Supreme Court case could snarl Biden climate agenda

Source: By Lesley Clark, Niina H. Farah, E&E News • Posted: Sunday, February 27, 2022

The Supreme Court in Washington.

The Supreme Court in Washington. Chip Somodevilla/Getty Images

The Supreme Court will hear arguments this morning in a case that could significantly undermine President Biden’s climate agenda.

Biden has pledged to cut U.S. emissions in half by 2030 — a considerable amount of which would have to come from power plants — but a coalition of red states and coal industry interests has convinced the justices to consider limiting EPA’s authority under the Clean Air Act to regulate carbon emissions from the power sector.

The court’s ruling, which is expected by early summer, has the potential to produce a “sea change” in environmental law, said Jeff Holmstead, who served as chief air official at EPA under former President George W. Bush.

“For many years, agencies and courts have taken a pretty broad view of what these statutes can do as long as they’re promoting the cause of environmental protection,” said Holmstead, now a partner at Bracewell LLP. “The court seems like it’s poised to rein them in a bit here and say, ‘No, on major policy issues, you can only regulate in that way if you have clear authority from Congress.’”

He added: “It could be the most important administrative law case in decades.”

Monday’s arguments in West Virginia v. EPA come as Biden’s grander ambitions to aggressively tackle climate change remain stymied in Congress. Biden on Tuesday will deliver his State of the Union address to lawmakers, with frustrated environmentalists calling on the president to use the occasion to declare a climate emergency.

Arguments also fall on the same day a key report by the United Nations’ Intergovernmental Panel on Climate Change is scheduled to be released. The report will focus on how to adapt to a warming world.

Parties arguing to handcuff EPA contend that the agency does not have sweeping authority to require companies to shift to renewables, as the Obama-era Clean Power Plan would have done. They say they are fighting to prevent “unelected bureaucrats” at EPA from writing such rules.

“This is not about the merits of climate change one way or the other,” West Virginia Attorney General Patrick Morrisey (R), the lead challenger in the Supreme Court case, said at a National Press Club forum last week. He said the case is instead about overreach by the executive branch.

But environmentalists insist EPA has the ability to broadly regulate power plant emissions under the 1970 Clean Air Act, which gave the agency authority to curb pollutants.

“EPA is decidedly inside its lane,” said David Doniger, senior strategic director of the Natural Resources Defense Council’s climate and energy program. “Regulating power plant air pollution has been at the core of EPA’s mandate under the Clean Air Act for 50 years.”

Environmentalists, EPA and others also argue that the West Virginia case isn’t properly before the Supreme Court because the Biden administration has yet to write its own carbon regulation after the U.S. Court of Appeals for the District of Columbia Circuit last January tossed out the Trump-era Affordable Clean Energy rule. Trump’s 2019 rule gutted the 2015 Clean Power Plan, which sought to curb emissions by moving to renewables.

Even in the absence of the Obama rule, however, power producers have already met the regulation’s targets more than a decade early.

“Petitioners are jumping the gun,” said Doniger, who accused EPA critics of seeking to “conjure up horror stories about extreme regulations EPA might issue in the future.”

The ruling in the West Virginia case could provide the first glimpse of how the Supreme Court’s new 6-3 conservative majority will approach questions on the federal government’s role in curbing global climate change.

A sweeping ruling could make it difficult for the Biden administration to achieve its climate goals at a time when congressional action seems unlikely.

“The question is no longer whether the Environmental Protection Agency properly set a standard, but to what extent a president can use executive branch authorities to address a policy issue when partisan gridlock in Congress prevents the legislature from doing so,” said analysts at the research firm ClearView Energy Partners LLC.

Conservative justices on the Supreme Court have already expressed interest in examining the executive branch’s ability to regulate, said Albert Lin, a law professor at the University of California, Davis, and a former trial attorney for the Justice Department’s environment division.

