This Report summarizes opinions issued on June 27, 29, and 30, 2022 (Part I).

Opinion: West Virginia v. EPA, 20-1530

West Virginia v. EPA, 20-1530. By a 6-3 vote, the Court held that the EPA lacked the authority in 2015 to issue the Clean Power Plan, which sought aggressively to deal with climate change. “[T]he thrust of Section 111” of the Clean Air Act “focuses on emissions limits for new and modified sources.” Under Section 111(d), once EPA has set new source standards, it must then address emissions of that same pollutant by existing sources―if they are not already regulated under the National Ambient Air Quality Standards program or the Hazardous Air Pollutions program. “Section 111(d) thus ‘operates as a gap-filler,’ empowering EPA to regulate harmful emissions not already controlled under the Agency’s other authorities.” Under Section 111(d), the EPA decides the amount of pollution reduction that must be achieved by determining “the best system of emission reduction [BSER] . . . that has been adequately demonstrated for [existing covered] facilities.” “Reflecting the ancillary nature of Section 111(d), EPA has used it only a handful of times since the enactment of the statute in 1970.” In October 2015, however, EPA promulgated two rules addressing carbon dioxide pollution from power plants, one for new plants under Section 111(b), one for existing plants under Section 111(d). The latter rule, called the Clean Power Plan, required “generation shifting from higher-emitting to lower-emitting” producers of electricity. One of its “building blocks” “was a shift in electricity production from existing coal-fired power plants to natural-gas-fired plants. Another “building block” required a shift “from both coal- and gas-fired plants to ‘new low- or zero-carbon generating capacity, mainly wind and solar.” Among the ways a regulated plant operator could implement those shifts in generation to cleaner sources was to “build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility and then increase generation there” or to “purchase emission allowances or credits as part of a cap-and-trade regime.” The end result would be “a sector-wide shift in electricity production from coal to natural gas and renewables.” The EPA chose “what it regarded as a ‘reasonable’ amount of shift,” which was projected to reduce coal’s share of national electricity generation from 38% to 27% by 2030. “[T]he emissions limit the Clean Power Plan established for existing power plants was actually stricter than the cap imposed by the simultaneously published standards for new plants.” And “EPA’s own modeling concluded that the rule would entail billions of dollars in compliance costs (to be paid in the form of higher energy prices), require the retirement of dozens of coal-fired plants, and eliminate tens of thousands of jobs across various sectors.”

The Clean Power Plan never went into effect. Dozens of parties (including 27 states) petitioned for review in the D.C. Circuit. After that court declined to stay the rule, the Supreme Court granted a stay. The D.C. Circuit never issued a ruling on the merits, as the Trump administration’s EPA reconsidered and then repealed the rule in 2019. The 2019 EPA concluded that the Clean Power Plan exceeded the agency’s authority under Section 111(d) because “generation shifting should not have been considered as part of the BSER.” “The Agency interpreted Section 111 as ‘limit[ing] the BSER to those systems that can be put into operation at a building, structure, facility, or installation.’” And the 2019 EPA determined that the Clean Power Plan was subject to the “major question doctrine,” under which courts “’expect Congress to speak clearly if it wishes to assign to an agency decisions of vast economic and political significance.’” The 2019 EPA replaced the Clean Power Plan with a new regulation known as the Affordable Clean Energy (ACE) Rule, which adopted “a combination of equipment upgrades and operating practices” that “would result in only small reductions in carbon dioxide emissions.” A number of states and private parties challenged EPA’s repeal of the Clean Power Plan and enactment of the ACE Rule; other states and private parties intervened to defend both actions. The D.C. Circuit ruled for the challengers, holding that EPA had the authority to adopt the Clean Power Plan under Section 111. In an opinion by Chief Justice Roberts, the Court reversed and remanded.

The Court first rejected “the Government’s contention that no petitioner has Article III standing to seek [the Court’s] review.” The Government emphasized that the D.C. Circuit stayed its mandate as it pertained to the Clean Power Plan at the request of the Biden administration’s EPA, which is considering a new regulation and does not intend to enforce the Clean Power Plan. The Court viewed the Government as in effect arguing that the case is now moot because of its actions. “But ‘voluntary cessation does not moot a case’ unless it is ‘absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.’ Here the Government ‘nowhere suggests that if this litigation is resolved in its favor it will not’ reimpose emissions limits predicated on generation shifting; indeed, it ‘vigorously defends’ the legality of such an approach. We do not dismiss a case as moot in such circumstances.” (Citations omitted.)

