Market News

 December 01, 2006
US Supreme Court to rule on CO2 regulation

 Washington, D.C. -- The U.S. Supreme Court has begun hearing arguments on the global issue of climate change, and is expected issue a ruling next spring on whether a group of states and cities can require the federal government to regulate greenhouse gas emissions from vehicles. This is the first time that a climate change case has reached the top judicial body, an event that could portend future climate change legislation in the U.S.

The central argument of the case, which has been filed by a group of a dozen states, three cities, and many environmental groups, is whether carbon dioxide is covered by the Clean Air Act and if so, must be regulated by the Environmental Protection Agency. Should this assertion be accepted, the EPA would be forced to issue regulations to limit emissions from vehicles.

Vehicle fuel economy standards in the U.S. have remained relatively stagnant since 1987, with manufacturers using efficiency improvements to enhance performance rather than reduce consumption.

Lawyers for the plaintiffs must prove that carbon dioxide is an "air pollutant" that is likely to endanger public health or welfare. The recognition of this claim hinges on climate change science that projects future damages to the U.S. from rising global temperatures, meaning that the justices must consider a wide range of scientific research.

Assistant Attorney General James R. Milkey of Massachusetts argued that "ongoing harm" included loss of land to rising sea levels that will continue in the future; the plaintiffs must prove that harm is occurring to them in order to have official 'standing' to plead the case.

The states must also prove that reducing emissions from vehicles would reduce that harm. Estimates are that U.S. vehicles produce around 6 percent of global greenhouse gas emissions, an amount which EPA lawyers allege would have little effect on climate change if regulated, but which the states say would have a significant impact. Chief Justice John Roberts questioned whether reducing vehicle emissions would have any impact when offset by expected increases in coal consumption in China.

Media at the hearing report that the court seems destined to reach a 5-4 decision on the issue, with 4 justices seemingly split between the sides with customary swing judge Justice Anthony M. Kennedy holding the decisive vote. The plaintiffs agree that even if they are granted standing, forcing the EPA to undertake regulation would be unlikely, though even an order for the Agency to reconsider its position would be a victory.

The case is the most prominent example of a trend which has taken place in the country over the past several years. States and lower levels of government have become increasingly dissatisfied with a lack of environmental protection and climate change legislation at the federal level, and have taken to the courts to force action.

California is currently involved in a legal dispute with the federal government over its strict vehicle emissions requirements. A number of other states have also pledged to adopt the tough standards. The EPA argues that "The only way to cut (carbon dioxide) emissions is through a drastic increase in fuel economy - which in the past has led to smaller, lighter and less-safe vehicles."

The Canadian government plans to develop new regulations for vehicle fuel consumption by 2011 following the expiration of the current voluntary agreement. Synchronization with U.S. vehicle emissions standards will occur in the next twelve months.