Less than a year after the Supreme Court settled one battle over EPA’s climate authority, the Biden administration is teeing up round two.
EPA is expected to soon propose the strongest-ever restrictions on greenhouse gas emissions from fossil-fuel-fired power plants, the nation’s second-largest contributor to global climate change.
The regulation would follow the Obama administration’s signature 2015 Clean Power Plan, which the Supreme Court ruled out of bounds 10 months ago using the “major questions” doctrine, a legal theory that says Congress must explicitly authorize agencies to regulate significant issues — and one that conservatives are likely to wield against President Joe Biden’s power plant rule.
West Virginia Attorney General Patrick Morrisey (R), who led the charge against the Obama regulation, signaled his office is prepared for the next fight.
“We are eager to review the EPA’s new proposed rule on power plants, and we’ll be ready once again to lead the charge in the fight against federal overreach, just as how we successfully have done in West Virginia v. EPA,” Morrisey said in a statement.
Unlike the Clean Power Plan, which technically never went into effect after the Supreme Court stayed its implementation in 2016, the Biden rule is expected to rely on rarely used technology that allows for the capture of greenhouse gas emissions from power plants. The Obama rule sought to reduce emissions across the power system by shifting generation from fossil fuels to renewable energy.
The release of the Biden EPA proposals — one of which would target existing coal- and natural-gas-fired plants and the other new gas plants — are now expected early in May. The agency expects to offer a final rule next year, opening the door to an anticipated flood of legal challenges.
An attorney who advocated for the Supreme Court to use the major questions doctrine in its West Virginia ruling said the Biden administration’s response to the June 2022 decision has been to roll out multiple, interlocking climate rules, instead of marquee regulations like the Clean Power Plan.
It’s unlikely that all of those rules will survive Supreme Court scrutiny, said Michael Buschbacher, a partner at Boyden Gray & Associates PLLC. Biden’s expected power plant rule could be among the casualties.
“The Biden administration appears to just want something to stick, essentially scaring industry into self-regulating,” he wrote in an email. “It’s a regulatory game of chicken, daring the Supreme Court to do the work of stopping executive action on multiple fronts. This approach could backfire spectacularly.”
The views of the Supreme Court’s six-justice conservative majority “unquestionably loomed large over the agency’s decisionmaking process in ways that likely impeded its ability to fulfill its statutory mandates,” said Karen Sokol, a Loyola University law professor.
“No matter what the proposal looks like,” she said, “the chances that it will end up before the court again are much higher than they would have before the court’s seeming de facto abandonment of agency deference.”
Sokol added that the “cloud of uncertainty” that has hung over power plants regulations since the Obama administration “will likely not lift anytime soon, to the detriment of public health and safety and democratic governance more broadly.”
Jay Duffy, litigation director for the Clean Air Task Force, said the group has recommended that the rules be “simple and clear.” It has also suggested rules that divide the fossil-fuel-fired power fleet into subcategories based on how plants operate and the cost of pollution controls, as well as to set standards based on “inside the fence” fuels, efficiencies, scrubbers, and carbon capture and storage.
“These are traditional pollution controls and means to design standards and fall well within West Virginia’s holding,” said Duffy, who represented environmental respondents in the case. “The Supreme Court takes up big legal questions, not these sort of weedy, record-based, technical questions about whether this or that at-the-source pollution control is the best to reduce emissions.”
Those briefed on EPA’s proposals say they in fact create subcategories for each of the three sources categories covered — including new gas plants and existing coal- and gas-fired units. The standards for baseload power that will remain in operation long-term are linked to CCS, but units that provide the grid with backup power or that commit to a certain retirement schedule will qualify for laxer standards. New gas units will be offered an alternative standard based on co-firing with hydrogen.
Lissa Lynch and David Doniger argue in a new report for the Natural Resources Defense Council that the administration has a “robust legal basis” for strong carbon standards, undergirded in large part by the Inflation Reduction Act that Biden signed into law three months after the Supreme Court ruling.
The law, which offers tax incentives and grants for clean energy technology, also “expressly” designates carbon dioxide and other greenhouse gases as air pollutants under the Clean Air Act, the pair said. They wrote that the law updates the Clean Air Act “to reaffirm the EPA’s authority and direct the agency to issue new standards for power plant carbon dioxide emissions while taking into account the new tax incentives and grants.”
The Inflation Reduction Act boosts CCS, which the authors say “falls squarely within the bounds of what the West Virginia decision allows EPA to consider in establishing carbon pollution standards.” Carbon capture, the authors wrote, “is similar to sulfur dioxide scrubbers and other pollution controls on which the EPA has been basing standards for decades.”
They noted the court in West Virginia v. EPA ruled that the Obama-era Clean Power Plan went beyond EPA’s authority “because it was based not on what is achievable through pollution controls but on ‘shifting generation’ — i.e., replacing coal and gas plants with wind and solar power.”
But, they added, the court made it clear that EPA “retains its ‘traditional’ authority to base standards on technology that ‘caus[es] plants to operate more cleanly’ and ‘ensur[es] the efficient pollution performance of each regulated source.'”
Jeff Holmstead, a former EPA air chief and partner at Bracewell LLP, said the West Virginia decision offered EPA clarity on what it can do as well as what it can’t.
“From just a good policy perspective, I think the Supreme Court power plan case helped quite a bit,” he said.
For example, the court explicitly declined to use its West Virginia decision to limit EPA to emissions controls that can be achieved “inside the fenceline” at power plants. While the Trump-era rule that replaced the Clean Power Plan required only modest heat-rate improvements on-site at existing generating stations, it provided states very little flexibility in designing their implementation plans.
“The Supreme Court said, ‘No, states have have discretion as long as they meet the targets,’” said Holmstead.
The high court’s decision does mean that EPA can’t reprise the Clean Power Plan’s gambit of basing emissions limits on what can be achieved through trading. But it opens a space for states to choose trading as a compliance mechanism.
In fact, the court spoke approvingly of a George W. Bush-era rule for power plant mercury — which Holmstead oversaw at the agency — that set limits based on what power plants can achieve but created compliance flexibility through trading.
Holmstead expected EPA to afford states similar flexibility in carrying out this rule. That might be expressed in a guidance to states that EPA releases after the proposals.
“I would say like states like California and the [Regional Greenhouse Gas Initiative] states that already have cap-and-trade programs will be able to continue to use those [for EPA compliance] as long as they get to the same emission reductions that EPA is saying,” he said.
Eleven Northeastern and mid-Atlantic states currently participate in RGGI.
Although the Obama-era Clean Power Plan was never officially implemented, the power sector achieved the goals of the regulation, which were to curb carbon emissions from the sector by 32 percent from 2005 levels before 2030, more than a decade ahead of schedule.
Noah Kaufman, former White House climate official and a current climate economist at Columbia University, wrote on Twitter that the Biden power plant rules could have similar impact — even if courts never allow them to take effect.
“We’ll analyze these EPA climate regs as if they’ll stay in place,” he wrote, “but if they’re likely to be rolled back by an ideological court or future admin, what matters most is how they’ll move markets right away.”
