In numerous statutes, Congress has granted federal agencies the authority to enact regulations to fill in the details necessary to implement the programs and broad policies approved by Congress. In particular instances, new regulations adopted by an agency may have such far reaching political, economic or social consequences as to raise a question whether Congress actually intended the important or controversial policy issue involved to be decided by the Executive branch. In the opinion issued on June 29, 2022 in West Virginia v. Environmental Protection Agency __U.S.__ (2022), the Supreme Court applied the “major questions doctrine” to assess whether a rule adopted by the Environmental Protection Agency (“EPA”) pursuant to the Clean Air Act to reduce carbon emissions by power plants went beyond the authority granted to EPA. The Court held it did, because the statutory provision relied upon by EPA did not provide the “clear congressional authorization” required by the major questions doctrine. The implications of West Virginia extend well beyond defining EPA’s authority to require reductions in carbon emissions through regulations. After West Virginia, all federal agencies will be required to take heightened care to ensure that any proposed regulations involving major questions are grounded in clear statutory authorization.
The regulation at issue in West Virginia was the Clean Power Program adopted during the Obama administration. The broad effect of the regulation was to require a shift in power generation from existing coal-fired plants to natural-gas-burning plants, and ultimately to renewables such as solar and wind. The purpose of the regulation was to reduce carbon emissions resulting from the nation’s power grid. As authority for the rule, EPA relied upon Section 111(d) of the Clean Air Act, which provides for standards of performance based on “application of the best system of emission reduction.” 42 U.S.C. § 7411(a). EPA concluded that requiring a shift in how electricity is generated would be the “best system for emission reduction.” EPA projected the rule would impose billions in compliance costs, raise retail electricity prices, require the retirement of dozens of coal-fired plants, and eliminate some jobs, but also projected benefits from reduced emissions and encouraging use of cleaner energy sources.
The Clean Power Program never went into effect due to a stay imposed by the Supreme Court. EPA repealed the Clean Power Program during the Trump administration, but that repeal was vacated by a lower court. The lower court stayed its order vacating the repeal pending reconsideration of the Clean Power Program by the Biden Administration. Notwithstanding the stay and the potential for changes to the regulation, the Supreme Court found the case was not moot.
The Supreme Court defined the issue before it in West Virginia as “whether restructuring the Nation’s overall mix of electricity generation, to transition from 38% coal to 27% coal by 2030, can be the ‘best system of emission reduction’ within the meaning of Section 111.” The Court decided that this was one of the “extraordinary cases” that required application of the major questions doctrine, which it describes as “an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.” The doctrine applies in cases “in which the ‘history and the breadth of the authority that [the agency] has asserted,’ and the ‘economic and political significance of that assertion, provide a ‘reason to hesitate before concluding that Congress’ meant to confer such authority.” In major questions cases “something more than a merely plausible textual basis for the agency action is necessary. The agency instead must point to ‘clear congressional authorization’ for the power it claims.”
The Court concluded the phrase “system of emission reduction” in Section 111 does not provide the clear authorization needed for adoption of the Clean Power Program. The Supreme Court found significant that EPA had never before claimed such authority under Section 111, even though the statute had long been in effect. Prior to the Clean Power Program, EPA had relied on Section 111 only to impose measures to requiring a particular plant run more cleanly given available technology for a plant of that type, rather than requiring power generators to shift to cleaner sources of energy. It also found significant that Congress had repeatedly declined to enact such a program itself.
Three members of the court dissented. Like the court below, the dissent argues the text of Section 111 supports adoption of the Clean Power Program because a program requiring a shift in energy sources fits within the phrase a “system for emissions reduction,” and that the majority had departed from this plain text. It further argues that even assuming EPA had never before asserted such authority under Section 111 that was not inconsistent with authorization to do so because Congress grants broad authority to agencies expecting they will use it to respond to “new and big problems.” The dissent also disputes whether the Clean Power Program would have had a significant economic impact had it been implemented, citing evidence that since 2015 power companies had moved away from coal-fired power generation despite the stay on the Clean Power Program. The dissent contends the majority has replaced “normal text-in-context statutory interpretation with some tougher-to-satisfy set of rules.”
The direct consequence of the ruling in West Virginia is that EPA cannot rely upon the authority it once claimed under Section 111 for requiring power plants to reduce carbon emissions. Whatever revisions the Biden administration had planned for the Clean Power Program must now account for this ruling. But the implications of West Virginia for federal administrative law go much further. West Virginia will likely affect adoption of regulations in many areas, including regulation of financial markets, human health and safety, and natural resources. Key issues likely to be debated include what qualifies as a major question, and whether a particular exercise of regulatory authority should give a court pause. Courts are likely to vary in their answers to these and other questions. Going forward, application of the major questions doctrine is likely to be prominently featured in challenges to new regulations addressing controversial issues.
Questions
If you have any questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.
Daniel O’Hanlon
dohanlon@kmtg.com | 916.321.4522
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