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Georgetown’s Lisa Heinzerling on the Supreme Court’s climate shell game.
It’s a sad day for the regulatory state. On Friday, the Supreme Court struck down a 40-year-old precedent that deferred to agencies’ interpretations of their own mandates where the statutory guidance was incomplete or ambiguous, otherwise known as Chevron deference, after the losing side in the original case. Not only has it been cited in more than 19,000 federal opinions, it’s the one congressional aides — the ones actually writing the laws — are most familiar with, as Lisa Heinzerling, a professor of environmental law at Georgetown Law, told me.
“So there’s a way in which Congress has been relying on Chevron for decades, right?” she said. “If Congress banked on Chevron, banked on the idea that if they didn’t make things clear the agency would take care of it, then that reliance is not being honored.”
This is not the first time the court has come for regulators. Two years ago, in West Virginia v. Environmental Protection Agency, the court held that the authority to resolve questions of interpretation involving high-stakes political and economic questions, a.k.a. “major questions,” rests with Congress, not the agencies, raising the threat of legal nightmares should regulators attempt to take any kind of big swings. This explicitly concerns only “extraordinary cases,” and yet regulators already appear to be reining in their own ambition to gird against potential challenges.
Friday’s decision comes the day after the court struck down a provision of the Dodd-Frank Act giving certain enforcement powers to the Securities and Exchange Commission and granted a stay on enforcement of the Environmental Protection Agency’s “good neighbor” rule, aimed at preventing harmful pollution from crossing state lines.
The two cases decided this week — Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al. and Relentless, Inc. v. Department of Commerce — turned on whether private commercial fishing companies could be compelled to pay for federal monitors to ride along and ensure they were complying with applicable fishing rules. Or at least they did initially. “The court decided to decide only the question whether to overrule Chevron, the case that establishes deference for agencies legal interpretations,” Heinzerling explained the day before the ruling came down. Our conversation has been edited for length and clarity.
Without Chevron, are we going to get completely bogged down in revising statutes? Are our courts going to be clogged up with nuisance suits from people who simply don’t want to have to follow the rules?
I think there will be a lot of efforts to undo other precedent that relied on Chevron — and especially paired with the Corner Post case, which has to do with the timing of challenges to agency action. You know, realistically, if that case comes down, accepting a longer period of time in which to sue people could go nuts, challenging all sorts of agency interpretations from the past. So that’s disruptive.
The Supreme Court is constantly saying, well, go and get a new statute. Well, okay, we saw what happens when Congress passes a new statute: The court holds it unconstitutional. The Dodd-Frank Act. Look what happened to the Affordable Care Act. These major pieces of legislation, major, major political stakes, and the court has not respected those. So I feel like we’re kind of in a shell game, something that’s not quite honest. That in all of these cases, actually, Congress did pass a law, but the court either rules it unconstitutional, says it’s not clear enough. And so I don’t think they’re respecting Congress’s handiwork as it exists now.
You mentioned Corner Post, could you talk about that case?
It came to the court kind of quietly. It’s got rich backers. It’s just a little truckstop, just like the commercial fisherman, that wants to challenge a rule on credit cards. They were incorporated after the rule went into effect, and they want to say, we weren’t injured when it first passed, so we should get the benefit of a longer period of time in which to sue. And amazingly, the justices seemed willing to accept that. That just adds to the stakes of overruling Chevron.
The Chevron deference is a big part of how agencies do their job. But after West Virginia, does it still matter? I’m not a lawyer, but I’m going to pretend I am one when I ask: Does the major questions doctrine effectively invalidate Chevron anyway?
No. They said that the major questions idea was for extraordinary cases, to see how it turns out over the years, but it’s not every case. Where Chevron applied, theoretically, in every case. At least it was a mix.
What recent regulatory decisions would be most vulnerable in a post-Chevron world?
It is complicated to know because it has to be a question about a statute, a question about a statute that a court finds ambiguous, right? That’s where Chevron would have helped. And I think it depends on what court you’re in. If you’re in the Fifth Circuit, there’s a good chance — I mean, they’ve just stopped using Chevron, period.
