How the high court ruling changes EPA and clean electricity

By Niina H. Farah | 07/01/2022 07:20 AM EDT

Supreme Court, Power Plant, Wind Turbine

Francis Chung/E&E News (Supreme Court and wind turbine); George Frey/Getty Images (power plant)

Yesterday’s Supreme Court ruling on EPA’s power to regulate power plant greenhouse gas emissions hamstrings the Biden administration’s efforts to pursue ambitious climate rules that could have accelerated the power sector’s ongoing transition to renewable energy.

The landmark 6-3 opinion in West Virginia v. EPA by Chief Justice John Roberts affirmed that while EPA has power under the Clean Air Act to address climate warming pollutants, the law does not give the agency the authority to craft a regulation based on power plants shifting their energy sources from fossil fuels to renewables as it did in the Obama administration’s Clean Power Plan (Greenwire, June 30).

The ruling, which confirmed EPA’s authority to regulate greenhouse gas emissions from power plants but rejected the approach of 2015 rule that never went into effect, may have little practical impact on the power sector in the short-term, legal experts and clean energy advocates said. However, the decision is still not good news for those looking for EPA to push stricter controls on heat-trapping emissions from the power sector as quickly as possible, they said.

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The utility sector will still continue shifting to more renewable energy as it has done in the absence of EPA regulation of power plant greenhouse gas emissions up to this point following yesterday’s ruling, said Gregory Wetstone, president and CEO of the American Council on Renewable Energy (ACORE).

The court affirmed that there were problems with the Clean Power Plan, but that rule is long gone, said Wetstone. The Clean Power Plan has been “far surpassed by the marketplace,” he said.

EPA’s targets under the 2015 rule to slash power plant emissions by 32 percent from 2005 levels by 2030 had already been achieved by the time the Trump administration finalized its replacement rule in 2019.

“What this decision does do is make it harder for EPA to augment the really economic-based transition that is ongoing at a rapid pace, with the regulatory program that we know we will ultimately need in the long-term to meet our climate objectives,” Wetstone said.

Roberts, writing for the court’s majority, said EPA’s 2015 rule had violated the major questions doctrine, a legal theory that federal agencies must have clear direction from Congress to craft regulations with major economic or political significance. EPA did not have that discretion to establish a “best system of emission reduction” under the Clean Air Act that was based on generation shifting from fossil fuel based energy to renewables, the court said.

The court’s other conservative justices joined in the majority opinion, with Justice Neil Gorsuch also writing a concurring opinion joined by Justice Clarence Thomas.

Justice Elena Kagan blasted the negative climate impacts of the ruling in a dissent with the court’s other liberal justices (Climatewire, July 1).

Michael Burger, the executive director of Columbia University’s Sabin Center for Climate Change Law, summed up the decision this way: “Congress didn’t clearly tell EPA that it could eliminate coal from the fuel mix.”

Regulatory options

Some legal experts said the ruling would likely mean that EPA is limited to crafting regulatory controls that could be applied to individual power plants, although Roberts’ opinion did not say that these “inside-the-fenceline” approaches were the only options available to EPA.

“We have no occasion to decide whether the statutory phrase ‘system of emission reduction’ refers exclusively to measures that improve the pollution performance of individual sources, such that all other actions are ineligible to qualify as the [best system of emission reduction],” Roberts said.

Theoretically, that could leave options like emissions trading — a more systemic approach to regulation — on the table for federal regulators as compliance measures.

But using that approach could cause a new set of legal problems for EPA, said Kevin Minoli, a former senior EPA official who is now a partner at the law firm Alston & Bird.

“If Congress didn’t give clear authority for what [EPA] did in the Clean Power Plan, it’s unlikely to permit half of what it did in the Clean Power Plan,” Minoli said.

The majority’s decision not to bar broader regulatory approaches may be a nod to states who had argued in favor of generation shifting as a more affordable way to comply with regulatory standards, said Minoli.