Turning to the merits, the Court stated that “[t]he issue here is 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.” To answer that question, the Court explained that its “precedent teaches that there are ‘extraordinary cases’ that call for a [special] approach—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.” The Court then walked through those cases, discussing FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000); Alabama Assn. of Realtors v. Department of Health and Human Servs., 594 U.S. ___ (2021) (per curiam); Utility Air Regulatory Group v. EPA, 573 U.S. 302 (2014); Gonzales v. Oregon, 546 U.S. 243 (2006); and National Federation of Independent Business v. OSHA, 595 U.S. ___ (2022) (per curiam). The Court explained that, in those cases, “[a]ll of these regulatory assertions had a colorable textual basis. And yet, in each case, given the various circumstances, ‘common sense as to the manner in which Congress [would have been] likely to delegate’ such power to the agency at issue, made it very unlikely that Congress had actually done so. Extraordinary grants of regulatory authority are rarely accomplished through ‘modest words,’ ‘vague terms,’ or ‘subtle device[s].’ Nor does Congress typically use oblique or elliptical language to empower an agency to make a ‘radical or fundamental change’ to a statutory scheme.” “Thus,” said the Court, “in certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent” mean that “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 that “this is a major questions case.” “EPA ‘claim[ed] to discover in a long-extant statute an unheralded power’ representing a ‘transformative expansion in [its] regulatory authority.’ It located that newfound power in the vague language of an ‘ancillary provision[]’ of the Act, one that was designed to function as a gap filler and had rarely been used in the preceding decades. And the Agency’s discovery allowed it to adopt a regulatory program that Congress had conspicuously and repeatedly declined to enact itself. Given these circumstances, there is every reason to ‘hesitate before concluding that Congress’ meant to confer on EPA the authority it claims under Section 111(d).” (Citations omitted.) The Court was unpersuaded that one previous use of Section 111(d), the Mercury Rule, established an agency precedent for its actions. The Court then reiterated why the Clean Power Plan involved a major question: Rather than “ensuring the efficient pollution performance of each individual source,” the Plan makes “a very different kind of policy judgment: that it would be ‘best’ if coal made up a much smaller share of national electricity generation. And on this view of EPA’s authority, it could go further, perhaps forcing coal plants to ‘shift’ away virtually all of their generation―i.e., to cease making power altogether.”

The Government attempted to “downplay the magnitude” of the Clean Power Plan by pointing out that, under Section 111(d), generation shifting “must be ‘adequately demonstrated’ and ‘best’ in light of the statutory factors of ‘cost,’ ‘nonair quality health and environmental impact,’ and ‘energy requirements.’” The Court was unpersuaded, noting that EPA still insists it has the power to “balanc[e] the many vital considerations of national policy implicated in deciding how Americans will get their energy. EPA decides, for instance, how much of a switch from coal to natural gas is practically feasible by 2020, 2025, and 2030 before the grid collapses, and how high energy prices can go as a result before they become unreasonably ‘exorbitant.’ There is little reason to think Congress assigned such decisions to the Agency.” The Court insisted that “[t]he basic and consequential tradeoffs involved in such a choice are ones that Congress would likely have intended for itself.” Finally, the Court noted that Congress had considered and rejected proposals for a cap-and-trade scheme.

Thus, found the Court, EPA had to show “clear congressional authorization” for the Clean Power Plan. The Court found none. It rejected the Government’s contention that such authorization can be found in EPA’s authority to establish emissions caps at a level reflecting “the application of the best system of emission reduction . . . adequately demonstrated.” The Government argued that generation shifting can be considered a “system,” but the Court said that “almost anything can constitute” a “system” under the Government’s definition of the term. “Such a vague statutory grant is not close to the sort of clear authority required by our precedents.”

Justice Gorsuch filed a concurring opinion that Justice Alito joined. Justice Gorsuch wrote to provide additional thoughts on the basis for the major questions doctrines and to offer proposals for how it should operate. He noted that there are many clear statement rules, which generally assist courts in acting “’as faithful agents of the Constitution.’” “The major questions doctrine works in much the same way to protect the Constitution’s separation of powers.” In Justice Gorsuch’s view, “[t]he framers believed that the power to make new laws regulating private conduct was a grave one that could, if not properly checked, pose a serious threat to individual liberty. As a result, the framers deliberately sought to make lawmaking difficult.” Yet allowing “Congress to divest its legislative power to the Executive Branch would ‘dash [this] whole scheme.’”

Turning to the major question doctrine’s application, Justice Gorsuch said that the Court’s “cases supply a good deal of guidance about when an agency action involves a major question.” It does so where the issue involves “a matter of great ‘political significance’”; involves “an ‘earnest and profound debate across the country’”; an agency “seeks to regulate ‘a significant portion of the American economy’ or ‘require billions of dollars in spending by private persons or entities”; or “an agency seeks to ‘intrud[e] into an area that is the particular domain of state law.’” The next question is “what qualifies as a clear congressional statement authorizing an agency’s actions.” In this regard, he said that (1) “courts must look to the legislative provisions on which the agency seeks to rely ‘with a view to their place in the overall statutory scheme’” (e.g., agencies shouldn’t “seek to hide ‘elephants in mouseholes’”); (2) “courts may examine the age and focus of the statute the agency invokes in relation to the problem the agency seeks to address”; (3) “courts may examine the agency’s past interpretations of the relevant statute”; and (4)“skepticism may be merited when there is a mismatch between an agency’s challenged action and its congressionally assigned mission and expertise.” Justice Gorsuch found this an easy case based on these principles.

