UPDATE: On June 30, 2022, the Supreme Court issued its decision in West Virginia v. U.S. Envt’l Protection Agency finding in favor of the plaintiff. According to the Court, EPA exceeded the authority granted to it by Congress under the CAA when it adopted the Clean Power Plan. In its opinion, the Court stated that the issues raised implicated the “major questions” doctrine which provides that federal agencies may not implement major policies without express authorization from Congress. Because the generation-shifting proposed in the Clean Power Plan would have had “vast” impacts on the economy, the Court found that the “major questions” doctrine applied. Since the text of the CAA did not explicitly authorize generation-shifting, the Court concluded that EPA could not adopt the Clean Power Plan.
The Supreme Court’s ruling comes shortly after a decision issued by the Fifth Circuit Court of Appeals that also considers the scope of agency authority. In Jarkesy v. Sec. & Exch. Comm’n, the Fifth Circuit concluded that without express authorization from Congress, the Securities and Exchange Commission did not have the authority to decide whether to resolve enforcement actions through an administrative process instead of federal court. Both Jarkesy and West Virginia appear to set a new trend of courts ruling in favor of narrowing the scope of agency authority.
The United States Supreme Court recently heard arguments in West Virginia v. U.S. Envt’l Protection Agency, No. 20-1530 (2022), a lawsuit involving the Clean Air Act (“CAA”) and the authority of the Environmental Protection Agency (“EPA”). While the narrow question presented to the Court concerns the scope of EPA’s CAA authority, the overall lawsuit may have a much broader impact. Depending on how the Supreme Court rules, its decision could affect EPA’s general authority to implement statutes.
Although the central issue of this case – EPA’s authority under the CAA – does not directly impact agriculture, the outcome of this case has the potential to impact how EPA implements various environmental statutes, including those which are important to agriculture. Because of the possible outcomes, this case is an important one to watch. However, in order to understand the arguments being made in this lawsuit and why it’s important, it is necessary to understand the background of the case and how it reached the Supreme Court. The following is an overview of the relevant parts of the CAA, and how EPA’s plan to regulate carbon dioxide emissions from power plants came under Supreme Court review.
The CAA & the Clean Power Plan
The CAA is the comprehensive federal law regulation air pollutants in the United States. The overall goal of the CAA is to reduce and control air pollution throughout the country. In order to do so, the CAA regulates emissions from both stationary and mobile sources of air pollutants. Like many other environmental law statutes, EPA is responsible for administering and enforcing the CAA.
The CAA has established a variety of regulatory programs aimed at controlling air pollution from stationary sources such as buildings or other facilities. One of those programs is outlined in section 7411 of the CAA. Under section 7411 of the CAA, EPA is directed to list “categories of stationary sources” that “cause, or contribute significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare.” 42 U.S.C. § 7411(b)(1)(A). Once EPA identifies a specific category of stationary sources for listing, the Agency is required to establish “standards of performance for new sources within each category.” 42 U.S.C. § 7411(b)(1)(B). In this context, “new sources” refers to any stationary source which is built or modified after EPA adopts the applicable standards of performance. 42 U.S.C. § 7411(a)(2). In contrast, an “existing source” is any stationary source that does not fit the definition of a new source. 42 U.S.C. § 7411(a)(6).
The CAA goes on to define a “standard of performance” as a “standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which [ . . . EPA] determines has been adequately demonstrated. 42 U.S.C. § 7411(a)(1). In other words, a standard of performance for a category of stationary sources is the amount of emission reduction that can actually be achieved by using the best available “system of emission reduction.”
Once a standard of performance is set for a category of stationary sources, it applies to all new sources within that category. However, the CAA requires EPA to work with the states in order to establish and meet standards of performance for existing sources. After EPA adopts standards of performance for new sources within a listed category, the CAA requires EPA to put in place procedures allowing states to submit plans establishing standards of performance for existing sources within that same category. 42 U.S.C. § 7411(d). This means that while new sources within a listed category of stationary sources will need to meet standards of performance established by EPA, existing sources will need to meet standards of performance established by their state. Importantly, while states are responsible for setting standards of performance for existing sources, those standards must comply with the procedures EPA establishes in order for states to submit plans. Often, these procedures will include a determination from EPA as to the best system of emission reduction available, and the degree of emission reduction that EPA views as achievable through use of that system. 60 C.F.R. § 60.22a. States still determine what amount of emission reduction existing sources will need to meet, but they do so based off of the system reduction and amount of possible emission reduction identified by EPA.
