Limbo Rock - Supreme Court Ruling Introduces New Regulatory Uncertainty to the Energy Sector

RBN Energy Blogcast

In its landmark West Virginia v. EPA decision, the Supreme Court on Thursday scaled back the powers of the Environmental Protection Agency — and, it would seem, other federal administrative agencies — to implement regulations that extend beyond what Congress specifically directed in its authorizing legislation, in this case the Clean Air Act. The ruling didn’t go as far as throwing out the long-standing deference of courts to federal agencies’ interpretations when it comes to acting under statutory law where there’s any ambiguity — the so-called “Chevron Deference” doctrine. But it does impose a threshold roadblock to the use of the doctrine, based on the “Major Question” doctrine. Yep, we have a duel of the doctrines here. The end result here is to hamstring the EPA and the Biden administration from reinstating emissions-limiting rules similar to the ones the Obama EPA put forth a few years ago in the “Clean Power Plan,” at least not without legislative approval. Most of the oil and gas industry and a lot of the power industry are likely to welcome the check on this particular regulatory authority, and certainly most of the oil and gas industry welcomes some restraint on the EPA in general. However, the broader implications of the ruling could make life more difficult in the near-term for industries like oil and gas that rely on a stable, or at least semi-predictable, regulatory environment for making long-term plans. In today’s RBN blog, we explain what was at stake in this case and what the decision could mean for the oil and gas industry.