Courthouse Steps Oral Argument: West Virginia v. EPA

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On February 28, 2022, the U.S. Supreme Court will hear West Virginia v. EPA, one of the most anticipated environmental law cases on the Court’s docket in recent years. By way of background, in 2015, EPA issued the “Clean Power Plan.” Using the Agency’s authority under Clean Air Act Section 111(d), and styled as a rule to control greenhouse gas emissions from existing coal- and gas-fired power plants, the Clean Power Plan would have required states to shift their electric generation mix away from fossil fuels towards renewables, employing a “cap and trade” credit scheme.

The Supreme Court stayed the Clean Power Plan in 2016, and in 2019 the Trump Administration rescinded it and replaced it with the Affordable Clean Energy rule, concluding that the Clean Power Plan’s design was unambiguously beyond the limits of the Agency’s authority under Section 111. In 2021, and over a dissent from Judge Walker, the D.C. Circuit disagreed. And in American Lung Association v. EPA (985 F.3d 914), the D.C. Circuit vacated the Clean Power Plan repeal and Affordable Clean Energy rule, staying the vacatur indefinitely pending further rulemaking because EPA, under the current administration, has declared it will not enforce either rule.  

The issue before the Court in West Virginia v. EPA is whether, when designing rules under Section 111, EPA is limited to identifying “systems of emission reduction” that can be applied to and at the level of an individually regulated facility, or whether there are no limits to EPA’s authority other than the textual commands to consider cost, nonair quality health and environmental impacts, and energy requirements. Federal respondents argue the case is moot and should be dismissed as improvidently granted.

This teleforum will discuss the legal issues involved, questions from the bench, and anticipate where the law could be headed. A broader discussion on West Virginia v. EPA, with additional speakers and analysis, will be provided after the Court renders its decision.

For accompanying document, click here

Featuring: 

Speaker: Justin Schwab, Founder, CGCN Law; former Deputy General Counsel, EPA.

Moderator: Garrett Kral, Associate Member of the Environmental Law & Property Rights Practice Group’s Executive Committee; former Special Advisor for Oversight, EPA.

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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript

 

Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

Guy DeSanctis:  Welcome to The Federalist Society's webinar call. Today, February 28, we discuss "Courthouse Steps Oral Argument: West Virginia v. EPA." My name is Guy DeSanctis, and I'm Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today's call. 

 

    Today, we are fortunate to have with us our moderator, Garrett Kral, Associate Member of the Environmental Law & Property Rights Practice Group's Executive Committee and former Special Advisor for Oversight, EPA. Throughout the panel, if you have any questions, please submit them through the question-and-answer feature, so that our speakers will have access to them for when we get to that portion of the webinar.

 

      With that, thank you for being with us today. Garrett, the floor is yours.

 

Garrett Kral:  Thank you, Guy, for that introduction and for putting together this event today. Hello, everyone. My name is Garrett Kral, and I will be moderating our Teleforum. First, I'm going to provide the procedural and substantive background on this matter, and then the law and policies leading up to oral argument today. And then Justin Schwab will provide his legal analysis and take some time for questions from the audience.

 

      Please do type your questions into the Q&A function of the Zoom feature. I've got some questions for Justin, but we would enjoy some audience participation. So please don't be shy when the time comes.

 

      Before we begin, I'd like to thank you all for tuning in. And a thank you to The Federalist Society for hosting this event. A personal disclaimer: the views expressed herein are my own and not the views of my current employer, nor the views of EPA, a former employer. I'm sure the same goes for Justin.

 

      All right. So let's get down to it. Certiorari was granted in this case on October 29, 2021. Oral argument took place today, February 28, 2022. And this was the only oral argument heard by the Court today. West Virginia v. EPA is perhaps the most anticipated environmental law case in a generation and has implications for administrative law across the board. As a matter of environmental law, it will determine the validity of the Clean Power Plan repeal in ACE Rules, and, potentially, how the EPA will regulate GHGs in the future.

 

      As a matter of general administrative law, it may provide an opportunity for the Supreme Court to finally articulate the metes and bounds of the major questions doctrine, under which certain agency regulations are so impactful that they can't rely on ambiguity or gaps in statutory text, but, instead, need to show a clear congressional intent to authorize a specific type of action taken.

 

      This case focuses on Section 111 of the Clean Air Act. You can find the relevant text of the statute on our event page where it says, "For accompanying document, click here.". So go ahead and click that link. There's a couple of pages of statutory text there, which we borrowed from the appendix of the petitioners' writ of certiorari. But, if, for whatever reason, that's not working for you, that link's not active, the relevant statutory text is available by searching in your preferred search engine "42 U.S.C. 7411" or "Clean Air Act Section 111."

 

      All right. So the procedure for today's case in West Virginia v. EPA — where it's Supreme Court docket number 20-1530, for those following along at home — this matter was consolidated with three others; first, North American Coal Corporation v. EPA; second, Westmoreland Mining Holdings v. EPA; and, third, North Dakota v. EPA. The case below, that is, the case on appeal here, is nine -- or is American Lung Association v. EPA. And that's at 985 F.3d 914, D.C. Circuit dock number 19-1140.

 

      So, originally, the Court had granted 70 minutes for oral argument. However, listening to oral argument this morning, it went for 127 minutes, by my count. And that is -- obviously, that's nearly double what the Court had originally granted. Oral argument was broken into four parts. The state petitioners went first. And that's 19 states total, plus the Mississippi Governor. Up next was the private petitioners, some of which were mentioned in the above case captions I briefly referenced. Then we had the federal respondents. That was DOJ representing EPA. And, lastly, last in line there was the power company respondents.

 

      So a little bit about the historical backdrop to this case. I think this case -- it's worth going through the last couple years of history. So we're going to do that now.

 

      The Clean Power Plan was issued by EPA in 2015 using the agency's authority under Clean Air Act Section 111(d) and styled as a rule to control greenhouse gas emissions from existing coal- and gas-fired power plants. The CPP would have required states to shift their electric generation mix away from fossil fuels and towards renewables, employing a cap-and-trade credit scheme. Those who challenge the Clean Power Plan's legality argue that the CPP is a totally different kind of rule from the scores of previous rules EPA had issued under Section 111.

