Environmental: Litigating the Biden Climate Agenda

When it comes to environmental laws and regulations, the only question is when—not if—the courts will be asked to resolve contentious issues. Such is the case with a rule proposed by the Environmental Protection Agency, under the Clean Air Act, to limit the greenhouse gas emissions of fossil fuel-fired power plants.

The EPA proposed the rule, which is part of the Biden administration’s agenda to address climate change, in May 2023 and aims to finalize it by April 2024. Doing so could help ensure that the rule would withstand scrutiny under the Congressional Review Act before the 2024 elections, while Democrats control the Senate.

“Significant federal efforts regarding the environment almost inevitably end up in court,” says Elizabeth Dawson, a partner in Crowell & Moring’s Environment & Natural Resources Group. “It’s reasonable to assume that that’s what will happen with the power plant rule.”

A key ruling will affect the rule

Any challenge to the power plant rule will likely involve the Supreme Court’s decision in 2022’s West Virginia v. EPA. The Court broadly applied its “major questions doctrine,” which states that courts should presume that Congress doesn’t delegate issues of major political or economic significance to federal agencies unless the statutory text is clear.

In West Virginia, the Court used this principle to hold that Congress didn’t authorize the EPA to set standards of performance based on “generation shifting” (i.e., the forced closing of coal-fired power plants in favor of cleaner generation methods). As a result, the decision rejected the Obama-era Clean Power Plan—a move that prompted the EPA to craft a new power plant rule proposal attempting to overcome the concerns raised in West Virginia.

Dawson notes that a challenge to the power plant rule would automatically be heard by the U.S. Court of Appeals for the District of Columbia Circuit, which thus far has generally taken a narrower view of the major questions doctrine.

IRA-based disputes, too

The Biden administration’s most ambitious legislative climate measure—the Inflation Reduction Act of 2022—likely will drive other types of disputes, according to Dawson. Potential examples include False Claims Act enforcement, administrative law disputes over regulations implementing IRA programs, disputes regarding the IRS and tax incentives, and those between commercial parties about allocation of benefits from the different IRA programs.

Three other pending federal proposals will probably drive litigation as well. These are the Securities and Exchange Commission’s proposed rules regarding greenhouse gas (GHG) emissions and climate-related financial risk; the Federal Acquisition Regulatory Council’s proposal that certain government contractors must disclose GHG emissions and climate-related financial risk; and the Council on Environmental Quality’s recommended requirement that federal agencies take into account climate change-related and environmental justice effects of a proposed federally funded or permitted activity.