What does the EPA decision mean?

The Supreme Court of the United States has issued a decision against the Environmental Protection Agency. I spent time reading about it and want to pass along my learnings.

The case is West Virginia v. EPA, and my key takeaway is this: when a federal agency is going to use its power to resolve a matter of “great political significance,” or regulate “a significant portion of the American economy,” or intrude “into an area that is the particular domain of state law,” then the agency must have clear congressional authorization to do so. These three precepts define the “Major Questions Doctrine,” MQD. ?In settling this lawsuit, the court, in a 6 to 3 ruling, decided that there was not clear congressional authorization in this regulation case.

What was the EPA trying to regulate?

Short answer: Carbon Dioxide (CO2) emissions by requiring power plants to shift from a higher-emitting source to a lower-emitting source.

Under the Clean Air Act of 1970, the EPA is authorized to regulate pollutants that endanger human health. ?In 2007, the Supreme Court ordered the EPA to determine whether CO2 fit the description of pollutants that “endanger human health.” ?In 2009, the EPA concluded that it did.

Fast forward to 2015, the EPA wanted power plants to accelerate the reduction of CO2 through a shift from coal-fired power to lower CO2 sources of power including natural gas and renewable energy of wind and solar. See below a timeline of relevant milestones.

Who sued and why?

Though there were many opponents and participants, there were four primary petitioners: West Virginia, North Dakota, North American Coal Corporation, and Westmoreland Mining Holdings LLC.?

In February 2022, West Virginia Attorney General Patrick Morrisey explained his point of view that the EPA did not have authority to decarbonize any sector of the economy and reorder entire industries including factories and power plants. Because it is such a substantially important question, he said, the EPA requires a clear statement from Congress before an agency can be allowed to upset the balance of power between the federal government and the states. The lower court’s ruling would devastate coal mining, increase consumer’s energy costs and eliminate jobs, he said.

What happens next?

When it comes to matters of “major questions”, i.e. ?great political significance, a significant portion of the American economy, crossing into the particular domain of state law, the EPA will have to ensure it has clear congressional authority. ?However, the EPA’s authorization for reducing greenhouse gas emissions remains. EPA Administrator Michael S. Regan said, "The EPA will move forward with lawfully setting and implementing environmental standards that meet our obligation to protect all people and all communities from environmental harm.”

Bottom line

The EPA and the states will continue to navigate the tension of workable greenhouse gas emission reduction pathways. In the meantime, because we live in a democracy with a free-market economy and a culture of individual freedom, we can use creativity and innovation to move faster. In the past decade, we have witnessed a power shift from corporations to the consumer. The consumer can influence corporations to deliver on better business models that consider environmental factors. ?

Many companies recognize that not only is considering #ESG in their strategies the right thing to do, it makes economic sense. ?For example, the market recognizes that coal-fired power is not only bad for human health, it’s bad for business and therefore they are transitioning. In fact, were you aware that even though the CPP never went into effect, the CPP goal of reducing CO2 emissions by 32% from 2005 levels by 2030, was achieved in 2019? Coal was more expensive vs. other power generating sources. Here in my home state, Georgia Power, one of America’s most coal-reliant utilities, announced that it would close all 14 of its coal plants no later than 2035, and double its renewable energy generation with solar and wind.

So let’s focus. Engage the companies we do business with that generate the largest proportion of CO2 to influence the transition to clean energy faster!?To learn more about sector emissions, read my sector GHG issue here.

Sources & further reading

Official Supreme Court decision, 89 page PDF https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf

The Supreme Court Restores a Constitutional Climate https://www.wsj.com/articles/restoring-a-constitutional-climate-west-virginia-v-epa-supreme-court-john-roberts-neil-gorsuch-11656620882

Will West Virginia v. EPA cripple regulators? https://www.brookings.edu/research/will-west-virginia-v-epa-cripple-regulators-not-if-congress-steps-up/

Meta-analysis on 11 studies, Coal transition https://energyinnovation.org/wp-content/uploads/2021/09/Studies-Agree-80-Percent-Clean-Electricity-by-2030-Would-Save-Lives-and-Create-Jobs-at-Minimal-Cost.pdf

What is the Clean Air Act? https://www.nytimes.com/2022/06/30/climate/clean-air-act-epa.html

Disclaimer: Sustainability Navigator is Elba Pareja-Gallagher's personal ESG newsletter published every Monday. Views expressed are her own. Corrections and respectful feedback are always welcome.