Supreme Court Hears Case on EPA GHGs Regulation

Yves here. This post reviews the main arguments in an important pending case on the authority of the EPA. It even includes issues of standing.

By Lexi Smith, a third-year student at Yale Law School. She studied environmental science and public policy as an undergraduate at Harvard, and she worked as an advisor to the Mayor of Boston on climate policy before enrolling in law school. Originally published at Yale Climate Connections
Oral arguments held February 28 gave attorneys on both sides of West Virginia v. EPA, which concerns the EPA’s authority to regulate greenhouse gasses, the chance to present their case before the Justices of the Supreme Court. (For more background on the case, see previous coverage.)

The outcome in terms of a final Court ruling remains uncertain.

On the petitioners’ side, Lindsey See, Solicitor General of West Virginia, argued for her state, and Yaakov Roth, a partner at the law firm Jones Day, argued for the North American Coal Corporation. On the Biden administration’s side, Solicitor General of the United States Elizabeth Prelogar argued for the Environmental Protection Agency, and Covington & Burling partner Beth Brinkmann argued for a consortium of utility companies that support EPA’s authority to regulate greenhouse gasses (GHGs).

The Justices asked wide-ranging questions, with particular emphasis on 1) the text of the Clean Air Act, which EPA argues gives it authority to regulate GHGs; 2) whether Congress delegated authority to EPA to create a rule like the Obama administration’s Clean Power Plan; and 3) standing (the requirements of injury, harm, and redressability that allow a plaintiff to bring a lawsuit).

But there was no clear sign of how the Court will ultimately rule. Justices Thomas and Barrett, who might be expected to side with the petitioners given their conservative leanings, asked tough questions of West Virginia and the North American Coal Corporation’s lawyers. And Justice Breyer, who might be expected to have the opposite sympathies, asked some difficult questions of Solicitor General Prelogar for EPA. The oral arguments were therefore more helpful for determining on which issues the Justices are likely to focus, rather than on how they will ultimately decide on those issues.

What Is Core Dispute About Clean Air Act Text?

Much of the oral argument focused on the text of the Clean Air Act, specifically Section 111. Section 111 gives EPA authority to set a “standard of performance” for air pollutants that “reflects the degree of emission limitation achievable through the application of the best system of emission reduction” that EPA decides has been “adequately demonstrated.” Section 111 was used by the Obama administration to create its Clean Power Plan rule, which set carbon emissions performance standards for power plants and gave states flexibility to choose how to comply.

Part of that flexibility was to allow emissions trading across plants (or even across states). For instance, a plant with emissions lower than the standard’s limit could sell emission credits to plants with higher emissions, which helps reduce emissions overall in a more cost-effective way than regulating each plant individually.

One of the core debates in the oral argument involved whether Section 111 of the Clean Air Act authorizes these types of trading schemes, or instead allows only regulations “inside the fenceline” of each individual power plant. For instance, if only “inside the fenceline” regulations were allowed, EPA could require all coal power plants to install scrubbers that reduce emissions at the source, but could not implement broader regulations like emissions trading that operate at a level beyond individual power plants.

EPA and its supporters argued that the “best system of emission reduction” language (emphasis added) in the Act means EPA can create a system like emissions trading that sets industry-wide limits rather than limits for each plant. West Virginia and the North American Coal Corporation, on the other hand, argued that “system” should be understood in the larger context of Section 111, which references EPA’s authority to create a “standard of performance for any existing source.” They emphasized that “any existing source” suggests that EPA regulations can regulate only on the individual source level (that is, at the level of individual plants).

The petitioners suggested that if EPA could regulate on a more systemic level, there would be few limits on EPA’s authority. One particularly interesting argument from West Virginia’s Solicitor General came in response to Justice Kagan, who asked about limitations on EPA’s authority found elsewhere in the statute, including the requirement that regulations be cost-effective. Justice Kagan essentially asked why, in West Virginia’s view, those other limitations are insufficient to constrain EPA. The West Virginia Solicitor General replied, “[I]f EPA is looking at the national or grid-wide level, and if it’s dealing with an issue as massive as climate change, it’s hard to see what costs wouldn’t be justified. So that cost limit isn’t really serving as a limiting factor if you take away the source-specific limitation that the rest of the words in the statute clearly put on EPA.” While that statement makes sense within the confines of her textual argument, it is noteworthy that the petitioners acknowledged (a) how significant the issue of climate change is, and (b) that its harms could justify almost any regulatory cost.

