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The Supreme Court’s Greenhouse Gas Decision

New York Law Journal

April 27, 2007
by Stephen L. Kass and Jean McCarroll

In one of its most important environmental decisions in recent years, the U.S. Supreme Court ruled earlier this month that the U.S. Environmental Protection Agency (EPA) has authority under the Clean Air Act to regulate greenhouse gas emissions from motor vehicles and that the EPA’s denial of a petition to do so was arbitrary and capricious and not in accordance with the law.

The Court’s 5-4 ruling in Massachusetts v. Environmental Protection Agency[1] is notable for its clarification of the EPA’s authority and responsibility under the Clean Air Act, for its impact on the procedural issue of standing, and for its likely effect in galvanizing governmental efforts to counter global warming in areas beyond motor vehicle emissions.

Background

The groundwork for the Massachusetts decision was laid in 1999 when a group of environmental and clean-energy organizations filed a rulemaking petition asking the EPA to regulate the greenhouse gas emissions, principally carbon dioxide (CO2), from new motor vehicles under Clean Air Act §202. After taking public comments, the EPA denied the petition in 2003, asserting that it lacked authority to regulate CO2 as an “air pollutant” under the act and that, even if it had such authority, its exercise would be unwise. Joined by states and local governments, the petitioner organizations challenged the EPA’s ruling in the U.S. Court of Appeals for the District of Columbia Circuit. In a 2-1 decision, the circuit court panel denied the petition for review (a decision we criticized in our New York Law Journal column of April 28, 2006, at p. 3). Recognizing the importance of the case, the Supreme Court granted the petition for certiorari and set the stage for the nation’s first authoritative ruling on global warming under the Clean Air Act.

The petitioners in the lawsuit were Massachusetts, 11 other states, the District of Columbia, two cities, 13 major environmental organizations, and American Samoa. They alleged that the EPA had failed to exercise its responsibility under §202(a)(1) of the Clean Air Act to regulate motor vehicle emissions of CO2 and other greenhouse gases, all of which have been identified as contributors to global warming. Ten states and several trade associations intervened in defense of the EPA’s position that it both lacked authority to regulate greenhouse gases and had properly declined to do so.

The opinion of the Court, by Justice John Paul Stevens, joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen Breyer, began by describing the U.S. government’s long history - going back to 1959 - of monitoring atmospheric CO2 levels and of studying, since 1978, the effects of human activity on climate change. The opinion referred to the reports of the Intergovernmental Panel on Climate Change (IPCC), established under the auspices of the United Nations, that warned, beginning in 1990, of the contributions of CO2 to climate change and, in turn, to adverse effects on human health and the environment. The opinion also described the EPA’s recognition in the 1990s of its authority to regulate CO2 and its subsequent reversal of that position in response to the petition for rulemaking that led to this litigation.

Standing

More than half of the remainder of the Court’s opinion is devoted to the issue of standing. Initially, Justice Stevens noted that “the proper construction of a congressional statute” - the central issue in this case - is “a question eminently suitable to resolution in a federal court”[2] and that Congress specifically authorized this type of challenge to the EPA action. Next, Justice Stevens, quoting extensively from Justice Kennedy’s concurrence in Lujan v. Defenders of Wildlife,[3] refuted the EPA’s argument that the petitioners cannot have standing because the harm from greenhouse gas emissions is too widespread and not sufficiently particularized. Justice Stevens then recited Lujan’s three-prong standing test: (1) concrete and particularized injury that is either actual or imminent; (2) injury that is fairly traceable to the defendant; and (3) likelihood that a favorable decision will redress the injury.[4]

What Justice Stevens added to the Lujan test is that states, as quasi-sovereign bodies, have a special interest when they seek to invoke federal jurisdiction, because of the sovereign prerogatives they surrendered when they joined the Union, thus obligating the federal government, in return, to protect the states. States are therefore “entitled to special solicitude” in the Court’s standing analysis.[5]

