On Friday, June 30, the U.S. Supreme Court issued its opinion in  West Virginia v. EPA resolving the seven-year debate over the Environmental Protection Agency’s statutory authority to promulgate the President Obama-era Clean Power Plan (“CPP”).

In 2015, the Obama administration promulgated the CPP regulations under the Clean Air Act § 111(d), imposing standards of operation that require a reduction of carbon dioxide from existing coal power plants. Section 111(d) of the Clean Air Act grants the EPA authority to prescribe Standards of Performance for air emissions from existing stationary sources that take into account the “remaining useful life of the existing source to which such standard applies,” as stated in 42 USC § 7411(d). A Standard of Performance is defined as the “degree of emission limitation achievable through the application of the best system of emission reduction . . . adequately demonstrated” in 42 USC § 7411(a)(1) (emphasis added).

The EPA reviewed several means of emissions reduction, and codified in 80 Federal Register 64728 that:

[M]ost of the CO2 controls need to come in the form of those other measures that are available to the utility power sector thanks specifically to the integrated nature of the electricity system, and that involve, in one form or another, replacement of higher - emitting generation with lower-or zero-emitting generation.

To achieve carbon dioxide reductions, the CPP contained three “building blocks,” codified in 80 FR 64745:

1. Improving heat rate at affected coal-fired [generating units].
2. Substituting increased generation from lower-emitting existing natural gas combined cycle units for generation from higher-emitting affected [units].
3. Substituting increased generation from new zero-emitting renewable energy generating capacity for generation from affected fossil fuel-fired generating units.

Simply put, the rule imposed traditional technical limits on emissions and required facilities to transition from coal to natural gas, and natural gas to renewable resources, to produce electricity.

Since its inception seven years ago, industry groups and states challenged the EPA’s promulgation of the CPP, immediately resulting in nationwide stays. As a result, the CPP never went into effect.

In its 6-3 ruling, the Supreme Court held the CPP presented an “extraordinary case” requiring a statutory construction analysis that looks closely at the “economic and political significance” of an agency’s assertion and determined that “more than a merely plausible textual basis for agency action” exists—known colloquially as the “major questions” doctrine of statutory construction.

The Court, through this lens, determined that § 111(d) allows for emissions reductions by requiring a source to operate more cleanly, but the language of the statute does not allow for regulations that require a larger systemic shift from one fuel source to another. Largely, this is because the statute authorizes the use of “technology-based” Standards of Performance that require emissions reductions at an existing facility. The EPA attempted to frame the requirement to change fuel sources as a “system of emissions reduction” that meets the technology-based standard. The Court, however, disagreed because the change of fuel sources is not a technology-based Standard of Performance.

Because of the sweeping political and economic impacts of allowing the EPA to exercise such broad discretion, the Court found that the EPA exceeded the authority granted by § 111(d). Under the major questions doctrine, the Court determined that the language of § 111(d) does not contain sufficiently explicit language to allow the EPA to implement the CPP.