The U.S. Supreme Court building in Washington, D.C.
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In a case with far-reaching implications, attorneys representing coal-reliant states and two coal producers urged the U.S. Supreme Court on Feb. 28 to restore a Trump-era carbon rule that mandated potential life-extending upgrades for old plants.
However, lawyers for the U.S. Environmental Protection Agency and a coalition of electric utilities contended that doing so would require the court to ignore more wide-ranging emissions reduction measures the U.S. power industry has long relied upon to comply with Clean Air Act rules.
The dispute at the center of the oral arguments in West Virginia v. EPA (No. 20-1530) is grounded in two EPA rules intended to rein in the carbon emissions of the nation's power plants to combat climate change.
Under the Obama administration, the EPA in 2015 issued the Clean Power Plan, or CPP. The rule largely focused on the use of "outside the fence line" measures to control carbon emissions, such as coal-to-gas generation shifting, emission trading schemes, and renewable energy development. The Supreme Court stayed the implementation of that rule in February 2016, however.
In 2019, the Trump administration's EPA repealed the CPP and replaced it with the Affordable Clean Energy, or ACE, rule. In contrast to the CPP, the ACE rule required power plant owners to implement measures only "inside the fence line" of the physical premises of the power plant itself, such as on-site efficiency upgrades for existing coal-fired plants.
The case at hand
The U.S. Court of Appeals for the District of Columbia Circuit in January 2021 vacated both the EPA's repeal of the CPP and the ACE rule after determining those actions rested on an impermissibly narrow reading of the statute. For instance, the D.C. Circuit faulted the Trump EPA for turning its back "on major elements of the systems that the power sector is actually and successfully using to efficiently and cost-effectively achieve the greatest emission reductions."
Following that decision, West Virginia was joined by North Dakota, The North American Coal Corp. and Westmoreland Mining Holdings LLC in asking the Supreme Court to review the lower court's ruling.
The plaintiffs specifically asked the high court to assess whether Congress, in passing the Clean Air Act, intended to give the EPA authority to issue rules "capable of reshaping the nation's electricity grids" or to decide "matters of vast economic and political significance." In doing so, the plaintiffs invoked what is known as the "major questions" doctrine, which some say allows a federal agency to take actions with such a dramatic impact only if Congress clearly directs them to do so and how to do so.
In contrast, most large power companies are opposing the plaintiffs' suit because the CPP offers more flexibility in the actions they can take to reduce power emissions. Moreover, the power groups, interest groups and the Biden EPA noted that the major issues doctrine has never been applied to a rule that is no longer in effect and, even if it were to be revived, would not impose any real costs.
Opponents also noted that the Supreme Court in 2007 in Mass. v. EPA specifically stated that the EPA was wrong in concluding that it lacks the legal authority to regulate carbon dioxide and other greenhouse gas emissions that may contribute to global warming and in refusing to exercise that authority.
Meanwhile, the Biden EPA has indicated that it will not reinstate the CPP because its requirements have already been met, even absent the rule and a decade earlier than contemplated by the rule. Instead, the agency is drafting a new rule regulating power plant carbon emissions.
Some environmental law experts viewed the Supreme Court's move to consider those questions despite the absence of an existing regulation as an indication that its 6-3 conservative majority might be poised to limit the EPA's authority under the relevant section of the Clean Air Act — Section 111(d) — or perhaps restrict federal agencies' rulewriting authorities more broadly.
Major questions
Appearing for the plaintiffs, West Virginia Solicitor General Lindsay See argued that the major questions doctrine applies to the case at hand because it involves questions of major economic or political significance.
"When this court deals with major questions, it is focused on the nature of the power at stake," See said. "Here, because there is transformative power that crosses industries and goes outside of EPA's core competency, this is an area where this court has been willing to apply the major questions canon."
See also noted that the major questions doctrine can serve as a threshold for the nondelegation doctrine, a dormant line of legal reasoning that argues the U.S. Constitution prohibits Congress from delegating broad rule-writing authorities to federal agencies. "Here, no matter what the answer is on the nondelegation question, Congress did not actually delegate," See argued.
During later questioning, however, U.S. Solicitor General Elizabeth Prelogar contended that applying the major questions doctrine would be premature because the EPA is still working on a replacement for the vacated ACE rule. "Here, I think it's particularly abstract because there's no agency action to review to try to put that 'major questions' gloss on it," Prelogar said.
Inside vs. outside the fence line
"We have a whole U.S. code filled with delegations to different agencies, and many of those words are fairly technical," Justice Stephen Breyer said. "How do we, in the face of silence, determine what Congress would have wanted to delegate?"
In response, See said Congress added cap-and-trade provisions to three sections of the Clean Air Act in 1990 but declined to do so for Section 111. Section 111(d) of the Clean Air Act specifically requires the EPA administrator to issue performance standards for existing fossil fuel-fired generators that reflect "the best system of emission reduction."
"We know Congress was thinking about these nationwide cap-and-trade measures at the exact same time it made changes to [Section 111], and it didn't put those words in there," See said.
Justice Clarence Thomas pressed plaintiffs on the distinction between "inside the fence line" versus "outside the fence line" measures.
"I don't know how you can draw such clean distinctions," Thomas said. "It would seem as though EPA could regulate the source in a way that actually requires changes, for example, in the mix of energy generation."
Jacob Roth, counsel for Westmoreland Mining, acknowledged that "there always could be incidental effects of regulation."
"Our objection is that the EPA's objective, the whole design of the Clean Power Plan and that reading of the statute, is that the agency can include in its best system measures that are calling on the plant to operate less or not at all," Roth said.
However, Justice Elena Kagan questioned whether the fence line debate is even relevant to the issue of whether the Clean Air Act gives the EPA authority to reshape entire industries.
"Inside-the-fence reform can be very small or it can be catastrophic," Kagan said. "There are inside-the-fence technological fixes that could drive the entire coal industry out of business tomorrow, and an outside-the-fence rule could be very small or it could be large."
Moreover, the Clean Air Act does not provide for performance standards that are simply focused on driving certain types of generators offline, argued Beth Brinkmann, counsel for a coalition of utilities including Consolidated Edison Inc. and Exelon Corp. "The purpose is to reduce emissions while maintaining power and energy," Brinkmann said.
With emissions trading, an older coal plant could operate longer by purchasing emission allowances from a cleaner facility within the same source category, Brinkmann said.
Injury at issue
Justices also spent significant time exploring what the outcome of a ruling in favor of the plaintiffs might look like.
Chief Justice John Roberts noted that plaintiffs supported the ACE rule and now oppose the D.C. Circuit's vacature and remand of the Trump-era regulation.
"They'd like good regulation, which they think they had with ACE, and now they don't have it," Roberts said. "Again, why isn't that justiciable?"
Prelogar argued that the D.C. Circuit's decision left the EPA without an effective carbon rule for existing fossil fuel-fired generators and that the plaintiffs have failed to demonstrate injury in the absence of regulation.
"Now the choice is, will there be no federal regulation while the rulemaking is completed, or is ACE going to take effect?" Prelogar said.
The solicitor general added that nothing currently prevents the state plaintiffs from regulating their power sectors as they see fit.
"If West Virginia, today, wants to start regulating consistent with what ACE contemplated, it can take whatever actions it wants to take with respect to the sources in its state," Prelogar said.
Prelogar said the EPA expects to complete its replacement for the ACE rule before the end of 2022.