More broadly, the Justices focused heavily on both sides’ textual arguments. Justices Breyer, Kagan, and Sotomayor questioned whether the petitioners’ narrow interpretation of “system” is correct. Justice Kagan in particular pointed out that the “inside the fenceline” distinction makes little sense on a practical level, given that EPA could still shift the energy sector away from coal power through individual plant regulations, such as requiring expensive technological modifications to coal plants, thereby making coal generation economically infeasible. Justice Thomas echoed that same argument in a later question. On the other side, Justice Kagan also asked EPA’s attorney about the “standard of performance for any existing source” language that the petitioners cited. Similarly, Chief Justice Roberts asked the attorney for the utility companies supporting EPA about the limits on their broad reading of “system.”

In short, conservative- and liberal-leaning Justices alike subjected both sides to tough questions about the text of the Clean Air Act, leaving unclear which way the Court will rule on the textual issue. But notably, the liberal-leaning Justices asked more questions about statutory text.

Oral argument is often said to be a conversation among the Justices, with each Justice using their questions to make points to the others. If that is true, the heavy questioning on text from the liberal-leaning Justices may signal that they were eager to steer the conversation away from broader questions of agency authority (discussed more below), and toward the narrower issue of the Clean Air Act and the authority it gives the EPA.

Will Supreme Court Overturn Its Precedent That EPA Has Authority to Regulate GHGs?

When the Supreme Court first decided to hear this case, many commentators expressed concerns the Court would use the case to overturn Massachusetts v. EPA, a 2007 case in which it decided that the Clean Air Act gives EPA authority to regulate greenhouse gasses as “air pollutants.” (For more on that case, see earlier coverage). But Massachusetts v. EPA was actually discussed very little in the February 28 oral arguments before the Court. (It was mentioned by name only three times.)

So what could explain the lack of discussion of this important and seemingly relevant precedent? One factor is likely that petitioners framed their argument to avoid an explicit request to overturn Massachusetts v. EPA. West Virginia and the North American Coal Corporation acknowledge that the Court has already decided that EPA can regulate greenhouse gasses under the Clean Air Act. They focused instead on howthe regulation is allowed to proceed, namely arguing that it should be limited to “inside the fenceline” measures. It seems unlikely, therefore, that the Court will overturn Massachusetts v. EPA. But limiting the scope of regulation can still be damaging from environmentalists’ point of view, because it would disallow systemic regulations like the Clean Power Plan to use cost-effective trading schemes that limit GHGs.

Arguments on Reducing Agencies’ Power to Exercise Authority Delegated by Congress

Previous coverage emphasized that this case raises two doctrines relating to Congress’s and agencies’ authority: the major questions doctrine and the nondelegation doctrine.

As a quick recap:

• The nondelegation doctrine suggests that Congress cannot constitutionally delegate its lawmaking power to federal agencies.
• Related but different, the major questions doctrine suggests that courts should presume that Congress wants to make the most important policy decisions itself, rather than delegating them to Executive branch agencies.

Deciding the pending case on “major questions” grounds could be less damaging to Executive branch agency authority. Under that doctrine, Congress would be required to explicitly delegate authority to agencies, while the nondelegation doctrine would place a constitutional limitation on Congress’s power to delegate authority to agencies altogether, whether done explicitly or not. The petitioners in their briefs and in their oral argument shied away from the more radical non-delegation doctrine, and focused instead on the major questions doctrine.

The Justices asked extensive questions about the major questions doctrine (MQD), drawing various analogies between this case and other MQD decisions and inquiring about how the MQD should be applied. One of the biggest debates involved when in the process the MQD applies: only if the court first determines that a statute granting an agency authority is ambiguous, or at the outset of a case? If the court can apply the MQD at the outset of any case, the doctrine is broader than previously thought. And it’s particularly broad in this case because the Court wouldn’t be applying it to any existing regulation. The Clean Power Plan under the Obama administration is no longer in effect, nor is the rule the Trump administration created to replace it. The Biden administration has not put forward a new rule regulating GHGs from power plants. So, the Court would be deciding whether a major question is implicated by what EPA theoretically has the power to do, not what it has done.

