My article, West Virginia, the Inflation Reduction Act, and the Future of Climate Policy, in the July issue of the Environmental Law Reporter, examines two momentous events in summer 2022 with broad implications for the nation’s capacity to tackle dangerous climate change. One year ago tomorrow, in West Virginia v. Environmental Protection Agency, the Supreme Court formally announced the “major questions” doctrine and used it to invalidate the Clean Power Plan, a novel approach that EPA had taken under the Clean Air Act to cut carbon dioxide (CO2) emissions from existing power plants, the second-largest source of climate-changing air pollution. Six weeks later, Congress enacted the Inflation Reduction Act (IRA), which provides large tax credits for cleaner power generation and renews EPA’s mandate to regulate power plant CO2 under the Clean Air Act.
Even as it limited EPA’s options, Chief Justice Roberts’ majority opinion left a pathway open for the agency to set effective carbon pollution standards – a pathway reinforced by the IRA. In May 2023, EPA proposed new standardsthat respond to both the Court and Congress.
My article traces the evolution of judicial review standards from Chevron U.S.A. v. Natural Resources Defense Council to West Virginia, with special focus on the many Clean Air Act cases involved in that arc. I show that the pathway between these two decisions was anything but straight and the pedigree of the major questions doctrine is anything but pure.
Though I was the losing lawyer for NRDC in Chevron, I defend the case’s iconic two-step test as a neutral framework for judicial review. It enforces clear congressional decisions and protects the legislature’s primacy in setting policy. But it also respects Congress’s need to enlist executive branch agencies in finer-grained policy making, not just fact finding, in order to govern effectively in our increasingly complex and fast-paced world. Politically, Chevron works both ways, respecting policy making by the two elected branches no matter which party is in control.
Chevron originated as a directive to lower court judges not to impose their own policy preferences in the guise of interpreting law. Under the current Court, however, Justices are increasingly using the major questions doctrine to do exactly what they told lower court judges not to do in Chevron. This is nowhere more evident than in the Court’s COVID shadow docket decisions in 2021.
Approaching West Virginia first as a Clean Air Act case, I critique the decision for misunderstanding and mischaracterizing key aspects of the statute, regulations, and facts actually at issue. It is a mystery how the Court found a justiciable question – let alone a major one – in a rule that never went or would go into effect, and whose goals the industry had already surpassed at no added cost 11 years ahead of schedule. It is puzzling how Chief Justice Roberts misconstrued an emission-rate trading program – one with ample legislative and administrative precedents – as a categorically different cap-and-trade system that Congress had failed to enact. And it is inexplicable how Roberts chose which failed legislation to treat as revealing the meaning of the previously enacted Clean Air Act. Why did he focus on Congress’s failure to enact an economy-wide cap-and-trade bill in 2010 and ignore the failure of a dozen more recent bills attempting to overturn the Clean Power Plan or rescind EPA’s authority over climate pollution?
I share other commentators’ deep concern that in the name of protecting Congress from the executive branch, the major questions doctrine elevates the judiciary over both. The Court’s criteria for determining what is a “major question,” which interpretations are “transformative,” and whether existing authorities are clear enough remain ill-defined and subjective. And the new authority for judges to declare legislation insufficiently clear dangerously diminishes the capacity of the national government to meet the challenges of our modern economy and society.
In my view, Congress passed laws enlisting agencies to help solve these challenges not because it has recently gotten lazy; others have shown that Congress has passed such laws since the Founding. The reason Congress passes such laws is that it knows it does not have – indeed, never had – the bandwidth, expertise, and foresight to act itself on every issue in a timely and effective way. In addition, Justice Gorsuch’s fixation on assuring that Congress protects the “liberty” of the unregulated is especially threatening, as it throws under the bus the liberty of those who are harmed by unregulated conduct.