In 2015 EPA finalized and adopted the Clean Power Plan (“CPP”) in order to regulate emissions of carbon dioxide from power plants. Along with establishing standards of performance to govern emissions of carbon dioxide from new power plants, the CPP also established procedures for states to follow in developing plans to limit carbon dioxide emissions from existing power plants. In doing so, EPA identified what it determined to be the best system of emission reduction. That system relied in part on states shifting electricity generation from higher-emitting sources to lower-emitting sources (aka “generation shifting”). 80 Fed. Reg. at 64,728. According to EPA, by shifting energy generation to lower-emitting sources, existing power plants could reduce emissions of carbon dioxide to 1,305 pounds per megawatt hour. 80 Fed. Reg. at 64,667. This was lower than the emission limits for new power plants which EPA set at 1,400 pounds of carbon dioxide per megawatt hour. 80 Fed. Reg. at 64, 513.
Believing that EPA had exceeded its authority, various states filed suit.
Path to the Supreme Court
In October 2015, a coalition of twenty-seven states filed West Virginia v. U.S. Envt’l Protection Agency, No. 15-1363 (D.C. Cir. 2016) challenging the CPP. According to the plaintiffs, the CPP exceeded the authority Congress granted to EPA when it passed the CAA. By requiring states to shift their electricity generation from higher-emitting power plants to lower-emitting plants, the plaintiffs argued that EPA was instituting a “wholesale transformation of the U.S. energy system.” In essence, the plaintiffs claimed that under the CPP many states would be forced to retire older, higher-emitting facilities in favor of alternative lower-emitting facilities in order to meet the carbon dioxide emission limits established by EPA. The plaintiffs argued that this went beyond EPA’s CAA authority. In general, federal agencies have only the authorities granted to them by Congress. If Congress does not pass a statute granting an agency authority, then the agency does not have authority. Because the text of the CAA did not mention generation shifting, but instead focused on technologies and practices that individual stationary sources could adopt to reduce emissions, the plaintiffs claimed that the CPP exceeded EPA’s CAA authority.
The plaintiffs asked the court to issue a stay that would have prevented the CPP from going into legal effect while the case was being litigated. When the D.C. Circuit denied that request, the plaintiffs appealed the denial to the Supreme Court. The Court agreed to hear that appeal, and ultimately issued ruling that prevented the CPP from going into effect while the underlying case was litigated in the D.C. Circuit.
In 2017, EPA decided to reconsider the CPP. Upon review, EPA determined that the CPP had “significantly exceeded” its authority in passing the CPP and formally repealed the regulation. 84 Fed. Reg. at 32,523. Specifically, EPA found that section 7411 of the CAA did not authorize the Agency to require states to adopt energy generation shifting practices. 84 Fed. Reg. at 32,523. Such requirements were beyond the authority Congress granted to EPA.
Following the repeal of the CPP, a different group of states and other interested parties filed another lawsuit to challenge the repeal. The states that joined the new lawsuit, Am. Lung Ass’n v. Envt’l Protection Agency, No. 19-1140 (D.C. Cir. Jan. 19, 2021) were all states that had not been a part of West Virginia v. U.S. Envt’l Protection Agency. In this new lawsuit, the plaintiffs argued that the CPP should be reinstated because EPA’s conclusion that the CPP exceeded its CAA authority was a misinterpretation of the law. The plaintiffs argued that the CAA language directing EPA to identify the “best system of emission reduction” was broad enough to include the generation shifting proposed in the CPP. The D.C. Circuit agreed with the plaintiffs. It issued a ruling overturning EPA’s repeal of the CPP, noting that the text of section 7411 of the CAA “does not unambiguously bar a system of emission reduction that includes generation shifting.”
After the D.C. Circuit issued its decision in Am. Lung Ass’n v. Envt’l Protection Agency, EPA requested that the reversal of the CPP repeal not go into effect while EPA worked to draft a new section 7411 rule for power plants. In its request, EPA stated that it did not wish to reinstate the CPP and was instead focused on crafting a new rule by which states could submit plans for regulating existing power plants. The D.C. Circuit granted EPA’s request, after which the plaintiffs in West Virginia v. U.S. Envt’l Protection Agency once again petitioned the Supreme Court for review. The Supreme Court agreed to hear the case, and it is that dispute which is now before the Court.
