On June 30, the last day of an historic term, the Supreme Court issued its decision in West Virginia v. EPA. As expected, the Court struck down EPA's 2015 Clean Power Plan (CPP), which was intended to reduce greenhouse gas (GHG) emissions by shifting the generation of electricity from coal-fired plants to gas-fired facilities and renewables through a cap-and-trade system.

In a narrow sense, striking down the CPP has little practical impact because the power sector has already exceeded the CPP's 2030 goal for generation shifting for reasons unrelated to the rule—cheap gas due to fracking, the sharply declining cost of renewables, tax incentives, state clean energy mandates, and the enormous amounts of renewable energy being purchased by large corporations seeking to meet their own sustainability goals. The real impact is likely to come in future legal challenges not only to climate regulations, but to all federal agency rules that address "major questions" absent a crystal-clear delegation from Congress.

The majority's reasoning

Writing for the six conservative justices, Chief Justice Roberts employed the so-called "major question doctrine" to hold that the CPP exceeded the authority Congress delegated to EPA in the Clean Air Act. Under that relatively new—and to many, controversial—doctrine, courts are instructed to be skeptical toward regulations that address major public policy questions, which the Court defines as matters of "vast economic and political significance." In those instances, the courts should be "reluctant to read into ambiguous statutory text the delegation claimed to be lurking there." "To convince us otherwise," the opinion continues, "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 problem, according to Roberts, is "agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted." Here, the Court concluded that the CPP addressed a major question because the GHG cap-and-trade system it contained would have substantially restructured the American energy market. According to the Court, Congress would want to decide for itself whether the EPA had authority to regulate emissions in this way itself, stating that "[t]here is little reason to think Congress assigned such decisions to the [EPA]." While conceding that a cap on GHG emissions might be sensible, the Court concluded that "it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in [Clean Air Act] Section 111(d). 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 short, the major question doctrine says that if at least five Justices conclude that a regulation would have vast economic and political significance, and that Congress has not spoken clearly enough in authorizing an agency to address the issue, the regulation must fall.

Justices Gorsuch and Alito take a harder line

Justice Gorsuch (in a concurring opinion joined by Justice Alito) would constrain agency regulatory discretion even more severely. Rather than viewing the major question doctrine as a rule of statutory construction, as Roberts indicates, Gorsuch asserts that the matter is rooted in the Constitution itself. According to him, the CPP rule violates Article I, section 1, which provides that: "All legislative powers herein granted shall be vested in a congress of the United States, which shall consist of a Senate and House of Representatives."

This is known as the antidelegation or nondelegation doctrine, a more extreme cousin of the major question doctrine. If Congress were permitted to divest its legislative power to the Executive Branch, Gorsuch warns, "agencies could churn out new laws more or less at whim," and "[i]ntrusions on liberty would not be difficult and rare, but easy and profuse." Among other things, Gorsuch sees constitutional limits on delegation as necessary to protect the proper role of states.

The dissent's response

Led by Justice Kagan, the three dissenters counter that Section 111 of the Clean Air Act clearly authorizes the EPA to promulgate the CPP. It directs EPA to regulate stationary sources of any substance that "causes… air pollution" that "may reasonably be anticipated to endanger public health or welfare." Kagan observes that GHGs not only fit that description, but they represent the most pressing environmental challenge of our time.

To address this public health danger, Section 111 authorizes EPA to select the "best system of emission reduction which … the [EPA] Administrator determines has been adequately demonstrated." 42 U.S.C. § 7411(a)(1) (Emphasis added.) The dissent notes that the dictionary definition of "system" is very broad: "a complex unity formed of many often diverse parts subject to a common plan or serving a common purpose," according to Webster's. As to "adequately demonstrated," Kagan notes that cap-and-trade systems (including EPA's longstanding acid rain program) are an ordinary part of modern environmental regulation.

