July 05, 2022

Much Ado About Not Much: West Virginia v. EPA

Posted on July 5, 2022 by Robert B. McKinstry, Jr.

Many have characterized West Virginia v. EPA as a decision depriving EPA of an important tool to address climate change under the Clean Air Act. The decision is better viewed as steering EPA away from a flawed regulatory strategy and toward strategies that will be far more effective in addressing the existential threat of climate disruption. The decision did not reverse EPA; it affirmed the action of the Trump EPA repealing the Clean Power Plan In so doing, Chief Justice Roberts’ majority opinion adopted the Trump EPA’s rationale for that repeal. The Trump EPA had invoked the major questions doctrine and the Agency’s past interpretation of technology-based standards under section 111 of the Clean Air to find that EPA could not rely upon switching methods of power generation to establish an emissions reduction budget under a cap-and-trade program.

What is significant is what the majority opinion did not do. First Court did not eliminate the Agency’s ability to require greenhouse gas (“GHG”) emissions reductions under section 111 or any other section of the Clean Air Act. Indeed, it leaves untouched the Obama Administration’s requirement under section 111(b) that new coal-fired power plants achieve reductions that that Administration found could be achieved by using carbon capture and sequestration (“CCS”) technology. The Court did not impair EPA’s ability to use or even require a greenhouse gas cap-and-trade regulatory approach under other sections of the Clean Air Act or even under section 111(d), provided the degree of emissions reductions required relies on goals or budgets authorized under the Act or other law. Even though Justice Roberts’ opinion adopts the major questions rationale relied upon by the Trump EPA, Justice Roberts’ majority opinion did not endorse the wholesale adoption of that doctrine reflected in Justice Gorsuch’s concurrence, joined only by Justice Alito.

The opinion can point EPA toward regulation that will be both far more effective in addressing the existential threat of climate change and consistent with the law and past practice. The Obama EPA hyped the Clean Power Plan as “transformative,” but modeling showed that the GHG reductions that it mandated would be no greater than reductions expected under a business-as-usual approach. That modeling has been borne out by the reductions that have actually occurred without the rule. With low natural gas prices, combined-cycle natural gas plants have been dispatched and built to replace higher-emitting coal plants, so that the Clean Power Plan reductions have been achieved without the rule.

More importantly, as I have written elsewhere, relying on section 111 to require reductions can never achieve the GHG reductions necessary to prevent “dangerous anthropogenic interference with the climate system” within the meaning of the United Nation Framework Convention on Climate Change (“UNFCCC”) before the Titanic has already hit the iceberg. Section 111 is limited to major stationary sources, which represent less than half of our GHG emissions. Even within that limited universe, adopting regulations on a source-category-by-source-category basis will stretch on for decades. More delays will be caused by inevitable appeals and state recalcitrance in adopting the standards that EPA selects. At the beginning of the Obama Administration, EPA reached settlements in which it agreed to establish GHG standards under section 111 for the two largest source categories, power plants and refineries; yet today we have standards only for new coal plants.

More significantly, an approach targeting only electricity generation and increasing electricity costs could be counter-productive. Deep decarbonization will require electrification of most of the transportation sector, the built environment (homes, offices, etc.) and many industrial sources. If electricity becomes more expensive and no cost to emit GHGs is imposed upon use of fossil fuels in these other sectors, the necessary electrification may be deterred.

The Clean Air Act provides two better mechanisms whereby EPA could require the economy-wide GHG emissions reductions that science and the parties to the UNFCCC have determined are necessary to achieve that treaty’s objective of preventing dangerous anthropogenic interference with the climate system.  Under both mechanisms EPA could issue a call for states to submit implementation plans (“SIPS”) which would include each state’s laws and regulations designed to achieve those reductions – i.e. a 45% reduction of total emissions from 2005 levels by 2030 and emissions neutrality by 2050.