 

      These critics argue that all earlier rules relied upon pollution control measures that could be achieved at and by individual source's actual performance, whereas the Clean Power Plan set limits that existing gas- and coal-fired power plants couldn't actually meet. Instead, the companies that would run them would have to either build their own renewable power plants — that's wind and solar, mostly — or subsidize their competitors to obtain credits to balance out the continued fossil fuel generation from their existing power plants.

 

      So the CPP's defenders argue that at least one earlier EPA rule under Section 111(d) — that's from the George W. Bush admin's Clean Air Mercury Rule — also used cap and trade. That was discussed during OA today, specifically by Justice Kavanaugh. The CPP's defenders also argue that the statutory language is too -- is broad enough to authorize this kind of rule design, which, in many people's eyes, is why the major questions doctrine is relevant and at issue here.

 

      So, as the Clean Power Plan went through the notice and comment period, it received four million comments. That was the most on any rule at EPA, up and to that point, and perhaps still holds that distinction. Thereafter, in 2016, the Clean Power Plan was stayed by the Supreme Court after the D.C. Circuit refused to do so. This was unprecedented. SCOTUS had never before stayed a rule while a lower court, here the D.C. Circuit, was still considering a challenge to that rule.

 

Thus, the Clean Power Plan never actually went into effect. However, as federal respondents and their amici note, the Clean Power Plan's emissions targets were met, despite the CPP never actually going into effect. Thus, these parties argue that the CPP's emissions reductions targets were more reasonable than their opponents have suggested in their briefs and elsewhere.

 

      That brings us to the Trump administration, and the ACE rule, specifically. In 2019 the Trump administration's EPA published the CPP Repeal rule and replaced it with the -- if I remember, replaced the Clean Power Plan with the Affordable Clean Energy Rule — that's the ACE rule — because the agency had determined that the CPP's design was unambiguously beyond the limits of the agency's authority under Section 111.

 

The Ace rule was based  around heat-rate improvements that individual coal-fired power plants could actually achieve. It had no cap-and-trade aspect and was not designed to shift aggregate generation away from coal and fossil, generally, and towards renewables. In 2021, the D.C. Circuit vacated the CCP repeal and ACE rules, staying the vacatur indefinitely, pending further rulemaking.

 

      The mechanics of this stay and its effects were of much discussion, and especially from Justice Breyer and his questioning of General Prelogar during oral argument today. Nevertheless, in a 2-1 opinion, with Judge Walker dissenting, the D.C. Circuit in American Lung Association, among other things, rejected EPA's reading of Section 111 and the view that the Clean Power Plan's use of generation shifting implicated the major questions doctrine.

 

      It is noteworthy that the Principal Deputy Assistant Administrator for the Office of Air and Radiation at EPA in the Biden administration stated no section — and I'm quoting here — "No Section 111(d) rule should go into effect until EPA responds to the Court's remand in a new rule-making action." This is the main basis for the CPP defenders' argument that the case is now moot. Again, you can find the decision below at 985 F.3d 914. That's D.C. Circuit docket number 19-1140.

 

Brings us to today, West Virginia v. EPA. The issue before the Court was whether, when designing rules under Section 111, EPA is limited to identifying systems — and that word was discussed throughout oral argument today — systems of emission reduction that can be applied to, and at the level of, an individually regulated facility, or whether there are no limits to EPA's authority, other than the textual commands to consider "cost, non-air quality health and environmental impact, and energy requirements." That's from Section 111(a)(1) of the Act.

 

      So what's next? If and when — but probably when, based on the comments made by federal respondents during oral argument — EPA, under the Biden administration, publishes a new Section 111 rule to regulate GHGs, the industry and states will almost certainly challenge that rule. In oral argument this morning, Justice Kavanaugh asked federal respondents, publicly, "What can you guys tell us about the status of the new rule-making?"

 

General Prelogar responded, "EPA will issue a notice of proposed rulemaking this calendar year. And a rule is normally completed one year thereafter." Doing that simple math, the timetable looks to produce a new rule in 2023 at the earliest. And, because past is prologue, the Court could very well stay any such rule from EPA before it goes into effect, thus precluding the regulative community from anticipatory compliance while judicial review is pending.

 

      A decision from the Court on West Virginia v. EPA will be issued later this year. And we were going to have a panel discussion featuring additional guests when that decision is rendered. So there's more to come on this important topic.

 

I am going to introduce Justin briefly and then turn it over to him for about 30-35 minutes of analysis. Then, like I stated at the top, we will take some questions from the audience. I also have got some questions for you here, Justin.

 

      So, Justin Schwab is the founder of CGCN Law, a law practice in D.C. focusing on environmental, energy, and administrative law. Justin served as the Deputy General Counsel at EPA from 2017 through 2019. Prior to that, Justin practiced administrative law at BakerHostetler's D.C. office. He clerked for the Second Circuit in the Utah Supreme Court. And he has a law degree from Yale and a PhD in classics from Berkeley. Justin, the floor is yours.

 

Justin Schwab:  Garrett, thank you very much. Thank you to Guy. Thank you to The Federalist Society for asking me to discuss this today. It's a very important issue. It's a very important matter of environmental law and policy, and a very important matter of more general administrative law.

 

I want to start, as Garrett properly did, by making a disclaimer. I did work at EPA. I was involved in some of these issues. But everything I'm going to say today is a result of publicly available analysis, the filings of the parties, the questions asked at oral argument, the general background of the matter. What I'm saying shouldn't be taken as impugning any view to any other party, to any client I may have, let alone, obviously, to the federal government, back then or today.

 

Garrett gave a good recap of the background and of argument. I just want to note that arguing here went on, as Garrett said, for around two hours and six minutes, two hours and seven minutes. So just a hair under the length of the OSHA vaccine mandate argument from January of this year, which was another very long argument on a very prominent and controversial matter. This just shows the seriousness with which the Court was taking it.

 

There were spirited questions. It was vigorously argued by all parties. The Justices were really digging into the meat of it. And, perhaps unlike the vaccine matter, there weren't, I think, many, if any, comments from the bench that will be taken as, "Oh, can you believe this judge said that?" Instead, this was real meat-and-potatoes analysis, digging into it. This may be because of the subject matter and just the context of it.

