Supreme Court Rejects Broad EPA Authority to Regulate Greenhouse Gases from Power Plants (Updated)

Today the Supreme Court decided West Virginia v. Environmental Protection Agency. Chief Justice Roberts wrote the opinion for the Court, rejecting claims that the case was non-justiciable and concluding that the EPA lacks broad authority to regulate greenhouse gas emissions from power plants under the Clean Air Act. Relying upon the "major questions" doctrine, the Chief Justice explained that Section 111 of the Clean Air Act does not allow the EPA to require generation shifting (i.e. the replacement of coal with renewable energy) to reduce greenhouse gas emissions. For quick background, my prior posts on the WVA case are indexed here.

The Chief Justice's opinion for the Court was joined by the Court's conservatives. Justice Gorsuch has a concurring opinion, joined by Justice Alito. Justice Kagan writes the dissent on behalf of herself and the other liberal justices.

As a threshold matter, the Chief Justice explains that the case is justiciable, even though the EPA is not currently enforcing greenhouse gas limits under Section 111. This is because the question on appeal is whether the petitioners experience an injury that is fairly traceable to the judgment below, and they easily meet that standard (as I noted here). Further, the government's stated intention to adopt new rules does not moot the case. Of note, Justice Kagan concedes the Court had jurisdiction to decide the case, and that it is not moot for purposes of Article III, but she makes clear she wishes the Court had declined to hear the case on prudential grounds.

On the merits, here is how the Chief Justice frames the issue in the case:

The Clean Air Act authorizes the Environmental Protection Agency to regulate power plants by setting a "standard of performance" for their emission of certain pollutants into the air. 84 Stat. 1683, 42 U. S. C. §7411(a)(1). That standard may be different for new and existing plants, but in each case it must reflect the "best system of emission reduction" that the Agency has determined to be "adequately demonstrated" for the particular category. §§7411(a)(1), (b)(1), (d). For existing plants, the States then implement that requirement by issuing rules restricting emissions from sources within their borders.

Since passage of the Act 50 years ago, EPA has exercised this authority by setting performance standards based on measures that would reduce pollution by causing plants to operate more cleanly. In 2015, however, EPA issued a new rule concluding that the "best system of emission reduction" for existing coal-fired power plants included a requirement that such facilities reduce their own production of electricity, or subsidize increased generation by natural gas, wind, or solar sources.

The question before us is whether this broader conception of EPA's authority is within the power granted to it by the Clean Air Act.

As already noted, the Chief Justice explains that the EPA does not have such authority. Whatever authority the EPA has to mandate that utilities adopt the "best system of emission reduction" that "has been adequately demonstrated," it does not extend to what the Obama Administration had proposed in the Clean Power Plan (and the D.C. Circuit had embraced): Basing emission limits on generation shifting.

Of particular importance, Chief Justice Roberts stresses that this conclusion is driven by recognition that in "extraordinary cases"—"cases in which the 'history and the breadth of the authority that [the agency] has asserted,' and the 'economic and political significance' of that assertion"—"call for a different approach" and "provide a 'reason to hesitate before concluding that Congress meant to confer such authority.'" In other words, even if one might conclude that the EPA's preferred interpretation of Section 111 is reasonable, the "major questions" doctrine counsels a narrower construction of the EPA's authority. As he writes:

in certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us "reluctant to read into ambiguous statutory text" the delegation claimed to be lurking there. Utility Air, 573 U. S., at 324. To convince us otherwise, something more than a merely plausible textual basis for the agency action is necessary. The agency instead must point to "clear congressional authorization" for the power it claims.

After pointing out there is nothing particularly new about this approach, the Chief Justice applies this principle to Section 111:

our precedent counsels skepticism toward EPA's claim that Section 111 empowers it to devise carbon emissions caps based on a generation shifting approach. To overcome that skepticism, the Government must—under the major questions doctrine—point to "clear congressional authorization" to regulate in that manner.

All the Government can offer, however, is the Agency's authority to establish emissions caps at a level reflecting "the application of the best system of emission reduction . . . adequately demonstrated." 42 U. S. C. §7411(a)(1). As a matter of "definitional possibilities," FCC v. AT&T Inc., 562 U. S. 397, 407 (2011), generation shifting can be described as a "system"—"an aggregation or assemblage of objects united by some form of regular interaction," Brief for Federal Respondents 31—capable of reducing emissions. But of course almost anything could constitute such a "system"; shorn of all context, the word is an empty vessel. Such a vague statutory grant is not close to the sort of clear authorization required by our precedents.

Importantly, the Chief Justice also goes out of his way to make clear that the Court is not endorsing the constrained interpretation of Section 111 embraced by the Trump Administration and urged by some petitioners:

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 BSER. To be sure, it is pertinent to our analysis that EPA has acted consistent with such a limitation for the first four decades of the statute's existence. But the only interpretive question before us, and the only one we answer, is more narrow: whether the "best system of emission reduction" identified by EPA in the Clean Power Plan was within the authority granted to the Agency in Section 111(d) of the Clean Air Act. For
the reasons given, the answer is no.

The Chief concludes:

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." New York v. United States, 505 U. S. 144, 187 (1992). But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body. The judgment of the Court of Appeals for the District of Columbia Circuit is reversed, and the cases are remanded for further proceedings consistent with this opinion.

This decision is an important one. It expressly embraces and solidifies the "major questions" doctrine (largely consistent with the approach I suggested here) and reaffirms the notion that federal courts should be reluctant to allow administrative agencies to pour new wine from old bottles.

The decision also makes clear that the EPA does not have broad, free-ranging authority to address climate change under the Clean Air Act. (This is also a warning for other federal agencies, including FERC and the SEC.) It makes clear that if the federal government is going to take meaningful action to mitigate the threat of climate change (as it should) that action will have to come from Congress. It also underscores a point I have been making for some time about the risks of trying to address climate change through administrative regulation.

I will have more to say about the majority opinion, the Gorsuch concurrence, the Kagan dissent, and the broader implications for the administrative state in subsequent posts.