Before the Supreme Court
The issue currently before the Supreme Court centers around agency authority. Specifically, the plaintiffs argued that interpreting section 7411 to allow generation shifting is a violation of the “major questions doctrine.” The major questions doctrine is a legal doctrine developed by the Supreme Court which holds that federal agencies may not pass regulations concerning issues of “vast economic or political significance” unless Congress has explicitly granted it the authority to do so.
The plaintiffs argue that the major questions doctrine is relevant to this case because the generation shifting in the CPP could have had a transformative impact on the economies of many states. Because Congress did not explicitly grant EPA the right to require states to engage in generation shifting under section 7411 of the CAA, the plaintiffs argue that EPA could not impose such requirements.
Narrowly, the plaintiffs are asking the Supreme Court to find that section 7411 of the CAA does not allow EPA to require states to shift from higher-emitting power plants to lower-emitting power plants. However, the plaintiffs also state that this case gives the Supreme Court the chance to make a broader ruling on the major questions doctrine. The plaintiffs claim that although the Supreme Court is clear that agencies may make decisions of vast economic and political significance only when clearly authorized by Congress, lower courts are uncertain when to apply the major questions doctrine to an agency action. According to the plaintiffs, this case presents the Supreme Court with an opportunity to clarify when a question or issue is sufficiently “major” enough for the major questions doctrine to apply.
In response, EPA claims that the plaintiffs should not be able to bring their case at all. EPA argues that because the Agency has stated it has no intention to revive the CPP, there is no regulation for the Supreme Court to review. Additionally, EPA claims that the major questions doctrine does not apply because the generation shifting in the CPP was merely a suggested method that states could use to meet emission reduction targets for existing power plants, not a requirement. Additionally, EPA notes that even without the CPP in effect, the power industry has already achieved the emissions reductions sought in the CPP without experiencing economic consequences. Therefore, EPA claims that the major questions doctrine does not apply because the CPP could not have produced “vast economic consequences.”
Broader Implications & Going Forward
The Supreme Court heard arguments in West Virginia v. U.S. Envt’l Protection Agency on February 28, 2022. A decision is expected to be issued later this year. At the moment, it is unclear which way the Court will rule. However, if the Court decides to address the major questions doctrine, a ruling could potentially impact EPA authority beyond the CAA.
The Supreme Court may ultimately issue a narrow decision focusing solely on the CPP. If the Court choses to decide the case on narrow grounds, it may agree with EPA that there is no present issue because the CPP is no longer in effect and EPA has stated it has no plans to revive it. Otherwise, the Court may agree with the plaintiffs and find that section 7411 of the CAA does not grant EPA the ability to require states to adopt generation shifting policies in order to regulate existing sources. If the Court limits its decision only to section 7411 and the CPP, the outcome of this case may only affect future section 7411 rules adopted by EPA.
However, it is possible that the Supreme Court will agree with the plaintiffs that this case presents an opportunity for it to clarify when the major questions doctrine applies to agency actions. If the Court choses to do so, it could have wider impacts on EPA’s authority, and potentially the authority of other federal agencies. EPA is responsible for implementing numerous environmental law statutes, many of which impact agriculture throughout the country. If the Supreme Court makes a ruling that impacts EPA’s agency authority, it could affect how EPA administers environmental statutes in the future.
Although this case itself does not specifically concern agriculture, its outcome has the potential to alter how EPA functions which would have consequences for agriculture and various other industries. The National Agriculture Law Center will provide updates once the Supreme Court issues its decision.
To read the plaintiff’s brief to the Supreme Court in West Virginia v. U.S. Envt’l Protection Agency, click here.
To read EPA’s brief to the Supreme Court in West Virginia v. U.S. Envt’l Protection Agency, click here.
To read the D.C. Circuit’s opinion in Am. Lung Ass’n v. Envt’l Protection Agency, click here.
To read the text of the CPP, click here.
To read EPA’s repeal of the CPP, click here.
To read the relevant provisions of the CAA, click here.