 

I am going to divide my analysis of argument and its implications into three general buckets. First, we're going to talk about should the Court even decide the merits of this case at all? Is the case moot? Do the parties still have challenge -- standing to bring this challenge? Would this be an advisory opinion? That's bucket one.

 

Bucket two is looking at arguments over the text of the statute, as it compares to the design of the Clean Power Plan itself, as sort of a vanilla matter of regular statutory interpretation, without bringing the major questions doctrine into play. And then the third and final bucket is, all right, let's look at the major questions doctrine.

 

Most, not quite all, but most of the justices had some questions to ask, and, sometimes, some statements to make about the major questions doctrine. It is hard, it seems, for all parties and all sides — and all justices, frankly — in this matter, to keep the vanilla statutory interpretation lens separate from the major questions lens. But there are some important differences. And so we'll talk about the differences and the overlap there.

 

 

      So first, on the question of whether the Court can and should decide the merits of this case at all, it's worth unpacking and stressing what Garrett already submitted in background as to why that would even be a question. So let's recap the history here.

 

      The Clean Power Plan is issued as a final rule by EPA in 2015. It is stayed by the Supreme Court in February of 2016. And so no state actually had to submit an implementation plan to EPA that would assign standards of performance to the individual existing sources within their jurisdiction. The D.C. Circuit litigation was held in abeyance. Eventually, in 2019, EPA repealed the Clean Power Plan. And, in the same federal register publication, issued the replacement rule, the so-called ACE, or Affordable Clean Energy rule. That all happened in one holistic action in 2019.

 

The day before President Biden was inaugurated, on January 19, 2021, the D.C. Circuit panel issued its ruling. And the 2-1 majority said EPA was wrong. The Trump EPA is too narrowly reading its statutory authority. So we think the Clean Power Plan, at least on the grounds identified in the repeal, these are not valid reasons to repeal the Clean Power Plan. So we are vacating the repeal of the Clean Power Plan. And then we're also vacating the replacement rule, the ACE rule, because it was likewise premised on what the D.C. Circuit majority found was an erroneous and a too-narrow reading of the EPA's authority under the statute.

 

      But then the DOJ, after the changed administration, asked the D.C. Circuit to withhold, to partially stay or withhold the issuance of the D.C. Circuit's own mandate with respect to the repeal of the Clean Power Plan, while letting the mandate issue, with respect to the ruling on the ACE rule. So, in terms of the Court's view on granting that motion and on the partial issuance and partial stay of its mandate, the ACE rule is vacated. The court order is fully in effect there. But the CPP repeal action has not yet actually been vacated because of the partial withholding of the mandate.

 

      At this same time, and, in fact, attached to the government's motion for partial withholding of the mandate, was a memorandum issued from EPA to its regional offices, very brief, saying, "We understand states are getting nervous about what their obligations to write their implementation plans might be. We need to tell everybody that no rule, Clean Power Plan or Ace, is going to go into effect. States do not have to do anything right now. We, EPA, intend to do a new rulemaking to decide how we're going to regulate in this area under this statute." And the Court did grant that.

 

      Now, this was a large part of the basis for DOJ and other parties to oppose granting cert here. They said, "There's no rule. The states and the industry petitioners are not injured by anything. There is no longer a live controversy. And it would be an impermissible advisory opinion for the Court to go ahead and take this case and then reach the merits." Well, that didn't work at the cert stage. SCOTUS did grant cert. But then, all, I believe, of the respondents in their merits brief reiterated these same basic arguments. And then, indeed, led with them, especially the Solicitor General, in argument today.

 

      I think the overall tenor of the Court's questioning is that there is not a majority of the Court that is going to go with this view. Chief Justice Roberts repeatedly said, "This appears justiciable to me. These parties didn't like the Clean Power Plan. They preferred the ACE rule, or maybe no regulation at all. But they definitely didn't like the Clean Power Plan. The D.C. Circuit held otherwise. Why is that not justiciable?"

 

Whereas, the Solicitor General — to a lesser extent, the industry respondents, — said, "Okay, but right now everybody agrees. CPP is never going into effect. The ACE rule hasn't gone into effect. No state or regulated company has to do anything right now. We, the federal government, we, EPA, will be going through a new notice-and-comment rulemaking to come up with a new replacement rule. Wait and challenge that."

 

      That was their position in the papers. That was their position in the argument. And it did not seem to get a lot of traction here. I want to note a few justices' particular questions and their responses to them.

 

      First, the first justice to raise this question of standing, mootness advisory opinion, should we even be deciding the merits of this, was Justice Gorsuch. And, unless I misheard, this was, in fact, Justice Gorsuch's only question in the oral argument. He was noticeably quiet, did not ask a lot of questions. This is interesting, because he's written at great length, both on the Tenth Circuit and now in the Supreme Court, very prominently on questions of Chevron, questions of the non-delegation doctrine, questions of administrative law and separation of powers. He did not ask any of those questions today. He may well end up writing a writing of some form on them, but he wasn't very active in questioning today on those matters. But he did noticeably raise first the question of, "Why are we even going forward with this case?" Not in an aggressive way. Not showing his hand either way. But he did raise it.

 

Justice Breyer, for his point -- as Garrett noted, Justice Breyer, for his part, seemed to have real trouble with the proposition that the D.C. Circuit did not bring the Clean Power Plan back into effect when the D.C. Circuit vacated the repeal of the Clean Power Plan. And the Solicitor General told him, accurately, that the D.C. Circuit has developed its own sort of specialized area of case law as to when and how, both when a court should vacate a rule that it is finding defective, and then, when and how its opinions doing so will actually ripen into taking the rule off the books, so to speak.

 

      Justice Breyer sort of said, "No. I don't take that on faith," kind of, "Point me where I should look to confirm that this rule, CCP, is, in fact, dead." And the Solicitor General, at that moment, referred him to the memorandum, the internal EPA memorandum to its field offices that was documentary basis for the motion to stay the mandate.

