SAN DIEGO — The Supreme Court’s recent decision in West Virginia v. EPA and its potential effects on the nation’s coal-burning power plants occupied a session on EPA’s authority over CO2 emissions at the National Association of Regulatory Utility Commissioners Summer Policy Summit.
NARUC’s Subcommittee on Clean Coal heard from attorney Matthew Leopold, who helped lay the legal groundwork against the EPA in the West Virginia case during a discussion moderated by West Virginia Public Service Commission Chair Charlotte Lane.
The high court’s 6-3 decision on June 30 ruled that EPA lacks authority to compel generation shifting to reduce carbon emissions, saying the agency failed to provide “clear congressional authorization” for the rulemaking. (See Supreme Court Rejects EPA Generation Shifting.)
While environmentalists decried the decision, Lane called it “exciting” given the push to retire coal plants.
“We all need to work together to make sure [EPA] regulations do not cause grid reliability problems, or make electricity less affordable for ratepayers,” she said.
Leopold, a former EPA general counsel during the Trump administration and now a partner at law firm Hunton Andrews Kurth, said the decision checked but did not fundamentally alter EPA’s ability to regulate greenhouse gases from power plants under the Clean Air Act.
Yet the decision could have far-reaching effects on federal agencies’ rulemaking, he said. It invoked the major questions doctrine, a rarely cited legal principle affecting Congress’ delegation of authority to executive agencies, to say the EPA had overstepped its bounds.
Going forward, courts will scrutinize EPA and other agencies’ actions to ensure they have a clear basis in statute and historical precedent, Leopold said.
“If an agency’s getting out of its lane, and it’s trying to do something that hasn’t historically done, it may be under threat,” he said. “And so, the example right now on the Biden administration’s list of big rules … is its [approach] to climate change that a lot of lawyers, including myself, are saying might be vulnerable.”
He cited a proposed rule requiring that public companies disclose business risks related to the climate and greenhouse gas emissions to the Securities and Exchange Commission.
“There, you have similar facts [to West Virginia v. EPA because] … the SEC has not regulated climate change since [the agency began in] the 1930s,” he said. The rule would be a “new transformative approach that [the SEC has] never done before. There’s no express discussion of environmental regulation in their statutory authority. And so, I think, you know, the administration is going to have to look long and hard about how they go about finalizing that rule.”
“More to the point and more practical, is how this decision is going to affect fossil-fired and coal generation,” Leopold said.
The case calls into question whether the EPA can require emissions controls only at the source power plant or whether it can go “outside the fence” to regulate emissions.
Requiring a power plant to switch fuels might be permissible but not “forcing a coal plant to become a gas plant,” Leopold said. The decision raised questions about possible carbon capture rules and whether emissions reductions that are not cost-effective would be permitted, “for instance if a plant is scheduled to close in 5 years,” he said.
For the foreseeable future, the EPA is going to “hit singles and doubles rather than … swinging for the fence,” being careful to base its actions on statutory authority and not push its boundaries beyond what the courts deem permissible under West Virginia v. EPA, Leopold said.