Supreme Court Rules on EPA’s Extent of Authority

By a 6-3 vote, the Supreme Court found that the Clean Air Act does not give the Environmental Protection Agency broad authority to regulate greenhouse gas emissions from power plants that contribute to global warming.

President Obama directed the EPA to create national CO2 emissions standards for new and existing power plants with the goal of reducing CO2 emissions. In 2015, Under the Obama Administration the Environmental Protection Agency (EPA) promulgated the Clean Power Plan rule, which addressed carbon dioxide emissions from existing coal- and natural-gas-fired power plants citing Section 111 of the Clean Air Act for authority. The Section which is known as the New Source Performance Standards program, also authorizes regulation of certain pollutants from existing sources under Section 111(d). This section of the law had rarely been used.

Under Section 111, although the States set the actual enforceable rules governing existing as power plants, EPA determines the emissions limit with which they will have to comply. The Agency derives that limit by determining the “best system of emission reduction . . . that has been adequately demonstrated,” for the kind of existing source at issue.

This Clean Power Plan was the Obama administration’s strategy to reduce greenhouse gas emissions from power plants and set the U.S. on course to meet its Paris Agreement commitment that the President had made. The Clean Power Plan never went into effect. It was challenged in court, and a staywas granted by the Supreme Court. Ultimately, it was repealed and replaced by what was called the Affordable Clean Energy rule under the Trump administration.

In 2019, the U.S. EPA issued the Affordable Clean Energy rule (ACE) to replace the Clean Power Plan intended to support energy diversity. The ACE rule establishes emission guidelines for states to use when developing plans to limit carbon dioxide emissions at coal-fired electric generation plants.

In January 2021, the Washington, DC, district court ruled that, indeed, the Clean Power Plan did fall within the EPA’s authority. This cleared the way for the Biden Administration to use a similar tool to regulate carbon dioxide emission from power plants to meet his higher level of CO2 equivalent emissions reduction when he rejoined the Paris Agreement. The Biden administration has pledged to decarbonize the power sector by 2035.

This Supreme Court case West Virginia v. EPA is a result of challenges to that district court decision. A handful of states, as well as several coal companies, argued that the EPA did not have the authority to regulate emissions the way it tried to do in the Clean Power Plan. The Supreme Court agreed.

“Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity maybe a sensible ‘solution to the crisis of the day,’” the decision reads. “But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme.”

President Biden said he has directed his legal team to work with the Justice Department and affected agencies to review the ruling and find ways under federal law to protect against pollution including emissions that cause climate change. The ruling raises new legal questions about any big decisions made by federal agencies without explicit congressional authorization. The court's conservative majority has “signaled skepticism” toward expansive federal regulatory authority.

EPA has several other pathways for regulating coal plants under the Clean Air Act. The Cross-State Air Pollution Rule (CSAPR) and the Mercury and Air Toxics Standards (MATS) are two of the more recent regulations to address power plants. MATS regulates mercury, arsenic, acid gas, nickel, selenium, and cyanide and slashes emissions of those pollutants from coal fired electrical generation plants. The CSPR slashes smokestack emissions of SO2 and NOX that can travel into neighboring states. Those pollutants react in the atmosphere to form fine particles and ground-level ozone and are transported long distances, making it difficult for other states to achieve their particle requirements under the National Ambient Air Quality Standards (NAAQS) which have also recently been tightened.

There has historically been no federal rule to control the amount of CO2 power plants release. Many states now have some sort of limitation on CO2; and EPA data shows that CO2 emissions from power plants fell 38% from 2005 to 2020. Driving the decline in CO2 emission was a shift away from the burning of coal, driven by cheaper prices for natural gas, wind, and solar power, as well as by the MATS and CSAPR rules that forced coal power plants to pay for more pollution controls.

I should admit that I remain one of the many who prefer a carbon tax to federal command and control regulations. Taxing the carbon content of products might be a more direct method to control CO2 generation and more effective method of reducing CO2 production without regulators taking control of a significant segment of the economy and could be applied to imports. In the meantime Virginia has the

Virginia Clean Economy Act, which establishes energy efficiency standards and provides a pathway for new investments in solar, onshore wind, offshore wind, and energy storage.