The Supreme Court Limits EPA's Authority To Regulate Greenhouse Gas Emissions

• Published date: 26 July 2022
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Climate Change
• Law Firm: Proskauer Rose LLP
• Author: Ms Aliza R. Cinamon and Thomas J. Ruane

On June 30, 2022, the Supreme Court of the United States issued an important environmental ruling in West Virginia v. EPA, holding that while the United States Environmental Protection Agency ("EPA") can regulate power plant emissions, it exceeded its statutory authority in promulgating rules that require a shift in power generation away from coal- and natural gas-fired power plants to renewable power sources.¹ While the decision itself is limited to EPA's reliance on Section 111(d) of the Clean Air Act ("CAA")² for its authority to promulgate the Obama-era Clean Power Plan ("CPP") rule,³the decision may have sweeping longer-term implications for regulatory agencies and the regulated community more generally, and throws into question whether President Biden's commitment to reducing greenhouse gas emissions by 50% below 2005 levels by 2030, achieving a carbon-free grid by 2035 and a carbon-free economy by 2050, is truly attainable.

Key Takeaways

• The decision limits, but does not eliminate, EPA's ability to regulate greenhouse gas emissions.
• The Court relied on the "major questions" doctrine under which regulatory agencies must point to "clear congressional authorization" for the authority it claims.
• The decision will likely make it harder for regulatory agencies to rely on existing statutes to promulgate regulations that address issues not considered when the laws were enacted -e.g climate change.
• Business interests may use the Court's reliance on the "major questions" doctrine as an opportunity to challenge other regulations by arguing that Congress was similarly not clear enough in delegating authority to whatever agency devised the regulation being challenged.

The Backdrop

In 2015, citing its authority under Section 111 of the CAA, EPA promulgated the CPP rule which, among other things, determined that the "best system of emission reduction" ("BSER") for existing coal and natural-gas power plants included "generation shifting" measures requiring an industry-wide shift in electricity production from coal- and natural gas-fired power plants to renewable power sources over a period of time.⁴ Upon promulgation, the CPP rule was challenged in the D.C. Circuit and, before a decision was issued by the Court of Appeals, it was held in abeyance by the Supreme Court, ultimately preventing the CPP rule from taking effect. In 2019, after a change in administration, EPA determined that it had exceeded its statutory authority under Section 111(d) of the CAA when...