Justice Kagan filed a dissenting opinion, which Justices Breyer and Sotomayor joined. The dissent opened by saying that, “Today, the Court strips the Environmental Protection Agency (EPA) of the power Congress gave it to respond to ‘the most pressing environmental challenge of our time.’” Turning to the statute, Justice Kagan wrote that Section 111(d) is not an “ancillary provision,” but rather “tells EPA that when a pollutant—like carbon dioxide—is not regulated through other programs, EPA must undertake a further regulatory effort to control that substance’s emission from existing stationary sources. In that way, Section 111(d) operates to ensure that the Act achieves comprehensive pollution control.” Justice Kagan then parsed the provision’s specific language: “the provision instructs EPA to decide upon the ‘best system of emission reduction which . . . has been adequately demonstrated.” That language gives EPA “regulatory flexibility” and “broad authority.” She particularly focused on the word “system,” which is “obviously broad” and “give[s] EPA lots of latitude in deciding how to set emissions limits.” And, concluded Justice Kagan, “generation shifting fits comfortably within the conventional meaning of a ‘system of emission reduction.’” Justice Kagan found further support in the Clean Air Act’s acid rain provision, which “describes a cap-and-trade program as an ‘emission allocation and transfer system.’” And Congress did not specify in Section 111(d), as it did in other provisions, that EPA’s efforts must be confined to a particular facility.

Justice Kagan then critiqued the majority’s use of the major questions doctrine. She found that the cases upon which the Court relied as support for the doctrine “do normal statutory interpretation: In them, the Court simply insisted that the text of a broad delegation, like any other statute, should be read in context, and with a modicum of common sense.” Those cases struck down agency actions where “an agency was operating outside its traditional lane” or “the action, if allowed, would have conflicted with, or even wreaked havoc on, Congress’s broader design.” Here, by contrast, “[t]he Clean Power Plan falls within EPA’s wheelhouse, and it fits perfectly . . . with all the Clean Air Act’s provisions.” Thus, the Court had previously “recognized that Congress had ‘delegated to EPA’ in Section 111 ‘the decision whether and how to regulate carbon-dioxide emissions from powerplants,’” recognizing that it “has the needed ‘scientific, economic, and technological resources’ to carry it out.” And Justice Kagan observed that “[e]very regulation of power plants—even the most conventional, facility-specific controls—’dictat[es]’ the national energy mix to one or another degree.” Justice Kagan insisted that the Clean Power Plan was not a “big,” “transformative” measure. Indeed, she noted, the industry exceeded the Plan’s target on its own, even though the Plan never took effect. “In effect, the Plan predicted market behavior, rather than altered it (as regulations usually do).” Nor, Justice Kagan said, need we worry about what EPA potentially could do with this power, for Section 111(d) includes its own constraints, “particularly involving costs and energy needs.” Justice Kagan also disagreed that the Clean Power Plan is novel, for EPA had previously imposed a cap-and-trade program for mercury under Section 111(d). In any event, she wrote, newness is not a problem. “Congress makes broad delegations in part so that agencies can ‘adapt their rules and policies to the demands of changing circumstances.’” And Congress’ refusal to enact a cap-and-trade regime is irrelevant: “under normal principles of statutory construction, the majority should ignore that fact.”

The final section of the dissent continued Justice Kagan’s critique of the major questions doctrine. “Some years ago, I remarked that ‘[w]e’re all textualists now.’ It seems I was wrong. The current Court is textualist only when being so suits it. When that method would frustrate broader goals, special canons like the ‘major questions doctrine’ magically appear as get-out-of-text-free cards.” (Citation omitted.) One of that doctrine’s goals, she said, is to “[p]revent agencies from doing important work, even though that is what Congress directed.” Yet “[t]he kind of agency delegations at issue here go all the way back to this Nation’s founding. . . . The records of the Constitutional Convention, the ratification debates, the Federalist—none of them suggests any significant limit on Congress’s capacity to delegate policymaking authority to the Executive Branch. And neither does any early practice.” Indeed, Justice Kagan argued, broad delegations are necessary. First, Members of Congress rely on experts “to regulate sensibly.” Second, “Congress usually can’t predict the future,” and so it “enables an agency to adapt old regulatory approaches to new times.” “Over time, the administrative delegations Congress has made have helped to build a modern Nation.” In the end, Justice Kagan accused the majority of being immodest, “substitut[ing] its own ideas about policymaking for Congress’s. The Court will not allow the Clean Air Act to work as Congress instructed.”