Even a narrow ruling “could certainly limit the options available for the Biden EPA to go forward with regulating greenhouse gas emissions from power plants,” Lin said. “It wouldn’t preclude it, but it would be restricted.”

A broader ruling, however, “could severely restrain not just EPA, but generally every federal regulatory agency,” he said.

Lin noted the Supreme Court has recently shown interest in constraining federal agencies, as it did earlier this year when it blocked the Occupational Safety and Health Administration from imposing a vaccine-or-test mandate.

“Depending on where the court falls, the federal agencies could be quite limited in their ability to issue regulations, unless there is explicit direction” from Congress, Lin said. “It could have broad implications for regulations, not just climate change, but all kinds of problems that the federal government tries to tackle.”

Holmstead, the former EPA air chief, said he doesn’t believe the West Virginia case will have much of a practical effect on the Biden administration, which has yet to issue its own carbon rule.

“It’s likely to confirm what the Biden folks already assumed — that they would not be able to do something like the Clean Power Plan,” Holmstead said. “I think they’ve assumed that that’s off the table, and I think the Supreme Court will likely confirm that fact.”

Holmstead noted however that the Biden administration had hoped to have enacted some of its climate agenda by now, in particular a clean electricity standard to move utilities away from fossil fuels and toward renewable sources.

“Had that been adopted, it would have obviated the need for any EPA rule,” Holmstead said.

Here is a breakdown of key terms to listen for during arguments Monday in this high-stakes case:

Regulatory terms

Section 111(d): EPA drafted both the Obama- and Trump-era carbon rules under this part of the Clean Air Act.

The provision regulates existing sources that are not already covered by other sections of the Clean Air Act controlling toxic air pollutants like mercury and criteria air pollutants covered under national ambient air quality standards.

EPA sets guidelines for state compliance, and states then develop their own standards. If a state fails to come up with a plan by EPA’s deadline, or if it doesn’t pass muster, then a federal plan will be put in place.

Red states, coal companies and other EPA critics say this is an ancillary provision that did not — as West Virginia Sen. Shelley Moore Capito wrotein a “friend of the court” brief signed by 91 Republican lawmakers — give the agency authority to compel a substantial and costly shift” in how the nation produces power.

But the agency and its supporters counter that Congress intended for this section of the Clean Air Act to pressure the power sector to adopt new and more efficient technologies to slash emissions — even if it means higher costs for industry.

Best system of emission reduction (BSER): EPA’s definition of what counts as the “best system of emission reduction” is at the heart of the fight before the Supreme Court.

While the Clean Power Plan adopted broader, systemwide approaches, such as emissions trading or shifts toward renewable energy, red states and coal companies say BSER only allows for technological fixes at the facility level.

EPA finalized a narrow interpretation of BSER in Trump’s Affordable Clean Energy rule, producing a regulation that was predicted to achieve almost no emissions reductions. Conservative interests defended the result, arguing that that is the limitation set by Congress — no matter the seriousness of the risks posed by the pollution.

Inside the fence line: This term is used to describe the type of emissions reductions that can be made at individual plants to improve their efficiency.

Under the Trump-era rule, states were encouraged to upgrade equipment and implement best operating and maintenance practices. That included using technologies like air heater and duct leakage controls and blade path upgrades.

But the Trump rule didn’t push utilities to adopt more renewable energy across the entire electric grid.

EPA says it has authority to look beyond the fence line. Coal companies and red states say that EPA is seeking to increasingly force a shift toward generating power from renewable sources when utilities might otherwise rely on coal or natural gas.

Generation shifting: The interconnected nature of the power grid calls for a regulatory approach that addresses the system as a whole, EPA and the agency’s supporters argue.

This “outside-the-fence-line” approach takes advantage of how the grid already works, with operators continually balancing supply from a range of energy sources like wind, solar, natural gas or coal against demand for power. Shifting energy production to renewables was a key part of the Clean Power Plan.

