U.S. Supreme Court issues major environmental rulings
April, 2007
Commonwealth of Massachusetts v. EPA and Environmental Defense v. Duke Energy
Background – Commonwealth case
In a widely-reported and important decision, on April 2, 2007 the U.S. Supreme Court ruled that EPA must reconsider its decision to not regulate "greenhouse gas" emissions from new motor vehicles. The 5 to 4 decision in Commonwealth of Massachusetts v. EPA was decided in large part on the purely procedural question of standing, the legal doctrine that Courts should not hear cases that do not involve a real or threatened injury to a personal interest of a plaintiff which can be remedied through the Court's decision. While much of the opinion thus evokes bland legalese about the standing of a state to sue on behalf of its citizens, the majority of the Court was clear that the basis for the States' standing is injury due to climate change exacerbated by greenhouse gas emissions from new automobiles, which could be reduced through EPA regulation.
EPA unsuccessfully argued that it had no authority over the emissions in question – carbon dioxide (CO2) – because it cannot be considered a "pollutant" as defined in the federal Clean Air Act. The Court said that EPA has an obligation to explain why it would not exercise its discretion to evaluate whether greenhouse gases contribute to climate change. The majority thus held that in not considering whether regulating new motor vehicle greenhouse gas emissions, through gas mileage regulations, EPA had acted arbitrarily and capriciously, and remanded the question back to EPA for additional consideration.
Background – Duke Energy case
On the same day it issued the Commonwealth decision, the U.S. Supreme Court issued its ruling in a much-anticipated Clean Air Case, Environmental Defense v. Duke Energy Corp., on appeal from the 4th Circuit Court of Appeals. The case concerns the regulation of coal-fired power plants under the Clean Air Act's "New Source Review" (NSR) provisions, which govern when facilities must install expensive state-of-the-art emission control equipment. Put as simply as possible, the NSR regulations require the inclusion of such equipment in new major stationary sources or in major modifications to major stationary sources. The Duke Energy case turns on the technically complex question of deciding whether a modification to a source is the kind that would trigger the NSR obligations, which essentially is determined by a comparison of pre-modification emissions vs. the anticipated post-modification emissions.
This case began when the Clinton administration pursued Clean Air Act enforcement lawsuits against a number of utility companies owning a large number of power plants, alleging they violated the Act by not undertaking NSR when making modifications to their coal-fired facilities. As the dispute worked its way up the federal court system, it ultimately turned on the question essentially on whether the emissions were to be calculated on a daily or annual average. That technical question is the tip of a larger iceberg of the impact on the coal-fired plants of having to make the calculations in the way advanced by the environmental plaintiffs. The uncertainty over the calculation method is at the heart of this litigation but meanwhile, EPA had drafted regulations that would clarify the issue in a way most favorable to the industry. Although EPA would not necessarily characterize this decision as a loss, it is likely EPA will now go forward with its draft regulations on the applicability of New Source Review. It is also very likely that those regulations will be litigated as well.
Impacts of Commonwealth and Duke Energy rulings
CO2 emission standards: The Commonwealth ruling will obviously have the immediate impact of requiring EPA to, if not promulgate new restrictive motor vehicle emission standards, at least develop a complete administrative record as to why tailpipe standards would not be effective. The Commonwealth ruling will also be immediately felt in lawsuits pending against California's efforts to set its own stringent motor vehicle emission standards. A federal district court lawsuit in California has been stayed, pending the outcome of the Commonwealth case. That case will most likely go forward now, and California's efforts to obtain a federal waiver permitting more stringent standards will be emboldened.
Taken together (even in light of the dissenting opinions), the Commonweath and Duke Energy decisions represent an unprecedented acknowledgment at the highest judicial level of the fact of climate change and the potential if not inarguable contribution of greenhouse gases to the problem. Thus, while it may take some time, these decisions will eventually support broad regulatory changes.
In point of fact, most utilities are not waiting either for these cases or for CO2 regulations in their planning of new, and in some cases already-built facilities. For example, recently it was reported that American Electric Power of Columbus, Ohio was planning to capture CO2 emissions on its coal-fired power plants in West Virginia and Oklahoma. Although some technical and legal questions need to be solved, many environmental and industry representatives alike see carbon capture and sequestration as the key to new energy development in the U.S.
Bullivant Houser Bailey, PC advises experts and policy makers on the leading edge of this important discussion as a Partner in the Big Sky Carbon Sequestration Partnership. (http://www.bigskyco2.org/).
For more information, contact:
Mark L. Stermitz at mark.stermitz@bullivant.com or 503.499.4461
Stephen F. Cook at steve.cook@bullivant.com or 503.499.4624
John P. Ashworth at john.ashworth@bullivant.com or 503.499.4428