A new twist in the US clean energy saga

The legal framework underpinning the US's environmental policies has a long and complex history.

One of US President Barack Obama’s signature efforts to fight climate change was the 2015 Clean Power Plan (CPP), a regulation of the Environmental Protection Agency (EPA) to shift electricity generation away from coal and toward cleaner sources of energy. Donald Trump ran for President on a pledge to repeal the CPP, and once he took office, he was true to his word and replaced it with a much weaker rule.

On January 19, 2021, the day before Joe Biden was inaugurated as US President, the US Court of Appeals for the District of Columbia Circuit threw out the Trump administration's measures, ruling they did not comply with the Clean Air Act’s mandate to reduce air pollution. In response, the Biden government said it was not going to reinstate the CPP because it had become largely obsolete, and vowed to come up with a different set of rules to move the US away from coal.

The US environmental community's hopes were dealt an unexpected blow on October 29, 2021, however, when the US Supreme Court announced that it was going to review the Court of Appeals decision, even before EPA issued its new rules. That led to widespread anxiety that the Supreme Court – now with a 6-3 conservative majority, including three Trump appointees – would take away most or all of EPA’s powers to fight climate change.

The Supreme Court issued its decision on June 30, 2022 by the expected 6-3 vote. In a case called West Virginia v. EPA, the Court ruled against EPA, but not as harshly as had been feared. The Court declared that EPA had gone too far with the CPP, but it left its  other authorities largely untouched. 

The Supreme Court based its decision on the “major questions doctrine” – a fairly recent judge-made rule that a federal agency needs very explicit direction from Congress before it can take an action of great economic or political significance. A general mandate to solve a big problem is not enough. Though the Supreme Court had ruled in a landmark 2007 decision called Massachusetts v. EPA that the Clean Air Act requires the EPA to regulate greenhouse gases, this time the Court said the statute wasn’t specific enough to authorize the CPP, because that went beyond regulating specific power plants, one at a time, to governing the entire electric grid as an interconnected system.

A new obstacle for clean energy

Requiring great specificity from Congress is a big problem. Congress has not enacted a major new environmental law since 1990. The partisan divide between Democrats (who generally favor strong environmental rules) and Republicans (who generally oppose them) has grown so wide that Congress has become paralyzed on this issue, and on many others.

Another big problem is that no one really knows what is a “major question” and what isn’t. That uncertainty will fuel lawsuits. The US has much more litigation challenging government action than any other country; a database maintained by the Sabin Center for Climate Change Law shows that of the nearly 2,000 lawsuits around the world related to climate change, more than 70 per cent are in the US.

In the wake of the West Virginia decision, those opposing federal action are likely to raise the major questions doctrine, in addition to their other claims. For example, the Securities and Exchange Commission has proposed an important rule mandating disclosure of companies’ direct and indirect greenhouse gas emissions. When that rule is issued in final form, it will surely be challenged in court, and one of the arguments will be that the SEC needs clearer direction from Congress.

This uncertainty will extend beyond environmental and energy rules. Federal actions on food and drugs, health and safety, telecommunications, and other areas will be subject to attack. That is not to say that the lawsuits will succeed, or that the federal rules will be held in abeyance while the litigation proceeds.

This uncertainty will extend beyond environmental and energy rules. Federal actions on food and drugs, health and safety, telecommunications, and other areas will be subject to attack. That is not to say that the lawsuits will succeed, or that the federal rules will be held in abeyance while the litigation proceeds.

But it will be difficult for companies to be confident what rules apply to them.

Despite all of this, the US government still has many tools to fight climate change. The West Virginia decision should not affect the ability to require cleaner and more fuel efficient motor vehicles. It does not impair EPA regulation of greenhouse gas emissions from stationary sources like power plants and factories that also emit other air pollutants. It does not mean that EPA can no longer regulate the other environmental impacts of coal plants and coal mines – air pollution, coal ash, heated water and other types of air pollution. Government subsidies and incentives for renewable energy, and regulations requiring greater energy efficiency in appliances and industrial equipment, are not touched. State and local governments retain all their powers.

Therefore one tool has been removed from the toolbox of US climate regulation, but many remain. And the movement toward clean energy will continue and accelerate.