The Supreme Court delivered a major setback to President Joe Biden’s ambitious climate change goals on Thursday, ruling that the Environmental Protection Agency does not have broad authority to curb planet-warming pollution from power plants.
The 6-3 ruling erects a significant obstacle to Biden’s hopes of addressing global warming through executive branch action — barely six months after a Senate stalemate shut down congressional Democrats’ efforts to pass their biggest-ever climate bill.
And the ruling could raise questions about other kinds of regulation where agencies are seeking to use older statutes to address emerging and ongoing social problems, including in health care, telecommunications, finance and other major sectors.
Thursday’s decision by the conservative majority said EPA cannot take the kind of broad approach that the Obama administration had adopted in regulating greenhouse gases from the nation’s power plants. And it put the onus on Congress — which has been unable to pass major climate legislation since Democrats’ cap-and-trade bill died 12 years ago — to give EPA more authority to fight climate change, if lawmakers wish for the agency to act aggressively.
Democrats’ hopes of passing major climate legislation are on ice since the demise of Biden’s Build Back Better plan, which contained more than $500 billion for climate-related efforts last year. And the door for congressional action is narrowing as Republicans are expected to retake at least one chamber in this fall’s midterm elections.
Now, after Thursday’s ruling, Biden’s options for addressing climate change by using existing laws are dwindling too.
The high court said that the Obama administration’s 2015 climate rule — which attempted to push a wholesale shift of states away from coal and toward natural gas and renewable sources — was an “unprecedented” and unlawful expansion of EPA’s power.
“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,’” Chief Justice John Roberts wrote, joined by the five other conservative justices.
“But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d)” of the Clean Air Act, he concluded. “A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.”
In her dissent, Justice Elena Kagan said the court had taken a grave step while neutering part of the 1970 Clean Air Act: “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,’” she wrote, citing an earlier climate decision.
EPA and the White House did not immediately comment.
The Supreme Court had ruled 15 years ago that EPA has regulatory authority over carbon dioxide and other types of pollution driving climate change. But the new, more conservative court ruled Thursday that its power to act aggressively to curb carbon pollution is relatively limited.
Scientists have warned that nations are running out of time to avoid the devastating effects of a warming planet, and that governments must take more aggressive steps if they are to live up to their promises under the 2015 Paris climate agreement. The U.S. is the world’s second largest source of greenhouse gas pollution, behind China, and electricity generation is the nation’s second biggest source of emissions, after transportation.
The scope of EPA’s authority has been an unanswered legal question since the Obama administration enacted its major power plant rule, the Clean Power Plan, in 2015. That rule was built on a complex scheme aimed at pushing states and utilities to shift away from coal as an electricity source and instead embrace natural gas or renewable energy.
The Obama EPA had taken an expansive view of the industry and argued that the rule reflected the utilities’ ability to shift fluidly among generation sources — a unique feature compared with other industries like oil refining or steel mills. It set goals for states to reduce their carbon pollution but offered flexibility on how to meet those targets, saying that would promote the most cost-effective solutions.
But West Virginia and other opponents persuaded the Supreme Court in 2016 to block that rule from taking effect. They argued that the Clean Air Act allowed EPA to reduce emissions only through requirements that could be applied directly on-site at individual power plants, and that Obama’s rule amounted to a power grab to reshape one of the nation’s most important industries.
The Trump administration then withdrew the Obama rule and wrote a replacement, called the Affordable Clean Energy rule, that required states only to consider certain efficiency improvements for coal-fired power plants. The plan would have achieved few carbon reductions, and it may even have increased emissions from some plants if they became more cost-effective and ran more frequently.
But the D.C. Circuit Court of Appeals struck down that plan on Trump’s last full day in office, finding EPA’s legal interpretation to be fatally flawed. That ruling opened the door for Biden to craft a replacement, though few experts saw it as giving EPA carte blanche to issue a rule as sweeping as Obama’s.
With Thursday’s ruling, the Supreme Court stepped in to set limits on the Biden administration rather than waiting to see what kind of rule it would release in the future.
In doing so, it relied on the so-called “major questions” doctrine, an academic term that the majority used in a ruling for the first time. The doctrine allows judges to strike down regulations or agency actions that address questions of vast economic or political significance without explicit authorization from Congress.
