Supreme Court justices lean toward hobbling EPA’s climate authority

The case comes at a critical moment for the Biden administration. Just hours before the court sat for arguments, the U.N. Intergovernmental Panel on Climate Change issued another dire report warning that the effects of climate change were accelerating, and without steep cuts in greenhouse gas emissions, extreme weather disasters and rising temperatures could push countries “beyond their ability to adapt.”

Biden has encountered strong headwinds in his climate campaign. Although the bipartisan infrastructure law enacted last year included some critical funding for electrification and other priorities, Democrats’ centerpiece legislative item, the Build Back Better Act, was stripped of its landmark provision that would have incentivized utilities to move away from coal. The remaining provisions — including hundreds of billions in clean energy tax incentives — are dead in the water.

That has left Biden, like President Barack Obama before him, with little choice but to lean heavily on existing statutory authority — authority the Supreme Court could soon restrict.

And depending on how broadly the high court rules in the case before it about EPA’s authority to directly reduce such pollution, it could make it harder for the government to regulate a broad variety of issues.

Justice Brett Kavanaugh argued that the Obama administration, unhappy with Congress’s inability to pass cap-and-trade legislation, “tried to do a cap-and-trade regime through … an old statute that wasn’t necessarily designed for something like this.”

Alito asked Prelogar about a claim frequently made by EPA’s critics that too much power would lead the agency to regulate everyday Americans’ emissions.

“Under your interpretation, is there any reason why EPA couldn’t force the adoption of a system for single-family homes that is similar to what it is claiming it can do with respect to existing power plants?” he asked.

Prelogar replied that single-family homes can’t sensibly be regulated that way because there is no “adequately demonstrated system that could be cost effectively installed at each and every home given how different they are.”

However, West Virginia Solicitor General Lindsay See, who is leading the challenge to EPA’s authority to regulate power plants, pushed back on the idea that cost could restrict EPA authority precisely because the threat of climate change is so large.

“If EPA is looking at the national or grid-wide level and if it’s dealing with an issue as massive as climate change, it’s hard to see what costs wouldn’t be justified. So that cost limit isn’t really serving as a limiting factor,” she said in response to a question from Justice Elena Kagan.

Kagan, along with the court’s other liberal members, Justices Stephen Breyer and Sonia Sotomayor, probed whether regulatory schemes such as requiring power producers to change their fuel mix for producing electricity really do exceed EPA’s statutory authority.

The use of the word “system” in the Clean Air Act suggests that Congress “wanted to give the agency flexibility to regulate as times changed, as circumstances changed, as economic impacts changed, all things that they could not possibly have known at the time,” Kagan said.

But See argued that Congress intended for the system to lead to emissions “reduction,” which is “different from elimination.”

Sotomayor expressed support for EPA’s goals. “I really wish there was any regulation that eliminated carbon dioxide,” she said. “Even this one might eliminate it from some sources, but this regulation doesn’t eliminate those emissions generally.”

Beyond EPA’s basic statutory authority, the justices spent time probing whether they should rule against EPA narrowly based on a simple statutory reading or if they should employ a stronger tool whose use could have broader implications for the executive branch’s ability to regulate.

At issue is the “major questions doctrine,” which holds that courts should not defer to agencies on questions of “vast economic or political significance.” The Supreme Court recently used it to knock down Biden rules requiring employees of large companies either be vaccinated or masked and tested regularly.

The Supreme Court ruled in 2007 that EPA has some amount of authority to regulate greenhouse gases, something the challengers confirmed they were not questioning. But the justices struggled to identify whether this sort of climate regulation was of vast enough significance to trigger the doctrine.

EPA and the power companies supporting its position argued that environmental regulations are well within the agency’s wheelhouse and that pollution credits trading and generation shifting are well-established strategies successfully used for other pollutants. That would mean this is more of a standard rulemaking subject to basic statutory interpretation, not a major question.

But Alito questioned whether EPA could ramp up its regulations in the future until they have enough of an effect to implicate a major question.

In prior major questions cases, Prelogar replied, the court “looked at the agency action first, and they have pressure tested against the statute before jumping to major question,” meaning the court should wait and see what EPA proposes before deciding anything.

Justice Amy Coney Barrett, meanwhile, noted that prior major questions rulings have focused on rules for topics outside an agency’s expertise — such as the CDC’s Covid-19 eviction prohibition or the FDA’s ability to regulate tobacco.

“Here, for thinking about EPA regulating greenhouse gases, well, there’s a match between the regulation and the agency’s wheelhouse, right?” she asked.

“The agency really isn’t regulating emissions,” replied Jacob M. Roth, a Jones Day attorney representing coal companies challenging EPA’s authority. “It’s regulating industrial policy and energy policy that is going to have downstream emissions consequences.”

However, it was unclear if any other justices were persuaded that EPA had stayed within its regulatory lines.

Alito noted near the end of the nearly two-hour arguments that power companies arguing in favor of EPA’s authority had described how compliance flexibilities under a cap-and-trade system are “good policy” that is preferable for regulated utilities.

“I think those are all solid arguments that we need to consider,” he said.

The court also showed little interest in the Biden administration’s arguments that procedural quirks of this case should cause it to be dismissed without defining EPA’s authority, with only a couple of justices bringing up the standing issue at all.

“The solicitor general makes a strong argument that states are not harmed here because under the current state of affairs, there is no rule in place,” said Justice Neil Gorsuch.

See replied that her state and others could still face requirements if the Obama-era Clean Power Plan ever were brought back into effect. The Supreme Court can relieve them from that potential future harm now by defining the scope of EPA’s authority, she said.

Prelogar later asserted that EPA had no plans to reinstate the Clean Power Plan, largely because the passage of seven years since its finalization have effectively made it obsolete.

West Virginia and the other states liked the Trump EPA’s much more lenient ACE rule, Chief Justice John Roberts argued. Now that it has been vacated, those states are unhappy. “I don’t understand why that’s not fully justiciable.”

West Virginia Attorney General Patrick Morrisey told reporters after the arguments that he is “cautiously optimistic” about the results.

“I’ve always said very clearly that major questions of the day need to be resolved by Congress, as opposed to an unaccountable bureaucracy. And those arguments were made very plain and clear today,” he said outside the courthouse. “And we’re hopeful that the Court hears them and agrees with that perspective.”

Environmentalists again called on the Supreme Court to uphold EPA’s authority.

“When an industry inflicts growing damage and risk on the nation’s economy and the health of its people, it’s the business model, not our laws, that must change,” Manish Bapna, CEO of the Natural Resources Defense Council, said in a statement.

Sierra Club President Ramón Cruz said the wide support for EPA’s carbon rules should help convince the court to uphold its power.

“A broad coalition of public health experts, businesses, scientists and even the utilities that would be regulated are on the side of the EPA’s authority today because they know that the Supreme Court must respond by rejecting this fringe attempt to undercut climate action when it is needed most,” Cruz said.

EPA is on track to propose a new rule to tackle power plant greenhouse emissions by the end of the calendar year, Prelogar told the court. The Biden administration’s most recent regulatory agenda listed a July target for the proposal. Such rules typically take a year beyond proposal to finalize, Prelogar added.

The cases are consolidated under West Virginia v. EPA, 20-1530. A ruling is expected by the end of the term in late June.