 

Well, the state — Lindsay See, the Solicitor General of the state of West Virginia — sort of pounced on that, I think it's fair to say, in rebuttal, and said, West Virginia said, "Well, the Solicitor General is wisely abandoning the reliance into papers on the withholding of the mandate. They recognized that short shrift. Instead, they're employing this internal memorandum. But that can't cut it, because we, petitioner states, had no input into that. We're prosecuting our claim. No one disputes that we had standing back then. You can't kind of make our standing go away, make this case and controversy go away, make our injury go away, by these kind of pinky-swear that we're never going to enforce it." She characterized that as voluntary cessation. And she said that, doctrinally, the parties invoking that, A) have the burden, and then, B) would have to show that it is absolutely certain that the aggrieved parties will no longer be aggrieved. Solicitor General See of West Virginia made a forceful case that that is just simply not the case here.

 

      Justice Sotomayor raised a case which had been cited in the briefing, a 1977 Supreme Court case, I believe, EPA v. Brown. In that case, basically, EPA had conceded that certain regulations in existence were kind of unworkable and unviable and were sort of dead letters until it revised them. And then the Supreme Court essentially took the view that, well, it would be an advisory opinion for us to pronounce on these merits, that that's kind of the best case. And Justice Sotomayor went the furthest in kind of implicitly embracing that view in her questioning.

 

But, generally speaking, in terms or whether there's a quorum or critical mass of a majority of five justices who think that they should not or cannot decide the merits of the case, at this point, I didn't hear it. As I noted, Justice Gorsuch did raise it, and then didn't ask any other questions. Not every justice weighed in on this issue, so it's possible that — after reflecting on this over the coming weeks and months — it's possible that a majority of justices decide that this should be dismissed, either because they shouldn't have taken it in the first place, or because, as a prudential matter, they just think it's not appropriate to weigh in now. But I don't think that's particularly likely to happen. And I think most commentary coming out now shares that view.

 

      The rebuttal at the very end of argument from the states, from the Solicitor General See from West Virginia, just said, "You have the power, Court, to give us an answer, and you should. The Court has full power to give an answer here, and it should. This is a critical question. The Court has a rule before it, i.e. the CPP and then its repeal, and it, the Court, should give an answer to that." It was forceful. And I don't like to be in the prediction business on these calls, but this is one where I'll say I will be surprised, at this point, if the Court does not reach the merits of this case.

 

      Moving on then to the merits of this case, let's first talk a little bit about what I call just plain vanilla statutory interpretation, without getting too much into the major questions doctrine yet. And I want to talk a little bit here about what the key features and text of the statute are, and then look at how the different justices and the different counsel sort of played around with them.

 

      I know that The Federalist Society has made a link to the statutory text available. I would strongly recommend that anybody who's able to, as they're listening along, either live or on a recording, take a look at that text, either through the link that you've been sent, or else if you just Google 42 U.S.C. § 7411, you should be able to pull it up.

 

      Let's talk a little about where this statute is first. Title I of the Clean Air Act deals, among other things, with EPA's regulation of stationary sources of air pollutants, is what it sounds like -- something that doesn't move. A factory or a power plant is sort of the paradigmatic example.

 

      Section 111 is one of the key sort of regulatory programs and regulatory authorities under Title I. And Section 111 — or in the code it's 7411, seventy-four eleven — is titled "Standard of performance for new stationary sources." And then subsection(d), as in David, is for existing sources. EPA has issued about 70 new source performance standards over the last 50 years since the Clean Air Act was enacted. But it's only issued a handful of existing source rules.

 

One of the main reasons for that is that you can -- the new source authority is not limited on its face, in terms of which pollutants EPA can regulate using it. But the existing source authority is. It's a little argument about what these limitations textually mean in the existing authority. But, essentially, EPA cannot use 111(d) to regulate existing sources' emissions of hazardous air pollutants, which are subject to the Section 112 air toxics program. And it can't use it for so-called criteria pollutants, which are the focus of the famous NAAQS program, N-A-A-Q-S, the National Ambient Air Quality Standards. That's another major program of Title I under the Clean Air Act, which deals with the appropriate regional concentration of certain pollutants of concern are. I think, smog, basically, in a metro area, is the paradigm there.

 

      111(d), for existing sources, cannot be used for either air toxics pollutants, or for MATS pollutants. Well, greenhouse gasses are a prime example of a pollutant of concern that doesn't fit into either of those two buckets. And so if your new source rule for a source category regulates greenhouse gasses, then EPA has the authority — and, arguably, the obligation — to do an existing-source companion rule.

 

When EPA issued the Clean Power Plan in 2015, it did that simultaneously with issuing new source standards to control greenhouse gas emissions from newly constructed or modified gas-fired- and coal-fired power plants. And so that was the basis on which it simultaneously also issued the Clean Power Plan itself, which was to govern state plans there. So that's the structural interplay.

 

      If you look at the text of the statute itself, the very first words in it are in the definition section. They define what a standard of performance is. And they say, "A standard of performance," — and this is for both existing source rules under (d) that are mediated through the state program, and for the standards of performance for new sources that EPA itself issues under section (b), as in Boris — "The term 'standard of performance' means a standard for emissions of air pollutants which reflect the degree of emission limitation achievable through the application of the best system of emission reduction that EPA determines has been adequately demonstrated."

 

And so I know that's a lot of words to follow orally, with your ears, but if you look at the text, okay, what do you notice? Well, it doesn't say what the best system of emission reduction is being applied to. And so this is the germ or the kernel of the theory of the Clean Power Plan. There are other arguments, but one that the defenders of the Clean Power Plan say, "This does not, on its face, say that the best system of emission reduction has to be applied at the facility-specific level directly to the specific sources. And that's true, as far as it goes.

 

      But now let's look structurally. In Section(d), as in David, which is the existing source program, EPA proscribes regulations, setting up a procedure. And, under that procedure, states give EPA a plan. And that plan "establishes standards of performance for any existing source for the pollutant in question." And Congress commanded EPA to permit the states "in applying a standard of performance to any particular source under those plans to take into account those sources' remaining useful life and other factors.

 

      So one of the major arguments the petitioners made is this intertextual structural argument, and then, looking at the text — indeed, but not only — in saying when you read these together, it's very clear. The standards, ultimately, are being established for particular individual existing sources. And so the design of the standard of performance, and EPA's role of identifying what the best system of emission reduction is, also has to be limited to things that individual facilities can actually do and achieve.