The high court most recently deployed the doctrine against agencies’ actions meant to protect public health, including last year when it struck down the Centers for Disease Control and Prevention’s Covid-era eviction moratorium, which it ruled strayed from the mission given the agency by Congress.
But Thursday’s ruling extended that power to target topics that are in an agency’s wheelhouse — such as regulation of air pollution from power plants, an area with which EPA has decades of experience.
The Biden administration argued that the carbon dioxide emissions trading scheme created by the Obama EPA’s Clean Power Plan was lawful, under a section of the Clean Air Act giving the agency broad latitude to regulate air pollution. But the conservative majority didn’t buy it.
“Congress certainly has not conferred a like authority upon EPA anywhere else in the Clean Air Act,” Roberts wrote. “The last place one would expect to find it is in the previously little-used backwater of Section 111(d).”
In her dissent, Kagan argued that Congress writes open-ended provisions in laws like the Clean Air Act precisely to empower agencies to act in the face of emerging issues.
“A key reason Congress makes broad delegations like Section 111 is so an agency can respond, appropriately and commensurately, to new and big problems,” she wrote. “Congress knows what it doesn’t and can’t know when it drafts a statute; and Congress therefore gives an expert agency the power to address issues—even significant ones—as and when they arise.”
Although the Supreme Court has barred EPA from using emissions trading in any future rule, the court otherwise declined to explicitly define EPA’s authority.
That raises the possibility that EPA could seek to require measures that go further than simply improving individual power plants but do not amount to pushing broad shifts toward cleaner energy. However, Roberts noted that this section of the Clean Air Act has only ever been applied to individual pollution sources, potentially a warning shot across EPA’s bow.
During arguments in February, multiple justices grappled with the practical application of the physical “fence line” boundary proposed by Republican attorneys general and several coal companies. That standard would limit EPA to enacting plant-level rules, rather than looking at statewide emissions as the Obama administration had done.
In her dissent, Kagan argued that the court’s majority had stripped EPA of the power granted to it by Congress to address climate change using a method that has been proven to work in the real world.
“The limits the majority now puts on EPA’s authority fly in the face of the statute Congress wrote,” wrote Kagan, joined by Justices Sonia Sotomayor and Stephen Breyer, just hours before the latter’s retirement.
“The parties do not dispute that generation shifting is indeed the ‘best system’—the most effective and efficient way to reduce power plants’ carbon dioxide emissions,” she added.
Kagan also blasted the majority for not waiting to see what new rule the Biden administration proposed before deciding “to constrain EPA’s efforts to address climate change.”
Because whatever EPA proposes for power plants will eventually need to win judicial approval, Administrator Michael Regan has suggested in recent months that the agency was considering “inside the fence” options, beyond the efficiency improvements that the Trump plan required. Those could include the installation of renewable energy sources on coal plant land.
Whatever rule the Biden administration ultimately issues is all but certain to be challenged again — though with these restrictions in place, possibly from both sides, as environmentalists stew over the legal limits imposed on EPA.
More broadly, Regan has touted a holistic approach to power plant regulations so that utilities can better understand their requirements regarding greenhouse gases, as well as conventional pollutants such as soot and those that cause smog and acid rain, wastewater discharge and disposal of coal ash and other solid waste. Considering those altogether means utilities can decide whether it makes better economic sense to keep investing in aging plants or pivot to cleaner sources, Regan argued.
“If some of these facilities decide that is not worth investing in and you get an expedited retirement, that’s the best tool for reducing greenhouse gas emissions,” Regan told reporters in March.
EPA is also considering strengthening separate but related Obama-era standards for newly built natural gas plants.
The agency in April floated a draft white paper reviewing available technologies that could further reduce emissions in newly built gas-fired plants, which could potentially lead to stronger regulations.
There is wide agreement in the energy sector that U.S. power companies will not build any new coal plants, because of the economic downsides — but utilities continue to construct new gas capacity. The U.S. Energy Information Administration projects that 21 percent of new power capacity installed in 2022 will be natural gas-fired, with major plants under construction in Florida and the Rust Belt.