West Virginia v. EPA: A Setback for the Steady State Economy

by Sydney Lyman

Throughout the month of June, many Americans frantically refreshed the Supreme Court’s website each morning, as immensely important cases appeared on the docket in rapid succession. It turned out to be a disorienting month. The freedom to get an abortion was stripped from 40 million people of reproductive age, gun control efforts were stymied, and the separation of church and state in public schools was weakened.

In the chaotic wake of these historic rulings, another monumental decision was lost on much of the public. The Court released its decision on West Virginia v. Environmental Protection Agency (EPA) on the afternoon of June 30^th, the last day of the annual session. Basically, the Court dropped an environmental bomb and left for vacation.

In its most significant environmental decision yet, the Court ruled 6–3 that Congress had not granted the EPA authority to establish “generation shifting” emissions caps when it passed the Clean Air Act in 1970. Littered with abnormalities, the ruling has already been called a “political act poorly disguised as a legal opinion” devised by the Court’s conservative justices, marking the Court’s swift swing to the right.

Bizarre from the Beginning

The origins of West Virginia v. Environmental Protection Agency (hereafter, West Virginia) can be traced back to the EPA’s 2015 Clean Power Plan proposal. President Obama had made bold promises to act on climate change. So, when he found himself fighting with a deadlocked Congress, Obama turned to the power of the administrative state to get things done.

Obama’s EPA proposed the Clean Power Plan (CPP). The plan included “strong but achievable” goals such as cutting CO₂ emissions from electricity generation by 32 percent over the subsequent 15 years. However, the CPP, initially thought to be one of Obama’s greatest achievements in office, never took effect. As soon as the rules were published in the Federal Register, 28 states and hundreds of companies filed suit in the DC Circuit Court, giving birth to West Virginia. In response, the Supreme Court ordered the EPA to halt enforcement of the law until a lower court ruled on the case; the first time the Court had intervened with regulations before a lower court could conduct its own review.

The plaintiffs issued three main challenges. First, they argued that the EPA couldn’t regulate CO₂ using § 7411(d) of the Clean Air Act, because the House and Senate versions of § 7411(d) were never reconciled in the 1990 amendments. In fact, both versions had been codified. The Senate version covered CO₂ emissions while the House version did not. In developing the CPP, the EPA followed the Senate’s version of § 7411(d), with the understanding that courts generally defer to an agency’s interpretation of the law pursuant to the principle of judicial deference. However, the plaintiffs claimed that the House version was more consistent with the law overall and should thus prevail.

The second challenge was that the EPA had overstepped its authority by mandating actions “outside the fenceline.” The EPA does have full authority to create standards to be met at each individual plant. However, the CPP’s requirement that states develop clean energy sources and increase efficiency of coal plants couldn’t be fulfilled at the actual power plants themselves. Such a requirement, then, was outside the fenceline.

Lastly, the plaintiffs claimed the CPP violated the Tenth Amendment by inappropriately delegating federal power to the states.

While the DC Circuit Court considered the plaintiff’s arguments in September 2016, the inauguration of Donald Trump and subsequent reorganization of the EPA four months later rendered the case moot. Trump’s EPA clearly stated its intent to repeal the CPP and did so in August 2018, replacing it with the Affordable Clean Energy (ACE) rule.

Compared to the CPP’s 32 percent target, the ACE established a far less ambitious target of between 0.7 and 1.5 percent reduction of CO₂ emissions. In turn, the American Lung Association and the American Public Health Association filed suit against the EPA, arguing that it was neglecting its duty to reduce emissions and improve public health. The Court ruled 2–1 in favor of the plaintiffs on January 19, 2021, vacating the ACE rule and allowing the EPA the opportunity to reinstate the CPP rule.

The very next day, President Joe Biden took office and the fear felt by industrial red states was reignited. Nineteen attorneys general and five power companies petitioned the Supreme Court to review the DC Circuit Court’s ruling before the Biden administration had even reinstated the CPP. The Supreme Court’s decision to hear the case at all, then, is questionable. In her dissenting opinion, Justice Elena Kagan wrote:

The Court’s docket is discretionary, and because no one is now subject to the Clean Power Plan’s terms, there was no reason to reach out to decide this case. The Court today issues what is really an advisory opinion on the proper scope of the new rule EPA is considering. That new rule will be subject anyway to immediate, pre-enforcement judicial review. But this Court could not wait—even to see what the new rule says—to constrain EPA’s efforts to address climate change.

