The Supreme Court recently decided a case related to the Clean Power Plan, an Obama-era regulatory scheme that would apply to the energy industry across the country. The main holding of the opinion in West Virginia v. EPA focused on the degree to which an administrative agency may assert power over the states, and by extension the economy, by congressional grant. In other words: how much authority may an administrative agency assert without an explicit statutory grant of the powers it is trying to assert over a specific process.

West Virginia involved a section of the Clean Air Act, the New Source Performance Standards program (codified in Section 111). That program seeks to regulate the release of substances into the air not covered under the more specific National Ambient Air Quality Standards (NAAQS, Sections 108-110) and Hazardous Air Pollutants (HAP, Section 112) regimes. The New Source Performance Standards program was made to regulate stationary sources of air pollution “which may reasonably be anticipated to endanger public health or welfare.” This has been interpreted to allow the regulation of carbon dioxide as a greenhouse gas because climate change poses a threat to the health and welfare of the public.

In 2015, the EPA interpreted its mandate under this statute to allow the agency to develop emissions standards (per unit of energy) that new and old energy producing sources must conform to called the Clean Power Plan. For new sources, this meant producing energy using a low-emissions process. For energy producers with coal plants already in use, this meant conforming in one of three ways: (1) technical updates, which could only effect minor benefits, (2) shifting to natural gas to produce energy, or (3) shifting to renewables, like solar or wind. These three steps could be done in three ways: (1) by reducing production at a facility, (2) building or investing in a new plant with lower emissions, or (3) trading credits in a cap-and-trade program.

Sources differed about the feasibility and cost of the program, and it was never fully implemented because many states moved to enjoin the EPA from enforcing it. When presidential administrations changed, the EPA repealed the Clean Power Plan in favor of a much more modest proposal called the Affordable Clean Energy Plan. Many states then sued to enjoin implementation of the new rule and repeal of the Clean Power Plan. In January 2021, the D.C. Circuit Court of Appeals vacated the EPA’s repeal of the Clean Power Plan and remanded the issue to the agency to reconsider. Presidential administrations changed again immediately after, and the EPA moved the D.C. Circuit to stay enforcement of the Clean Power Plan pending the promulgation of a new rule. The Court granted the stay. Many states appealed the decision.

First, the West Virginia Court had to determine the issue of standing. EPA argued that because the enforcement of the Clean Power Plan was stayed, the Plaintiffs had no standing. The Court saw it differently, writing that the issue actually falls under the mootness doctrine. The doctrine of mootness removes jurisdiction to hear a case where the conflict or controversy of the case is otherwise eliminated or resolved. The agency had not shown to a reasonable certainty that the rule would never be enforced. Because the EPA could still recommence enforcement of the Clean Power Plan, the behavior that was ultimately the subject of the suit, the issue was not moot.

The next issue – the main issue – was whether Section 111 of the Clean Air Act gave the EPA a mandate to enact regulations that would require vast changes to the nation’s energy system. For this, the Court examined and applied the “major questions doctrine.” The doctrine requires examining the plain language of a statute to inform the extent of an administrative agency’s mandate to promulgate rules for a practice or activity. The Court examined precedent dealing with similar situations and reasoned that the West Virginia case would appropriately be determined by reference to that doctrine.

Though the EPA had implemented rules to curb emissions of certain chemicals in the past – such as mercury – the statutory grants in cases like that had been explicit enough to justify the rulemaking done at the time. Additionally, in the case of mercury emissions, the technology to all but eliminate the emissions was fairly easily implemented across industry.

In this case, the Court noted, the EPA’s rules would advance a set of policies – like cap-and-trade of carbon emissions – that Congress has explicitly rejected in the past. Moreover, the generational shift in power production mandated by the Clean Power Plan would have extraordinary implications for the economy. The Court held that the language of the statute did not grant the EPA the mandate to regulate to guide policy to that extent.

The Court rejected the argument that EPA’s regulatory reach extended to reshaping the energy industry based on the statutory language of the provision in question. Looking at the decision narrowly, this removes the very strict standards set by the Clean Power Plan. Looking at the decision more broadly, West Virginia may restrain administrative agencies from overstepping their statutory grants of authority in a greater variety of contexts. The language the Court used seems to describe the doctrine as one that would prevent significant policymaking by administrative agencies in favor of legislation by Congress. However, given the size and scope of the Clean Power Plan (which would have cost trillions of dollars and effectively set energy policy for the nation) how often the doctrine will be applied to lesser situations remains to be seen.