Kagan closes with a reminder that "[o]ver time, the administrative delegations Congress has made have helped to build a modern Nation." Citing the long history of progress on such issues as industrial safety, car and airplane safety, and food safety, in addition to cleaner air and water, she writes that: "It didn't happen through legislation alone. It happened because Congress gave broad-ranging powers to administrative agencies, and those agencies then filled in—rule by rule by rule—Congress's policy outlines." But rather than stand aside and let Congress do its job, Kagan accuses the majority of substituting its own ideas about delegation for those of Congress, thereby appointing itself as the final arbiter of how much regulation is too much. In this case, "[t]he Court appoints itself—instead of Congress or the expert agency—the decisionmaker on climate policy. I cannot think of many things more frightening."

What does this mean for EPA's efforts to reduce GHG emissions from the electric generating sector?

Because the Court focused its skepticism on the cap-and-trade component of the CPP and the specific text of Section 111(d), EPA likely could propose regulations tightening the GHG emission standards applicable to coal-fired powerplants (often referred to as the "inside the fence" approach). For example, EPA could require that coal-fired powerplants implement carbon capture technology. Such a rule would certainly hasten the shuttering of that fleet, but, because that trend is already well underway, it's not clear how much difference it would make, particularly after years of litigation on any such rule. Moreover, there's some chance that West Virginia and other coal states could convince the Court that even inside-the-fence regulations require major question scrutiny because of the economic and political impact on the coal industry.

What does this mean for EPA's other efforts to fight climate change?

The Court's ruling was limited to existing power plants, so EPA can likely still apply GHG limitations to new plants (as it did in 40 C.F.R. 60, Subpart TTTT, adopted in 2015). The case also does not limit EPA's ability to regulate toxic air pollutants from existing coal-fired powerplants, which may reduce GHG emissions as a side benefit. Such regulation would also increase production costs, thereby making coal-fired plants even less competitive against renewables. The ruling also does not affect EPA's pending rulemaking to reduce methane emissions from the oil and gas industry, nor would it limit efforts to reduce motor vehicle tailpipe emissions.

What does this mean for other federal agencies fighting climate change?

In the wake of this big victory for the coal industry, interested parties will probably invoke the major question doctrine against any federal regulation addressing climate change. The outcome in each case will turn on the assessment of the courts as to: (a) the economic and political impact of the regulation; and (b) the clarity with which Congress has spoken.

In the near term, the doctrine will undoubtedly be invoked by opponents of the SEC's proposed regulation requiring publicly traded corporations to make certain climate change-related disclosures. When that proposed regulation was issued on March 21 by a 3–1 vote, the dissenting Commissioner, Hester Peirce, quoted from Utility Air Regulatory Group v. EPA, a 2014 Supreme Court case that the majority in West Virginia heavily relied upon in striking down the CPP. Without using the term, the language quoted by Peirce describes the major question doctrine: "When an agency claims to discover in a long-extant statute an unheralded power to regulate 'a significant portion of the American economy,' we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast 'economic and political significance.'"

What does this mean for the ongoing climate efforts of the states and the private sector?

State and private sector efforts are now even more important. Although a federal cap-and-trade system would be more effective, states are moving forward on their own. California has a longstanding cap-and-trade program, and Washington will launch one on January 1 of next year. In the East, a dozen states are trading allowances within the power sector through the Regional Greenhouse Gas Initiative (RGGI). In addition, more than a dozen states have enacted statutes requiring their electric utilities to reach zero GHG emissions by mid-century. Progress toward these goals is also being boosted by the large and growing amounts of renewable energy that large corporations are procuring as they strive to meet their own ambitious sustainability commitments.

Finally, what does this mean for the ability of any federal agency to address any big problem?

West Virginia v. EPA was about climate change, but the major question doctrine will now likely arise in all major federal rulemakings. As long as Congress remains gridlocked, new legislation to overcome this new judicial constraint will be unlikely, thereby frustrating the efforts of the federal government to address big problems. Instead, the judicial branch will often be left with the final word. It's not clear how often or how extensively the Court will exercise the power to block regulations it believes go too far, but it's highly unlikely that the Court is done.