Supreme Court Limits Federal Authority In Greenhouse Gas Emissions Case

The Supreme Court ruled on Thursday to restrict the ability of the Environmental Protection Agency to regulate greenhouse gas emissions from coal- and gas-fired power plants.

In a 6-3 vote in West Virginia v. U.S. EPA, the high court found that a 2015 EPA regulatory scheme known as the Clean Power Plan — which had never been enacted — represented an unlawful expansion of the agency's authority under the Clean Air Act.

The case involves power plants, but the wider trend of Supreme Court rulings on regulatory matters could impact efforts among regulators to address climate change issues in the real estate industry, which is a major source of greenhouse gas emissions, and other ESG regulatory initiatives. 

The wider trend by the Supreme Court in recent years has been to void regulations on the grounds that agencies usurped power from the legislative or judicial branches of the federal government, The Wall Street Journal reports.

Power plants produce roughly a quarter of all U.S. greenhouse gas emissions, commercial and residential properties emit about 13%, according to the EPA.

The West Virginia ruling and others like it could, for example, pave the way to curb the Securities and Exchange Commission in its effort to enact reporting rules for emissions generated by certain building materials or commercial property tenants.

“If the Supreme Court shows that it’s pretty strongly supportive of the major questions doctrine — that is, they care about narrowing constructions of regulatory authority — it should give commissioners on the SEC some pause,” Andrew Vollmer, a deputy general counsel for the SEC during the George W. Bush administration, told Bisnow.