Is there a world in which courts develop more subject matter expertise as a result of being forced to decide on questions of statutory interpretation?
Over the years people have offered the possibility of science courts or environmental courts — specialized courts where adjudicators have expertise. That’s never really taken off — never really at all taken off. Certainly the D.C. Circuit judges handle administrative cases all the time. Cases go exclusively to them, and I think the judges do develop some expertise. But it doesn’t turn them into ecologists or engineers. And the thing is that the structure of a judicial chambers is both tiny and insular: you have one judge; on the Supreme Court four clerks, but elsewhere two to three. It’s just not that much. Whereas EPA, they have teams of people on these rules from all over the agency, and then the rule gets reviewed by others.
We’re obviously focused on climate-related regulations, but is there an area of policy that you think will be most vulnerable immediately without Chevron?
The hallmarks of where Chevron has been really important: complicated statutes; technical and/or scientific subject matter; places where the language is either vague or just broad enough, it’s not clear how to fill it in. That’s environmental law, but there’s a lot of other law that’s also … I mean, it’s just OSHA, FDA, the FTC. Looking for those signature traits, that’s going to be a place where it pinches particularly hard. I think the agencies now are sort of bracing for this, but they still have a lot of rules in the works, and this is going to come down in the middle of that in election year.
Chevron started with Reagan wanting to change the way the EPA interpreted its mandate. Would removing it potentially make things more difficult for an incoming Trump administration?
I mean, it should. Chevron was supposed to work that way. But certainly the major questions doctrine, at least as it’s been practiced, so far cuts only against ambitious regulation. It doesn’t cut in favor of it.
The thing that worries me is the anti-regulatory skew that’s in some of the court’s other recent rulings. So for example, in West Virginia itself, the Supreme Court struck down Obama’s Clean Power Plan but upheld — without even explaining why — Trump’s plan. They were the same question under the same statute with the same evidence, the same costs and benefits. Everything was the same except for the direction. If one was a major question, the other should have been a major question. And so if you want to put it in the terms of these two possible administrations, they will go after Biden rules more than they’ll go after Trump rules, at least on the major questions idea.
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Removing the subsidies would be bad enough, but the chaos it would cause in the market is way worse.
In their efforts to persuade Republicans in Congress not to throw wind and solar off a tax credit cliff, clean energy advocates have sometimes made what would appear to be a counterproductive argument: They’ve emphasized that renewables are cheap and easily obtainable.
Take this statement published by Advanced Energy United over the weekend: “By effectively removing tax credits for some of the most affordable and easy-to-build energy resources, Congress is all but guaranteeing that consumers will be burdened with paying more for a less reliable electric grid.”
If I were a fiscal hawk, a fossil fuel lobbyist, or even an average non-climate specialist, I’d take this as further evidence that renewables don’t need tax credits. The problem is that there’s a lot more nuance to the “cheapness” of renewables than snappy statements like this convey.
“Renewables are cheap and they’ve gotten cheaper, but that doesn’t mean they are always the cheapest thing, unsubsidized,” Robbie Orvis, the senior director of modeling and analysis at Energy Innovation, told me back in May at the start of the reconciliation process. Natural gas is still competitive with renewables in a lot of markets — either where it’s less windy or sunny, where natural gas is particularly cheap, or where there are transmission constraints, for example.
Just because natural gas plants might be cheaper to build in those places, however, doesn’t mean they will save customers money in the long run. Utilities pass fuel costs through to customers, and fuel costs can swing dramatically. That’s what happened in 2022 after Russia invaded Ukraine, Europe swore off Russian gas, and the U.S. rushed to fill the supply gap, spiking U.S. natural gas prices and contributing to the largest annual increase in residential electricity spending in decades. Winter storms can also reduce natural gas production, causing prices to shoot up. Wind and solar, of course, do not use conventional fuels. The biggest factor influencing the price of power from renewables is the up-front cost of building them.
That’s not the only benefit that’s not reflected in the price tags of these resources. The Biden administration and previous Congress supported tax credits for wind and solar to achieve the policy goal of reducing planet-warming emissions and pollution that endangers human health. But Orvis argued you don’t even need to talk about climate change or the environment to justify the tax credits.
