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Reining in the EPA


July 1, 2022 - In a majority decision in West Virginia v. EPA, the U.S. Supreme Court placed important limits on the authority government agencies have to unilaterally issue transformative regulations of vast economic and political significance. The court ruled that the U.S. Environmental Protection Agency (EPA) doesn’t have the authority under the Clean Air Act to force systemwide changes to the nation’s electricity generating fuel mix, upending the makeup of the grid. That authority, the court reasoned, must be explicitly given by Congress, and it hasn’t. As Chief Justice Roberts wrote in the opinion, “a decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.”

While some have tried to label this the climate change case, it’s rather about fundamental questions over authority and regulatory overreach. The question posed here isn’t whether we should reduce emissions. That’s happening – the energy transition is underway – but whether a government agency has been given the clear authority to force wholesale, upending changes to foundational pieces of states’ economies. That’s a question and precedent that stretches well beyond the electricity-generating sector and the debate over how best to address carbon emissions.
Hardly a Cure-All

This was an important ruling but for those concerned with EPA overreach and the reliability and affordability of the nation’s grid, much work remains to be done.

While the Supreme Court confirmed that EPA authority to regulate emissions stops at the fence line, meaning it can’t force fuel switching to achieve emission reductions as it attempted to do with the Obama-era Clean Power Plan, EPA’s coal plant closure crusade has only been staggered, not stopped.

Before the Supreme Court even heard the case, EPA Administrator Michael Regan signaled that his agenda would advance even with an adverse ruling.

Speaking to reporters in February, Regan pointed to the EPA’s other authorities to achieve system-wide emissions reductions. He said, EPA is “aligning all of our regulations so that we can basically present a suite of regulations to the industry at one time…. They'll have to determine whether or not those investments warrant the longevity of these coal plants.” He added, given the suite of regulations at our disposal, “we see a future of tremendous economic pressure on this industry. And I think the industry will have to determine how they close and when they close.” In other words, one way or another, EPA is going to accelerate coal plant closures.

Despite ever-mounting evidence of a grid reliability crisis and a nearly unprecedented surge in electricity prices, EPA is showing no signs of a policy rethink. For an agency that is setting the nation’s de-facto energy policy, there is a remarkable lack of awareness or acknowledgement of reality.

Federal regulators in charge of reliability, grid operators and even utilities are on the verge of panic as the challenges to maintaining reliability grow ever steeper. The loss of dispatchable, fuel-secure generating capacity is happening far faster than reliable alternatives – and the infrastructure needed to enable them – are being added. From one coast to the other, the grid is being pushed to its limit by bad policy choices.
Need for Course Correction

An energy policy course correction can only come from Congress, and it needs to come immediately. The reliability crisis is going to grow more severe – driven by EPA pressure – while energy-driven inflation continues its upward climb towards economy-wrecking levels.

Navigating this treacherous moment requires every tool at our disposal. It requires ramping up domestic energy production, reshoring supply chains and putting an end to a regulatory agenda that is outrunning our ability to replace the resources we’re tearing down. Smart policy will build upon the energy infrastructure we have, adding renewable power on the shoulders of existing traditional capacity, expanding electricity generating reserve margins while also ensuring the fuel diversity and security we need remains intact.

There is an effective, responsible and collaborative way to approach the energy transition that respects the unique needs of every state and responds to the reliability and affordability challenges reshaping the energy landscape. It’s past time we find it.