In a 6-3 decision, the U.S. Supreme Court held that Section 111(d) of the Clean Air Act did not give the U.S. Environmental Protection Agency (EPA) the authority to use “generation-shifting” measures to set carbon dioxide emission limits for power plants. In doing so, the Court reversed the D.C. Circuit’s January 2021 decision that found that the Trump administration’s repeal and replacement of the Obama administration’s Clean Power Plan was based on a too-narrow construal of EPA’s authority under Section 111(d). The Clean Power Plan used generation-shifting measures as two of the three “building blocks” for the “best system of emission reduction” for power plants under Section 111(d). One Clean Power Plan building block shifted electricity production from coal-fired to natural gas-fired units, and another building block shifted generation to low- or zero-carbon sources such as wind and solar. 

In the majority opinion by Chief Justice Roberts, the Court first determined that state petitioners, led by West Virginia, had standing because the D.C. Circuit’s judgment “purports to bring the Clean Power Plan back into legal effect,” which would require the states to “more stringently regulate power plant emissions within their borders.” The Court said the government’s arguments on standing—i.e., that EPA did not intend to enforce the Clean Power Plan but instead to develop a new Section 111(d) rule and that the D.C. Circuit had stayed the portion of its judgment that vacated the Clean Power Plan’s repeal—implicated mootness, not standing. The Court further concluded that EPA’s “voluntary cessation” of enforcement of the Clean Power Plan did not meet the heavy burden of establishing that the case was moot. 

On the merits, the Court determined that this was “a major questions case” under Court precedents dictating that “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.” In such cases, the Court wrote, there must be “something more than a merely plausible textual basis for the agency action,” and so an agency “must point to ‘clear congressional authorization’ for the power it claims.” The Court identified factors that made this case a major questions case: EPA argued that Section 111(d) “empowers it to substantially restructure the American energy market” based on “an unheralded power” discovered “in a long-extant statute”; this asserted power was found in the “vague” language of an “ancillary” provision of the statute (i.e., Section 111(d), which the Court also referred to as a “previously little-used backwater”); and EPA’s interpretation “allowed it to adopt a regulatory program that Congress had conspicuously and repeatedly declined to enact itself.” The Court said that prior to the Clean Power Plan, EPA had always set Section 111 emission limits based on measures that would cause the regulated source to operate more cleanly, and that the Clean Power Plan’s generation-shifting plan therefore was “unprecedented” and “effected a ‘fundamental revision’” of the Clean Air Act’s regulatory scheme. Having found that its precedent “counsels skepticism toward EPA’s claim that Section 111 empowers it to devise carbon emissions caps based on a generation shifting approach,” the Court then determined that Section 111(d)’s “vague statutory grant” of authority to EPA to establish emission limits at a level reflecting “the application of the best system of emission reduction … adequately demonstrated” was “not close to the sort of clear authorization required by our precedents.” The Court also found that examples of other Clean Air Act provisions that describe cap-and-trade or sector-wide mechanisms for reducing pollution as systems did not support the argument that such a mechanism would be a “system of emission reduction” under Section 111(d). The Court noted, however, that it was not addressing whether “system of emission reduction” must exclusively refer “to measures that improve the pollution performance of individual sources” (sometimes referred to as inside-the-fenceline measures). 

Justice Gorsuch wrote a concurring opinion, joined by Justice Alito, that offered “additional observations” on the major questions doctrine and when it applies. This concurrence spoke favorably of the nondelegation doctrine. Justice Kagan wrote the dissent, joined by Justices Breyer and Sotomayor. The dissent described the majority’s decision as “really an advisory opinion on the proper scope of the new [Section 111(d)] rule EPA is considering” since no party was currently subject to the Clean Power Plan’s terms. The dissent stated that “[t]he limits the majority now puts on EPA’s authority fly in the face of the statute Congress wrote,” which in the dissent’s view “broadly authorized” EPA to set the “best system of emission reduction.” The dissent said that a “key reason” for Congress to make broad delegations like the one in Section 111(d) is so that “expert” agencies “can respond, appropriately and commensurately, to new and big problems.” 

Challenge to final rule repealing the Clean Power Plan and replacing it with the Affordable Clean Energy rule.

West Virginia v. EPA

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Supreme Court Said Obama Administration Regulation of Power Plant Carbon Emissions Exceeded EPA’s Authority

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United States of America

District of Columbia

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Supreme Court Said Obama Administration Regulation of Power Plant Carbon Emissions Exceeded EPA’s Authority

Target

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Finance