Court, Under Guise of Major Questions Doctrine, Slashes EPA Authority to Regulate Power Plants

Steven D. Schwinn, University of Illinois Chicago School of Law

The Supreme Court ruled this week in West Virginia v. EPA that EPA lacked authority to adopt generation-shifting measures to regulate power-plant emissions, because Congress didn't grant EPA that authority with sufficient clarity in the authorizing legislation.

The ruling strikes the Clean Power Plan, a regulatory scheme that is no longer in use, anyway. (More on that below.)

Bigger picture, the ruling creates a new separation-of-powers rule--the major questions doctrine--that says that if Congress wants to delegate regulatory authority over a significant policy question to an administrative agency, it must do so with clarity.

Because of lingering questions--What is a "major question"? What does it mean for Congress to legislative with sufficient specificity?--and because Congress often delegates authority in broad terms, this new doctrine threatens to take down a wide array of federal agency regulations, across the regulatory board. In short: The ruling is a potentially sweeping setback to the administrative state.

The case challenged EPA's authority to adopt the Clean Power Plan, a complex regulatory scheme that, in short, set emissions standards for existing power plants based on generation-shifting, that is, a power-plant's shift to cleaner sources. EPA claimed authority under the Clean Air Act, which authorizes EPA to select the "best system of emission reduction" for regulating power plants.

This didn't sit well with several States. They claimed that this provision authorized EPA to regulate only emissions from within power plants ("inside the fenceline" regulations), and not to force power plants to shift to new sources of energy or to engage in cap-and-trade ("outside the fenceline" regulations). In other words, they claimed that the generation-shifting standard in the Plan was not a "system of emission reduction," because it forced plants to make changes outside their existing facilities.

The Trump Administration later disavowed the Plan, and the Biden Administration put it on ice, because by then it was obsolete. (Market forces drove shifts to cleaner power since its original adoption.) The Biden Administration announced that it'd consider new rules, but continued to defend the Plan in court.

The Court first ruled that the case wasn't moot: it fell under the "voluntary cessation" exception, because the Biden Administration could re-adopt the Plan, or something like it.

The Court ruled next that the Plan violated the major questions doctrine. The Court held that EPA, in adopting the Plan, "assert[ed] highly consequential power" without "clear congressional authorization." In other words, the Plan effects Big Policy, but the Clean Air Act only authorized EPA to select the "best system of emission reduction." The statutory text was too vague to support EPA's regulatory regime.

Justice Gorsuch concurred, joined by Justice Alito, and set out a full-throated articulation of the major questions doctrine and his view of its basis in constitutional law.

Justice Kagan dissented, joined by Justices Breyer and Sotomayor. She argued that the Clean Power Plan fits well within valid congressional authorization, and that the Court has no business second-guessing the judgments of Congress and EPA on something as important as greenhouse gas regulation.