Bad enough, as Justice Kagan warns, that the Supreme Court “appoints itself… the decisionmaker on climate policy” and other critical matters. But because most cases never reach the Supreme Court, the new doctrine will often put unelected lower court judges in the driver’s seat. This is already leading to forum shopping, increasingly partisan decisions, and policy chaos. It will get worse if the Court overturns Chevron next term and makes judicial substitution of judgment the norm in all statutory construction cases, not just extraordinary ones.
All that said, however, the Chief Justice’s majority opinion in West Virginia left a pathway open for EPA to set effective carbon pollution standards. While he rejected the novelty of the Clean Power Plan, he confirmed EPA’s authority to set standards in their “traditional” form – standards that “caus[e] plants to operate more cleanly” and “ensur[e] the efficient pollution performance of each regulated source.” Thus, EPA may still set standards based on applying pollution control technology to individual power plants.
This is where the Inflation Reduction Act comes in. While new legislation responding to court decisions typically gets enacted, if at all, only after many obstacles and delays, the IRA was passed almost immediately through the reconciliation procedure, which allows one budget-related bill per year to avoid the Senate filibuster. Designed in part in anticipation of the West Virginia outcome, the IRA provides unprecedented tax incentives and grants to deploy a wide range of carbon-reducing technologies, including two – carbon capture and storage (CCS) and hydrogen – that fit the “traditional” model blessed by the Roberts opinion. Further, the IRA amends the Clean Air Act itself to clearly state that greenhouse gases are air pollutants subject to EPA regulation and to clearly direct the agency to regulate power plants again using its existing Clean Air Act authority.
EPA has since proposed new standards principally based on the emission reductions achievable by applying CCS. Taking lead-time and costs into account, the proposed rules would adopt different emission rate limits and deadlines for various subcategories of coal- and gas-fired generating units considering, among other things, how long they will operate and how much they will be used. By reducing the cost of CCS for power companies and their customers, the IRA has made it much easier to find that technology the “best system of emission reduction.”
Challengers will have a hard time ringing the major questions bell when final standards are promulgated next year. Consistent with West Virginia, the proposed standards are premised on applying adequately demonstrated, reasonable cost technology to individual units. They make no “transformative expansion in [EPA’s] regulatory authority.” They are grounded in the 50-year-old Clean Air Act as just interpreted by the Court, and freshly backed by the IRA’s clear statement of congressional intent to incentivize the relevant technologies and that EPA should regulate again.
Some may claim that these standards will lead to shifts in power generation from coal and gas to cleaner alternatives – the “generation-shifting” that the Court found EPA could not mandate under this part of the Clean Air Act. But Chief Justice Roberts noted the “obvious difference” between the Clean Power Plan, which he found was expressly based on mandating such shifts, and traditional technology-based standards that produce such shifts “incidental[ly],” as a byproduct of the costs of applying pollution controls to individual plants’ emissions. Further, the vast majority of the expected changes in the make-up of the power sector are attributable to underlying industry trends and the IRA’s incentives, before applying any new EPA standards.
Additionally, though the new standards will be based on the reductions achievable by applying technology to individual plants, they will not require companies to use that technology. Rather, companies will make their own choices whether to retrofit existing plants or replace them, using the IRA’s incentives available for either course. To be sure, EPA will have to defend the achievability and cost-reasonableness of the emission rates it promulgates next year. But that is a far more ordinary problem governed by the still-deferential “arbitrary and capricious” standard of review.
So, within the boundaries of West Virginia and the incentives and directives of the IRA, EPA still has substantial authority to tackle the climate-changing carbon pollution from power plants and other industries. Nonetheless, by weakening both Congress and the executive branch and elevating a judiciary too often disposed to protect polluters and other malefactors, the major questions doctrine casts a dark shadow over our governmental capacity to meet the complex, life-threatening, and planetary-scale challenges of the modern world. As Justice Kagan said in dissent, it is hard to “think of many things more frightening.”
David D. Doniger is the Senior Strategic Director of the Climate and Clean Energy Program at the Natural Resources Defense Council.