How the Supreme Court Decision to Rein in EPA Authority Could Affect Builders

The Supreme Court last week issued a decision that is generally positive toward NAHB’s interests when it voted 6-3 to restrict the ability of the Environmental Protection Agency to regulate carbon emissions.

In the case of West Virginia et al v. EPA et al, the high court ruled that the EPA exceeded the authority of the Clean Air Act when it promulgated the Clean Power Plan (CPP) during the Obama administration. The decision’s main relevance for NAHB is its discussion of an administrative law principle, the “major questions doctrine.”

The major questions doctrine holds that unless Congress has clearly stated its intent for a federal agency to exercise its authority to regulate an issue, courts must reject the agency’s approach. In this case, the Supreme Court said the EPA asserted “highly consequential power beyond what Congress could reasonably be understood to have granted.”

The major questions doctrine is helpful to NAHB because it sets a higher bar for courts when faced with agencies using existing statutory authorities for novel regulatory approaches.

With regard to the CPP rule itself, the original rule had never gone into effect, and most of the deadlines and goals were met through market forces. In its original form, the CPP contained provisions that would have incentivized the adoption of stringent energy efficiency building codes for new construction.

While it was unlikely that the Biden administration would bring back the original CPP, the Supreme Court’s ruling cements that reality, and EPA will be unable to set a section 111(d) rule that impacts NAHB members through demand-side efficiency requirements.

The Supreme Court’s application and discussion of the major questions doctrine will be helpful to NAHB members in addressing agency attempts to create new regulatory programs that depart significantly from statute.