Summary of West Virginia v. EPA and its potential impact on NRC and other federal agencies

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In a recent decision that could have wide-ranging implications, the U.S. Supreme Court in West Virginia v. Environmental Protection Agency found that the Environmental Protection Agency (EPA) had overstepped its authority in promulgating the Obama-era Clean Power Plan. The ruling restricts EPA’s authority to regulate emissions of greenhouse gases (GHG) from existing power plants, but also could constrain efforts by other federal agencies to prioritize the effects of climate change in agency decisions, and the precedent may be relied on by litigants seeking to challenge other significant federal agency actions as well—as recently seen in some recent challenges to the U.S. Nuclear Regulatory Commission’s (NRC) authority to license a spent fuel storage facility in Texas. Below we walk through a summary of the case, and its potential impacts, including the recent challenges pertaining to the NRC.

Summary of the Case

On June 30, 2022, the Supreme Court issued its decision in West Virginia v. EPA, which limited the EPA’s ability to regulate carbon dioxide emissions from power plants by holding that the Clean Power Plan established in 2015 under the Obama administration went beyond the EPA’s regulatory mandate. Specifically, the majority found that the EPA had exceeded its congressionally-delegated responsibility by pushing utilities to make system-wide moves away from coal-generated power and towards cleaner forms of electricity generation.

Factual Background and History of the Case

In 2015, the EPA promulgated the Clean Power Plan rule, which addressed carbon dioxide emissions from existing coal- and natural-gas-fired power plants. The plan required power plants to install more efficient devices to limit emissions of carbon dioxide and called for plants to move toward implementing different methods of energy creation, including natural gas and emission-free sources. The EPA relied on Section 111 of the Clean Air Act as statutory authority for the regulations. Section 111, among other things, authorizes regulation of certain pollutants from existing sources under Section 111(d) (42 U. S. C. §7411(d)). Prior to the Clean Power Plan, EPA had used Section 111(d) only a handful of times since its enactment in 1970. Under Section 111(d), although the states set the actual enforceable rules governing existing sources (such as power plants), EPA determines the emissions limit with which they will have to comply.

As noted in the Supreme Court decision, at the time of its promulgation, the White House stated that the Clean Power Plan would “drive a[n] . . . aggressive transformation in the domestic energy industry.” And EPA’s “own modeling concluded that the rule would entail billions of dollars in compliance costs (to be paid in the form of higher energy prices), require the retirement of dozens of coal-fired plants, and eliminate tens of thousands of jobs across various sectors.” The Court further referenced other evaluations at the time of the impact of the Clean Power Plan. These evaluations were never tested, however, because the Clean Power Plan never went into effect.

The same day that EPA promulgated the rule, dozens of parties, including 27 states, petitioned for review in the federal courts, and requested a stay of the plan pending court review, which they eventually received. The Clean Power Plan was subsequently repealed after a change in Presidential administrations. In 2019, the EPA found that the Clean Power Plan had exceeded the EPA’s statutory authority under Section 111(d), explaining that the Clean Power Plan had based its regulations on “a shift in the energy generation mix at the grid level.” The EPA determined that the interpretive question raised by the Clean Power Plan fell under the “major questions” doctrine, under which a clear statement by Congress is necessary for a court to conclude that Congress intended to delegate authority “of this breadth to regulate a fundamental sector of the economy.” In repealing the Clean Power Plan, the EPA found no such authority.

Again, a number of states and private parties filed petitions for review in the federal courts challenging EPA’s repeal of the Clean Power Plan. The D.C. Circuit Court of Appeals held that the EPA’s repeal of the Clean Power Plan relied on a “mistaken reading of the Clean Air Act,” vacated the EPA’s repeal and remanded for further consideration.

The court’s decision was followed by another change in Presidential administrations, leading to some more stays and the present Court case.

Court Decision

The issue presented to the Court was whether the U.S. Constitution gives Congress the authority to delegate broad regulatory power to the EPA related to greenhouse gas emissions. More specifically, the Court framed the issue as whether under Section 111(d) of the Clean Air Act, Congress had authorized the EPA to issue rules—including those capable of reshaping the nation’s electricity grids and unilaterally decarbonizing virtually any sector of the economy—without any limits on what the agency can require so long as it considers cost, non-air impacts, and energy requirements. The Court held that Congress must provide clear direction to the EPA – rather than a broad delegation of power – for the agency to regulate greenhouse gas emissions. The Court's 6-3 decision reversed the D.C. Circuit’s previous ruling and remanded the case for further proceedings.

