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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The most-litigated federal regulation that never actually went into effect hit another roadblock on Thursday when the U.S. Supreme Court voted 6-3 to reject the Environmental Protection Agency's (EPA) rationale for regulating carbon dioxide (CO2) emissions from power plants. The court remanded the issue back to the EPA, which has been working on a new Clean Air Act rule to reduce CO2 emissions from the power sector.
The case, West Virginia v. EPA, capped a years-long effort by coal interests and coal-state Republican attorneys general to limit or abolish the EPA's ability to regulate CO2 emissions from coal-fired power plants. In one form or another, federal litigation around the EPA's ability to regulate CO2 emissions has spanned nearly 20 years and four presidents.
One of the arguments made by the plaintiffs in the case was that the EPA exceeded its authority in proposing a "best system of emissions reduction" to lower carbon dioxide emissions. Previously, the EPA under Section 111(d) of the Clean Air Act, focused on individual power plants, rather than the entire electric system.
Writing for the majority in West Virginia v. EPA, Chief Justice John Roberts' opinion said the case involved the "major questions" doctrine, which requires an agency to show it had "clear congressional authorization" to undertake an action that would have significant economic and political consequences.
"This is a major questions case," the majority wrote. "EPA claimed to discover an unheralded power representing a transformative expansion of its regulatory authority in the vague language of a long-extant, but rarely used, statute designed as a gap filler. That discovery allowed it to adopt a regulatory program that Congress had conspicuously declined to enact itself. Given these circumstances, there is every reason to 'hesitate before concluding that Congress' meant to confer on EPA the authority it claims under Section 111(d)."
Citing prior rulings, the majority opinion said it "doubts that 'Congress ... intended to delegate ... decision[s] of such economic and political significance,' i.e., how much coal-based generation there should be over the coming decades, to any administrative agency."
"The only question before the Court is ... 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. The answer is no."
In fact, the Roberts-authored opinion continued, "Congress did not grant EPA in Section 111(d) of the Clean Air Act the authority to devise emissions caps based on the generation shifting approach the Agency took in the Clean Power Plan."
The ruling did not say the EPA had no authority to regulate CO2 emissions from power plants, as some plaintiffs had hoped and some defendants had feared. In fact, the West Virginia decision did not even address a 2007 Supreme Court ruling in Massachusetts v. EPA, which said that if the agency found carbon dioxide endangered public health, it had the authority and obligation to regulate it. The EPA had issued such an "endangerment" finding.
In the West Virginia case, three justices dissented: Elena Kagan, Stephen Breyer and Sonia Sotomayor. Writing for the minority, Kagan said, "Today, the Court strips the Environmental Protection Agency (EPA) of the power Congress gave it to respond to 'the most pressing environmental challenge of our time.' "
Quoting a 2021 report from the Intergovernmental Panel on Climate Change, Kagan continued: "Climate change's causes and dangers are no longer subject to serious doubt. Modern science is 'unequivocal that human influence' -- in particular, the emission of greenhouse gases like carbon dioxide -- 'has warmed the atmosphere, ocean and land.' "
"Congress charged EPA with addressing those potentially catastrophic harms, including through regulation of fossil-fuel-fired power plants," the dissenters wrote. Section 111 of the Clean Air Act directs EPA to regulate stationary sources of any substance that 'causes, or contributes significantly to, air pollution' and that 'may reasonably be anticipated to endanger public health or welfare.' Carbon dioxide and other greenhouse gases fit that description."
In remanding the issue to the EPA, which has been working on a replacement rule to the Trump-era American Clean Energy rule, the court signaled the litigation is not over. The court ignored pleas from the Biden's EPA to not take the case or delay a ruling until it has finished working on a replacement to the Trump rule.
The litigation has a long and convoluted backstory. In 2014, then-President Barack Obama's EPA first proposed the Clean Power Plan, which was the first federal effort to limit CO2 emissions from power plants. The rule offered utilities a variety of ways to lower CO2 emissions from their plants by about 32% by 2030 compared to a 2005 baseline. For coal-fired power plants, the reduction was estimated at about 870 million tons of CO2. After millions of public comments were received, the regulation was finalized in August 2015. For more on that, see August 5, 2015, article - Obama Unveils Final Clean Power Plan, But Will it Survive Court Challenge?
The Clean Power Plan was never enacted because, in a highly unusual step, in February 2016 the Supreme Court blocked it before it actually went into effect or any court had held a trial on the regulation.
