In a decision with potentially broad implications for the electric power industry, the Supreme Court ruled on April 2 that the Environmental Protection Agency was wrong when it declined to promulgate regulations to limit car and truck emissions of carbon as a greenhouse gas that contributes to global warming. The case before the high court was confined to US automobile emissions; it did not directly address the far greater domestic carbon emissions from stationary, coal-fired power plants. But the precedent established will surely fuel efforts to reduce power plant emissions either through a tax on carbon or an emissions cap-and-trade program.
In Massachusetts v. EPA (Case No. 05-1120), a harshly divided U.S. Supreme Court overturned EPA’s 2003 refusal to undertake a rulemaking to regulate carbon emissions from new motor vehicles under §202(a)(1) of the Clean Air Act. Court patriarch, Justice Stevens (joined by Justices Kennedy, Souter, Ginsburg and Breyer) held that EPA’s denial of the petition should go back to Agency for reconsideration because EPA’s reasoning was not based on the requirements of the Clean Air Act. The majority also rejected the government’s contention that the State of Massachusetts lacked sufficient interest (standing) to challenge EPA’s decision. In dissent, Chief Justice Roberts (joined by Justices Scalia, Thomas and Alito), opposed what he called the majority’s “special solicitude” to the State of Massachusetts, cautioning that the climate change grievances were tailored for redress by the Congress and the Chief Executive, not the federal courts. Justice Scalia (joined by Chief Justice Roberts and Justices Thomas and Alito) separately dissented on the merits decision, arguing that EPA’s judgment on the petition to regulate carbon emissions was based on permissible reasons that warranted deference from the Court.
Nineteen private organizations petitioned EPA in 1999 for a rulemaking to regulate greenhouse gas emissions from new motor vehicles under §202 of the Clean Air Act. (A dozen states (CA, CT, IL, ME, MA, NJ, NM, NY, OR, RI, VT and WA), local governments and others later joined in the petition.) Section 202(a)(1) of the CAA requires EPA to prescribe by regulation “standards applicable to the emission of any air pollutant from . . . any class of new motor vehicles . . . which in the [EPA Administrator’s] judgment cause[s], or contribute[s] to, air pollution . . . reasonably . . . anticipated to endanger public heath or welfare.” The CAA defines “air pollutant” to include “any air pollution agent . . . , including any physical, chemical . . . substance . . . emitted into . . . the ambient air.”
EPA denied the petition four years later because, in its view (1) the CAA does not authorize the agency to issue mandatory regulations to address global climate change, and (2) even if the agency had the authority to set greenhouse gas emission standards, it would nevertheless be unwise to do so at that time. The U.S Court of Appeals for the District of Columbia Circuit affirmed. Each of the three judges on the appeals panel wrote separately, but two (Randolph and Sentelle) agreed that EPA properly exercised its discretion in denying the rulemaking petition. Judge Sentelle’s separate opinion also found that the petitioner’s failed to demonstrate standing in the case because a “particularized injury” could not be demonstrated where “global warming is harmful to humanity at large.”
The United States Supreme Court heard oral arguments on November 29, 2006. (In addition to EPA, respondents opposing Massachusetts and the petitioners were the Alliance of Automobile Manufacturers, National Automobile Dealers Association, Engine Manufacturers Association, Truck Manufacturers Association, CO2 Litigation Group, Utility Air Regulatory Group, and ten states (MI, AK, ID, KN, NB, ND, OH, SD, TX and UT).
Because the harm of greenhouse gasses is widespread, EPA argued it wasn’t a controversy specific enough to Massachusetts and the other petitioners to fall within the jurisdiction of the federal courts under Article III of the U.S. Constitution. The Court majority disagreed because (i) Massachusetts held a special position and interest on behalf of its residents, (ii) the harms associated with climate change are serious and based on a strong consensus, (iii) EPA’s refusal to regulate carbon emissions from new cars, at a minimum contributes to injuries to Massachusetts’ coastal lands, and (iv) the delayed effectiveness of regulating only new motor vehicles and the concern that developing countries are poised to substantially increase greenhouse gas emissions does not excuse EPA from taking steps today to slow or reduce global warming.
The Court then reviewed the merits of EPA’s decision that it lacked authority to regulate new vehicle emissions because carbon dioxide is not an “air pollutant” under § 7602, and that, even if it possessed authority, it would decline to exercise it because regulation would conflict with other administration priorities. The Court’s review of the merits of those decisions was narrow ¾ i.e., the Court would reverse only if its decision were found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Despite the narrowness of that review, the Court found that greenhouse gases fit well within the CAA’s capacious definition of “air pollutant” and that EPA’s contrary conclusion could not be squared with the statute. The Court instructed that the law requires EPA to regulate an air pollutant if it causes or contributes to air pollution that may reasonably be anticipated to endanger public health or welfare; other policies cannot countermand that scientific judgment.
In dissent, Justice Scalia argued that the CAA says nothing at all about the reasons for which EPA may defer making a judgment on greenhouse gas emissions and that the Court should defer to EPA’s deferral.
Does this mean EPA will be forced to regulate carbon from car and truck emissions? Not necessarily. The question of whether is carbon is a pollutant subject to the Act is only a threshold question. Now an analytical process begins on the road to establishing an administrative record on carbon. Recall that the Clinton Administration in its Cannon memo argued that the Act covered carbon, but it never regulated or even proposed a carbon regulation.
If EPA did regulate car and truck emissions of carbon, would stationary source regulation be inevitable? Stationary sources were not before the Court, and a separate administrative record would be required to establish a criteria document to regulate carbon from stationary sources. That said, it is hard to imagine regulation of the 30 percent of US carbon emissions that come from cars and truck and ignoring the 70 percent that comes from stationary sources, primarily coal-fired electric generating stations. Moreover, the balancing that EPA does for car and truck emissions allows for greater consideration of economic factors than does its stationary source program.
If the Agency decided to regulate, does that mean a cap? Not necessarily. There is little agreement over how to regulate carbon just yet. Economists uniformly favor a tax because it is more efficient and enforceable, while coal-dependent electric utilities prefer a cap-and-trade program under which they would be allocated the lion’s share of allowances. Acid rain (sulfur dioxide) is regulated pursuant to a cap/trade program. But the acid rain program was a legislative compromise. Before EPA actually regulates, there would likely be a Congressional enactment - just as there was for acid rain and ozone depletion.
Does this hurt the "public nuisance" climate change cases in the Second Circuit? Some court-watchers believe that Justice Stevens was able to entice Justice Kennedy to join the 5-Justice majority for the petitioners by slicing the standing argument narrowly. Justice Stevens differentiates Massachusetts from other potential parties in part by noting that States should be treated with special deference. The Chief Justice warns that the majority is using an outdated view of standing to cobble its majority.
In the Second Circuit nuisance cases, a Rule 28(j) letter was filed only two days after the Supreme Court's decision, arguing (among other things) that the standing decision does not undermine defendant's arguments in the nuisance cases because the statutory right to challenge EPA's action was "of critical importance to the standing inquiry" in order to be asserted "without meeting all the normal standards of redressability and immediacy." The 28(j) filing also argues that the States' sovereign prerogatives to force reductions in greenhouse gases "now lodged in the Federal Government," and that "Congress has ordered EPA to protect" States from harms associated with those emissions. And thus, that the narrow federal common law cause of action to abate nuisances is not a remedy for complex environmental issues, and cannot be expanded given Congress's authority.