“It may be about preserving some flexibility where they want to do some generation shifting,” he said. “But it can’t be mandated.”

The way the court used the doctrine in this case was as a blunt tool to halt what it considered to be excessive or novel agency action, said Burger.

That approach is consistent with how the court has used the doctrine in recent cases, but Kagan also pointed out a change in how the court was using the legal theory in West Virginia, he said.

The use of major questions doctrine in this case also “divorces the Court’s analysis from the text of the statute. And it does not provide any clear indication as to when or why an agency action will be big enough to trigger it,” he said in an email. “The Justices are eyeballing it. There may be some sense and reason to the conclusion, but there’s no real rigor to it.”

But Burger also noted that the court did not do what some observers had feared, which is set a standard that Congress has to provide a level of specificity that lawmakers typically don’t do.

“But it does not seem like they’ve necessarily done that here,” he said.

Minoli and other experts pointed out that EPA has anticipated the Supreme Court limiting its power and is working on other strategies, including tightening controls on other types of pollutants that will help to clean up the power sector and could force the closures of the nation’s dirtiest plants.

The agency has pushed back when it will release its proposed new rule for power plants until next March.

EPA Administrator Michael Regan said in a statement following the ruling that the agency would continue to work to protect public health protections.

“While I am deeply disappointed by the Supreme Court’s decision, we are committed to using the full scope of EPA’s authorities to protect communities and reduce the pollution that is driving climate change,” Regan said.

And while EPA is an important regulator to prompt a shift to clean energy, it isn’t the only agency helping slash the 25 percent of U.S. emissions that come from generating electricity.

Agencies like FERC are working on approvals of a cleaner and more reliable electrical grid, the Securities and Exchange Commission is taking action on climate disclosure, and the Department of Energy is working to foster offshore wind development, said ACORE’s Wetstone.

“There are a variety of things that are happening now that go well beyond the EPA that really are reflective of the Biden administration’s whole-of-government approach,” he said.

Biden and Congress

While yesterday’s decision restricts the tools that the Biden administration can use to cut greenhouse gas emissions, its effects on the administration’s efforts to curtail emissions overall remain less clear.

Congressional action was always going to be needed to cut greenhouse gas in half by 2030, a target supported by the Biden administration to meet the goals of the Paris climate agreement and to stave off the most devastating effects of climate change, said Jesse Jenkins, an assistant professor of energy systems engineering at Princeton University.

“I think the 50 percent emissions reduction goal is really only within reach if Congress successfully passes some kind of clean energy package as a last-minute budget deal,” Jenkins said. “Since the court initially stayed the Clean Power Plan long ago, and given its modest emissions reduction goals, it was a pretty implausible outcome that the EPA would drive emissions reductions at that level with regulation alone.”

In some ways, the ruling helps provide needed clarity as to how the EPA can address greenhouse gas emissions from power plants going forward, assuming the Supreme Court makeup remains the same, Jenkins added. Still, the “most concerning” aspect of the decision is its invocation of the “major questions” doctrine, as it now becomes unclear how and when lower courts could invoke the doctrine to strike down other rules from various agencies, he said.

“A broad concern is that this will introduce uncertainty to the lower courts. Some may feel like they now have a tool to strike down regulatory decisions they disagree with,” Jenkins said.

Long legal fight

The court ruling is a victory years in the making for West Virginia’s Republican Attorney General Patrick Morrisey, who had also helped lead opposition to the Obama administration’s Clean Power Plan, which broadly interpreted the Clean Air Act to permit state compliance through emissions reductions from emissions trading and by shifting to renewable energy sources (Climatewire, Jan. 18).

Morrisey, along with North Dakota Attorney General Drew Wrigley (R), Westmoreland Mining Holdings LLC and North American Coal Corp. sought to prevent the Biden administration from taking a similar approach to the Obama-era climate rule.

Morrisey yesterday emphasized the court’s decision was about the separation of powers, not about preventing action on climate change.

