Climate change case could lead to resurrection of ‘nondelegation’

In an unexpected move that has proponents of President Joe Biden's climate change agenda wary, the U.S. Supreme Court announced that it will hear arguments on the scope of the Environmental Protection Agency's authority regulate greenhouse gas emissions from the energy production sector in West Virginia v. Environmental Protection Agency.

The Supreme Court's decision to hear the challenge will almost certainly have serious implications for the ability of the Biden EPA, or any future EPA, to regulate GHGs from existing power plants. Even more troubling, the legal question posed provides the Supreme Court's conservative majority an opportunity to deal a strong blow to not only the power of the executive agencies to impose climate regulations, but also the power of the executive agencies to impose stringent nationwide regulations at all without express congressional permission to do so.

How We Got Here

The Supreme Court's 2007 landmark 5-4 ruling in Massachusetts v. Environmental Protection Agency determined that GHGs fall under the definition of "air pollutants," paving the way for the EPA to regulate GHGs under the Clean Air Act. However, Massachusetts did not address exactly how the EPA must, or could, engage in such regulation. The imminent West Virginia decision is set to be the most consequential climate change-related decision since, likely setting parameters on exactly how the EPA may permissibly use the Clean Air Act to regulate GHG emissions from the country's many power plants.

The roots of the question now before the Supreme Court lie in the Obama administration's ambitious "Clean Power Plan," first promulgated in 2015. The Clean Power Plan was the first attempt at regulation of GHG emissions from existing power plants under Section 111 of the Clean Air Act (42 U.S.C. Section 7411), flowing directly from the EPA's newfound authority under the holding in Massachusetts and EPA's subsequent 2009 GHG endangerment finding. Under Section 7411(d), the EPA may set guidelines for emissions reductions from existing sources at the level of emissions reductions it determines is achievable based on the application of "best system of emission reduction" available. The Clean Power Plan promulgated standards based on three distinct building blocks to create its "best system of emission reduction": (1) on-site heat rate improvements to boost efficiency at coal-fired steam power plants, (2) substitution of increased generation from natural gas generators for generation from higher-emitting steam generating plants, and (3) prioritizing the use of generation from renewable sources over generation from fossil fuel-fired plants. The two latter building blocks proved to be the most controversial as they extended regulation "beyond the fence line" -- they contemplated reduction measures applied at a systemic grid-wide level by shifting generation from higher emission sources to lower emission sources, as opposed to reduction measures that applied at the individual facility level.

The Clean Power Plan was the subject of legal challenges, but before such challenges were resolved, the Trump administration repealed and replaced with Clean Power Plan with the "ACE Rule" which only applied to coal-fired power plants, and set emission standards based only on on-site heat rate improvements at individual units or facilities, abandoning "beyond the fence line" regulation entirely. The Trump-era EPA justified the changed rule by claiming that the "best system of emission reduction" contemplated in the Clean Air Act explicitly limits the EPA to considering only reduction measures "at and to the source," or those reduction measures that can be implemented at a specific facility.

In January, the U.S. Court of Appeals for the D.C. Circuit heard consolidated challenges to the Trump administration's ACE Rule in American Lung Association v. Wheeler. In a split-panel opinion, the D.C. Circuit rejected the Trump EPA's constrained interpretation of "best system of emission reduction," and vacated the ACE Rule, holding that the Trump EPA's approach would "atrophy the muscle that Congress deliberately built up." In the majority's view, nothing in Section 7411 limits permissible methods of a "best system of emission reduction" to a narrow "at and to the source" interpretation. In all, the D.C. Circuit concluded "the straitened version of the EPA's best system that the Agency espies in Section 7411 is simply not supported by the text, let alone plainly and unambiguously required by it."

The Decision to Hear West Virginia v. EPA

It is surprising that the Supreme Court has elected to grant certiorari from the American Lung decision; as many commentators have noted, it was expected that the Supreme Court would decline to hear arguments arising from a challenge to a rule that the Biden administration will not resurrect, and has not yet replaced. In the wake of the American Lung decision, the newly elected Biden administration opted not to reinstate the Obama administration Clean Power Plan, and to promulgate a wholesale new rule, albeit one that was expected to build on the framework of the Clean Power Plan with more ambitious emissions reductions. This lack of a live rule was enough to dissuade potentially affected regulated utilities that were parties in American Lung from seeking review; however a coalition of Republican-led states and coal companies moved forward with a petition. The Supreme Court's bucking of expectations to allow argument, given the current tenor of the Biden EPA's rulemaking, is an ominous sign for those hoping for the EPA's ability to regulate GHGs to come through unscathed. Certainly, at the very least, the Supreme Court's decision will have tremendous implications the drafting of the Biden EPA's forthcoming power plant rule.

The Supreme Court and its conservative majority will be addressing a fairly broad question in West Virginia. The court's order frames the question as: "In 42 U.S.C. § 7411(d), an ancillary provision of the Clean Air Act, did Congress constitutionally authorize the Environmental Protection Agency to issue significant rules including those capable of reshaping the nation's electricity grids and unilaterally decarbonizing virtually any sector of the economy-without any limits on what the agency can require so long as it considers cost, nonair impacts, and energy requirements?"

