Bloomberg Law
July 8, 2022, 8:00 AM

SCOTUS Ruling in West Virginia v. EPA Threatens All Regulation

Richard L. Revesz
Richard L. Revesz
New York University School of Law

The US Supreme Court on June 30 issued its most important environmental law decision in more than a decade, in West Virginia v. Environmental Protection Agency.

In a 6-3 ruling, the court struck down the Clean Power Plan—the Obama administration’s regulation limiting the greenhouse gas emissions of existing power plants. It did so by invoking the major questions doctrine, which made its appearance for the first time in a majority opinion.

For now, most EPA climate regulations can proceed, though power-sector rules will be somewhat constrained. But the court’s pointedly vague invocation of the major questions doctrine casts a long shadow over the future of regulation.

Constraints on Regulation of Power Sector

The direct impact of the West Virginia case will be significant but not cataclysmic. Its effects will be limited to the power sector and it will not impair the EPA’s authority to regulate greenhouse gas emissions from transportation, oil and gas exploration, manufacturing, and other activities.

And even for the power sector, the court struck down only one regulatory approach. The EPA retains the ability to regulate electricity generation in several other ways.

The court had no objection to one of the Clean Power Plan’s components, which required heat rate improvements—burning fuel more efficiently so that one unit of fuel produces more electricity—which it viewed as a traditional, and therefore permissible, “source specific” measure.

But the court took issue with the additional requirement of a partial shift in electricity production from coal to natural gas, which generates fewer greenhouse gas emissions; and from coal and natural gas to renewables, which produce no greenhouse gas emissions at all.

Chief Justice John Roberts’ majority opinion acknowledged that the Clean Air Act’s broad language can be read to support the EPA’s interpretation. But it concluded that such “generation shifting from higher-emitting to lower-emitting” producers of electricity, requires “clear congressional authorization” as a result of the major questions doctrine, primarily because of the program’s “economic and political significance” and the agency’s discovery of an “unheralded power.”

Thus, the court turned on its head the normal approach to statutory interpretation, under which agencies can take reasonable measures pursuant to congressionally delegated authority, unless their interpretation is “inconsistent with the clear intent of Congress.”

As Justice Elena Kagan noted in a powerful dissent, “a key reason Congress makes broad delegations … is so an agency can respond, appropriately and commensurately, to new and big problems.”

‘Generation Shifting’

“Generation shifting” of the sort that the court found troubling in the Clean Power Plan is not a regulatory technique that EPA uses, or is likely to use, in the transportation or oil and gas sectors, for which the agency currently regulates greenhouse gas emissions through the kind of “source specific” measures that the court refers to approvingly.

And, similarly, “generation shifting” is not a likely regulatory technique for future programs that the EPA might undertake to reduce emissions from manufacturing or other sectors. As a result, the holding in West Virginia should not have a direct impact outside of electricity generation. Moreover, the EPA retains the ability to regulate the greenhouse gas emissions of existing power plants in a variety of ways.

While any subsequent regulation will need to pay close attention to the Supreme Court’s opinion, the main alternative tools involve technological changes that individual sources can adopt. For example, coal plants could be required to use carbon capture and storage or begin co-firing with natural gas.

And the EPA might also consider whether heat rate improvements could now lead to more significant greenhouse gas reductions than the ones contemplated in the Clean Power Plan. None of these regulatory tools is called into question by West Virginia because all of them involve “source specific” reductions.

Impact of Major Questions Doctrine

By far the greatest threat to regulation—of all types—comes from the court’s enshrinement of the major questions doctrine as a key technique of statutory interpretation. This doctrine casts an ominous pall over the nation’s regulatory future.

The court does not attempt to define the contours of the doctrine, and its repeated invocations of terms like “economic and political significance” and “unheralded power” could mean virtually anything. To borrow from a different area of law, the major questions doctrine, as the court articulated it in West Virginia, has an “I know it when I see it” quality that makes it inherently unpredictable but potentially all encompassing.

For example, the court notes that the EPA had estimated that the Clean Power Plan “would entail billions of dollars in compliance costs” (though the court overlooks that fact that it had much larger benefits). Several long-standing regulations had higher costs. Are they now suspect? And, how would the court in the future go about determining the cost threshold that would trigger the major questions doctrine?

And what counts as an “unheralded power”? Obviously, no agency will ever promulgate a regulation that is identical to a prior one, since then the new rule would not be necessary. How analogous must the new rule be to avoid “unheralded power” problems?

As Kagan’s dissent highlights, the Clean Power Plan had several analogous regulatory antecedents, but Roberts brushed them away, pointing to distinctions for each. But, by definition, there are distinctions between any two things that are not identical.

The contours of the major questions doctrine will be unknowable until the Supreme Court decides additional cases. But in the meantime, enterprising red-state attorneys general will aggressively invoke the major questions doctrine to challenge the Biden administration’s regulatory programs.

The EPA can now return to the business of fashioning greenhouse gas regulations for the power sector and can continue its efforts to regulate the emissions of other activities. West Virginia v. EPA does not foreclose those efforts. But the EPA, and every federal agency, will need to worry about where the Supreme Court and the lower courts will take the major questions doctrine in the future.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Richard L. Revesz is the AnBryce Professor of Law and Dean Emeritus at New York University School of Law, where he directs the Institute for Policy Integrity.

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