Supreme Court rulings paring federal regulatory power will impact energy policy

The U.S. Supreme Court issued two momentous decisions this week that upend decades of government regulatory frameworks, with profound consequences for environmental and energy policy.

First, the Supreme Court ignored the 1984 precedent in the Chevron case v. the Natural Resources Defense Council, which gave federal agencies too much latitude in determining how to regulate the energy sector and other industries.

By abandoning this doctrine, the justices gave parties dissatisfied with agency decisions more opportunities to overturn regulations by convincing federal judges that agency officials had exceeded their authority.

A number of rules and programs related to environmental regulation could be at risk without Chevron’s consideration; parts of the Inflation Reduction Act including guidance on eligibility for tax credits, rules issued under the Clean Air Act, regulations guiding the management of public lands, and more could be subject to legal challenge.

Chevron’s cancellation is a positive outcome for the oil and gas sector, because most efforts to reduce fossil fuels and carbon emissions have relied heavily on administrative interpretation, not congressional action, Wells Fargo analyst Roger Reed said in a note.

The Supreme Court’s decision will not stop the energy transition, Reid wrote, but it would change its course and pace, because it means Congress will need to pass specific legislation to force changes in how energy is produced and consumed.

The court also blocked the EPA’s “Good Neighbor” plan, which would have imposed strict limits on smokestack emissions from power plants and other industrial sources in 11 states, as well as air pollutants that the EPA said could drift downwind to states. Other.

The Biden administration said the rule would protect the health of people in downwind states that suffer from emissions from their neighbors; challengers said the rule would impose billions of dollars in costs and threaten the reliability of the power grid by forcing generators to retire early.

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