The Supreme Court of the US (SCOTUS) has ruled in West Virginia v. EPA that the EPA lacks the authority to set emission standards for power plants so strict as to force a shift of power generation from fossil fuels.

The opinion (6-3) applied the “major questions doctrine”, which requires Congress to specify clearly and directly regulatory authority involving issues of vast economic and political significance, rather than allowing agencies themselves to interpret more ambiguous statues to define their own authority.

The opinion holds that Congress did not grant EPA in Section 111(d) of the Clean Air Act the authority to devise emissions caps based on generation shifting—i.e., forcing a shift from higher-emitting to lower-emitting producers.

In devising emissions limits for power plants, EPA first “determines” the “best system of emission reduction” that—taking into account cost, health, and other factors—it finds “has been adequately demonstrated.” 42 U.S. C. §7411(a)(1). The Agency then quantifies “the degree of emission limitation achievable” if that best system were applied to the covered source. Ibid.; see also 80 Fed. Reg. 64719. The BSER, therefore, “is the central determination that the EPA must make in formulating [its emission] guidelines” under Section 111. Id., at 64723. The issue here is whether restructuring the Nation’s overall mix of electricity generation, to transition from 38% coal to 27% coal by 2030, can be the “best system of emission reduction” within the meaning of Section 111.

… Where the statute at issue is one that confers authority upon an administrative agency, that inquiry must be “shaped, at least in some measure, by the nature of the question presented”—whether Congress in fact meant to confer the power the agency has asserted.

… Under our precedents, this is a major questions case. In arguing that Section 111(d) empowers it to substantially re-structure the American energy market, EPA “claim[ed] to discover in a long-extant statute an unheralded power” representing a “transformative expansion in [its] regulatory authority.” Utility Air, 573 U.S., at 324. It located that newfound power in the vague language of an “ancillary provision[]” of the Act, Whitman, 531 U.S., at 468, one that was designed to function as a gap filler and had rarely been used in the preceding decades. And the Agency’s discovery allowed it to adopt a regulatory program that Congress had conspicuously and repeatedly declined to enact itself. Brown & Williamson, 529 U.S., at 159–160; Gonzales, 546 U.S., at 267–268; Alabama Assn., 594 U.S., at ___, ___ (slip op., at 2, 8). Given these circumstances, there is every reason to “hesitate before concluding that Congress” meant to confer on EPA the authority it claims under Section 111(d). Brown & Williamson, 529 U.S., at 159–160.

… On EPA’s view of Section 111(d), Congress implicitly tasked it, and it alone, with balancing the many vital considerations of national policy implicated in deciding how Americans will get their energy. EPA decides, for instance, how much of a switch from coal to natural gas is practically feasible by 2020, 2025, and 2030 before the grid collapses, and how high energy prices can go as a result before they become unreasonably “exorbitant.”

There is little reason to think Congress assigned such decisions to the Agency. For one thing, as EPA itself admitted when requesting special funding, “Understand[ing] and project[ing] system-wide …trends in areas such as electricity transmission, distribution, and storage” requires “technical and policy expertise not traditionally needed in EPA regulatory development.”

… We also find it “highly unlikely that Congress would leave” to “agency discretion” the decision of how much coal- based generation there should be over the coming decades.

… the only interpretive question before us, and the only one we answer, is more narrow: whether the “best system of emission reduction” identified by EPA in the Clean Power Plan was within the authority granted to the Agency in Section 111(d) of the Clean Air Act. For the reasons given, the answer is no.

Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible “solution to the crisis of the day.” New York v. United States, 505 U.S. 144, 187 (1992). But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body. The judgment of the Court of Appeals for the District of Columbia Circuit is reversed, and the cases are remanded for further proceedings consistent with this opinion.

—Opinion in West Virginia v. EPA