The Supreme Court’s New Threat to Climate Policy

The US Supreme Court has agreed to take up a new case on the Environmental Protection Agency’s authority to regulate greenhouse gases. That’s bad news for ambitious climate policy—and potentially for the power of administrative agencies more generally.

The ACE rule was itself an attempt by the Trump EPA to supplant the Obama EPA’s Clean Power Plan, which would have limited the emissions from fossil fuel power plants. Most ambitiously, the Clean Power Plan would have given credit for so-called “outside-the-fence” emissions reductions (i.e., shifting from coal to gas, or from fossil fuels to renewables) and licensed states to construct emissions trading programs. The coal industry (probably correctly) saw these credits as an existential threat and sued (alongside coal-heavy states) to block the rule, arguing that the relatively brief and rarely used statutory provision on which the Clean Power Plan was based—Section 111(d) of the Clean Air Act—could not be interpreted to allow outside-the-fence regulation, emissions trading, or any kind of industry-wide regulation.

The Supreme Court appeared to agree, leading it to stay the Clean Power Plan in early 2016, preventing the Obama rule from going into effect. This stay was one of the court’s last actions before the death of Justice Scalia launched a series of battles over the court in the past five years. Less than a year after the Clean Power Plan was halted, Donald Trump was president, and his EPA administrators set about undoing much of the previous administration’s work, particularly that related to climate. The ACE rule was designed to prevent any future repeat of the Clean Power Plan: it not only discarded outside-the-fence regulations and emissions trading, but also claimed that the Clean Air Act could not be interpreted to allow either flexible tool. It was this interpretation of the statute that the DC Circuit rejected last January.

Ironically, the Trump EPA likely would have won that case had the agency not been so aggressive in its rulemaking. If the Trump EPA had said it was dropping the more flexible parts of the Clean Power Plan merely as an exercise of policy discretion, the DC Circuit probably would have allowed it. By claiming there was only one legally permissible interpretation of the statute, the Trump EPA forced the court’s hand. But the DC Circuit did not force the agency to revive the Clean Power Plan. Nor has the Biden EPA attempted to do so, announcing instead that it will write its own, likely more stringent, regulations—a plan that, with the court’s decision to take up these appeals, now hangs in the balance.

Of course, the legal ambition of the ACE rule was the point: The ACE rule was never intended to actually reduce emissions, but rather to tie the agency’s hands. The true goal of the rule was not to supplant the Clean Power Plan, but to bury it. But by taking the appeals last week, the Supreme Court now is exhuming the long-dead Clean Power Plan and putting it on trial, in a regulatory Cadaver Synod. That may be appropriate for a decision announced two days before Halloween, but it’s highly unusual—bordering on the bizarre—and puts EPA in a near impossible position. Because the Biden EPA has not issued any rulemaking of its own under Section 111(d), the agency hasn’t announced a legal position, at least other than withdrawing the ACE rule. Without a new rule on the table, the agency will be forced to defend its legal authority in the abstract, with the court able to then define the specifics—a reversal of the two branches’ traditional roles. Because it would be so unusual—perhaps unprecedented—to decide a case without the agency having taken any position on the law, I and most legal experts had assumed the court would be extremely unlikely to grant review of these appeals.

The fact that the court has granted the reviews is bad news for the agency. As always, predicting outcomes from anything other than a final opinion is dangerous. But granting review of these cases means that at least four justices want to do something. There’s no realistic prospect of a decision expanding EPA authority because none of the questions presented contemplate a broader interpretation of the statute. And because no actual rulemaking is at stake, even preserving the agency’s status quo authority seems unlikely. The best outcome for the agency would be if the court, after deliberation, decides to dismiss the case as “improvidently granted”—a rare move, but not unheard of.

Failing such a bloodless dismissal, a decision constraining EPA authority over climate is a near certainty—there’s simply no other reason to take the case. Just how much EPA’s authority—or indeed, the authority of administrative agencies in general—might be affected is much harder to predict. One possibility is a narrow decision, grounded in the single provision of the Clean Air Act at issue: Section 111(d). The court could decide that EPA may not consider outside-the-fence emissions reductions, can’t allow emissions trading, or must give states more freedom to act (though the last of these is in some tension with the other two, as some states would undoubtedly want flexibility).

Such a ruling by the court would make a rerun of the Clean Power Plan impossible. But a narrow opinion would not necessarily cripple EPA’s ability to address climate pollution from power plants. The agency still could limit emissions from coal plants, perhaps to a degree that requires them to either capture their carbon or shut down. The agency could, as I have long suggested, treat coal and gas plants as the same “source category,” setting the required emissions performance based on the emissions of an efficient gas plant—which also would effectively ban coal plants that don’t employ carbon capture and storage. The flexible parts of the Clean Power Plan that would be lost could reduce such a program’s cost-effectiveness but not its basic legal viability.

Be careful what you wish for, then, coal interests: you just might get it. A narrow decision also likely would preserve EPA authority to regulate other carbon sources, like the oil and gas wells from which the administration has just announced it will limit methane.

A small silver lining for the Biden EPA is that this case could resolve some legal uncertainty over the Clean Air Act and climate soon—in the second year of Biden’s term, rather than at the end of a term with no time to try again (as with Obama’s Clean Power Plan). But even then, any subsequent Biden EPA rule will launch yet another round of litigation that would be likely to reach the court again—the just-granted case likely won’t be the end of uncertainty over the agency’s climate authority.

However, I’m skeptical that the court is taking this case just because the justices who voted to do so want to reach a technical, limited decision. If that were all that’s at stake, there’d be little reason to take the case before the Biden EPA has acted. Maybe a narrow result is the only way the court gets to five votes in the end, but I strongly suspect a broader opinion is more likely. What might that more consequential outcome look like?

