic states and environmental groups sued. In January 2021, the D.C. Circuit Court sustained this challenge, concluding that EPA’s rule was unnecessarily constrained because EPA has authority to regulate outside the fenceline. That ruling vacated the ACE rule, and the Biden administration has since indicated it will work on its own rule. Nonetheless, West Virginia and other coal supporters sought review in the Supreme Court. They contend that the ruling effectively reinstated Obama’s Clean Power rule. To the surprise of many, the Supreme Court agreed to hear the case even though EPA asserts that the CPP rule is not currently in effect.
The Oral Argument
The arguments considered by the Supreme Court divide into two parts. First, a contention by EPA that there is no rule currently in place and, therefore, no “case or controversy” over which the Court has jurisdiction. In response, West Virginia has argued that the controversy is live, because the D.C. Circuit Court effectively breathed life back into the Clean Power Plan. In oral arguments, West Virginia and the coal industry were pressed hard by several Justices on the issue of whether there was in fact a case or controversy, but several other Justices appeared interested in reaching the merits of the case by suggesting that the petitioners suffered real injury when the ACE rule was set aside.
The second argument is one the Court will not reach if it determines there is no live controversy—whether the so-called “major questions” doctrine prohibits EPA from stretching its rulemaking authority. That doctrine, created by the courts, posits that Congress could not have intended to give an agency such widespread authority having such economic and political significance without a clear delegation of that authority. That is, Congress does “not hide elephants in mouseholes.” During arguments, the Justices spent significant time exploring the contours of the “major questions” doctrine and whether it really applied here. Both Justices Kagan and Thomas suggested that since an “inside the fenceline” rule can also effectively force generation shifting by increasing costs of compliance, the “inside” vs. “outside” distinction might not be a “major” question. A ruling is expected by the end of June.