 

      There's that word "achievable" in the definition of standard of performance. And that's another textual hook petitioner point to say, "Ah ha. This means it's source-specific."

 

      Well, that's kind of the petitioner's view is notwithstanding that there's no "thou shalt not go grid-wide" right up there in front in the definition of standard of performance. They're getting at it through sort of a Gulliver's Travels, tying it down through a bunch of other textual clues and hooks in 111(a), the definition of standard performance, and in 111(d), the existing source program.

 

      Respondents and the government and the industry parties that are essentially like the Clean Power Plan and are defending its legality, they say, "No, no, no, no, no. It's exactly the opposite." Congress said, "Go find what a system of emission reduction is." And they say that was deliberately broad language. They say it was deliberately meant to be flexible, breathing, evolve, that when Congress enacted these words decades ago, Congress knew that it didn't know every problem that would face the EPA, and every environmental problem and every environmental control technique that would arise.

 

And so it deliberately wrote this in very loose and open terms. That certainly was -- that argument did find traction with the democratic-appointed justices. But, with a couple exceptions that I'll mention, there did not seem to be a lot of appetite from the republican-appointed justices of saying, even as a vanilla textual interpretation matter, "Oh yes, this is broad. So follow your bliss." That is not where folks' heads were at.

 

      Everybody concedes. And the challengers conceded here, that the word "system" in "system of emission reduction" -- in a vacuum, the word, "system" might be very open-ended and broad. But they stressed and urged that you have to read statutes holistically and in context and giving meaning to all of their words. And so they pointed to the phrase "standard of performance," itself is only read -- can only be read to address measures that actually address the performance of individual sources, rather than "the source will buy a bunch of credits from renewable generation to justify its continued operation as a fossil-fuel-generated plant."

 

That fourth point was very forcefully made of that's not a standard of performance. A standard of performance is also defined to include the word emissions limitation. That's not limiting emissions. You're just either shutting them down or you're still running them but buying credits from someone else. Either way that doesn't work, is the petition of the challengers there. And they point also heavily to the existing source subsection, subsection (b), to say all of that facility-specific language means you really have to be booking and basing your design, your standards, around what individual plants can achieve.

 

Now, one interesting aspects of the case which did not come up all that much in the question — but DOJ and industry defending the Clean Power Plan did make this gambit — is to say, well, no. Actually Clean Power Plan is the flexible federalist one, because the Clean Power Plan says that states can do a cap-and-trade system. States can do whatever they want. If a state decides that its sources can do carbon capture, they could do that too. We're letting them do whatever, whereas, under the 2019 approach, and under the ACE rule, states would be limited to standards that were really done on a source-specific level.

 

Well, isn't that violating federalism? There just did not seem to be a lot of appetite from potential swing votes here from the so-called center or right block of the Court. I don't like using those terms, because it oversimplifies things. But, just for shorthand, didn't seem to be a lot of appetite there.

 

      Now there was one interesting exception to that. And I want to note that. Justice Thomas, who I think most people would think, "Oh, this is a safe vote to say, 'CPP's bad.'" But Justice Thomas did ask some pretty pointed questions. I think it was to the industry challengers, to the North American Coal Company from Jones Day, if I'm not mistaken. Justice Thomas said, "Okay. You're saying that the design of the Clean Power Plan was based on generation shifting, i.e. at the grid-wide level, relatively drawing down fossil-fired sources of energy and bringing on more renewable-fired power plants, renewable power plants onto the grid. But generation shifting is going to happen as a backend effect whenever you regulate the power industry, because this is just how the utility industry operates. So what's the difference? If they can get at the same effect through a more roundabout way, why can't they just design their rules explicitly that way?"

 

      Now, Justice Thomas could have just been doing what a good judge does, which is probe to really kind of the seams of the argument. I don't want to take this as a sign that he necessarily is going to uphold the Clean Power Plan. I think that would surprise a lot of people. But it is just worth noting that that kind of questioning was not limited only to Justices Kagan and Sotomayor and Breyer, although they were more active in it.

 

      Another sort of what I'll call vanilla textual interpretation aspect is the significance of other language within the Clean Air Act. The challengers against it were saying the Clean Power Plan was illegal, basically say, "Cap and trade authority -- Congress gave it explicitly elsewhere in the statute under other programs. And that means that it should not be read to be within EPA's authority here, when they're designing a standard of performance under Section 111."

 

      For their parts, the industry respondents, and, to a lesser extent, DOJ, went in a similar direction. And what they said is, "Okay. Fine. Other programs under the Clean Air Act do explicitly talk about retrofit requirements at plants, do much more specifically sort of situate the regulatory verbs, let's say, that are happening at particular individual regulated facilities. So Congress's looser language here in 111(a), talking about a standard of performance being based on the application of a system of emission reduction, but not saying to what, or by whom, that should be given effect. So, forceful, complex, sophisticated arguments of vanilla statutory interpretation on both sides. The overall tenor and take was that there does seem to be a majority of the Court that is simply not convinced that the Clean Power Plan was within the statutory authority. But Justice Thomas's questioning, the relative reticence of some other justices across the board around these issues mean that it's not a complete slam-dunk prediction. But that does seem to be where it's headed. And, that, I think, is a good segue to the third and final bucket, which is the major questions doctrine. Does it apply here, and what even is it?

 

      The general sort of hallway understanding of the major questions doctrine is that normally, under the regular Chevron deference world, if a statute is ambiguous or if Congress has left a gap for the agency to fill in, then the Court will defer to an agency's reasonable interpretation of the statute and its ambiguities or its silences, let's say, although that's more of a policy choice thing. Even if the Court thinks, "Well, you could read it another way. And I actually like it my way better. But it is ambiguous. And you can also read it the government's way. So the government wins." That's regular Chevron. Everybody knows how that's supposed to work. 

 

    What major questions says, in essence, is some agency actions have such an impact of such importance or raise questions of such significance in a bunch of different ways that regular arguing from ambiguity [inaudible 00:38:57] isn’t going to cut it. Instead, for these major actions, whatever they are, you have to be able to point to a sufficiently clear expression of congressional intent to authorize this type of action.

