On June 30, 2022, the United States Supreme Court published its opinion in West Virginia v. Environmental Protection Agency (EPA), issuing a challenge to the purview of the Clean Power Plan. Under the Clean Power Plan, the EPA determined that the best system of emission reduction for existing coal and natural gas plants included generation shifting, the process of shifting electricity production from higher-emitting to lower-emitting producers. For authority, the Agency cited Section 111 of the Clean Air Act, which permits the regulation of certain pollutants from existing sources under Section 111(d).
However, the Supreme Court found that the regulation of existing power plants falls under the major questions doctrine, which holds that if an executive agency makes a decision on an issue of major national significance, the action must be supported by clear statutory authorization. Given that Congress did not grant the EPA the clear authority to regulate emissions from existing power plants using generation shifting, the Supreme Court decided that Section 111(d) of the Clean Air Act does not authorize the EPA to regulate emissions through this method. This restricts the agency’s options for reducing emissions and transforming the energy grid in the future.
To provide context for how the majority decision in West Virginia v. EPA came to be, here are 5 Supreme Court cases that led up to the case:
1 Chevron, U.S.A, Inc. v. Natural Resources Defense Council, Inc. (1984)
Under the 1977 Amendments to the Clean Air Act, all companies planning to build or install any major source of air pollutants had to undergo a “new-source review” process. However, the bill did not specify what a “source” of air pollution was. In response, the EPA defined a “source” as any significant change or addition to a plant or factory. If a factory made any significant change or addition to a plant or factory, it would have to undergo review.
In 1981, the EPA redefined “source,” making it a plant or factory in its entirety. This enabled companies to avoid the review process if they reduced emissions with one modification while simultaneously increasing emissions through another; essentially maintaining net zero emissions. The Natural Resources Defense Council, an environmental advocacy organization, then challenged the legality of the EPA’s decision to change the definition of “source.”
The Supreme Court decided in the EPA’s favor, arguing that their definition of “source” was reasonable and therefore valid. This decision created the doctrine known as “Chevron deference,” which maintains that in instances where Congress delivers a statute with ambiguous phrasing to a federal agency, the agency gets to decide how to interpret it, so long as their interpretation is reasonable. In light of the decision in West Virginia v. EPA, Chevron deference was overwhelmed by the major questions doctrine as the EPA’s interpretation of the Clean Air Act was unreasonable and too nationally significant.
2 Food and Drug Administration v. Brown & Williamson Tobacco Corp. (2000)
In 1996, the Food and Drug Administration (FDA) attempted to regulate tobacco products by labeling nicotine as a “drug” under the definition outlined in the Food, Drug, and Cosmetic Act (FDCA) and by labeling cigarettes and smokeless tobacco as “combination products” that deliver nicotine to the body. Prior to this action, the FDA had denied any authority to do so. As a result, the Brown & Williamson Tobacco Corporation challenged the regulations set forth by the FDA.
Justice Sandra Day O’Connor delivered the majority opinion and argued that, even in the face of serious public health problems like premature death resulting from tobacco use, federal agencies cannot exercise their authority in a manner that is inconsistent with the administrative structure created by Congress. Additionally, Justice O’Connor invoked the major questions doctrine. She stated that tobacco has a unique economic, social, and political history in the United States, which resulted in Congress creating a distinct regulatory scheme for tobacco products. As such, the FDA’s claim to be able to regulate or even ban tobacco products would have significant national consequences. Therefore, the ability to regulate tobacco could not be deferred to an executive agency.
The decision was later superseded by the Family Smoking Prevention and Tobacco Control Act, which granted the FDA the authority to regulate such products. This supersedure is significant in the wake of West Virginia v. EPA as it provides the basis for allowing the EPA to regulate greenhouse gas emissions via generation shifting. If Congress passes legislation that gives the EPA this express authority, the Supreme Court decision predicated on the major questions doctrine will become null.
3 Massachusetts v. Environmental Protection Agency (2007)
As it became understood that carbon dioxide and other greenhouse gasses contribute to climate change, Massachusetts and eleven other states petitioned the EPA to classify these gasses as air pollutants and to regulate their emissions from motor vehicles. Massachusetts argued that Section 202(a)(1) of the Clean Air Act requires the EPA to regulate “any air pollutant” which “may reasonably be anticipated to endanger public health or welfare." The EPA listed seven reasons for declining to regulate greenhouse gasses, including that they did not believe that greenhouse gasses were pollutants under the Clean Air Act, they didn’t want to interfere with then President Bush’s global climate talks, and the National Highway Traffic Safety Administration already regulated emissions from vehicles.
