One of the key points argued before the Supreme Court was whether the appellants (i.e., the states, local governments and environmental organizations) are allowed to sue EPA over its choice to not regulate greenhouse gas emissions from new automobiles. The courts have an established doctrine that they will not hear a case if a plaintiff lacks a personal and specific stake in the outcome of the litigation. Referred to as "standing," this doctrine has prevented individuals from challenging broad policy or statutory decisions. However, the court held in this case that a state has a unique ability to claim standing that exceeds the right to standing of an individual. The court went on to conclude that the states will suffer injury as a result of climate change, that greenhouse gas emissions from new automobiles contribute to climate change and that requiring EPA to regulate new motor vehicle greenhouse gas emissions will reduce climate change impacts. This assessment was hotly debated by the four justices who dissented on the case. Nonetheless, a narrow majority of the court held that the state plaintiffs had standing and so proceeded to the merits of the case.

One of EPA’s primary substantive arguments was that Congress did not intend the agency to regulate greenhouse gas emissions and, therefore, that carbon dioxide is not an "air pollutant" as the term is used in the Clean Air Act. Throughout its deliberations as to whether to regulate greenhouse gas emissions from new motor vehicles, EPA was very mindful of the stern rebuke that the Food & Drug Administration received from the Supreme Court when the agency sought to regulate tobacco. There the court said that the agency should not rely on its general authority to regulate an "industry constituting a significant portion of the American economy." FDA v. Brown & Williamson Tobacco Corp, 529 U.S. 120 (2000). EPA relied on this decision to conclude that Congress’ extensive debates over climate change legislation suggested that the agency should not try and create a regulatory structure until Congressional action provided clear direction. EPA was also mindful that section 103(g) of the Clean Air Act, where carbon dioxide is expressly identified, limits the agency to non-regulatory actions.

The Supreme Court summarily rejected EPA’s arguments. First, the court held that the regulation of greenhouse gases would not result in "extreme measures" and that while the FDA’s regulation of tobacco clashed with common sense, EPA’s regulation of greenhouse gases does not. The court rejected EPA’s argument that it should not assume authority over motor vehicle carbon dioxide emissions when Congress had specifically delegated the authority to regulate gas mileage (the means of addressing vehicle carbon dioxide emissions) to another agency (the Department of Transportation). The majority opinion of the court was that EPA should still retain authority over the emissions, strongly suggesting that EPA possesses independent ability to regulate gas mileage. Finally, the court held that EPA can only decline to regulate greenhouse gases if "it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do." The majority held that EPA did not adequately justify its decision not to regulate greenhouse gases in relation to this standard. This, the court held, was arbitrary and capricious and so the case was remanded so that EPA could rethink its reasons for action or inaction in relation to new motor vehicle greenhouse gas emissions.

The case was accompanied by two separate dissenting opinions. Chief Justice Roberts wrote the first of the dissents, in which he argues that the majority is usurping the role of Congress and the President by dictating policy decisions. The Chief Justice maintained that precedent did not accord the states standing in this instance, noting that there was not a clear basis in the record for determining an imminent and particularized injury. This dissent also questioned how the court could conclude that the regulation of new U.S. motor vehicles would clearly result in the plaintiff states’ injury (rising sea levels) being redressed. The Chief Justice stated that the states were looking for a symbolic victory and that the purpose of the standing doctrine is to avoid such decisions, limiting the court to concrete issues with demonstrable solutions.

Justice Scalia’s separate dissent makes several additional points (Scalia also joined in the Chief Justice’s dissent). He reasons that when a third party petitions EPA to engage in rulemaking, EPA typically has the discretion to choose to defer such action to a later time (as it did here). Scalia notes that the Clean Air Act establishes no standard for evaluating EPA’s decision to defer. He additionally noted that EPA complied with the requirement established by the majority for refusing to regulate new vehicle greenhouse gas emissions at this time. He quotes the majority opinion where is says that EPA’s deferral is appropriate if the agency makes a reasoned judgment that there is profound scientific uncertainty. Scalia goes on to state that EPA explicitly reached this determination in reliance on a 2001 report from the National Research Council. Finally, Scalia calls into question the majority’s assumption that carbon dioxide is an "air pollutant," pointing out that part of the definition requires that it be "an air pollution agent or combination of such agents." Scalia argued that EPA properly acted within its discretion when it concluded that carbon dioxide is not the sort of pollutant anticipated by the Clean Air Act.

What Commonwealth Will Mean

The Commonwealth decision will likely have several short term impacts. First, EPA will obviously have to reconsider its conclusion to forego for the present the regulation of new motor vehicle greenhouse gas emissions. The court literally just told the agency to restate its reasons for a decision on whether to regulate; so EPA could demur and just provide a more thorough explanation of its actions. But EPA could read the majority opinion as a compelling mandate for the agency to assume authority over new vehicle greenhouse gas emissions, which would usher a new age of EPA regulation and potentially a plethora of political struggles.

A second impact of the Commonwealth decision will be to allow the lawsuits challenging California’s greenhouse gas motor vehicle standards to proceed. The lawsuit challenging California’s move to regulate motor vehicle carbon dioxide emissions was being held in abeyance pending the Supreme Court’s decision. That lawsuit is now expected to move forward and the State will likely be feeling much more enthusiastic about its position.

Of greater interest to many is how the decision will affect other sources of greenhouse gas emissions. The primary source of greenhouse gas emissions in this country is the power generation industry. A lawsuit against EPA for not regulating greenhouse gas emissions from this sector was held in abeyance pending the Supreme Court’s decision. That case is now expected to move forward and there will be increased pressure on EPA to regulate greenhouse gas emissions from power plants and all other industries. This will, in turn, place greater pressure on Congress to develop a coherent national policy that considers the question more holistically than might be expected from EPA. Given that EPA could not generate a greenhouse gas regulatory program in less than 18 to 24 months, there is adequate time for Congress to debate the question and take action closer to the next elections (which many deem politically expedient).

The greatest benefit to the U.S. economy and to climate change would come from a consistent national policy rather than a patchwork of local policies. Regardless of how you feel about the subject of climate change, the reality appears to be that regulation will arrive soon, be it at the local or federal level. The most sensible place for authority to lie for climate change regulation is with Congress, as it has authority to approach the issue holistically. Leaving the problem with EPA risks a federal piecemeal approach as EPA has limited tools and limited areas of focus. The best outcome from the Supreme Court’s decision would be for Congress to be catalyzed into action. The worst would be for Congress to continue debating while inconsistent local programs continue to develop and EPA incubates its own ideas. Whether you are for or against climate change regulation, as a country we need to develop a common and reasoned approach.

The Commonwealth decision can be found at Stoel Rives’ Climate Change web page.

If you have any questions about this update or if you would like our assistance in connection with this matter, please contact your Stoel Rives lawyer or one of the following attorneys:

Thomas R. Wood at trwood@stoel.com or (503) 294-9396
J. Mark Morford at jmmorford@stoel.com or (503) 294-9259
Krista K. McIntyre at kkmcintyre@stoel.com or (208) 387-4239
Martin K. Banks at mkbanks@stoel.com or (801) 578-6975
John A. McKinsey at jamckinsey@stoel.com or (916) 319-4746
William H. Holmes at whholmes@stoel.com or (503) 294-9207
Seth D. Hilton at sdhilton@stoel.com or (415) 617-8943

This is a publication of Stoel Rives Energy and Environmental groups for the benefit and information of clients and friends. This bulletin is not legal advice or a legal opinion on specific facts or circumstances. The contents are intended for information purposes only. Copyright 2007, Stoel Rives LLP.