 

      And so most, not all, but most of the justices had quite a bit to ask and even to say and pronounce about this doctrine. Chief Justice Roberts — another surprising, potentially, area of argument and maybe a suggestion of where this is all headed and maybe even who's going to write it — Chief Justice Roberts was very interested in major questions and really seemed to want to raise the question of the order of operations, which is, let's say, assuming it applies, for a second, when does it apply?

 

Justice Kagan has been forcefully arguing — at the vaccine mandate oral argument and today — that, in her view, major questions only comes in at the end. You go through all the regular Chevron steps, and if you get to an ambiguity in the text, then major questions might come in as sort of a thumb on the scales to say, "Nah. It's sort of a tie-breaker. Nah, this is too big a rule to just argue from silence."

 

      Chief Justice Roberts said that's almost like the rule of lenity here. He's not -- he seems dissatisfied with that. He directly asked the parties, "Why can't we do it on the front end? Why can't I, as a justice, look at the action that the agency took, say, 'Whoa. That's a big deal?'" Think of last year. Well, the CDC is doing an eviction moratorium. Kind of gets your eyebrow raised already, as a court. And then go look at the statute saying, "Okay. I'm willing to be persuaded, the Agency and DOJ, but you better have a darn clear statement of authority there, because I've already raised my eyebrows in surprise at how momentous the action you took was."

 

      And there was at least one amicus brief from the Boyden Gray firm, explicitly arguing that it should come at the beginning as sort of a step zero, in terms of reversal of the order of operations. And Chief Justice Roberts, he didn't refer to that brief, but he does seem very interested in raising that possibility.

 

Justice Thomas, let's note, his very first question — and he gets to go first, because he's the most senior — was, "Do you need major questions at all to win?" And West Virginia said, "No, we don't. But we do think it does apply here. And we do think you should make that statement." For their parts, the Solicitor General and the industry respondents kept saying, "You can't resolve major questions in this abstract way. And Chief Justice Roberts said, "What are you talking about, abstract? I have the agency action right here. I have the Clean Power Plan. I can go look at it and read what it did. That's not abstract. I know what they did. The question is whether, A, it was legal or not, and then, subquestion, does it require a heightened clear statement of authority to do that kind of rule?"

 

The parties defending the Clean Power Plan, and then the justices who seemed sympathetic to them, referred repeatedly to a 2011 Supreme Court case, American Electric Power V. Connecticut, A-E-P versus Connecticut. In that case, a coalition of blue states, and, I think, NGOs, sued, essentially, the coal-fired power industry saying, "You're causing climate change. And that's damaging us." The Supreme Court held that even if, in the abstract, there could be a federal common law action here, the Clean Air Act displaces that federal common law, and, specifically, the Court unanimously said — I think Justice Alito was recused, so 8-0 — unanimously said, "Congress has delegated to EPA the authority of whether and how to make the decisions of whether and how to regulate carbon dioxide emissions from existing power plants under section 111(d)."

 

The rebuttal from the challengers here, when pressed on that was, "Yes, but it didn't say that any potential regulation that they might want to do would be within the scope of authority that they had." So that's kind of where that all went.

 

And Justice Barrett — this might be a good note to sort of close on, here, or two more notes to close on here, in terms of two other justices with different takes on this, potentially — Justice Barrett asked, "What's the daylight between the major questions doctrine, which is about how you read a statute, and then the non-delegation doctrine, which holds that there are constitutional limits on Congress's ability to delegate this legislative power over to executive agencies, even if it wants to?" And the states said, "We don't think you need to get into that latter one here." Congress did not give the clear statement here, states say. And so you don't need to get into whether they constitutionally could have, because we just think they didn't.

 

But Justice Barrett, later on in her questioning, again seemed to say, "This is environmental. This is EPA's job. This doesn't seem like maybe a category mismatch. You're just saying this rule was a really big deal and we don't like it. Kind of help me out here. How do I deal with that?"

 

And, in that light, it's very noticeable Justice Alito -- Justice Alito did not speak much when the challengers were up. But he became very active when the respondents spoke. And Justice Alito asked industry respondents the following question. He said, "If an agency decides it has some big new power that it hasn't used before, but the agency's actual first step in regulating using this power is relatively humble, it takes only five percent of the potential space that it is clear authority says it could, is that not a major question? And if it does that, and then the next time it takes another five percent, and another ten percent of the possible space, can the agency sort of, and the government executive branch, sort of evade major questions scrutiny by proceeding by stages?"

 

Now, that's important, because a lot of argument here, under defenders of the CPP have said, "Actually, it wasn't that revolutionary, because even though it was stayed and never went into effect, the reductions that CPP projected wouldn't happen until the 2030 and would need the CPP to do, have basically, voluntarily happened through market shifts anyway, trying to say it can't be major if it happened anyway, even though the CPP was stayed.

 

And so Justice Alito's question really seems to zoom in on what I've long thought might be the ultimate crux of the major questions aspect of this case, which is, can the major questions doctrine be activated, not by the sticker price of a particular rule, or even in an area which has already been subject to some kind of regulation, based on what might be an unlimited theory of authority of what the agency could do, even if the step it took is portrayed as, by itself, not rising to some existential, colossal, titanic impact.

 

And, that, if they do decide they have jurisdiction to hear the case and if they do decide not to resolve it solely based on vanilla statutory interpretation and they want to really flesh out how major questions will work, that could really come into play. And you could start seeing, if your theory of authority is that system is very unbounded and that, other than your requirement to consider costs, energy requirements, and non-air quality health and environmental impact, those are your only limits, which is essentially what the D.C. Circuit held, can that right there take you from regular regulation to invoking the major questions and triggering the major questions doctrine? And with that, I'm happy to turn it over to Garrett for any questions from him or from the audience.

 

Garrett Kral:  Thanks, Justin, for that analysis. We really appreciate it. Folks, don't forget to type your questions into the Q&A function here in this Zoom feature. Justin, I've got a question for you here. And it stems off of the last set of remarks you were making in major questions. I think that this is a topic which practitioners and people generally are just wondering if the Court is going to say is applicable. Obviously, it did so in the CDC eviction moratorium and vax or test cases, both of which were mentioned in the oral argument this morning.