The Justices also drew several analogies between this case and other MQD cases. Most notably, the Court recently handed down two COVID-related decision on MQD grounds. In Alabama Association of Realtors v. Department of Health and Human Services, the Court struck down an eviction moratorium created by the Centers for Disease Control and Prevention (CDC) during the pandemic, writing that “[w]e expect Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.” Similarly, in National Federation of Independent Business v. Department of Labor, Occupational Safety and Health Administration, the Court struck down a workplace COVID vaccine mandate by OSHA, also on major questions grounds. Chief Justice Roberts and Justice Alito analogized between this case and both recent COVID MQD cases. But Justice Barrett pointed out that this case might be different because “if we’re thinking about EPA regulating greenhouse gasses, well, there’s a match between the regulation and the agency’s wheelhouse.”

As with the textual arguments discussed earlier, it is unclear where the Court will come down on the merits of the MQD, but the Justices, particularly those with conservative leanings, showed a strong interest in the doctrine.

Could This Case Change Requirements for Bringing a Case to Court?

As discussed in this site’s previous coverage, in order to get into court, litigants must prove they have standing. Standing requires that a litigant show they have been injured; that the person or institution they are suing caused the injury; and that the courts can redress the injury. The two sides in this case have debated whether petitioners have standing because, as mentioned earlier, there is no regulation currently in place concerning GHGs under the relevant section of the Clean Air Act. The suit instead involves the power the Biden EPA could exercise, either in reinstating the Clean Power Plan or creating a new GHG rule concerning power plants, but EPA has not yet exercised that authority.

The Justices addressed this issue during oral argument, with Justices Gorsuch and Sotomayor both asking the petitioners to explain why they meet the requirements of standing. Perhaps most notable is a question from Chief Justice Roberts to the attorney for EPA: “I gather [the petitioners’] position would be it’s – just because there’s no regulation doesn’t mean we’re happy. They would like regulation according to their particular perspective. They’d like good regulation, which they think they had with [the Trump administration’s Affordable Clean Energy rule, which replaced the Clean Power Plan], and now they don’t have it. Again, why isn’t that a justiciable harm?”

A brief discussion of the history of standing helps show why this question is so striking. Standing has long been used to keep environmental advocacy groups out of court, often on grounds that the absence of regulation is not grounds to claim an injury (unless an agency is mandated by Congress to regulate a given problem). But here, there is arguably an absence of regulation because neither the Clean Power Plan nor Trump’s replacement is in effect. Chief Justice Roberts’s question seemed to suggest that the petitioners should be able to challenge the absence of regulation. Allowing such challenges could be a significant change to standing doctrine, and one that could potentially benefit environmentalists in the long run.

Nonetheless, such a change to the doctrine seems quite unlikely. If the Court finds that the petitioners have standing in this case (which it may or may not do based on the questions asked at oral argument), it could do so without changing standing requirements. Petitioners argue that they have standing because when the Trump administration’s Alternative Clean Energy rule was struck down by the D.C. Circuit Court of Appeals, the door opened for the Clean Power Plan to be reinstated, even if the Biden administration did not actually reinstate it. If the Court finds that petitioners have standing, it seems likely to do so on these grounds, rather than by changing the requirements. But it is still interesting to see Chief Justice Roberts suggest that the doctrine could be different, and Court observers will watch closely to see if that idea evolves in future cases.

Overall, much like the other issues discussed so far, the Justices’ questions on standing are helpful in signaling their interest in the issue, but they do not clearly show whether the Court will rule one way or the other.

Bottom Line Looking Ahead

The oral argument questions focused most heavily on 1) the text of the Clean Air Act, especially from liberal-leaning Justices; 2) the major questions doctrine, especially from conservative-leaning Justices; and 3) standing.

If the oral arguments can be used as a guide, it seems likely the Court’s decision also will emphasize these issues. But as for the Court majority’s views on the merits, those following this important case will have to await that opinion, unlikely to be released until around the end of this Court session in June.