In 2016, after campaigning in coal country on a platform to save coal, Donald Trump was elected president. In 2017, his EPA issued a draft successor plan, the American Clean Energy Act, which held utilities to reduce CO2 emissions by a far lower amount. For more on that, see October 11, 2017, article - EPA Releases Plan to Repeal Clean Power Plan and Save Up to $33 Billion in Compliance Costs. Blue-state attorneys general sued in federal court, and on the last full day of the Trump presidency, the U.S. Court of Appeals for the District of Columbia Circuit voted 2-1 to vacate the rule, arguing it "hinged on a fundamental misconstruction" of a section of the Clean Air Act, and was also "arbitrary and capricious." The court sent the rule back to the Biden administration's EPA for revision. For more on that, see January 21, 2021, article - Federal Appeals Court Vacates Trump's Affordable Clean Energy Plan.
The market has moved faster than the litigants. Carbon emissions have fallen steadily in the years after 2015, when Obama's Clean Power Plan was finalized. Years before 2015, electric utilities, perhaps seeing the writing on the wall, began closing coal-fired generators or switching them to burn natural gas instead. Federal activity on carbon regulation also was backstopped by state public utility commissions, which compelled utilities to file integrated resource plans on their proposed long-term electricity fuel mixes. As renewable energy became more competitive with traditional fossil-fueled generation, regulators pressed utilities to switch to the cleaner, lower-cost generation.
The 2015 Clean Power Plan would have lowered carbon emissions from coal-fired power plants by an estimated 870 million tons by 2030 compared to a 2005 baseline. In fact, CO2 emissions from coal-fired power plants declined by at least 1.2 billion metric tons between 2005 and 2020, according to data from the U.S. Energy Information Administration (EIA).
According to Industrial Info, approximately 115 gigawatts of coal-fired generating capacity has been closed between 2011 and 2021.
Click on the image at right to see a graphic on the actual and planned closure of electric generation capacity by fuel type since 2011.
"Although this is a victory for the coal industry and Republican attorneys general seeking to preserve coal production in their states, the issue of federal regulation of carbon dioxide emissions is not done," commented Brock Ramey, Industrial Info's North American power specialist. "On the one hand, we shall have to see what the Biden EPA comes up with to justify regulating those emissions. On the other hand, the market already has spoken. Emissions of CO2 from coal-fired power plants already are below the level sought by Obama's Clean Power Plan."
"Coal-fired power plants, once closed, are not economical to reopen," he continued. "The public has moved against coal. State regulators have moved against coal. Utilities have moved against coal. There has not been a new coal-fired generator build in this country for years. I can't see a utility or power developer announcing plans to build a new coal-fired generator in the foreseeable future."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The case, West Virginia v. EPA, capped a years-long effort by coal interests and coal-state Republican attorneys general to limit or abolish the EPA's ability to regulate CO2 emissions from coal-fired power plants. In one form or another, federal litigation around the EPA's ability to regulate CO2 emissions has spanned nearly 20 years and four presidents.
One of the arguments made by the plaintiffs in the case was that the EPA exceeded its authority in proposing a "best system of emissions reduction" to lower carbon dioxide emissions. Previously, the EPA under Section 111(d) of the Clean Air Act, focused on individual power plants, rather than the entire electric system.
Writing for the majority in West Virginia v. EPA, Chief Justice John Roberts' opinion said the case involved the "major questions" doctrine, which requires an agency to show it had "clear congressional authorization" to undertake an action that would have significant economic and political consequences.
"This is a major questions case," the majority wrote. "EPA claimed to discover an unheralded power representing a transformative expansion of its regulatory authority in the vague language of a long-extant, but rarely used, statute designed as a gap filler. That discovery allowed it to adopt a regulatory program that Congress had conspicuously declined to enact itself. Given these circumstances, there is every reason to 'hesitate before concluding that Congress' meant to confer on EPA the authority it claims under Section 111(d)."
Citing prior rulings, the majority opinion said it "doubts that 'Congress ... intended to delegate ... decision[s] of such economic and political significance,' i.e., how much coal-based generation there should be over the coming decades, to any administrative agency."
"The only question before the Court is ... 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. The answer is no."
In fact, the Roberts-authored opinion continued, "Congress did not grant EPA in Section 111(d) of the Clean Air Act the authority to devise emissions caps based on the generation shifting approach the Agency took in the Clean Power Plan."
The ruling did not say the EPA had no authority to regulate CO2 emissions from power plants, as some plaintiffs had hoped and some defendants had feared. In fact, the West Virginia decision did not even address a 2007 Supreme Court ruling in Massachusetts v. EPA, which said that if the agency found carbon dioxide endangered public health, it had the authority and obligation to regulate it. The EPA had issued such an "endangerment" finding.