 

So the critique of this doctrine being that it's vague, it's unworkable, and, therefore, it's an odd legal standard for the originalist and textualist members of the Court to say, "Well, this might apply here." Conversely, I'll note that, just like you said, Justice Alito had provided some guardrails for major questions, potentially stating that major questions might be those of vast -- I'm quoting, "vast economic and political significance." Or that the doctrine could be applicable where, say, an agency finds new powers in a decades-old statute like the Clean Air Act.

 

      So, one thing I noted -- Justice Kagan, for her part, she went so far as to potentially hash out a three-prong approach for determining if the major questions doctrine applies. And further and serious thought was given to when to apply it. And I think that that's something you mentioned. I'd like to hear you discuss more. When should it apply? Should it apply on the front end? Should it apply on the back end? What are you thinking if the Court might invoke this doctrine? Your thoughts please.

 

Justin Schwab:  Absolutely. So the problem with the major questions doctrine, it's sort of been the doctrine that dare not speak its name. People were saying a lot after cert was granted here. And my understanding is this is true. And my understanding is this is true, even after the vaccine opinions, is that a majority controlling opinion of the Supreme Court has never actually used the phrase "major questions doctrine."

 

It has done it. It has cited a line of case law. And it has used language and analysis that makes it pretty clear that there is a doctrine of some boundary saying that some agency actions are so big that they can't just rely on ambiguity or gaps to justify them. But putting a label and formalizing it with a sort of multi-prong test, or whatever, is something they've studiously avoided doing until now.

 

      And I think there are good reasons for that, because it is sometimes challenging to articulate an understanding of the major questions doctrine that doesn't call into question the validity of much of the history of the administrative state over the last few generations. Now, for some folks, for some advocates, and for some citizens, that may be a feature, not a bug, of this doctrine, and may say, "That's right."

 

But the controlling votes on this Supreme Court currently are not folks you would necessarily think want to throw the baby out with the bath water of how the administrative state functions. So, if it's just major economic impact, and the Clean Power Plan had a price tag of billions of dollars, but, so do most major EPA regulations these days, and other regulations, even not from EPA.

 

      So it's sort of inchoate, I think -- it's necessarily been inchoate until now. And then the question is do they go there now, and does the majority of the Court squarely say what this doctrine is, when it's triggered, and how it works? You're right that Justice Kagan did suggest a three-part test. I think she was saying you need to have all of these. One, you need textual ambiguity. Two, the agency has to step far outside of what we think is its appropriate lane. The FDA tobacco case is the prime example there. And, then, third, it might be conceivable on the text, but it wreaks havoc on other things in the statute.

 

That was Justice Kagan's sort of attempt to confine, is how I read it, the major questions doctrine. And then, implicitly, from her question, she thinks it does not apply here. And the challengers say, "Oh, it totally applies here." And the respondents would say, "Well, it absolutely doesn't." The respondents would say -- the DOJ and industry respondents would say, "The text is not ambiguous. The text is clearly broad. It is unambiguously broad. They were allowed to do this because it's a system. Generation shifting, cap-and-trade credits are a system." They'd say if the agency hasn't stepped outside of its lane because emissions control is emissions control, is environmental protection. And then they'd say, "There's no havoc under any of the rest of the statute, in fact, this works harmoniously with the statute. That's their view.

 

      Challengers obviously would say, "Nuh-uh to all of that." But then, they'd also sort of urge, I think, the Court towards more of a front-end analysis. Because, remember, Justice Kagan is a little bit setting the table by the first prong saying ambiguity is a condition. That's what I mean by Justice Kagan -- and she was much more clear about this in the OSHA vaccine mandate argument. In her view, you look at the -- is it unambiguous? No. Okay. Is it ambiguous? You play with all of the traditional tools, try to forget what the heck this thing means. And then you can look at whether it's a so-called major rule.

 

Whereas, Chief Justice Roberts seemed to be suggesting, no, that's not how this should work. We can, maybe should, look at what the agency did. And if that is so beyond the pale, if it raises our eyebrows all the way up to the middle of the forehead, then we decide we're in major questions land. And that influences what you're looking for in the statute in the first instance. My personal preference is not particularly relevant here. But I will say that, on balance, I do see the appeal of the Chief Justice's remarks.

 

And, the idea that, whether it's the CDC eviction moratorium, whether it's FDA deciding after decades of saying it couldn't, that, actually, it was going to regulate tobacco, or, frankly, whether it's using this obscure, rarely-used part of the statute to essentially take the northeastern states RGGI policy, Regional Greenhouse Gas Initiative, and essentially try to compel the rest of the country, who had not chosen to adopt it, to do so under the aegis of 111(d), which, I would argue, looks nothing like — and I did argue— looks nothing like any prior EPA rule, that would trigger major questions. That seemed to be where the Chief Justice was going, but with some forceful counter and pushback from Justice Kagan.

 

Justin Schwab:  All right. Thank you for that. I've got another question here. This one's, again, from me. You did get one or two from the audience, so I will make sure to get to those. I wanted to ask about generation shifting. How might the Court deal with federal respondent's argument that Section 111 does not categorically exclude generation shifting as a component of the best system of emission reduction for existing power plants? In other words, the federal respondents have said there is generation shifting elsewhere in the Clean Air Act, as was noted in oral argument. Examples of generation shifting elsewhere in the statute include Title IV, Acid Deposition Control Program, Clean Air Act's stratospheric ozone program, and the like.

 

So, generally petitioner's critique to that point is that a plain reading of Section 111 -- the best system of emission reduction fails to provide a springboard for this type of market transformation, and that, even though generation shifting is called for in some parts of the Clean Air Act, as previously was just noted, this does not imply that it's permissible elsewhere. And, in fact, that generation shifting is provided in these separate bespoke provisions, let's call them, of the Act. This actually confirms that Congress did not intend to include generation shifting in Section 111, or would have said so. What's your thoughts on that? And where might you see the Court going there?

 

Garrett Kral:  That is -- that's a very good framing of it. Thank you. So, let's talk a little about what generation shifting is. In the industry sense, generation shifting is, okay, I'm a company that has a whole fleet of power plants. They may be powered by all kinds of different fuels, some fossil, some renewable. Or I'm a regional authority that's responsible for managing the grid, making sure the lights stay on. I'm taking bids in and out in the contract stage, and then, as a traffic cop, I'm kind of saying, okay, where is the power going to come from? And you're just shifting, sort of like in air traffic control. Who's going onto the grid, and at what terms?

