Power & Pipes

FERC, CFTC, and State Energy Law Developments

The US Supreme Court recently heard oral arguments in West Virginia v. the Environmental Protection Agency (EPA), a major environmental case questioning the extent of the EPA’s authority to regulate greenhouse gas emissions.

Section 111 of the Clean Air Act, 42 USC § 7411

At issue in the litigation is the proper interpretation of Section 111 of the Clean Air Act, 42 USC § 7411. That provision authorizes the EPA to identify “categories of stationary sources” that cause or contribute to pollution and then, for new sources within that category, to adopt standards of performance for emissions that reflect “the degree of emission limitation achievable through the application of the best system of emission reduction . . . [that] has been adequately demonstrated.” 42 USC §§ 7411(a), (b)(1).

The question presented in West Virginia v. EPA is “[w]hether by 42 U.S.C. § 7411(d), an ancillary provision of the Clean Air Act, did Congress constitutionally authorize the Environmental Protection Agency to issue significant 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, nonair impacts, and energy requirements.”

Procedural History

The Clean Power Plan

During the Obama administration, the EPA relied on Section 111(d) of the Clean Air Act to issue the Clean Power Plan (CPP) in October 2015, establishing the first national limits on carbon pollution from US power plants. The CPP sought to fight climate change by shifting the generation of electricity from steam-generating units to natural gas–fired units, and from fossil fuel–fired units to renewable energy sources. The EPA predicted that, by 2030, the CPP would lower carbon emissions from power plants by about one-third from 2005 levels.

When the CPP was announced, the coal industry and many conservative states warned that it would cause tens of millions of lost tons of coal production, thousands of lost jobs in the mining industry, and rippling unemployment effects for those dependent on the coal industry. Shortly thereafter, 27 states and many other parties challenged the Clean Power Plan in the US Court of Appeals for the DC Circuit, arguing that the EPA had exceeded its congressional authority.

The Supreme Court issued a stay, which prevented the policy from going into effect until the lower court had a chance to weigh in. The DC Circuit heard oral arguments in the case, but after the election of President Donald Trump in November 2016, it agreed to suspend its decision as the EPA reconsidered the policy. Ultimately, the DC Circuit dismissed the case.

The ACE Rule and Current Appeal

After then President Trump withdrew the United States from the Paris Agreement, the Trump administration repealed the CPP, saying it exceeded the EPA’s authority under the Clean Air Act. The Trump administration then instituted its own rule, the Affordable Clean Energy Rule (the ACE Rule), which also aimed to combat carbon emissions, but did so more leniently, allowing states to set their own emissions goals.

The ACE Rule also drew legal challenges—this time from Democratic-leaning states and cities, environmental advocates, renewable energy trade associations, and some power companies. They sued the Trump administration, arguing that it should not have repealed the CPP nor instituted the ACE Rule.

In January 2021, the US District Court for the District of Columbia sided with the plaintiffs, vacating both the repeal of CPP and the ACE Rule itself and remanding the case to the EPA for further administrative proceedings. This has left the EPA, now under President Joseph Biden, to produce its own rule, which it has not yet issued.

The Dispute


On April 29, 2021, West Virginia Attorney General Patrick Morrisey (R), Republican attorneys general from more than a dozen other states, and two private coal companies appealed the DC Circuit’s ruling that had vacated the repeal of the CPP and the ACE Rule.

The energy companies and coal mine owners challenge the EPA’s regulation of existing power plants under the Clean Air Act and argue that the EPA should not have authority over these plants. They contend that, under Section 111 of the Clean Air Act, the EPA has the authority to regulate only “inside the fence” of an energy source and lacks authority to regulate in a grid-wide manner across sources (“outside the fence”), as it did in the Clean Power Plan.

According to the petitioners, the major question is whether Congress clearly gave the EPA authority to transform the power industry through a generation-shifting scheme. The petitioners argue that because Congress did not provide such a statement, the EPA lacks such authority.


The respondents—including the federal government, certain states and municipalities, and various power companies, contend that there is no basis for the case to be brought to the Supreme Court, as current environmental law is ambiguous and does not have a place for the federal rule.

Ultimately, the respondents side with the EPA, stating that if the EPA’s regulating powers are taken away, it will drastically impact the future of fighting climate change.

What’s Next?

The Supreme Court is expected to issue a decision by late June. Whether or not the Court decides this type of rulemaking authority is within the power of the EPA, it will certainly provide clarity with regard to the EPA’s authority to issue regulations to fight climate change.