“We intend to use the strong win the Court gave us in today’s decision to keep fighting for our State, local communities and our jobs,” Morrisey said in a statement. “We are optimistic that the decision will save many West Virginia jobs.”

The red states and coal companies had argued before the justices in February to reverse a ruling by the U.S. Court of Appeals for the District of Columbia that gave the Biden administration a clean slate to craft new emissions rules for existing power plants.

However, large investor-owned utilities, which had been critical of the Clean Power Plan, this time joined with EPA to defend its power to broadly regulate emissions as the cost of renewable energy from wind and solar dropped.

In its ruling yesterday, the Supreme Court reversed the 2-1 ruling by the D.C. Circuit on the eve of President Joe Biden’s inauguration, capping years of litigation over what power EPA has to limit emissions.

Morrisey, along with other Republican-led states and coal companies, had at first succeeded in convincing the Supreme Court in 2016 to take the unusual step and block the Clean Power Plan from ever going into effect while they challenged the rule in the D.C. Circuit.

With the 2015 rule still blocked by the Supreme Court, the agency under former President Donald Trump moved to repeal that rule that took a system-wide approach to regulation. EPA replaced the Clean Power Plan with the Affordable Clean Energy rule, which only allowed emissions controls to be applied at the power plant.

The Trump-era EPA had argued that its “inside-the-fenceline” approach that did not put any set limits on emissions fell within the limits of the agency’s power under the Clean Air Act. But the D.C. Circuit struck down EPA’s repeal and replacement of the Clean Power Plan.

Going forward, the Supreme Court did not go so far as to mandate the Trump-era approach, but the ruling still drew praise from critics of EPA’s regulatory reach.

Utah Solicitor General Melissa Holyoak applauded the ruling for stopping “the EPA from unlawfully imposing measures that cost hundreds of billions of dollars and impact millions of Americans.” Holyoak’s state relies on coal for roughly 60 percent of its electricity mix and was one of 27 states to challenge the EPA’s authority.

Texas Attorney General Ken Paxton commended the ruling as a “great day for American energy production,” saying in a statement it “protected not only the Rule of Law and the constitutional balance between the federal government and the states and between the branches of government, but … Americans’ pocketbooks as well.”

The National Rural Electric Cooperative Association CEO Jim Matheson also praised the decision for resetting EPA’s regulatory approach.

“As our nation depends on electricity to power more of the economy, policymakers must recognize the need for time, technology development and the importance of always available energy sources to maintain reliability and affordability,” Matheson said in a statement.

“That’s particularly true in light of recent warnings that dozens of states may struggle with rolling blackouts this summer due to policies that promote the disorderly retirement of existing generation resources,” he said.

Others were critical of the new limits on EPA’s power.

The Supreme Court decision is a “step backward,” said John Begala, vice president of federal and state policy at the Business Network for Offshore Wind.

“The trajectory is clear – states, utilities, and consumers are demanding more renewable energy to create jobs and combat climate change,” he said in a statement.

“Congress should work to accelerate the development of offshore wind, and all renewable energy, to create well-paying jobs and keep the nation on a path to a cleaner energy future,” he continued.

Will Toor, executive director of the Colorado Energy Office, said in an interview that the ruling shows that “action at the state level is more critical than ever.”

Under a 2019 climate change law, the state set a goal of reducing greenhouse gas emissions from the power sector by 80 percent of 2005 levels by 2030. Several utilities have filed plans approved by state regulators that would meet or exceed that goal by closing coal plants; Xcel Energy, the state’s largest utility, anticipates reducing emissions 80 percent by 2030 and closing the state’s last coal-fired power plant by the beginning of 2031.

The decision “certainly lends urgency to the work of Colorado and other states to lean in on the clean energy transition,” Toor said. “What we’ve seen here in Colorado is that states can act to reduce emissions from the electricity sector in a way that’s good for ratepayers and good for our economy. This is something every state could and should be acting on.”

Reporters Miranda Willson and Jason Plautz contributed. 

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