The EPA, Power Plants, and the Chevron Doctrine

Earlier this month, the Biden administration announced yet another plan to shut down America’s fossil fuel power generation capabilities using regulations without any explicit Congressional authorization. If adopted, the Environmental Protection Agency’s 681-page rule would mandate emissions limits that are simply not possible with available today’s technology, forcing coal and natural gas plants to cease operation.

The Clean Air Act authorizes the EPA to regulate emissions from stationary sources, such as power plants, using the “best system of emission reduction…[that is] adequately demonstrated.” However, the proposed rule will require the vast majority of the nation’s power plants to implement either a carbon capture and storage solution (CCS) or green hydrogen as a fuel source, or both. While these technologies do exist, they are largely still in the development stages, with CCS being demonstrated on a small scale despite significant investment and green hydrogen being extremely difficult to produce in industrial quantities.

If implemented, the Biden EPA’s plan would, quite literally, change the landscape of America. Carbon capture and storage technology captures carbon dioxide from emissions sources, transports it to a geologically beneficial area, and injects the gas back into the earth. Logistically, this means that companies in the United States would have to build thousands of miles of pipelines across local, county, and even state lines to transport the gas to injection sites, which is a regulatory nightmare and an enormous economic burden.

In fact, the EPA is already acting as one of the major permitting obstacles to CCS plans under development, while another project is being fought in court by farmers that do not want the pipes going through their property.

It seems the point of the rulemaking is to put traditional power plants in an untenable regulatory situation, which could force them to close. Even if it were feasible to obtain the necessary permits, the resulting costs, which are projected to potentially double the price of generating power, would have to compete against subsidized wind and solar.

Fortunately, there is a pending case before the U.S. Supreme Court that could help provide relief against the out-of-control federal regulatory system. In Loper Bright Enterprises Inc. v. Raimondo, the question the Court is considering is whether to continue deferring to administrative agencies (known as Chevron deference after the 1984 case that spawned the doctrine) on interpretations of statutes in cases where there is ambiguity in statutory language.

Over the last several years, the Supreme Court ruled against agencies using this defense as they usurped Congressional authority. In West Virginia v. EPA (2021), the Supreme Court ruled that the EPA’s proposed rules went far beyond what congress intended, and that the agency had not been delegated authority to make rules of vast economic and political importance without clear statutory authorization.

This legal theory is known as the Major Questions Doctrine, and it is an increasingly effective tool to combat regulatory overreach by the executive branch. Between the EPA’s new proposed rule and the case before the Court, Loper Bright Enterprises Inc. v. Raimondo, there are ample opportunities for courts to rein in the administrative state.

For states that want to protect against higher electric bills, ALEC has two model policies worth consideration. The first, the Affordable, Reliable, and Resilient Electricity Act, directs agencies to develop rules and procedures promoting an affordable, reliable and resilient electric grid that meets peak net load and peak demand, including during extreme weather events.

The second, Electric Generation Facility Closures and Reliability Act, prevent shutting down traditional power plants before new generation sources are online and ready to operate. With power plants closing before new sources of electricity come online, Americans are at risk for rolling blackouts during times they need electricity the most.