At the close of its 2024 Spring Session the U.S. Supreme Court’s ruling in Loper Bright Enterprises v. Raimondo (Loper Bright), threw out the Chevron Deference. The 40-year-old doctrine had been used to uphold agency actions in environmental protection and energy policy.

The Court’s decision in Loper Bright now means questions over how an ambiguous federal statute should be interpreted, which had been left to federal agencies, will now be decided by judges. This change gives the courts greater power in making and shaping the implementation of law in the US and could be used to restrict future actions on climate.

The decision was criticized by climate advocates, the Biden Administration, and elected officials like Senate Majority Leader Schumer. They warned of the decision’s potential impact on future efforts to decarbonize the economy and lower emissions.

Piling On

Even before this decision, the Roberts Court had moved to limit the power of the federal agencies to act on climate issues. In 2022, the court’s opinion in West Virginia v. EPA, which was based on the so-called “major questions” doctrine, said the government could not implement an Obama Administration program to cut power plant emissions. When you add the Court’s taking away Chevron Deference to its use of the major-questions doctrine one can see how the Court might rule against current and future agency actions.

One of the key areas the Loper Bright ruling might impact is climate disclosure. Earlier this year, the U.S. Securities Exchange Commission (SEC) issued new rules to enhance and standardize climate-related disclosures by companies. The SEC acted because, as Carbon Tracker’s research shows, many of the top emitting companies are not supplying climate risk data and failing to properly account for the impact of climate change on their business.

Despite that need, the rules were immediately challenged in court. In the view of Michael B. Gerrard, Director, Sabin Center for Climate Change Law, Columbia Law School, while the SEC climate rules were already under attack using the major questions doctrine, the court’s ruling on Chevron Deference adds another set of arguments that conservative states and industry will use in attacking the disclosure rule.

In this current environment it should not be a surprise if the Court says the rule is an overreach by the SEC. This would mean the Congress would have to pass legislation mandating disclosure nationally.  Given the current makeup of Congress and legislative obstacles that is not likely to happen.

Gerrard says that we are likely to see attacks on other agency actions. Gerrard believes the ruling in Loper Bright will be used to try to stop the Biden Administration’s recent power plant regulations. The rules, which mandate many new gas and existing coal plants cut their greenhouse gas emissions by 90% by 2032.  Based on the recent court actions, these rules may be in jeopardy.

Carrots and States

So where do we go from here?

Unless there are changes to the makeup of the Supreme Court, climate advocates and allies should operate under the assumption that they will not find much support from the US Judiciary in the coming years. Given the ages of the justices, half of its conservative block is under 60 and likely to serve another 25 years, it is likely the current majority will have several chances to continue limiting the power of the Executive Branch and federal agencies to act on the climate.

However, there is a limit to how far the courts can go. As Gerrard pointed out, while the courts may throw out the SEC’s climate disclosure rules, the impact can be limited by state actions.

Last year, California legislature passed climate disclosure rules. Although the reporting requirements have been delayed until January 2028, they are stronger than the SEC’s and cover about three-quarters of large US companies. Given that they are state laws, passed by the legislature, the Court’s recent decisions do not impact them.

Gerrard also highlights a similar situation with the power sector saying, “states have considerable power to reduce the emissions within their own borders. and to induce a reduction in the emissions of power plants that sell electricity into these states.”

At the federal level, rather than relying on regulatory actions climate advocates could follow the path set by the Inflation Reduction Act. This type of legislation would use government spending and tax incentives to encourage the development of clean energy. Or climate advocates could look at regulatory reform that streamlines or eliminates regulations to make it easier for renewable energy to come online, rather than using expanded regulatory power.

While the Court’s rulings make things more complicated it does not mean governments at all levels do not have the opportunity and ability to make a big impact in the fight against climate change. Whether they are willing to is yet to be decided.

The photo was taken by Lorie Shaull. The use of the photo does not suggest or assume that Ms. Shaull endorses the views expressed in the piece or the work of Carbon Tracker.