Supreme Court restricts EPA’s authority to mandate carbon emissions reductions

The U.S. Supreme Court on Thursday dealt a major blow to the Environmental Protection Agency’s power to regulate carbon emissions that cause climate change. The decision by the conservative court majority sets the stage for further limitations on the regulatory power of other agencies as well.

By a vote of 6 to 3, the court said that any time an agency does something big and new – in this case addressing climate change – the regulation is presumptively invalid, unless Congress has specifically authorized regulating in this sphere.

At issue in the case were rules adopted by the Trump and Obama administrations and aimed at addressing the country's single-largest carbon emissions problem – from coal-fired power plants. The Obama plan was broad, the Trump plan narrow. The Obama plan didn't regulate only coal-fired plants. Instead, it set strict carbon limits for each state and encouraged the states to meet those limits by relying less on coal-fired power plants and more on alternative sources of energy – wind, solar, hydro-electric and natural gas. The goal of the plan was to produce enough electricity to satisfy U.S. demand in a way that lowered greenhouse emissions.

The concept worked so well that even after Obama's Clean Power Plan was temporarily blocked by the Supreme Court and then repealed by the Trump administration, most utilities continued to abandon coal because it was just too expensive, compared to other energy producing methods. In fact, even without the regulation in place, the reduction targets for carbon emissions were met 11 years ahead of schedule.

Fearing the Obama approach might someday be revived, the coal industry, joined by West Virginia and 16 other states, went to court in support of the Trump plan and its more restrictive interpretation of the Clean Air Act. A federal appeals court in Washington, D.C., ruled against them in 2021.

But on Thursday, the Supreme Court sided with the coal industry, ruling that the Clean Air Act does not authorize anything other than direct regulation of coal-fired plants.

Writing for the court majority, Chief Justice John Roberts said that under what the court has recently called the "major questions doctrine," neither the EPA nor any other agency may adopt rules that are "transformational" to the economy — unless Congress has specifically authorized such a transformative rule to address a specific problem, like climate change.

In his opinion, Roberts wrote: In "certain extraordinary cases, both separation of powers principles and a practical understanding of legislative intent make us 'reluctant to read into ambiguous statutory text' the delegation claimed to be lurking there. Utility Air, 573 U. S., at 324. To convince us otherwise, 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."

Justice Elena Kagan wrote in her dissent: "Today, the court strips the EPA of the power Congress gave it to respond to the most pressing environmental challenge of our time. ... It deprives EPA of the power needed—and the power granted—to curb the emission of greenhouse gasses."

She was joined by the court's other two liberals.

The decision appears to enact major new limits on agency regulations across the economy, limits of a kind not imposed by the court for 75 years or more. The decision, for instance, casts a cloud of doubt over a proposed Securities and Exchange Commission rule that would require companies offering securities to the public to disclose climate-related risks – like severe weather events that have or likely will affect their business models. Also in jeopardy is a new interim rule adopted by the Federal Energy Regulatory Commission "aimed at treating greenhouse gas emissions and their contribution to climate change the same as all other environmental impacts [the Commission] considers."

The decision was a particularly bad omen for environmentalists. In a very real sense, it seemed to reject any holistic regulatory attempt to deal with climate change.

What's more, the way the court dealt with the case is an indication of its new and very muscular approach to regulations in general. After all, when the case was initially before the court, for all practical purposes, there was no regulation in place. The Obama rule had been put on hold by the court and then repealed by the Trump administration; the Trump rule had similarly been paused, and the Biden administration said it would not adopt either the Obama or Trump approach. So it would have been easy, indeed, even expected, that the Supreme Court would toss the whole case out and wait for a new rule to be adopted.

As Case Western Reserve professor Jonathan Adler put it, "The fact that the court took the case shows that these are justices in a hurry" – in a hurry to rewrite the nation's regulatory laws in a way not seen in three quarters of a century.

Harvard law professor Richard Lazarus had an even more ominous view. "By insisting that Congress must specifically authorize significant rules at a time when the justices know that Congress is effectively dysfunctional, the court threatens to upend the national government's ability to safeguard the public health and welfare." The court, he added, is taking these "dire" steps "at the very moment when the United States, and all nations, are facing our greatest environmental challenge of all: climate change."

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