 

      So that's fine. It happens all the time in industry. And, in fact, the industry parties who are defending the Clean Power Plan say, "We love that stuff. We want to do it. It's gangbusters. It's economically efficient. It's great for everybody." Therefore, it must be the best system of emission reduction that's been adequately demonstrated in the colloquial terms. And you, they say, are just making up all these fake reasons why you don't want to allow that as the design of an EPA rule. That's the position they articulated very forcefully.

 

      The counter to that is, well, no. In 1990 there were major amendments to the Clean Air Act. And an entirely separate title of the act, Title IV — it's actually, technically 4(a), the acid rain, basically cap-and-trade program for power plants — was created with very precise instructions from Congress about how this phase-down of acid-rain-causing pollutants, through a market-permit-trading system, credit-trading system among power plants. Well, if 111 already had this authority in it, dormant, the whole time, why did Congress feel the need to do that? And, elsewhere, Congress has explicitly talked about auctionable, auctions for pollution, tradable rights to emit. That's cap and trade. That's what it is. They didn't do that here.

 

      Now, the counters, as I understand them from the parties defending the Clean Power Plan, would be, one, they felt a need to spell it out there in acid rain, because that was a specifically pressing problem that Congress took unusually hands-on control there. But that just meant just that, that they wanted to really carefully tell EPA what to do. They weren't forbidding it from doing it elsewhere.

 

      Two, they point to Section 110. Section 110 governs the SIPs, which are the State Implementation Plans of another program, the National Ambient Air Quality Standards Program. So 111(d) — what we are talking about for existing sources — says EPA passed regulations that set up a procedure similar to that one under 110 for states to regulate their existing sources. Well, if you go look at 110, which is for that ambient air quality program, that explicitly says that state plans can include marketable auctions to pollute, marketable cap-and-trade systems.

 

      So, this came up today. I believe it was Justice Kagan or Justice Sotomayor said that, "Hey, why doesn't that carry over?" Well, the challenger said, "No. That procedure being referred to there in 111 is just draw up a state, send it EPA, they can just approve or disapprove it." Literally, just that procedure does not import the substantive authority under which you can do cap and trade. Or — and certainly industry respondents, at least, suggested — maybe a state can do that as a compliance matter. Maybe a state can have a little more flexibility to decide what it wants to do. And maybe the 2019 EPA was wrong about that.

 

But that's not what's before you here now to decide. What's here before you to decide is not whether the ACE plan itself is too strict and stringent — the ACE rule — but whether the Clean Power Plan was within EPA's authority, and whether these references to cap and trade elsewhere in the statute are neutral, or, as challengers would say, whether they showed that this is not within what a best system of emission reduction can be, as EPA designs the rule on the front end.

 

      Or, as respondents would argue, and as DOJ and industry respondents would argue, is this shows that Congress likes cap and trade and thinks it's a good idea and we should be allowed to use it here. Those are sort of the play. On balance, I think the majority of the Court is just not buying it. And Justice Kavanaugh in particular, who has a lot of Clean Air Act experience on the D.C. Circuit, noted these things. He noted that cap and trade was enacted by Congress in 1990. He didn't touch 111 here at all. He noted that there had been an attempt to do it legislatively that had failed and it was after that that the Clean Power Plan was issued. So I think that if Justice Kavanaugh is in the center of gravity where the Court's heading, then I don't think his arguments are going to fair very well.

 

Garrett Kral:  All right, Justin. We have one last question here. I see one from the audience. It looks like it's a biomass question. In ACE, EPA declined to make biomass a compliance option on the belief its carbon-beneficial use depends on offsite sustainable forest management. Do you think the Supreme Court is likely, even if implicitly, to support this position?

 

Justin Schwab:  That's an excellent question. And so this gets a little into what exactly is this so-called fence line? Now, the repeal of the Clean Power Plan did not actually use the word fenceline, but it's been introduced in the briefs and it's a colloquial good way for people to understand what we're talking about. In other words, do regulations look at what can be done at a particular plant, i.e. inside its fenceline, or whether they can be based on a broader design, like what structural changes can happen to the entire power sector, as, I would argue, was the Clean Power Plan.

 

Biomass, which is the burning of, essentially, plant matter at a power plant, which might have any amount of emissions coming out there. But the argument is, but this is all coming from plant matter that was built out of carbon sucked out of the atmosphere and so was the carbon sink on the front end. So it's carbon-neutral or better. That's the argument there. It is possible that the Supreme Court, if it really goes straight for the fenceline, and if it essentially adopts the reading of the 2019 EPA, under which only measures reflecting and addressing the emissions performance from the smokestack of the particular regulated facility count, and stuff going on elsewhere offsets whatever credits being out from other plants don't count, it is possible that they could preclude EPA from crediting biomass, at least under Section 111.

 

But they don't necessarily need to go there, because -- and this gets into justice, Chief Justice Roberts' front-end questions. If they go major questions, and if they just say, look, the CPP, which is not abstract, we have it before us, we and our court can look at it and see what it did, you EPA in 2015, if you just went off the rails here, you colored outside the lines, you went ultra vires, you can't do that. And then they could implicitly or explicitly reserve nicer questions of what exactly you can do, per future rule making. If they go that route, it is, in fact, possible that they will not have to get into that question at all.

 

Garrett Kral:  Great. And I -- we are running short on time here. So, thus concludes our Courthouse Steps Oral Argument Teleforum on West Virginia v. EPA. I want to thank you, Justin, again, for your time. And, thank you, Guy, for setting this up. And a special thank you to The Federalist Society for hosting us today. Over to you, Guy.

 

Guy DeSanctis:  Yeah. Thank you. On behalf of The Federalist Society, I want to thank our experts for the benefit of their valuable time and expertise today. And I want to thank our audience for joining and participating. We welcome listener feedback by email at [email protected] As always, keep an eye on our website and your emails for announcements about upcoming Teleforum calls and virtual events. Thank you all for joining us today. We are adjourned.

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.