Higher prices or regulatory pressures push operators to pick the cheapest, lowest emission option that can meet energy demand.

Generation shifting doesn’t just happen with climate rules. It’s the way grid operators respond to other types of regulatory pressures because it is the most effective and least costly method for them to reduce emissions, power sector experts wrote in a brief to the Supreme Court.

Endangerment finding: In 2009, EPA made a scientific finding that the accumulation of human-caused greenhouse gas emissions in the atmosphere significantly contributes to the endangerment of public health and welfare. This finding requires EPA to regulate greenhouse gas emissions under the Clean Air Act.

The agency argues it must take action to limit emissions from the power sector, which is the largest stationary source of greenhouse gases in the United States, second only to the transportation sector.

Legal terms

Major questions doctrine: This legal theory holds that courts do not have to defer to a federal agency’s interpretation of the law when it comes to issues that are of “vast economic or political significance.” 

Republican-led states have raised the doctrine to argue in the West Virginia case that Congress did not give EPA specific authority under the Clean Air Act to impose requirements beyond fixes to individual power plants.

America’s Power, a trade association representing companies that produce electricity from coal, wrote in an amicus brief that it was “difficult to imagine a better illustration of the need for the major questions doctrine.”

But the Environmental Defense Fund and other groups wrote in a brief that the court has never — as it has been asked to do in the West Virginia case — applied the doctrine to an agency rule that is defunct, nor to a “hypothetical future rule whose impacts are not yet knowable.”

Nondelegation doctrine: In addition to the major questions doctrine, coal and red state challengers have raised the related theory that Congress cannot pass off its legislative authority to executive agencies. The Supreme Court’s conservative wing has expressed interest in reviving the long-dormant legal doctrine.

But the Supreme Court’s application of both the major questions and nondelegation doctrines would not enhance government accountability as proponents claim, said Harvard Law School professor Nicholas Stephanopoulos and other legal scholars in a joint brief.

“There’s no reason to think these voters would become better informed if 16 more items were placed on Congress’s agenda,” the scholars said. “These voters would therefore lack the necessary political knowledge to hold their representatives accountable for the extra issues on Congress’s plate.”

Chevron deference: This legal doctrine gives federal agencies leeway to interpret ambiguous laws — such as the Clean Air Act — when Congress has not directly addressed the issue in question.

The doctrine was established in the 1984 Supreme Court case Chevron v. Natural Resources Defense Council.

Chevron has been integral to environmental law, but it has recently been targeted by some of the Supreme Court’s conservative justices, who question whether the doctrine gives too much autonomy to federal agencies like EPA.

Supreme Court precedent

American Electric Power Co. v. ConnecticutIn this 2011 Supreme Court case, the justices ruled unanimously that EPA’s statutory authority over greenhouse gas releases prevented states and private parties from suing utilities to reduce emissions.

The Edison Electric Institute, a trade group representing the largest U.S. utilities, cited the case in its amicus briefsiding with EPA in the West Virginia case. The group argued that AEP shows that the Supreme Court prefers a nationwide regulatory structure over what it warned would be chaos caused by “myriad federal tort claims” against utilities and other greenhouse gas emitters.

Massachusetts v. EPAThis 5-4 Supreme Court decision in 2007 established that EPA can regulate greenhouse gas emissions under the Clean Air Act and is the keystone undergirding the agency’s climate regulations.  

Massachusetts and other states had sued EPA after the George W. Bush administration found that the Clean Air Act did not require it to control greenhouse gas from new vehicles.

EPA and its supporters say the ruling requires the agency to take substantive action to address emissions from the power sector.

Justice Stephen Breyer, who announced last month that he would retire at the end of this term, is the last remaining justice on the bench who voted with the majority in the case. But few observers predict the high court will attempt to overturn Massachusetts v. EPA in its ruling in the West Virginiacase.

Arguments in West Virginia v. EPA are scheduled to begin at 10 a.m. Monday.

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