In addressing the hastiness of her colleagues and the fact that the Court had no place in the matter, Justice Kagan waves a red flag about the Court’s political activism, which seems outside a fenceline of its own.

Major Questions About the Major Questions Doctrine

Authoring the majority opinion, Chief Justice Roberts invoked the “major questions doctrine” as the decision’s main justification. He claimed that, because the CPP was so unprecedented and transformative, the Court had a “reason to hesitate” before confirming that Congress actually intended (via Clean Air Act) to provide the EPA with the authority to make such drastic changes.

In the end, the Court did far more than hesitate. The majority held that Congress didn’t intend for the EPA to attain such authority, preventing the CPP and any other similarly comprehensive regulation from becoming law. In essence, the CPP created more change than the Court’s conservative majority was willing to accept, so they ruled it unconstitutional.

The principle of judicial deference is essentially thrown out the window should a case fall under the major questions doctrine. Adding to the confusion, the public doesn’t know if the Court will apply this doctrine in any particular case until the decision and opinion is released.

Now referred to as a “legal theory,” the major questions doctrine is a seldom-used concept stemming from FDA v. Brown & Williamson Tobacco (2000). The FDA Court claimed that, given the “economic and political significance” of the tobacco industry, Congress couldn’t have possibly intended for the FDA to have regulatory jurisdiction over tobacco when it passed the Food, Drug, and Cosmetic Act (FDCA) in 1938. FDA created a dangerous loophole that allows the Court to reject the principle of judicial deference whenever the majority believes a decision might have “vast economic and political significance”—whatever that means.

In her West Virginia dissent, Justice Kagan included a few “major questions” threads in the red flag she wove: “Apparently, there is now a two-step inquiry… The majority claims it is just following precedent, but that is not so. The Court has never even used the term ‘major questions doctrine’ before.”

The major questions doctrine has been described by Progressives as a move toward juristocracy, giving nine unelected judges from the least democratic branch of government the final say on society’s most controversial issues. Perhaps the doctrine should be applied to the Supreme Court itself. After all, overturning a 50-year-old precedent that upheld legal access to abortion would have vast political significance. Perhaps the public, too, has “reason to hesitate” before concluding such a transformative decision is within the Court’s authority.

Consequences Beyond the Courtroom

In April 2021, the Biden administration announced its plan to cut greenhouse gas emissions in half by 2030. The administration was relying on three approaches to accomplish this ambitious task.

The first approach was the development of a national network of electric vehicle chargers and new standards to make EVs more reliable and affordable. The second was the Build Back Better Act, a substantial part of which was dedicated to clean energy and reducing carbon emissions. Thanks to coal-powered Democratic Senator Joe Manchin, however, the bill is stuck in reconciliation and is unlikely to be salvaged in earnest.

The final approach included sweeping regulations enacted by the EPA to address smog, cross-border pollution, mercury, and toxic contaminants produced by power plants. These regulations were also intended to compel plants to adopt renewable energy. West Virginia has sent the agency back to the drawing board, leaving only the first of the administration’s approaches in effect.

Stripped of its ability to fully execute its climate action plan, and short of plans to degrow the economy, the White House will likely see its target of halving emissions by 2030 slip further into mathematical impossibility.

Worse yet, the consequences of the decision don’t stop with the EPA and climate action. Richard Revesz, a professor at NYU School of Law, contends that the “court’s pointedly vague invocation of the major questions doctrine casts a long shadow over the future of regulation,” regardless of which agency is doing the regulating.

This poses a significant problem for advancing the steady state economy. West Virginia leaves the USA idling in the depths of neoclassical, pro-growth economics, if not mired in the ancient tar sands of laissez faire. In a steady state economy, regulations would be “part of the landscape,” from tax code changes and banking reforms to restrictions on extractive industries and outright bans of certain practices. West Virginia makes such regulations profoundly more difficult to develop, uphold, and enforce.

With hyperpolarization and constant gridlock in Congress, the executive branch is perhaps the most promising channel for advancing necessary nationwide changes. Combating an unprecedented threat like environmental breakdown will certainly call for an unprecedented transformation of government. Unfortunately, that’s exactly the kind of change the Supreme Court has chosen to undermine.

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Sydney Lyman is a summer 2022 journalism intern at CASSE.