In coming to this conclusion, the Court relied on the "major questions" doctrine in finding that the EPA exceeded its authority under the Clean Air Act when it issued its Clean Power Plan. The doctrine, invoked for the first time by a majority of justices, holds that courts should not defer to agencies on matters of "vast economic or political significance" unless the U.S. Congress has explicitly given the agencies the authority to act in those situations. Furthermore, the Court stated that the doctrine “refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”

Critical of the scope of federal agencies’ regulatory reach, the majority held that in “extraordinary cases” where agency regulation is of particular “economic and political significance,” a federal agency must be able to point to clear congressional authorization for the power it asserts. The Court concluded that the legislation relied upon by the EPA—Section 111(d) of the Clean Air Act—lacked the necessary evidence of congressional authorization needed to permit the agency to implement the Clean Power Plan.

Impacts to Federal Agencies and Current Challenges to the NRC’s Authority

In addition to limiting the power of the EPA and other agencies with respect to climate change in the absence of a clear congressional mandate to do so, the Court decision may challenge the authority of federal agencies to promulgate other regulations of “economic and political significant” when such regulations are not specifically authorized by Congress, but may otherwise related to an agencies overall mission to protect public health and the environment.

The decision could impact all federal agencies, many of which have or will contribute to climate policy by trying to reduce emissions or build resilience as more regulatory actions now risk judicial review under the “major questions” doctrine. The decision opens the door to more legal challenges claiming that federal agencies are overstepping their regulatory authority in pursuing a mission to tackle climate change or other significant activities. Some recent agency activities could include EPA’s rules to boost car emissions standards, new climate accounting proposals from the Securities and Exchange Commission, and certain Federal Energy Regulatory Commission initiatives. As the Court heard the arguments in West Virginia v. EPA last February, there was another pending case in which two biofuel coalitions, a group of oil and gas producers and a refinery industry group joined 15 Republican state attorneys general in suing the Biden administration over a December rulemaking that increased vehicle fuel economy standards to cut greenhouse gas emissions.

Even if ultimately unsuccessful, agencies could become embroiled in court battles, and the mere prospect of judicial review—even if the agency ultimately wins—may chill agency regulation and lead to significant delays as agencies determine the limits of their powers.

The West Virginia v. EPA decision has already been cited in an action challenging the NRC’s authority in at least two instances involving the same NRC license. In response to the Supreme Court decision, the Texas Attorney General and State Solicitor General submitted a letter to the Fifth Circuit Court of Appeals arguing that the case bolsters its argument that the NRC wrongly approved a West Texas nuclear waste storage project by exceeding its statutory mandate under the “major questions” doctrine.

The letter stated that the Supreme Court decision “demonstrates that the [NRC] lacks statutory authority” to issue a license for the Interim Storage Partners’ (ISP) to construct and operate a high level nuclear waste interim storage facility in Texas. Texas officials reference Bullcreek v. NRC, 359 F.3d 536 (D.C. Cir. 2004), arguing that the case recognized that the NRC’s authorizing statute “does not specifically refer to the storage or disposal of spent nuclear fuel,” id. at 538, and that under the major questions doctrine, “that is the end of the matter.”

The letter further states that the NRC “relies on the Atomic Energy Act of 1954 [AEA] to license the storage of all of the nation's commercial spent nuclear fuel at the Texas-New Mexico border without state consent. "There is 'every reason to hesitate before concluding that Congress' conferred that expansive power upon the Commission."

The case was similarly invoked by the non-profit Beyond Nuclear, which recently argued in a letter to the D.C. Circuit that the West Virginia v. EPA case and the “major questions” doctrine is relevant to Beyond Nuclear’s challenge to the ISP interim waste storage facility license.

As a general matter, the NRC has broad authority under the AEA to license commercial facilities using radioactive materials, which it has relied on for decades to license a broad range of facilities, including novel, first of a kind facilities. And the ISP proceeding is not the first time the NRC has issued a license for an interim spent fuel disposal facility. The NRC first licensed this type of standalone facility for Private Fuel Storage, LLC back in 2006—which proposed a spent fuel storage facility located on its own and not with a reactor. In issuing that decision, the NRC relied on Sections 131 and 183 of the Atomic Energy Act of 1954, as amended, which concern subsequent arrangements for the storage or disposition of spent fuel elements and the terms of the license, respectively, and 10 CFR Part 72 of the NRC regulations, which governs the licensing requirements for independent storage of spent fuel and other radioactive waste. The license was unsuccessfully opposed by the state of its location at the time, Utah. The NRC has further issued a number of general and specific licenses for ISFSIs located next to nuclear power plants. According to the NRC, there are about 71 such licensed facilities in 34 states (56 reactor sites operating generally licensed ISFSIs, and 15 specifically licensed ISFSIs, including both at and away from reactor facilities). In any event, regardless of the outcome of the challenges to the NRC in the interim waste storage disposal facility licensing, the West Virginia v. EPA decision could have potentially significant impacts on both climate change regulations and broader agency actions, and the continued repercussions from the decision are worth monitoring closely.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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