On April 2, the Supreme Court, in a 5-4 decision, pushed the Environmental Protection Agency (EPA) in the direction of regulating greenhouse gas (GHG) emissions from new motor vehicles. Overturning the Court of Appeals for the D.C. Circuit, the Court in Massachusetts v. EPA held not only that the EPA has the authority to regulate GHG from new motor vehicles, but that the Clean Air Act requires it to regulate them if it finds that those gases, in the words of the Clean Air Act, "may reasonably be anticipated to endanger the public health or welfare."
In an opinion by Justice Stevens, the Court rejected a host of EPA policy arguments for not determining whether endangerment exists. Instead, the Court remanded the matter to the EPA to make that determination and, if so, how to regulate GHG emissions from new motor vehicles. The Court was careful to note that "[w]e need not and do not reach the question of whether on remand the EPA must make an endangerment finding, or whether policy considerations can inform the EPA's actions in the event that it makes such a finding. We hold only that the EPA must ground its reasons for action or inaction in the statute." Slip Op. at 32 (citation omitted).
The ruling was based on the judicial review provisions of the Administrative Procedure Act. The Court determined that the EPA's rejection of a rulemaking petition by several states and environmental groups was "arbitrary, capricious, and not otherwise in accordance with law," and lacked "a reasoned justification for declining to form a scientific judgment" on the endangerment question.
Although this decision is unlikely to result in substantial regulation of GHG from new motor vehicles during the remainder of the Bush Administration, it clearly opens the door to rigorous regulation of new motor vehicle emissions by the next Administration, even in the absence of new climate change legislation. More importantly for the electric utility industry, because the Clean Air Act contains comparable provisions regarding stationary sources, the EPA may be required to conduct an analysis of whether emissions from powerplants also endanger public health or welfare.
It is also interesting to note that the Court found that the plaintiffs had standing in large part because the case was brought by states, rather than individuals. This suggests that standing in future climate change lawsuits will be substantially strengthened if states are among the plaintiffs.