• The Supreme Court has ruled the federal Clean Air Act does not grant the Environmental Protection Agency authority to act without Congress when capping plant emissions through measures such as “generation shifting” — i.e. transitioning from high-emission (coal) to low-emission (electricity) production.
• The court invoked the “major questions” doctrine to support its decision, which requires an agency to identify “clear congressional authorization” for its actions.
• The ruling will likely affect the scope of regulation allowed not just by the EPA but numerous other federal agencies, too, severely limiting the ability of those agencies to make independent decisions regarding regulatory activity if that activity could cause a major economic or other “extraordinary” impact.

The U.S. Supreme Court has ruled the EPA cannot sidestep Congress in setting power plant emissions, ruling the federal Clean Air Act does not give the agency sole authority to act.

In deciding West Virginia v. the Environmental Protection Agency, the court invoked the “major questions” doctrine that requires an agency to identify “clear congressional authorization” for its actions.

The Court found that the Clean Air Act did not contain such authorization, and that the EPA was instead relying on “the vague language of a long-extant, but rarely used, statute designed as a gap filler” to create a regulatory program that Congress itself had declined to enact. The EPA’s view of its authority was not only unprecedented, the court held, but also affected a fundamental revision of the Clean Air Act, changing it from one sort of regulatory scheme into an entirely different kind.

While the court’s decision will likely enable businesses and investors to operate with more certainty within the existing regulatory environment, it will also likely have far-reaching implications on the scope of the regulatory power of federal agencies without specific Congressional authorization.

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