One possibility is a decision that forbids climate regulation under Section 111 entirely. When it was decided, Massachusetts v. EPA was widely understood to have unlocked the authority to regulate greenhouse gases anywhere in the statute by declaring them to be “air pollutants” within the law’s definition. But the court’s 2014 decision in Utility Air Regulatory Group v. EPA substantially limited the reach of Massachusetts, ruling that the question of whether greenhouse gases are within scope had to be assessed separately for each part of the law. Thus, the court could decide that Congress did not intend (or could not have intended) to grant EPA the power to regulate climate pollution in either Section 111 in general, which applies to all sources, or the skeletal Section 111(d), which applies only to existing sources of pollution.

More broadly, the court might decide that interpreting the statute to allow EPA to regulate climate pollution from large parts of the economy raises a “major question” that demands additional scrutiny from the courts (or, conversely, requires a clear statement of such intent from Congress—a related principle is that “Congress does not hide elephants in mouseholes”). The court in recent years has been much less willing to defer to agency interpretations of statutes, particularly on such “major questions”—though what counts as “major” is notoriously imprecise. Two of the questions taken up by the court last week directly implicate the “major questions” aspect of EPA climate authority, suggesting that the court is interested in the issue. Nevertheless, the bizarre procedural posture here, without an actual rulemaking on the table, makes this an awkward “major questions” case. Previously, the doctrine’s role was to deny agencies a say in the limits of their power on “major” issues. But because the Biden EPA has issued no rule, the agency has not taken any position on what those limits are. The agency offers nothing to which the court might deny deference, except, again, the exhumed Clean Power Plan—which the Biden EPA has explicitly rejected.

If the court does, nevertheless, decide the case on “major questions” grounds, it will have to issue a ruling in more general terms, taking that principle out of the confines of doctrines of administrative deference and elevating it to a general interpretive rule. In other words, the court could say that if Congress wants to delegate authority to regulate “major” policy matters (such as climate), then it must do so extra-explicitly. Such a decision would throw any climate legislation (and perhaps legislation on other major policy issues like health care or immigration) into legal jeopardy. How clear would Congress have to be? Only the Supreme Court can say!

And the court could go even further. Critics of the administrative state have long alleged that Congress should not—and, constitutionally, may not—make broad delegations of power to administrative agencies, though Congress has been doing so since the New Deal (and, some scholars say, since the founding era). Such broad delegations are the basis for policy in virtually every area, not just environmental law. The court has rejected statutes only twice on such “nondelegation” grounds, and both almost a century ago in the same year.

But the current court has shown real interest in reviving the nondelegation doctrine, only narrowly deciding not to do so in Gundy v. United States in 2019. In that case, three justices (Gorsuch, Thomas, and the Chief Justice) would have struck down the statute on nondelegation grounds. Another (Alito) suggested he would be willing to do so in a future case. Since then, Justices Kavanaugh (who has signaled he would have voted with the Gundy dissenters) and Barrett have joined the court. A rerun of Gundy very likely would come out the other way today, and the just-granted climate case will be a tempting vehicle for conservatives on the court to re-fight the nondelegation battle.

The questions presented tee this delegation question up: West Virginia’s appeal asks whether “Congress constitutionally authorize[d] the Environmental Protection Agency to issue significant rules—including those capable of reshaping the nation’s electricity grids and unilaterally decarbonizing virtually any sector of the economy.” It’s not difficult to imagine the court answering no—either because, a majority might say, Congress did not speak clearly enough (a “major questions” problem) or because even if Congress did in fact speak clearly, the Constitution itself prohibits such a broad delegation of power (a nondelegation problem).

Such a decision would add another veto point to an American legal system that’s already burdened by obstacles and would make action even more difficult for a Congress already crippled by partisan gridlock and abuse of the filibuster. All of American administrative law could be thrown into question: any delegation of power to administrative agencies could be challenged plausibly on nondelegation grounds. It would take many years—easily decades—for the courts to identify the limits of what powers Congress may delegate. That situation unquestionably would be bad for climate policy—not just under current laws like the Clean Air Act, but for any new climate legislation. And the effects of the decision would reach far beyond climate: such a sweeping decision would be the crowning achievement of the long “anti-administrative” project advanced by a group of conservative jurists, including (at least) Justices Thomas, Alito, Gorsuch, and the Chief Justice. A revival of nondelegation by the court would show that, as Dan Epps put it this week, “the American constitutional structure may be ill-suited for dealing with catastrophic threats like climate change.”

I would not say a return of nondelegation is a likely outcome of the newly granted climate case—but it’s a plausible one. Because of the personnel now on the Supreme Court and the scope of the questions presented, this case is the greatest threat the modern administrative state has faced since the New Deal–era Supreme Court.

Short of nondelegation, a narrower decision that undercuts climate policy under the Clean Air Act seems quite likely. Massachusetts once was fêted as the most important environmental case the court ever decided—the launching pad for real climate policy under the Clean Air Act. As I’ve said before, I’ve reluctantly come to the conclusion that the promise of Massachusetts has vanished in the face of a skeptical court. Though I doubt Massachusetts will be formally overturned, this new case threatens to put the final nail into the coffin of broad climate policy under the Clean Air Act (though narrower policies, like the proposed oil and gas methane rule and limits on carbon from new vehicles, are a bit more likely to survive).

And the court could do much worse, throwing the entire administrative state into legal uncertainty. Such a move would have political consequences, of course, which the justices (particularly the Chief Justice) will surely consider. But, as with cases on abortion rights, the likelihood of broad decisions that advance long-term conservative goals (such as constraining regulatory authority) is much greater on a court with a 6–3 conservative majority. This new climate case opens many dangerous doors, and this court may just walk through one of them.