First, under section 115 of the Clean Air Act, governing international air pollution, EPA could determine that GHG emissions from all of the states interfere with air quality in other nations and require every state to submit a SIP requiring those reductions. As it did in the Cross-State Air Pollution Rule (“CSAPR”) upheld in EPA v. EME Homer City Generation, EPA could back that up with a stand-by Federal Implementation Plan (“FIP”) that would impose a cap-and-trade program similar to California’s where a state failed to submit an adequate SIP.

Alternatively, EPA could rely upon sections 108-110 of the Clean Air Act, which authorize EPA to adopt national ambient air quality standards (“NAAQS”), and require states to adopt state implementation plans (SIPs) to meet those standards. In that case, EPA could list GHGs as criteria pollutants, establish a welfare-based NAAQS, and issue the same SIP call with the same standby FIP. The majority opinion acknowledges that cap-and-trade can be implemented and even imposed (as occurred in CSAPR) to achieve a NAAQS.

The section 115 approach is preferable in several respects. First, it could be implemented relatively quickly by way of a single rulemaking proceeding. Second, it has been widely endorsed by leading practitioners and environmental law professors. Although the approach has not been widely used, it is supported by case law developed in connection with acid rain and its use is consistent with the legislative history of the 1977 Amendments to the Clean Air Act, where Congress added “climate” to the definition of “effects on welfare” due to concerns about global cooling caused by sulfur dioxide emissions. 42 U.S.C. § 7602(h). Third, it would be based on a science-based goal adopted under the UNFCCC, a treaty that has been ratified with the advice and consent of the Senate. At least one other national court has determined that that nation’s GHG reduction goals were inadequate because they fell short of what was deemed necessary under a series of UNFCCC decisions. Fourth, there are already rule-making petitions requesting action under 115 (and other sections) which EPA could grant to initiate the rule-making process.

The NAAQS approach has many of the same advantages as the section 115 approach. The majority opinion in West Virginia v. EPA expressly recognized that a cap-and-trade approach could be used to meet standards based on a NAAQS. The approach is feasible legally. However, it would require rule-making proceedings to list GHGs as a criteria pollutant and to establish a NAAQS in addition to the rulemaking to issue the SIP call with the stand-by FIP. All of that would take years and is unlikely to result in SIPs being put in place and implemented within the necessary timeframe.

Although the section 111 approach is not as effective a tool, West Virginia may not preclude a rulemaking to establish an electricity-sector cap-and-trade program with the overall budget based on inside-the-fence approaches such as add-on emissions control technologies and fuel switching. Although it does not endorse the approach, the West Virginia majority opinion discusses the approach used by the Bush EPA to promulgate a mercury cap-and-trade program under section 111(d). In that regulation, the Clean Air Mercury Rule (“CAMR”) (reversed on other grounds), the Bush EPA established a budget for mercury emissions based on the total tons of mercury emissions that would result if inside-the-fence emissions controls were imposed. It then allowed emissions trading to lower the cost of achieving those reductions (due in part to generation switching). Although Chief Justice Roberts’ opinion left open the question of whether the CAMR approach was legal, it did note that the method of establishing the emissions budget was consistent with the statutory directive.

If the CAMR approach is permissible and employed, it could result in meaningful GHG reductions from the electricity sector. Carbon capture and sequestration technology has been successfully used in two North American coal-fired power plants that capture 90% of their emissions. The owner of one of those plants, Saskatchewan Power, submitted an amicus brief supporting EPA’s reliance on CCS to establish the new source GHG standard under section 111(b). Co-firing of coal with wood, which does not add carbon-dioxide to the atmosphere on a net basis, is well established. Partial fuel switching to biogas and biodiesel could be applied to natural gas and diesel-fired power plants. If EPA established a GHG emissions budget based on CCS and fuel switching, it could also impose a cap-and-trade program for the fossil-fuel-fired electricity sector under section 111(d) that would be more meaningful than the Clean Power Plan.

Thus, there are many approaches to deal with GHG emissions under the Clean Air Act more effective than the weak Clean Power Plan. If EPA is willing to act swiftly and comprehensively, West Virginia and its fellow travelers will find that their victory is a Pyrrhic one.