Granting to the state petitioners that “special solicitude,” the Court found that at least the state of Massachusetts has the requisite concrete injury (inundation of the state’s coastal property) and met the causation and redressability tests. As to causation, the Court noted that the EPA did not dispute the causal linked between greenhouse gases and global warming. As to redressability, relief of even a small amount of the alleged harm satisfies the test. Even if the EPA’s action cannot by itself reverse global warming, it can slow or reduce it, thus providing some redress. The Court also noted that the “harms associated with climate change are serious and well-recognized” and that the widely shared nature of the harms “does not minimize Massachusetts’ interest in the outcome of this litigation.”[6]  The Court’s elaboration and application of the standing test - which Justice Roberts vehemently rejected in his dissent - swings the standing pendulum back from the Court’s excessively narrow application in the recent past.

EPA’s Power to Regulate

In its discussion of the merits of the petitioners’ claims, the Court initially acknowledged that the scope of its review is narrow and the discretion of the agency is broad. The Court noted, however, that denial of a petition for rulemaking - the issue here - is different from a decision not to initiate an enforcement action. The former is susceptible to judicial review under the “arbitrary and capricious” standard.

The Court then found that the EPA does have the power to regulate greenhouse gas emissions from new motor vehicles under Clean Air Act §202(a)(1) because CO2 is an “air pollutant.” Justice Stevens quoted the Clean Air Act’s “sweeping definition” of “air pollutant,” which includes “any air pollution agent of combination of such agents, including any physical, chemical . . . substance or matter which is emitted into or otherwise enters the ambient air . . . .”[7] Justice Stevens also noted that, before the denial of the petition for rulemaking at issue in this case, the “EPA had never disavowed the authority to regulate greenhouse gases, and in 1998 it in fact affirmed that it had such authority.”[8]

Under the Court’s reasoning, the EPA may deny a petition to act pursuant to §202 only if it determines that greenhouse gases do not contribute to climate change or, alternatively, if the EPA provides a reasonable explanation for not making a determination as to the relationship between greenhouse gases and climate change.[9]  The Court found that the EPA’s explanation for not acting did not satisfy either test, and its offer of “policy” reasons for declining to act did not accord with the statute. Thus, its denial of the petition for rulemaking was “arbitrary, capricious, . . . or otherwise not in accordance with law.”[10]  The Court then reversed the decision of the District of Columbia Circuit and remanded the case.

Roberts and Scalia Dissent

In two separate dissents, Chief Justice John Roberts and Justice Antonin Scalia strongly disagreed with the opinion of the Court, both on standing and on the merits. Chief Justice Roberts, in a dissenting opinion joined by Justices Scalia, Clarence Thomas, and Samuel Alito, strenuously argued that the petitioners’ challenge was nonjusticiable. He asserted that the majority changed the rules on standing by giving states “special solicitude” and argued that relaxed Article III standing requirements for states had “no basis in our jurisprudence.”[11]  He then argued that the petitioners could not meet the three-part standing test of Lujan because their injury was insufficiently particularized. In Chief Justice Roberts’s view, the “very concept of global warming seems inconsistent with this particularization requirement. Global warming is a phenomenon ‘harmful to humanity at large,’ . . . and the redress petitioners seek is focused no more on them than on the public generally . . . .”[12]

The Chief Justice also argued that Massachusetts can neither establish a causal connection between any specific injury to it and the lack of regulation of greenhouse gas emissions from new motor vehicles nor show that promulgation of regulations would redress their specific harm.[13]  He compared the Court’s opinion to what he calls “the previous high-water mark of diluted standing requirements,”[14]  United States v. Students Challenging Regulatory Agency Procedures (SCRAP).[15]

Justice Scalia dissented on the merits, joined by the Chief Justice and Justices Thomas and Alito. He argued that nothing in the Clean Air Act either requires the EPA administrator to explain a decision to decline to take action sought in a rulemaking petition or restricts the reasons that the administrator may use in declining to act. In any event, Justice Scalia argued, the EPA did explain, at length, the reasons for its decision, relying on a 2001 report by the National Research Council that emphasized the uncertainties about a causal link between greenhouse gases and climate change.[16]  Finally, Justice Scalia argued that greenhouse gases are not “air pollutants” as defined in the Clean Air Act because they are not “air pollution agents,” which, according to Justice Scalia, must be at or near the surface of the Earth, not in the upper atmosphere, where greenhouse gases are concentrated.[17]

The Decision’s Significance

Although environmentalists were understandably delighted with the majority’s support for the EPA’s power to regulate greenhouse gases, the Court’s ruling on standing is also important. On remand, the EPA could still decline to regulate greenhouse gas emissions, although the Court has made such a decision more difficult by removing some of the possible reasons for doing so. In any event, the current EPA leadership is likely to take its time in considering these issues on remand, after which further litigation is highly likely.

