This week’s Supreme Court ruling in the case of West Virginia v. Environmental Protection Agency (EPA) should be interpreted as a warning to federal agencies not to overstep their explicit statutory authority in crafting regulations, according to legal and energy experts.

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At the heart of the case was whether EPA had legal authority under section 111(d) of the Clean Air Act (CAA) to implement the Clean Power Plan (CPP), the Obama-era rulemaking from 2015 that sought to aggressively curb greenhouse gas emissions from the power sector. Before it could be implemented, the CPP was stayed by the Supreme Court in 2016, then repealed and replaced by the Trump administration in 2019 with the much narrower in scope Affordable Clean Energy (ACE) rule. A federal appeals court struck down ACE in early 2021, a decision that the high court reversed in its ruling this week.

Though the CPP never took effect, its opponents feared a similar policy could be enacted unless the courts intervened, leading to the West Virginia case.

“The petitioners in the case — West Virginia, and North Dakota, along with two coal companies — asked the court to decide whether a particular provision in the CAA…which addresses standards of performance for existing stationary sources of air pollution, constitutionally gives blanket authority to the EPA to issue major rules on what kind of generators can run, without any limits on what it can require,” said RBN Energy LLC analyst Rick Smead. “Simply put, the petitioners questioned the scope of the EPA’s powers to force changes in generation mix in the name of greenhouse gas reduction.”

With the CPP, EPA sought to set emission targets for existing facilities that could only be feasibly met through “generation shifting,” i.e. reducing output, investing in lower-emission capacity or purchasing emission allowances.

Under Trump’s ACE rule, EPA would only mandate emissions targets that could be met through efficiency upgrades to facilities, rather than generation shifting.

Writing for the majority, Chief Justice John Roberts wrote that “capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible ‘solution to the crisis of the day.’ But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme. A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.”

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The message was clear, according to analysts at ClearView Energy Partners LLC.

“In our view, today’s ruling sends a strong caution to the Executive Branch: policy ambitions are limited to clearly expressed Congressional authority,” the ClearView team said Thursday evening. They added, “It may have taken two months shy of seven years for the CPP’s trial by fire to finally conclude. The gambit failed to survive.”

Attorneys with Van Ness Feldman LLP expressed a similar view, noting that the ruling “will force the Biden administration to approach its development of regulations to implement greenhouse gas controls for power plants more narrowly than the Clean Power Plan. “Importantly, if EPA is constrained in what the replacement for CPP and ACE can achieve with regard to GHG reductions, this may mean that the power sector will see the Agency targeting more stringent regulation of non-greenhouse gas pollutants—such as oxides of nitrogen (NOx), particulate matter, and hazardous air pollutants—which could achieve climate mitigation co-benefits that the Agency cannot achieve through direct regulation.” 

EPA is expected to issue a new proposed rule under section 111(d) of the CAA in March 2023, with finalization likely in 2024, the Van Ness Feldman team noted.