Court Turns Up the Heat on Global Warming


In a landmark decision, the Supreme Court affirms that the EPA has the authority to regulate carbon emissions

Adding to the mounting pressure for federal legislation on climate change, the U.S. Supreme Court on Apr. 2 ruled that the Environmental Protection Agency (EPA) has the authority to regulate carbon dioxide from vehicle emissions and that the agency has shirked its responsibility to do so.

The 5-4 decision in the high court's first global warming case is a rebuke to the administration of President George W. Bush, which has opposed mandatory caps on carbon emissions. The EPA, headed by Bush appointees, has declined to regulate greenhouse gas emissions that contribute to global warming for a number of reasons, including its argument that carbon dioxide and other heat-trapping gases emitted from car tailpipes aren't pollutants.

The groundbreaking Supreme Court ruling establishes that carbon dioxide and other greenhouse gases are, in fact, pollutants and fall under regulation established by the Clean Air Act of 1970. "EPA has refused to comply with this clear statutory command," the court said in the majority opinion written by Justice John Paul Stevens. "Instead, it has offered a laundry list of reasons not to regulate."

Ruling Isn't a Requirement

The decision included sharp words for the Administration: "[W]hile the President has broad authority in foreign affairs, that authority does not extend to the refusal to execute domestic laws."

The court's ruling doesn't explicitly require the EPA to regulate carbon dioxide emissions. But the agency can avoid doing so "only if it determines 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."

A spokeswoman for the EPA said in an e-mail that the agency "is reviewing the court's decision to determine the appropriate course of action." She added that the "Bush Administration has spent over $35 billion on climate-change programs—more than any other country in the world."

Minority View

The dissenting judges had critical words for the majority. The minority opinion was written by Chief Justice John Roberts and signed by Justices Antonin Scalia, Clarence Thomas, and Samuel Alito. Roberts wrote that new motor-vehicle greenhouse gas emissions have played only a "bit part" in the "150-year global phenomenon" of global warming, and that lead plaintiff Massachusetts' link of the loss of coastal land to such emissions is "far too speculative to establish connection." In his own, additional dissent, Justice Scalia argued that even if global warming is a crisis requiring immediate attention, it is the job of Congress and the President—not the courts—to address it. "No matter how important the underlying policy issues at stake, this court has no business substituting its own desired outcome for the reasoned judgment of the responsible agency."

The lawsuit that sparked the Supreme Court decision was brought by cities and states, including Massachusetts, that claimed the EPA's refusal to regulate carbon emissions was causing harm to their residents (see BusinessWeek.com, 10/30/06, "Global Warming: Here Come The Lawyers"). The case is specifically about carbon emissions from cars and trucks produced by the auto industry. But it may serve as a precedent for broader regulation of carbon emissions, including those from power companies. The key is that the decision defines greenhouse gases like carbon dioxide as pollutants, affirming they fall under the regulatory scope of the Clean Air Act. With that definition established, states and Congress appear to be entitled to enact legislation curbing them.

Environmental groups say that the decision is a crucial step in the path to federal carbon emissions legislation. "Today's ruling is a watershed moment in the fight against global warming," said Carl Pope, executive director of the Sierra Club in a statement. "The ruling is a total rejection of the Bush Administration's refusal to use its existing authority to meet the challenge posed by global warming. It also sends a clear signal to the markets that the future lies not in the dirty, outdated technologies of yesterday, but in the clean energy solutions that will fuel the economy of tomorrow."

Congress Getting Involved

Momentum for federal legislation to curb carbon emissions has been growing in recent months. Major U.S. corporations are joining environmentalists' call for a federal cap in greenhouse emissions, underlining the need for both a uniform regulatory environment, and a reduction in the risks global warming poses to their businesses. In January, the heads of 10 large U.S. corporations, including General Electric (GE), said they supported mandatory caps. And in March, General Motors (GM), Ford Motor (F), Chrysler (DCX), and Toyota North America (TM) endorsed a mandatory economy-wide emissions cap.

Five bills in Congress currently call for a national cap on greenhouse gas emissions. On Mar. 20, Representative Henry Waxman (D-Calif.) used his moment at the mike to introduce the Safe Climate Act, which calls for 80% cuts from 1990 emissions levels by 2050.

But environmental groups say they don't see such far-reaching legislation until Bush is out of office. In the shorter term, today's Supreme Court decision will impact other similar court cases, especially those related to the auto industry. Automakers have brought suit against Clean Car Laws enacted by California and 13 other states. The states derive their authority to enact stricter standards from the Clean Air Act, so the high court's ruling is expected to strengthen the states' hand in cases pending in California and Vermont.

Helping Hand for the States

California has been asking the EPA for authority to limit tailpipe emissions since 2004, but the agency has yet to grant a state a waiver to do so. Ten other states have adopted California's tougher rules, which would force automakers to cut exhaust from cars and light trucks by 25% and from sport-utility vehicles by 18%, beginning with 2009 models.

At a news conference today, California Attorney General Jerry Brown said the Supreme Court ruling "makes it very clear that California has a right to regulate greenhouse gases." He added that, "It is time for the automakers, the electric power industry, and other large greenhouse gas emitters to join California in leading the world to global warming solutions."

The auto industry has said it supports federal carbon emissions legislation, but has resisted raising fuel economy standards. Instead, it has focused on producing flexible-fuel vehicles (see BusinessWeek.com, 3/28/07, "The Dirty Secret About Clean Cars"). The Alliance of Automobile Manufacturers, a defendant in the Supreme Court case representing GM, Ford, and DaimlerChrysler, issued a statement saying it would work for federal carbon-cap legislation, which could come at a lesser cost to the group's members than higher fuel economy standards.

"The Alliance of Automobile Manufacturers believes that there needs to be a national, federal, economy-wide approach to addressing greenhouse gases," says Dave McCurdy, president of the Alliance of Automobile Manufacturers. "This decision says that the U.S. Environmental Protection Agency will be part of this process."

Environmental advocates are optimistic that today's decision signals a change in legislative winds, though they don't expect major policy shifts overnight. "I expect new standards to result from this opinion," says Norman Dean, executive director of the environmental group Friends of the Earth. "How stringent they'll be in this environment is another matter."


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