Coal Country Court Case Could Transform America’s Climate Regulation

On Monday, February 28, the US Supreme Court heard oral arguments in the case of West Virginia vs the Environmental Protection Agency, sponsored by Republican-led states along with coal mining interests. There are two main questions before the court. First, does the US Supreme Court even have jurisdiction to resolve this question, and does the lower court's decision on appeal here violate the so-called major questions doctrine, which holds that if Congress wants to delegate broad powers to federal administrative agencies it must do so clearly? How the Supreme Court chooses to interpret this doctrine has enormous implications for federal regulatory policy. If the court interprets it in a broad, expansive fashion (as we believe the conservative justices on the court will do), the court would "curtail the regulatory scope not just of the EPA but many other federal agencies as well" according to scotusblog.com. In addition to the EPA, OSHA, FDA, and the SEC might find their activities limited, too. 

The highly technical legal issue here stems from an interpretation of Section 7411 of the Clean Air Act. The Obama administration, in promulgating regulations to restrict CO2 emissions, included industry-wide remediation measures in its 2016 Clean Power Plan. The issue is whether it exceeded its administrative authority in proposing pollution controls that were not "inside the fenceline", that is, industry-wide as opposed to plant-specific. The Supreme Court ruled in favor of states challenging this proposed EPA plan, which never went into effect. The Trump administration repealed the Clean Power Plan, replacing it with a more industry-friendly Affordable Clean Energy Rule in 2019, which another set of plaintiffs challenged in court. In January of last year, the DC Court of Appeals vacated the Trump administration's repeal of the Clean Power Plan and sent the issue back to the EPA. The Biden administration has stated in this case that it will not return to the previous Clean Power Plan but are instead redraft its own regulations with respect to power plant greenhouse gas emissions. The District of Columbia's Circuit Court final decision is on hold until EPA issues a rewrite of power plant emissions regulations.

Several legal observers have questioned whether the states and coal interests even have a legal right to bring this case before the Supreme Court since the lower court's final ruling is awaiting further power plant emissions regulations by the EPA. Nevertheless, the West Virginia solicitor requested that the Supreme Court invalidate the lower court's ruling (which put on hold Trump's Affordable Clean Energy Rule) stating that West Virginia. would benefit (economically) from a Supreme Court decision that reimposed more lenient greenhouse gas regulations. The US Solicitor General, representing the Biden administration, suggested that the Republicans and their allies in the coal industry were attempting to preemptively constrain the power of the EPA in future rulemaking.

Interestingly, it was not clear from the justices' comments whether there was unanimity that the major questions doctrine applied in this case. It was clear however that justices Roberts, Alito, and Kavanaugh did see implications for the major questions doctrine while justices Barrett, Thomas, and Gorsuch seemed less convinced. (As an aside we should point out that Gorsuch's mother was head of the EPA under President Reagan.)

Because of the oddness of this case, essentially challenging a minor Obama-era power plant regulation that never went into effect, it's very tough to guess how the court will ultimately rule. But it is clear to us that the court will remain sensitive to any administrative policy that - in the court's view- exercises an expansive use of federal regulatory power. A Supreme Court decision, in this case, is expected sometime this summer. Depending on how it goes, it could have seismic ramifications for the American regulatory process. 

By Leonard Hyman and William Tilles

More Top Reads From Oilprice.com:

• Why China Should Want Russia's Invasion To End
• Kazakhstan Braces For Russian Sanction Fallout
• Big Oil's Sudden Decision To Exit Russia Comes At A High Price