In the West Virginia case, three justices dissented: Elena Kagan, Stephen Breyer and Sonia Sotomayor. Writing for the minority, Kagan said, "Today, the Court strips the Environmental Protection Agency (EPA) of the power Congress gave it to respond to 'the most pressing environmental challenge of our time.' "
Quoting a 2021 report from the Intergovernmental Panel on Climate Change, Kagan continued: "Climate change's causes and dangers are no longer subject to serious doubt. Modern science is 'unequivocal that human influence' -- in particular, the emission of greenhouse gases like carbon dioxide -- 'has warmed the atmosphere, ocean and land.' "
"Congress charged EPA with addressing those potentially catastrophic harms, including through regulation of fossil-fuel-fired power plants," the dissenters wrote. Section 111 of the Clean Air Act directs EPA to regulate stationary sources of any substance that 'causes, or contributes significantly to, air pollution' and that 'may reasonably be anticipated to endanger public health or welfare.' Carbon dioxide and other greenhouse gases fit that description."
In remanding the issue to the EPA, which has been working on a replacement rule to the Trump-era American Clean Energy rule, the court signaled the litigation is not over. The court ignored pleas from the Biden's EPA to not take the case or delay a ruling until it has finished working on a replacement to the Trump rule.
The litigation has a long and convoluted backstory. In 2014, then-President Barack Obama's EPA first proposed the Clean Power Plan, which was the first federal effort to limit CO2 emissions from power plants. The rule offered utilities a variety of ways to lower CO2 emissions from their plants by about 32% by 2030 compared to a 2005 baseline. For coal-fired power plants, the reduction was estimated at about 870 million tons of CO2. After millions of public comments were received, the regulation was finalized in August 2015. For more on that, see August 5, 2015, article - Obama Unveils Final Clean Power Plan, But Will it Survive Court Challenge?
The Clean Power Plan was never enacted because, in a highly unusual step, in February 2016 the Supreme Court blocked it before it actually went into effect or any court had held a trial on the regulation.
In 2016, after campaigning in coal country on a platform to save coal, Donald Trump was elected president. In 2017, his EPA issued a draft successor plan, the American Clean Energy Act, which held utilities to reduce CO2 emissions by a far lower amount. For more on that, see October 11, 2017, article - EPA Releases Plan to Repeal Clean Power Plan and Save Up to $33 Billion in Compliance Costs. Blue-state attorneys general sued in federal court, and on the last full day of the Trump presidency, the U.S. Court of Appeals for the District of Columbia Circuit voted 2-1 to vacate the rule, arguing it "hinged on a fundamental misconstruction" of a section of the Clean Air Act, and was also "arbitrary and capricious." The court sent the rule back to the Biden administration's EPA for revision. For more on that, see January 21, 2021, article - Federal Appeals Court Vacates Trump's Affordable Clean Energy Plan.
The market has moved faster than the litigants. Carbon emissions have fallen steadily in the years after 2015, when Obama's Clean Power Plan was finalized. Years before 2015, electric utilities, perhaps seeing the writing on the wall, began closing coal-fired generators or switching them to burn natural gas instead. Federal activity on carbon regulation also was backstopped by state public utility commissions, which compelled utilities to file integrated resource plans on their proposed long-term electricity fuel mixes. As renewable energy became more competitive with traditional fossil-fueled generation, regulators pressed utilities to switch to the cleaner, lower-cost generation.
The 2015 Clean Power Plan would have lowered carbon emissions from coal-fired power plants by an estimated 870 million tons by 2030 compared to a 2005 baseline. In fact, CO2 emissions from coal-fired power plants declined by at least 1.2 billion metric tons between 2005 and 2020, according to data from the U.S. Energy Information Administration (EIA).
According to Industrial Info, approximately 115 gigawatts of coal-fired generating capacity has been closed between 2011 and 2021.
Click on the image at right to see a graphic on the actual and planned closure of electric generation capacity by fuel type since 2011. "Although this is a victory for the coal industry and Republican attorneys general seeking to preserve coal production in their states, the issue of federal regulation of carbon dioxide emissions is not done," commented Brock Ramey, Industrial Info's North American power specialist. "On the one hand, we shall have to see what the Biden EPA comes up with to justify regulating those emissions. On the other hand, the market already has spoken. Emissions of CO2 from coal-fired power plants already are below the level sought by Obama's Clean Power Plan."
"Coal-fired power plants, once closed, are not economical to reopen," he continued. "The public has moved against coal. State regulators have moved against coal. Utilities have moved against coal. There has not been a new coal-fired generator build in this country for years. I can't see a utility or power developer announcing plans to build a new coal-fired generator in the foreseeable future."
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
