The U.S. Supreme Court's June 30 ruling restricting the U.S. Environmental Protection Agency's authority to regulate climate pollution from existing power plants will likely hamper the Biden administration's ability to issue future climate and energy rules that have a major economic impact, according to legal experts.

In a 6-3 decision, a majority of conservative justices on the high court, for the first time, invoked a legal line of reasoning known as the "major questions" doctrine in finding that the Obama-era Clean Power Plan exceeded the EPA's authority.

The major questions doctrine, according to the majority, holds that courts should not defer to agencies on matters of "vast economic or political significance" unless the U.S. Congress has explicitly given the agencies the authority to act in those situations.

In repealing and replacing the Clean Power Plan, the Trump administration found that doing so would have no practical effect on the U.S. power sector, in part because the industry had already met the program's emissions reduction goals before its 2022 start date.

But the Supreme Court, siding with a coalition of red states and coal producers that challenged the Obama-era rule, found that its approach to generation shifting went too far. The court's decision also focused on the possible inclusion of similar systemwide measures in a future EPA regulation.

The June 30 ruling in West Virginia v. EPA (No. 20-1530) was largely based on the idea that the EPA "must point to clear congressional authorization" in issuing regulations under Section 111(d) of the Clean Air Act, although experts predicted that the ruling will also curtail other agencies' rule-writing abilities.

"Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible solution to the crisis of the day," Chief Justice John Roberts wrote for the majority. "But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d)."

Court expected to scrutinize 'major' rules, 'novel' approaches

Supporters of the Clean Power Plan's "beyond the fence line" approach were quick to note that the U.S. electric utility industry has long relied on generation shifting and emissions trading schemes as cost-effective ways to comply with Clean Air Act rules.

The Clean Air Act's landmark Acid Rain Program, for example, allowed older, dirtier coal-fired power plants to pay cleaner coal-fired units for emissions allowances that reduced overall compliance costs for the industry. EPA rules addressing interstate smog pollution have adopted a similar approach.

"This notion that rules can't be controversial, that they can't be creative or expansive, is troubling," Jack Lienke, regulatory policy director of the Institute for Policy Integrity at New York University School of Law, said in an interview. "The traditional approach is when statutes are written in broad terms and are susceptible to multiple reasonable interpretations, courts defer to agency readings of that text so long as they're reasonable."

Jay Duffy, an attorney with the Clean Air Task Force, said he did not interpret the Supreme Court's June 30 ruling as prohibiting generation shifting entirely.

Indeed, the court's majority said it has "no occasion" to decide whether Section 111(d)'s statutory phrase "best system of emission reduction" refers "exclusively to measures that improve the pollution performance of individual sources."

"I think you could have inside-the-fence approaches paired with market mechanisms, and I don't think that is eliminated by this decision," Duffy, who briefed the Supreme Court case for public health organizations, said in an interview.

Nevertheless, legal experts on both sides of the debate agreed that future EPA efforts to tackle climate pollution under the Clean Air Act will be subject to far more scrutiny by the high court.

"The majority had no trouble finding that the question of how the U.S. electricity sector should be structured (and how much electricity should come from coal as opposed to other sources) was a major question," Jeff Holmstead, a former EPA air office chief in the George W. Bush administration, said in an emailed statement. "Because it is a major question, EPA can make such determinations only if there's a clear statement that this is what Congress intended."

Nathan Richardson, an attorney and assistant professor at the University of South Carolina School of Law, said the court's focus on the Clean Power Plan's "novel approach" could also spell trouble for other climate- and energy-related administrative rulemakings.

The EPA is in the process of finalizing rules to control methane emissions from existing oil and gas facilities. And in March, the U.S. Securities and Exchange Commission proposed requiring publicly traded companies to reveal climate risks and carbon emissions data in financial filings. That proposal has already sparked a fierce debate.

"Every time an agency tries to do something, it's subject to this kind of inquiry: is it like what you did before?" Richardson said in an interview. "Any time an agency does something that is new and different and major, with major being totally up to the whims of the judges, then there's the potential for it to get thrown out, or more precisely, thrown back to Congress."

U.S. Rep. Frank Pallone, D-N.J., who chairs the House Committee on Energy and Commerce, said in a June 30 statement that the Supreme Court's decision "does not derail our commitment or ability to achieve our climate goals."

"EPA continues to have many powerful tools at its disposal and there is more both Congress and [U.S. President Joe Biden] can do to meet the climate crisis head-on," Pallone said. "I am determined to get the job done."

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