The argument was taken to the Supreme Court and the Court ruled 5-4 in favor of Massachusetts. The Court declared that Massachusetts had standing to sue the EPA over potential damage caused to its territory from climate change, that greenhouse gasses fit well within the Clean Air Act’s “capacious” definition of an air pollutant, and that the EPA was unjustified in delaying its decision to regulate greenhouse gas emissions. Specifically, the Court felt that by listing so many unrelated reasons to not regulate greenhouse gas emissions, the EPA was incoherent and not acting in accordance with the law. As such, this decision illuminates the other side of Chevron deference. Unlike Chevron v. NRDC, the Supreme Court found the EPA’s interpretation of the Clean Air Act to be unreasonable given the definition of “air pollutant” provided by the bill. Consequently, the agency was required to regulate greenhouse gas emissions. Within the context of West Virginia v. EPA, Massachusetts v. EPA created the requirement that the EPA regulate greenhouse gas emissions to combat climate change. It also illustrates an example of the agency interpreting its authority under the Clean Air Act unreasonably.
4 Michigan v. Environmental Protection Agency (2015)
In 2012, the EPA found that electric utility steam generating units (EGUs) were producing unhealthy levels of mercury emissions. In response, the agency implemented emissions standards for the units, citing the 1990 Amendments to the Clean Air Act which require the EPA to regulate stationary sources of pollution if they find that such regulation is “appropriate and necessary.” From this, the EPA estimated that regulations would cost power plants $9.6 billion per year, but the agency concluded that costs should not be considered when determining whether power plants should be regulated. Twenty-three states and industry and labor groups challenged the EPA’s refusal to consider costs.
Justice Antonin Scalia delivered the 5-4 majority opinion on the case and analyzed the EPA’s interpretation of the Clean Air Act under Chevron deference. Justice Scalia found that the agency’s interpretation of the statute “strayed far beyond the bounds” of reasonable interpretation by ignoring costs and concluded that the phrase “appropriate and necessary” warranted attention to cost.
This case is significant in relation to West Virginia v. EPA because it determined that the EPA does have to consider the cost of implementing regulations. In the Supreme Court’s majority opinion, they found that generation shifting under the Clean Power Plan would result in billions in compliance costs, heightened retail electricity prices, the retirement of coal plants, and the elimination of tens of thousands of jobs—a significant price to pay for renewable energy. The decision in Michigan v. EPA may also impact future climate change mitigation efforts as costs must be included in EPA assessments, potentially limiting what technologies can be used.
5 King v. Burwell (2015)
In 2010, Congress passed the Affordable Care Act (ACA) to expand health care insurance and decrease the cost of healthcare. As a part of the ACA, “exchanges” were created at the state level, or at the federal level if the state declined to create one, so that people could purchase health care coverage. Additionally, people were required to obtain a minimum level of coverage or pay a tax penalty unless they qualified for an unaffordability exemption. To decrease the number of people that qualified for this exemption, the ACA provided tax credits. However, the language of the ACA only referred to the exchanges established by the states. In response, the Internal Revenue Service (IRS) made the tax credits available to people enrolled in federal exchanges as well.
The state of Virginia declined to establish a state-run exchange. Consequently, a group of residents who, without the tax credits, would have qualified for an exemption, sued the IRS and argued that its creation of federal exchange tax credits exceeded the agency’s authority.
The Supreme Court ruled 6-3 in favor of the IRS, claiming that while Congress did not delegate the authority to determine if tax credits are available at both the state and federal level to the Internal Revenue Service, the language of the Act clearly indicated that Congress intended the tax credits to be available through both exchanges.
When creating the Clean Power Plan, the EPA used the decision in King v. Burwell to justify their regulation of carbon dioxide emissions from existing power plants. In the 1990 Amendments to the Clean Air Act, there are House and Senate versions of an amendment to Section 111(d). In the House version, the EPA is not allowed to cite the section to cover carbon dioxide emissions from existing plants. Meanwhile, in the Senate version, it is. Given the authority the IRS was granted in King v. Burwell, the EPA inferred that they had judicial deference in interpreting the amendments and used the Senate version to develop the CPP. Under the major questions doctrine, this inferred deference did not hold up.