The U.S. Supreme Court has held that the Environmental Protection Agency (EPA) must regulate the greenhouse gas (GHG) emissions from new motor vehicles or provide a reasonable explanation for its failure to do so. The recently decided landmark case of Massachusetts v. Environmental Protection Agency initially began as a rulemaking petition brought by 19 private organizations, which were joined on appeal by the states of Massachusetts, California and New York, among others. On April 2, 2007, the Supreme Court decided the case in favor of these petitioners, acknowledging the relationship between rising global temperatures and increasing concentrations of atmospheric carbon dioxide and ruling that the Clean Air Act allows EPA to regulate GHG emissions from new motor vehicles.
The Clean Air Act states that EPA shall regulate the emission of any air pollutant from new motor vehicles that in its judgment contributes to air pollution that may reasonably be expected to endanger public health or welfare. In overturning the decision of the D.C. Circuit – and in ruling that EPA’s decision not to regulate was arbitrary, capricious and not in accordance with law – the Supreme Court considered (i) whether the petitioners, particularly the State of Massachusetts, had standing to challenge EPA’s denial of the rulemaking petition; (ii) whether EPA has statutory authority to regulate GHG emissions from new motor vehicles; and (iii) if it does, whether EPA’s stated reasons for not regulating these emissions are consistent with the statute.
In a 5–4 decision, the Court ruled that the State of Massachusetts had standing to challenge EPA’s decision, particularly because EPA’s refusal to regulate GHG emissions from new motor vehicles presented a risk of harm to the state that was both "actual" and "imminent" – and because that risk could be reduced if the federal government enacted the regulation that the state sought. That the effects of climate change are global did not minimize Massachusetts’s specific interest in protecting its sovereign territory. According to the Court, EPA’s refusal to regulate the emissions at a minimum contributed to Massachusetts’s injuries, particularly because EPA did not dispute the causal connection between anthropocentric GHG emissions and global warming. The Court added that although regulating motor vehicle emissions may not by itself reverse global warming, it still has jurisdiction to decide whether EPA had a duty to take steps to reduce or slow global warming.
The Court then ruled that EPA has statutory authority to regulate GHG emissions from new motor vehicles. The Court found that GHGs, including carbon dioxide, fit well within the Act’s broad definition of "air pollutant", which includes any physical, chemical substance emitted into the ambient air. It ruled that the language of the Clean Air Act is intentionally broad and reflects Congress’s intention to grant EPA the regulatory flexibility to develop new approaches to global warming and air pollution. The Court also rejected EPA’s reasons for not using this authority to regulate. According to the Court, the statute conditions EPA’s rulemaking obligation on a judgment of whether an air pollutant causes or contributes to air pollution that may reasonably be anticipated to endanger public health or welfare. Yet EPA gave no reasons that would dispute the link between GHGs and climate change. Instead, it only offered a "laundry list" of policy reasons why regulating would conflict with other administrative priorities, including voluntary executive branch programs to reduce GHG emissions and the President’s role in negotiating reductions with developing nations, all of which the Court considered divorced from the statutory text.
The Court concluded that under the Clean Air Act, EPA could refuse to regulate GHG emissions only if it found that such emissions do not cause or contribute to climate change, a conclusion that would itself be subject to further judicial review. If EPA found, however, that GHGs do cause or contribute to climate change, it must regulate their emissions.
Torys’ cross-border Climate Change Group brings our business law expertise to the many challenges and opportunities in this complex, multifaceted field. Because we understand that the implications of global warming extend to every aspect of modern business, the group is interdisciplinary, drawing on our depth of top-ranked expertise in a variety of fields, including energy and power; environmental, health and safety; corporate/commercial; securities; mergers and acquisitions; project finance; institutional lending; financial institutions; intellectual property; pension and employment; real estate and infrastructure; trade; tax; and litigation.
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