This framing provides numerous avenues for a Supreme Court ruling, ranging from those that would deal a significant blow to the Biden administration's current climate goals, to those that may alter the ability of any future administration to use executive power to impose broad health, safety, or environmental regulations.

Potential Implications

While it's possible that the Supreme Court affirms the holding in American Lung, the current ideological tenor of the court and the court's decision to even hear the case given the procedural history seems to suggest that this outcome is unlikely. On the other hand, stare decisis makes it equally unlikely that the Supreme Court would attempt to explicitly overturn the Massachusetts ruling.

However, there are several routes that the court could take that would limit the strength of the EPA's regulatory authority while not directly contradicting precedent; essentially, the court could leave in place the nominal authority of the EPA to regulate GHG emissions as established in Massachusetts, but determine that the range of regulatory actions that the EPA is permitted to take under the Clean Air Act in this instance is limited -- thereby rendering the practical effect of the EPA's authority established under Massachusetts far more insubstantial than proponents of GHG emissions regulations would like.

For instance, in the most narrow view, the Supreme Court will have an opportunity to revisit the D.C. Circuit's ruling on the Trump EPA's interpretation of "best system of emission reduction" and the associated question of whether EPA may set standards relying on "beyond the fence line" emissions reduction measures. The court may simply elect to endorse the Trump EPA's interpretation, or a similar interpretation, and determine that Section 7411 only permits the EPA to impose a rule based on reduction measures that can be implemented at a specific facility. Such a ruling would not completely gut the Biden EPA's ability to reduce GHG emissions (i.e., it could still promulgate regulations involving steep facility specific emissions reductions), but it would deprive it of the ability to rely on the grid-wide energy production shifting measures that underpinned the Clean Power Plan, and likely send the Biden EPA back to drawing board on its forthcoming rule.

Alternatively, the Supreme Court may attempt to build upon a point raised in Judge Justin Walker's dissent in American Lung, referencing the "major questions doctrine," established by the Supreme Court's 2000 holding in FDA v. Brown & Williamson Tobacco Corp., which holds that courts should not defer to agency interpretations of a statute in a case that involves questions of vast economic or political significance. Walker's dissent suggests the question of how exactly to regulate GHG emissions, and whether the estimated price tag of $30 billion for proposed power plant GHG emissions regulations is justified, may be a question of vast economic and political significance, requiring a clear statement from Congress authorizing the EPA to enact such regulations. An opinion invoking the "major questions doctrine" could cripple the executive branch's ability to enact meaningful climate change regulation. On the surface, such a holding would not be at odds with Massachusetts -- it would not hold that the EPA could not regulate GHGs, only that the EPA could not promulgate regulations with such vast economic consequences as those that would result under the Clean Power Plan, or a comparable plan, without clear congressional authorization. In practice, it is hard to envision any truly comprehensive climate change regulation that would not necessarily involve an economic effect in the billions of dollars, and precedent determining that the question of whether regulating climate change can incur such a cost is a question of vast economic and political significance would mean that the major questions doctrine could be used to undercut any executive agency action on climate without clear congressional authorization.

In perhaps the most extreme scenario, the West Virginia case could provide an opportunity for the conservative wing of the Supreme Court to attempt to enforce or revive the "nondelegation doctrine," which imposes strong limitations on the permissibility of Congress to delegate its legislative power to executive branch agencies without specific and precise guidance on how the agency can wield such power. The court could reason that Section 7411 provides the EPA with too broad a degree of unfettered authority and discretion to enact sweeping national rules regarding existing power plant emissions, and find such a grant of power to be unconstitutional. If the court were to issue such an opinion, any regulation or further regulatory guidance for existing power plant GHG emissions would have to come from Congress, a virtual impossibility in the current political climate. Though the Supreme Court has not invoked the nondelegation doctrine to invalidate an executive agency action since 1935, petitioners explicitly argue for its application in their petition for writ of certiorari, and conservative justices have shown a willingness to apply the doctrine as recently as the Gundy v. United States decision in 2019. If the court uses the West Virginia decision as an opportunity to revive the nondelegation doctrine, the damage to Biden's regulatory agenda would not necessarily be limited to climate change -- it could theoretically provide a basis for opponents to challenge many of the Biden administration's expected executive agency regulatory actions, when those actions are based on statutes granting regulatory power and discretion to said agency.

Regardless of the particulars of the eventual holding, it is all but certain that the West Virginia v. Environmental Protection Agency opinion will be the most significant climate change opinion since Massachusetts. The case will give the Supreme Court's conservative majority the opportunity to set limits on how exactly the EPA may regulate GHG emissions from a wide swath of existing sources, and to potentially take aim at the EPA or other executive agencies' wider ability to regulate, with implications that will certainly shape the Biden EPA's immediate regulatory plans, and have the potential to shape the power of the EPA and other executive agencies for administrations to come. 