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Nation's High Court Rules on Global Warming, New Source Review Cases

April 1, 2007

On April 2, the U.S. Supreme Court issued two Clean Air Act decisions, one finding that EPA has existing authority under the act to regulate greenhouse gas emissions from motor vehicles and the other concluding that a company may have violated clean-air laws when it modernized coal-burning power plants without obtaining a permit.

In a 5-4 ruling, the nation's high court found that EPA "offered no reasoned explanation"

for its refusal to regulate carbon dioxide (CO2) and other vehicle emissions that contribute to climate change (Massachusetts vs. EPA, No. 05-1120). The court directed the agency to reconsider its refusal based on the factors set forth in the law.

Writing for the majority, Justice John Paul Stevens stated: "Under the clear terms of the Clean Air Act, EPA can avoid taking further action only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation."

Joining Stevens in the majority were Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen Breyer. Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, and Samuel Alito dissented. Roberts stated that the court should not have found that the coalition of states, cities and environmental groups bringing the suit had any legal standing.

In 1999, the case began when various environmental groups filed an administrative "rulemaking petition" that formally requested that the EPA set motor vehicle emission standards for greenhouse gases. In August 2003, EPA denied the petition on two grounds; that the agency had no statutory authority to regulate greenhouse gases and that even if it had authority under the Clean Air Act, they would not regulate the gases because the agency preferred voluntary programs and further study. In October 2003, Massachusetts along with 29 other parties challenged the ruling in the U.S. Court of Appeals for the D.C. Circuit.

On July 15, 2005, a three-judge panel of the D.C. Circuit by a 2-1 vote let EPA's ruling stand, although the two judges who voted in favor of this could not agree on a legal ground for doing so. In December of 2005, the full D.C. Circuit denied en banc review by a 4-3 vote.

Environmental Defense officials said that the landmark ruling in the Massachusetts case does not require the federal government to act, it puts new pressure on Congress to write legislation that mandates federal action on global warming.

"It's important to remember the court did not rule EPA has to take action on climate change, that's why this is ultimately up to Congress. The court did all it can, but if we're really going to fix climate change, Congress has to pass a cap on carbon pollution, and soon," said Environmental Defense President Fred Krupp.

Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, stated that the organization "looks forward to working constructively with both Congress and the administration, including EPA and the National Highway Traffic Safety Administration, in developing a national approach."

Officials with the Competitive Enterprise Institute (CEI) stated that the decision has broad implications, ranging from the judicial standing of environmental plaintiffs to America's economic future.

"The decision implies that Congress ratified the Kyoto Protocol in 1977 when it enacted the Clean Air Act's Section 202 regulating auto emissions, but somehow forgot to tell anybody. The same groups that sued EPA to regulate CO2 auto emissions under Section 202 will now sue EPA to set national ambient air quality standards (NAAQS) for CO2," said CEI Senior Fellow Marlo Lewis. "However, in previous rulings, the court has forbidden EPA to consider cost when setting NAAQS. As a result, the potential for economic harm is vast."

In the second case, the U.S. Supreme Court found that a district court and the U.S. Court of Appeals for the Fourth Circuit misinterpreted statutes in holding that Duke Energy Corp. did not need a permit from EPA because the modifications were minor (Environmental Defense vs. Duke Energy Corp., No. 05-848).

"This is a huge win for clean air. The court ruled unanimously that companies have to use the latest cost effective technology to reduce pollution when they upgrade their plants. This is not a legal abstraction -- it means we'll have cleaner air and less childhood asthma," Krupp said. "We're very proud of our work in this case -- it's going to make a real difference in people's lives."

The Duke Energy case originated in December 2000 when the federal government filed a civil enforcement action charging that Duke had engaged in extensive expansions at 30 coal-fired electric generating units (eight power plants) in North and South Carolina without modernizing its air pollution controls as required under the Clean Air Act.

The nation's high court found that the U.S. Court of Appeals for the Fourth Circuit improperly interpreted Prevention of Significant Deterioration (PSD) regulations under the Clean Air Act. The lower court determined that the Clean Air Act requires the EPA to conform PSD regulations to their New Source Performance Standards (NSPS). However, the U.S. Supreme Court held that "the Court of Appeals' reading of the 1980 PSD regulations, intended to align them with NSPS, was inconsistent with their terms and effectively invalidated them; any such result must be shown to comport with the act's restrictions on judicial review of EPA regulations for validity."

The U.S. Supreme Court ordered the case back to district court for reconsideration.

"We are disappointed the Supreme Court overturned the lower court rulings in our favor on this matter," said Marc Manly, Duke Energy group executive and chief legal officer. "We continue to believe we have solid defenses against the government's claims and will show in the lower courts that our power plant projects were not subject to NSR New Source Review."

Duke officials stated that the nation's high court considered only whether an hourly emissions standard was appropriate to use when triggering NSR -- and did not review what constitutes routine repair and replacement activities under NSR.

Both opinions can be accessed at http://www.supremecourtus.gov/opinions/06slipopinion.html.