West Virginia v. Environmental Protection Agency: Legal Analysis (Part 1)
In one of the most significant decisions of 2022, the U.S. Supreme Court ruling in West Virginia v. Environmental Protection Agency has widespread implications for national action on climate change. Two ASP Fellows offer their analysis on the findings and implications, and what it means for climate action in the U.S. going forward.
By ASP Senior Adjunct Fellow, Lindsay Iversen
In West Virginia v. EPA, the penultimate decision of its monumental 2021 term, the U.S. Supreme Court effectively announced two findings – one on environmental law, and one on administrative law. Though the 6-3 decision was not, ultimately, as sweeping as some had feared, it will nonetheless have lasting ramifications for executive branch regulations in this country, particularly but not exclusively in the environmental arena. It is worth examining both components of the decision in turn.
First, in a relatively narrow analysis of President Barack Obama’s 2015 Clean Power Plan (CPP), the Court decided that the Environmental Protection Agency (EPA) had exceeded the legal authority granted to it under the Clean Air Act. The CPP was, in brief, a system of regulations designed to reduce carbon dioxide (CO2) emissions from coal- and gas-fired electric power plants. Unlike, say, particulate matter, a regulated pollutant that has both local and systemic effects on human health and the environment, CO2 emissions only cause damages at the climatic level. The danger doesn’t come from one plant so much as it comes from every plant, together.
So, the Clean Power Plan was designed to operate on a system-wide level. By 2030, it aimed to reduce nationwide carbon dioxide emissions from existing coal and gas power plants by 32%, relative to 2005 levels. The EPA evaluated three core avenues for reducing power plant emissions – applying technology to improve power plant efficiency; switching fuels from coal to natural gas; and switching generation sources altogether, from fossil fuels to renewables. EPA calculated the emissions reductions targets it thought could be achieved using those three avenues, and then put states in charge of deciding how they would meet those targets.
The idea was to give states policy space to choose emissions reductions plans that would work for their circumstances while still achieving the overall national goal. States were offered a wide range of options for hitting their targets, from regulating power plants directly to reducing energy demand across a range of sectors within their states or participating in carbon trading markets among states. This flexibility would, the argument went, enable states to choose the compliance methods that would be both cheapest and politically easiest to achieve given their particular energy mixes.
The Supreme Court, however, decided that the section of the Clean Air Act used to justify the CPP did not give EPA the authority to make environmental regulations for the energy system as a whole. Instead, it said that EPA must, under that section, restrict itself to regulating emissions on a plant-by-plant basis. Though it did not rule out the possibility that EPA might have the ability to make system-wide rules under some other authority (or that another agency might be able to step in), the ruling left little doubt that the Court would look critically on future EPA attempts to regulate emissions on a system-wide, rather than individual plant, level.
In a twist of irony, this decision is likely to impose the heaviest costs on the very states that brought this case to court. Under the Court’s reasoning, EPA will be on the safest legal ground if it regulates emissions “inside the fenceline” – on individual smokestacks at specific facilities. Imposing CO2 emissions standards on each facility that are consistent with the CPP’s national emissions reductions goals would, according to experts, be far more expensive than allowing states to work together on a system-wide approach.
Carbon capture and storage – or CCS, a still-nascent technology that pulls carbon dioxide from power plants and buries it underground – is one of the potential regulatory solutions to this problem. While the costs of CCS will vary depending on the age, type, and surrounding geology of a plant, it would in all cases be substantial. S&P Global estimated earlier this year that the cost of a new coal-fired plant with CCS would be about $4,600 per kilowatt (kWh). Retrofitting an existing plant with CCS – the scenario suggested by West Virginia – would cost as much as 50% more. Building a new solar plant, by way of comparison, costs under $1,800 per kWh.
Seventeen of the twenty biggest coal-consuming state electricity sectors were co-litigants in West Virginia. If, as the Supreme Court strongly implied, the EPA is limited to regulating on a site-specific basis, the cost of compliance for those states could be significant.
The second component of the Court’s decision addressed an administrative law question – specifically, the degree to which regulatory agencies could apply their own interpretation to vague or dated legislation. The Supreme Court had already ruled, in Chevron v. NRDC, that agencies could make “reasonable” interpretations of laws, as long as they did not contradict any explicit statutory guidance. In West Virginia, however, the Court imposed a new standard: the major questions doctrine. Under this doctrine, which derives not from statutory authority but from judicial interpretation, judges have granted unto themselves the power to consider whether the effects of a regulation would dramatically expand a regulator’s power over questions of economic or political significance.
In West Virginia, the Court decided that because achieving the Clean Power Plan’s emissions reductions goals would require a structural realignment of the U.S. energy system away from coal, it qualified for closer inspection under the major questions doctrine. This meant that the EPA had to demonstrate clear, specific Congressional authorization for what it hoped to do under the CPP – authorization that, the majority decided, could not be found where EPA claimed it.
Far from being an arcane adjustment to administrative legal practice, the major questions doctrine opens a broad new avenue for legal challenges to proposed regulations, giving judges wide discretion to intervene. Though Justice Neil Gorsuch submitted a concurrence to the majority decision purporting to reinforce the concept, the decision for judges applying the doctrine is ultimately a subjective one. How much power, in their view, is too much?
The introduction of this doctrine portends an even slower, more contentious path for future executive agency actions, as litigants offer new cases and new legal rationales that test the boundaries of its interpretation. This is especially true in an era of Congressional paralysis, when new or even amended legislation is only rarely forthcoming and regulatory agencies are trying to solve modern problems with dated laws. Strict textual authority will become increasingly difficult to find as the complexity of the society’s challenges – on climate and many other issues – outruns the vision of yesterday’s policymakers.
But it is on climate change where the risks are perhaps highest. This case was decided seven years after it was filed. In the meantime, the regulation it overturned was rescinded. So was the regulation introduced to replace it. The presidency changed hands twice. Atmospheric CO2 concentrations rose from 401 parts per million (ppm) to more than 416 ppm. Though market forces drove down power plant emissions, that was more by luck than design. If the United States is going to successfully address climate change, it will need to work faster than this.
Climate Security in Focus is a blog series dedicated to exploring key elements of climate security that impact American interests both at home and abroad. The series aims to examine specific aspects of climate security issues in order to better understand climate policy challenges, facilitate conversation, and generate ideas.