“We’re not saying let’s go tomorrow to wind, water, and solar,” Orvis said. “We’re saying these bring a lot of benefitsonto the system, and so more of them delivers more of those benefits, and incentives are a good way to do that.” Another benefit Orvis mentioned is energy security — because again, wind and solar don’t rely on globally-traded fuels, which means they’re not subject to the actions of potentially adversarial governments.
Orvis’ colleague, Mike O’Boyle, also raised the point that fossil fuels receive subsidies, too, both inside and outside the tax code. There’s the “intangible drilling costs” deduction, allowing companies to deduct most costs associated with drilling, like labor and site preparation. Smaller producers can also take a “depletion deduction” as they draw down their oil or gas resources. Oil and gas developers also benefit from low royalty rates for drilling on public lands, and frequently evade responsibility to clean up abandoned wells. “I think in many ways, these incentives level the playing field,” O’Boyle said.
When I reached out to some of the clean energy trade groups trying to negotiate a better deal in Trump’s tax bill, many stressed that they were most worried about upending existing deals and were not, in fact, calling for wind and solar to be subsidized indefinitely. “The primary issue here is about the chaos this bill will cause by ripping away current policy overnight,” Abigail Ross Hopper, the CEO of the Solar Energy Industries Association, told me by text message.
The latest version of the bill, introduced late Friday night, would require projects to start construction by 2027 and come online by 2028 to get any credit at all. Projects would also be subject to convoluted foreign sourcing rules that will make them more difficult, if not impossible, to finance. Those that fail the foreign sourcing test would also be taxed.
Harry Godfrey, managing director for Advanced Energy United, emphasized the need for “an orderly phase-out on which businesses can follow through on sound investments that they’ve already made.” The group supports an amendment introduced by Senators Joni Ernst, Lisa Murkowski, and Chuck Grassley on Monday that would phase down the tax credit over the next two years and safe harbor any project that starts construction during that period to enable them to claim the credit regardless of when they begin operating.
“Without these changes, the bill as drafted will retroactively change tax policy on projects in active development and construction, stranding billions in private investment, killing tens of thousands of jobs, and shrinking the supply of new generation precisely when we need it the most,” Advanced Energy United posted on social media.
In the near term, wind and solar may not need tax credits to win over natural gas. Energy demand is rising rapidly, and natural gas turbines are in short supply. Wind and solar may get built simply because they can be deployed more quickly. But without the tax credits, whatever does get built is going to be more expensive, experts say. Trade groups and clean energy experts have also warned that upending the clean energy pipeline will mean ceding the race for AI and advanced manufacturing to China.
Godfrey compared the reconciliation bill’s rapid termination of tax credits to puncturing the hull of a ship making a cross-ocean voyage. You’ll either need a big fix, or a new ship, but “the delay will mean we’re not getting electrons on to the grid as quickly as we need, and the company that was counting on that first ship is left in dire straits, or worse.”
A new subsidy for metallurgical coal won’t help Trump’s energy dominance agenda, but it would help India and China.
Crammed into the Senate’s reconciliation bill alongside more attention-grabbing measures that could cripple the renewables industry in the U.S. is a new provision to amend the Inflation Reduction Act to support metallurgical coal, allowing producers to claim the advanced manufacturing tax credit through 2029. That extension alone could be worth up to $150 million a year for the “beautiful clean coal” industry (as President Trump likes to call it), according to one lobbyist following the bill.
Putting aside the perversity of using a tax credit from a climate change bill to support coal, the provision is a strange one. The Trump administration has made support for coal one of the centerpieces of its “energy dominance” strategy, ordering coal-fired power plants to stay open and issuing a raft of executive orders to bolster the industry. President Trump at one point even suggested that the elite law firms that have signed settlements with the White House over alleged political favoritism could take on coal clients pro bono.
But metallurgical coal is not used for electricity generation, it’s used for steel-making. Moreover, most of the metallurgical coal the U.S. produces gets exported overseas. In other words, cheaper metallurgical coal would do nothing for American energy dominance, but it would help other countries pump up their production of steel, which would then compete with American producers.