The Court’s decision on standing, however, should have a present impact on standing decisions of the federal courts. Although it does not return to the SCRAP analysis, the majority’s standing analysis does swing the pendulum back from the Justice Roberts view (which has been prevalent recently in both the federal and New York State courts[18]) that the more widespread, and presumably the more important, an issue is, the less likely it is that anyone would have standing to seek redress in the courts.

The Massachusetts decision is also likely to have - indeed is already having - important indirect effects in areas beyond the regulation of greenhouse gases from new motor vehicles.

As we have previously commented in this column, the effects of climate change touch many areas of environmental law, as well as corporate transactions and disclosure requirements under the securities laws, and the Court’s holding that CO2 is an “air pollutant” will require many companies to consider their future exposure to regulatory controls or civil liability for greenhouse gas emissions.[19]

Moreover, the decision is likely to encourage further action on the state level to regulate greenhouse gases and to result in more pressure on the federal government to conform U.S. environmental policy with the emissions reduction requirements of the European Union and the Kyoto Protocol.[20]  As many U.S. companies and their lawyers are coming to realize, reducing the impact of greenhouse gases on the Earth’s climate is an important component of the new global marketplace. The Supreme Court may well have done the business community a favor by holding, over the objections of its conservative wing, that the EPA could no longer close its eyes to that impact.

Stephen L. Kass and Jean M. McCarroll, together with Clifford P. Case, direct the Environmental Practice Group at Carter Ledyard & Milburn.

Reprinted with permission from the April 27, 2007 edition of The New York Law Journal
© 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

Endnotes


[1] US - , 127 SCt 1438, No. 05-1120, 2007 U.S. LEXIS 3785 (April 2, 2007).

[2] Id., 2007 LEXIS 3785, at *34.

[3] 504 US 555 (1992).

[4] 2007 LEXIS 3785, at *35.

[5] Id. at *41.

[6] Id. at *42, *44.

[7] Id. at *54-55 (emphasis in the Court’s opinion).

[8] Id. at *59 (emphasis in original). Michael C. Davis, Barry Neuman, and Christine A. Fazio of our firm submitted an amicus brief to the Supreme Court on behalf of four former EPA administrators on that issue.

[9] Id. at *62.

[10] Id. at *64-*65 (quoting 42 USC §7607(d)(9)(A).

[11] Id. at *68.

[12] Id. at *76 (citations omitted).

[13] Id. at *79.

[14] Id. at *87.

[15] 412 US 669 (1973). SCRAP involved a challenge to a railroad freight surcharge. The petitioners alleged that railroad rate increases would encourage the use of nonrecyclable goods and thus more natural resources, which might lead to more refuse in parks used by members of the petitioning organization.

[16] 2007 LEXIS 3785, at *96-*100.

[17] Id. at *105-*107.

[18] See Stephen L. Kass and Jean M. McCarroll, “Standing in SEQRA Cases,” NYLJ, Aug. 23, 2002, at 3, col. 1.

[19] See Stephen L. Kass and Jean M. McCarroll, “Climate Change and Environmental Practice,” NYLJ, Dec. 22, 2006, at 3, col. 1.

[20]  See Stephen L. Kass and Jean M. McCarroll, “Litigating Climate Change Via State Regulations, Federal Courts,” NYLJ, April 28, 2006, at 3, col. 1; Stephen L. Kass and Jean M. McCarroll, “Standing Alone on Climate Change,” NYLJ, Jan. 4, 2002, at 3, col. 1.



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