5 things to know about the Supreme Court’s recent climate ruling

Late last month, the Supreme Court ruled that the U.S. Environmental Protection Agency’s Clean Power Plan, a 2015 regulation limiting carbon dioxide emissions from power plants, exceeded the agency’s authority under the Clean Air Act. Where does this decision leave climate policy at EPA? Down but not out. The agency still has meaningful options for decarbonizing the power sector, but it won’t be able to implement them quickly — or without a fight.

Here are five things to know — some encouraging, some not — about the road ahead. 

1. EPA can issue a new rule

As many environmental lawyers have already rushed to clarify, the court didn’t rule that EPA can’t regulate power plants’ carbon emissions at all. Instead, it concluded only that EPA can’t regulate those emissions in the way the Clean Power Plan did.

Under the relevant section of the Clean Air Act, pollution limits must be based on the ​“best system of emission reduction.” In designing the Clean Power Plan, the Obama-era EPA concluded that, because power plants operate on an interconnected grid and electricity is fungible, the best system for reducing the plants’ carbon emissions included ​“generation shifting” — that is, using higher-emitting coal plants less and lower-emitting gas plants and non-emitting renewables more.

The court has now nixed that approach, but EPA can — and will — issue a new set of limits premised on a different means of reducing pollution from the power sector.

2. The new rule needn’t be a weak one

The Clean Power Plan never actually took effect because the Supreme Court stayed its implementation in early 2016 and the Trump administration replaced it with a much weaker rule in 2019. (Litigation over that Trump rule is what yielded last month’s decision.) The Trump administration’s preferred alternative to generation shifting — modestly increasing efficiency at coal plants — was expected to result in little to no overall reduction in carbon emissions from the power sector. But other approaches that could achieve much larger cuts remain available to the Biden EPA.

The agency could, for instance, base its emission limits on an assumption that coal plants will sometimes burn gas instead — a practice known as co-firing. Alternatively or additionally, it could assume that some old plants will be retrofitted with equipment that captures a portion of their carbon output and sequesters it underground. Newly constructed coal plants are already subject to such a requirement.

If these other options are so great, why didn’t EPA choose them the first time around, when it issued the Clean Power Plan? Because they’re more expensive than generation shifting on a per-ton basis. That doesn’t mean, however, that they’re too costly to qualify as a ​“best system of emission reduction” under the Clean Air Act, especially now that generation shifting is off the table.

3. The new rule won’t be finalized anytime soon

Rulemaking is, for better or worse, a slow process. Before EPA can even propose a new set of emission limits, the agency must conduct extensive legal and technical analysis. It then has to give the public time (usually a couple of months) to comment on the proposal. And it has to respond to any significant issues raised in those comments before finalizing the policy.

According to EPA’s most recent regulatory agenda, it won’t even propose a new carbon rule for power plants until March 2023. Finalization likely wouldn’t follow until the fall, at the earliest, and it could be years more before any plant is actually obligated to comply with the new limits.

4. The new rule will be litigated

Once EPA does finalize new limits — no matter what system of emissions reduction it adopts and no matter how extensive its supporting analysis — the agency will get sued again, likely by many of the same coal companies and states that brought last month’s case. As they did with the Clean Power Plan, the challengers will ask the courts to put EPA’s rule on hold while the litigation plays out. If the courts oblige, implementation of emission limits will be delayed years further, even if EPA ultimately wins the suit.

5. It’s not an easy time to be in the business of making rules

While the consequences of the Supreme Court’s ultimate decision on the Clean Power Plan are fairly narrow, the implications of the path that the court’s conservative majority took to reach that conclusion are much broader and could muck up the regulatory works at EPA and many other agencies.

Typically, courts defer to an agency’s reasonable interpretation of a broad statutory phrase like ​“best system of emission reduction” — on the theory that Congress used the broad language intentionally, to afford the agency flexibility to address a problem on which it (and not the court) has expertise.

But in finding the Clean Power Plan unlawful, Chief Justice John Roberts’ majority opinion invokes an exception to this general interpretive rule. Under the ​“major questions doctrine” — a phrase that had never before appeared in a majority opinion — if an agency seeks to make ​“unheralded” use of its authority in connection with a policy of ​“vast political and economic significance,” a reasonable interpretation of broad statutory text isn’t enough. Instead, Roberts explains, the agency must point to a ​“clear statement” from Congress authorizing the agency’s chosen course of action.

While the court repeatedly stresses that this newly labeled ​“major questions doctrine” will apply only in ​“extraordinary cases,” it provides precious little guidance to lower courts on how to distinguish the ordinary from the extraordinary. What, for instance, counts as an ​“unheralded” policy? No rule will look exactly like its predecessors, so how unique is too unique? Roberts’ majority opinion is similarly elliptical regarding the dividing line between acceptable and ​“vast” political and economic significance, and on what constitutes clear authorization from Congress.

The resulting uncertainty is already encouraging a barrage of major-questions challenges to all sorts of policies. Even worse, it could chill agency ambitions — not just with respect to climate and not just at EPA, but on a range of health and safety issues across the federal government. That likely suits proponents of the doctrine just fine. But it’s bad news for the rest of us.