The new provision “has American taxpayers pay to send metallurgical coal to China so they can make more dirty steel and dump it on the global market,” Jane Flegal, the former senior director for industrial emissions in the Biden White House, told me.
The U.S. produced 67 million short tons of metallurgical coal in 2023, according to data from the U.S. Energy Information Administration, more than three-quarters of which was shipped abroad. Looking at more recent EIA data, the U.S. exported 57 million tons of metallurgical coal through the first nine months of 2024. The largest recipient was India, the final destination for over 10 million short tons of U.S. metallurgical coal, with almost 9 million going to China. Almost 7 million short tons were exported to Brazil, and over 5 million to the Netherlands.
“Metallurgical coal accounts for approximately 10% of U.S. coal output, and nearly all of it is exported. Thermal coal produced in the United States, by contrast, mostly is consumed domestically,”according to the EIA.
The tax credit comes at a trying time for the metallurgical coal sector. After export prices spiked at $344 per short ton in the second quarter of 2022 following Russia’s invasion of Ukraine (much of Ukraine’s metallurgical coal production occurs in one of its most hotly contested regions), prices fell to $145 at the end of 2024, according to EIA data.
In their most recent quarterly reports, a number of major metallurgical coal producers told investors they wanted to reduce costs “as the industry awaits a reversal of the currently weak metallurgical coal market,” according to S&P Global Commodities Insights, citing low global demand for steel and economic uncertainty.
There was “not a whisper” of the provision before the Senate’s bill was released, according to the lobbyist, who was not authorized to speak publicly. “No one had any inkling this was coming,” they told me.
But it’s been a pleasant surprise to the metallurgical coal industry and its investors.
Alabama-based Warrior Met Coal, which exports nearly all the coal it produces, reported a loss in the first quarter of 2025,blaming “the combination of broad economic uncertainty around global trade, seasonal demand weakness, and ample spot supply is expected to result in continued pressure on steelmaking coal prices.” Its shares were up almost 6% in afternoon trading Monday.
Tennessee-based Alpha Metallurgical Resources reported a $34 million first quarter loss in May, citing “poor market conditions and economic uncertainty caused by shifting tariff and trade policies,” and said it planned to reduce capital expenditures from its previous forecast. Its shares were up almost 7%.
While environmentalists have kept a hawk’s eye on the hefty donations from the oil and gas industry to Trump and other Republicans’ campaign coffers, it appears that the coal industry is the fossil fuel sector getting specific special treatment, despite being far, far smaller. The largest coal companies are worth a few billion dollars; the largest oil and gas companies are worth a few hundred billion.
But coal is very important to a few states — and very important to Donald Trump.
The bituminous coal that has metallurgical properties tends to be mined in Appalachia, with some of the major producers and exporters based in Tennessee and Alabama, or larger companies with mining operations in West Virginia.
One of those, Alliance Resource Partners, shipped almost 6 million tons of coal overseas. Its chief executive, Joseph Craft, andhis wife, Kelly, the former ambassador to the United Nations, are generous Republican donors. Craft was a guest at the White House during the signing ceremony for the coal executive orders.
Representatives of Warrior, Alpha Metallurgical, and Alliance Resources did not respond to a requests for comment.
While coal companies and their employees tend to be loyal Republican donors, the relative small size of the industry puts its financial clout well south of the oil and gas industry, where a single donor like Continental Resources’s Harold Hamm can give over $4 million and the sector as a whole can donate $75 million. This suggests that Trump and the Senate’s attachment to coal has more to do with coal’s specific regional clout, or even the aesthetics of coal mining and burning compared to solar panels and wind turbines.
After all, anyone can donate money, but in Trump’s Washington, only one resource can be beautiful and clean.
Two former Department of Energy staffers argue from experience that severe foreign entity restrictions aren’t the way to reshore America’s clean energy supply chain.
The latest version of Congress’s “One Big, Beautiful Bill” claims to be tough on China. Instead, it penalizes American energy developers and hands China the keys to dominate 21st century energy supply chains and energy-intensive industries like AI.
Republicans are on the verge of enacting a convoluted maze of “foreign entity” restrictions and penalties on U.S. manufacturers and energy companies in the name of excising China from U.S. energy supply chains. We share this goal to end U.S. reliance on Chinese minerals and manufacturing. While at the U.S. Department of Energy and the White House, we worked on numerous efforts to combat China’s grip on energy supply chains. That included developing tough, nuanced and, importantly, workable rules to restrict tax credit eligibility for electric vehicles made using materials from China or Chinese entities — rules that quickly began to shift supply chains away from China and toward the U.S. and our allies.
That experience tells us that the rules in the Republican bill will have the opposite effect. In reality, they will make it much more difficult for U.S. companies to move supply chains away from Chinese control. The GOP’s proposed restrictions require every developer of a critical minerals project, advanced manufacturing facility, or clean energy power plant to sift through their supply chains and contracts for any relationship with a Chinese (or Russian, Iranian, or North Korean) entity. Using a Chinese technology license, or too many subcomponents, or materials produced in China — even if there are few or no alternatives — would be enough to render a company ineligible for the very incentives they need to finance and build new U.S. energy production or manufacturing facilities.
This would put companies in the position of having to prove the absence of Chinese entanglements (and guarantee that there will be none in the future) to qualify for tax credits, an all but impossible task, particularly given the untested set of new rules. Huge portions of the supply chain have flowed through China for decades, including 65% of global lithium processing and 97% of solar wafer manufacturing. American companies are already working to distance themselves from Chinese expertise and components, but the complex, commingled nature of global supply chains and corporate business structures make it infeasible to flip the switch overnight.
On top of that, the latest version of the bill would impose a brand new tax on any new solar and wind projects that have too much foreign entity “assistance,” while providing the Treasury Secretary carte blanche for determining what that might be. The result: An impossible bind, whereby the very sectors that need the most support to disentangle from China are now the ones most penalized by the new Republican “foreign entity” restrictions.
The fact is that China is ahead, not behind, in many energy sectors, and America desperately needs help playing catch-up. Ford’s CEO has called Chinese battery and electric vehicle technologies “an existential threat” to U.S. automaking. In energy supply chains for nuclear, solar, batteries, and critical minerals, China is not merely producing cheap knockoffs of American inventions, it is churning outcutting-edge battery chemistries, advancedmanufacturing processes, and high-speedcharging systems, all at lower cost. And at least until the Inflation Reduction Act enacted incentives for U.S. manufacturing and deployment, the gap between the U.S. and China waswidening.
These untested foreign entity rules will widen that gap once more. Since the start of the year, developers have abandoned more than $14 billion in domestic clean energy deployment and manufacturing projects, citing the uncertain tariff and tax policy environment, and that was before the new tax on solar and wind. New analysis from Energy Innovation finds that the latest version of the bill would reduce U.S. generation capacity by 300 gigawatts over the next decade — multiple times what we will need to power new data centers for artificial intelligence. Stopping clean energy projects in their tracks is also likely to trigger an energy price shock by constraining the very energy technologies that can be built most quickly. In the end we will cede not only our supply chains to China, but also our competitive edge in the race for AI and manufacturing dominance.
Fortunately, we have all the ingredients in this country already to achieve energy leadership. The U.S. boasts deep capital markets, a highly skilled manufacturing and construction workforce, a strong consumer economy driving demand, and, in spite of recent attacks, the world’s greatest universities and national labs. We simply need policy to provide a workable path for companies to invest with certainty, bring factories back to the United States, hire American workers, and learn to produce these technologies at scale.
With the Inflation Reduction Act’s domestic production incentives and supply chain restrictions, hundreds of companies stepped up over the past few years and made that bet, pouring billions of dollars into American supply chains. Should they be enacted, the reconciliation bill’s foreign entity rules would slam the brakes on all that activity, playing right into China’s hands.
There is a way to apply a set of carefully crafted restrictions to wean us off Chinese supply chains, but we cannot afford to saddle American energy with new taxes and red tape. If we scatter rakes across the floor for companies to step on, they will just throw up their hands and send their investments overseas, leaving us more reliant on China than before.