On Monday, the Supreme Court ruled in Massachusetts vs. EPA, siding with 11 states and forcing U.S. EPA to consider regulating greenhouse gases. What does this ruling mean for the future of climate change legislation in the United States? How will EPA's practices be affected by the ruling? And how will the Bush administration react as it nears the end of its term? During today's OnPoint, David Hayes, partner and global chair of Latham & Watkins' Environment, Land & Resources practice and former deputy secretary of the Interior, discusses the case in detail. He talks about some of the surprises of the court's decision and discusses what the ruling may mean for other pending cases.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is David Hayes, partner and global chair of Latham and Watkins Environment, Land, and Resources practice. David is also a former deputy secretary of the Interior. David thanks for coming on the show.
David Hayes: My pleasure Monica.
Monica Trauzzi: Dave, the Supreme Court ruled in Massachusetts v. EPA this week forcing the EPA to consider regulating greenhouse gases. How significant is this in the climate change discussion?
David Hayes: Monica, this is an amazingly important development for several reasons. First of all you have, on the merits itself, the Supreme Court essentially said to EPA you must regulate greenhouse gases under the Clean Air Act. In doing so they got past the standing argument, which was a major threat to whether the Supreme Court would hear the case. And in dealing with standing they emphasized the seriousness of climate change, the importance of taking steps, the legitimacy of the state of Massachusetts in particular in petitioning for change, and reinforced the notion that this is a serious public policy issue that falls squarely under the Clean Air Act. And then on the merits of course, they went further than I think many folks anticipated. Many, many folks anticipated that, yes, the Supreme Court would conclude that greenhouse gases were an air pollutant because of the breadth of the definition of air pollutant under the act. But the Supreme Court went further and interpreted Title II of the act to say essentially once EPA determines that there is a serious environmental impact associated with greenhouse gases they must regulate them. That's further than most folks expected.
Monica Trauzzi: So what do you think this decision means for the next few years at EPA?
David Hayes: Well, it means EPA has to get busy. EPA has essentially been on the sidelines on this issue, as you know, working on the voluntary initiative side. But essentially saying they couldn't work under the Clean Air Act. Now the court is saying under Title II for mobile sources you must begin regulation. And the same definition of air pollutant applies with equal force to Title I, which regulates of course stationary sources. And we're talking about coal-fired power plants, methane producing feedlots, etc. The way that you intimate Title I with greenhouse gases is not at all clear. It's probably worth us talking about it a little bit. But EPA has got to now roll up its sleeves and tackle these problems.
Monica Trauzzi: Is this going to have any effect on the push for climate change legislation in Congress or are lawmakers still going to be grappling with those fundamental issues that we've been hearing them talk about recently?
David Hayes: I think that this is going to provide a significant new impetus for congressional action in the relatively near term. And that may seem counterintuitive because on one hand the Supreme Court told EPA get working on climate change. So some might think, well, then let's see what the agency comes up with. Two problems there. One is the agency doesn't do anything quickly. And we're nearing the end of the Bush administration, an administration that many question the resolve of in terms of dealing with climate change. So there'll be a sense that nothing is going to happen quickly. We may, in fact, be into the next administration. Can we wait that long? But number two is also, I think, a recognition in many quarters that the Clean Air Act is a very awkward instrument for regulating greenhouse gases. And that perhaps much like the acid rain problem that led to a special title of the Clean Air Act in 1990, perhaps we need a special title, a new title of the Clean Air Act to deal with climate change. I think that's going to be persuasive to many people and provide further impetus for congressional action.
Monica Trauzzi: Like you said, we're nearing the end of the Bush administration. What does this ruling mean for the Bush demonstration? There's a year and a half left, do they have the option to not act on it and sort of just, you know, sit back?
David Hayes: I don't believe they have the option not to act. And this accelerates several things that they have to do. First and most directly they have to take action on the mobile source side and at least start a process of potentially taking greenhouse gas emissions into account when setting standards. And a related issue is they're going to now have to deal with the issue much more seriously I would say of California and other states wanting to regulate motor vehicle emissions in a more stringent way in order to deal with greenhouse gas emissions. Prior to this decision they could say basically Clean Air Act is off limits and the states were essentially way out of bounds. They could also say, prior to this decision, that you're messing with mileage standards and that's the Department of Transportation. That's not the Clean Air Act. This Supreme Court seemed to go out of its way a little bit to say that those two parallel requirements are not mutually exclusive, arguably undercutting EPA's argument in those litigations.
Monica Trauzzi: The President has indicated that his proposed biofuels mandate would be an adequate way for Congress to act. Is it? Is it adequate?
David Hayes: Well, that's for a policymaker to decide I guess. But biofuels is targeted at one portion of the climate change issue. It's essentially a substitute for some of our transportation fuel. And even under extraordinarily generous assumptions of our biofuels capabilities we could be talking, we're probably not talking about more than 5 percent or 10 percent of our transportation fuel being provided by biofuels. That strikes me at least, putting a policymaker hat on, as certainly not being sufficient, particularly when viewed against the very broad, strong statements that the court made, drawing on some of the administration's own documents, that climate change is a serious, serious effort that needs to be addressed.
Monica Trauzzi: So were you surprised at all at how the final divisions came down and that there were no concurring opinion?
David Hayes: No. I mean this is the kind of issue that sharply divides. What is interesting, there's several things that are interesting about the split here. It was a 5-4 decision. Justice Roberts dissented. But his dissent was limited to standing. He didn't talk about the language of the act. And I think Justice Stevens' majority opinion took on the tone carefully of a narrow decision. Basically saying this language is pretty clear and we're going to apply it. And Justice Roberts did not object to that, now arguably because he didn't get to that point, although Justice Scalia jumped right in.
Monica Trauzzi: Yeah, what about Justice Scalia? He made some interesting comments in his dissent.
David Hayes: He did. He was very tough on the majority on both the standing issue and tough on his colleague Justice Kennedy who went along with the majority opinion in basically concluding that the majority on standing said, you know, there are litigants and there are litigants. And we're dealing with the Commonwealth of Massachusetts here, a quasi-sovereign with, well, they are a sovereign in some respects. They have quasi-sovereign concern about resources and Justice Stevens said they deserve special solicitude as a litigant in front of the court. Justice Roberts and Justice Scalia had a problem with that, but pundits suggest that may have brought Justice Kennedy over to the majority.
Monica Trauzzi: What does this decision mean for other pending cases on the state level?
David Hayes: Well, as I discussed a few minutes ago, I think the major issue, the major litigation that we're looking at is the question of the federal/state relationship that is playing out now most evidently on the automobile side. And there, as I mentioned Monica, the Supreme Court in a way both gaveth and tooketh away on that issue. On the one hand, as I mentioned before, the Supreme Court indicated that it's not inconsistent to both deal with mileage on the one hand and deal with the need to regulate greenhouse gases. Suggesting that perhaps the field is not preempted, if you will, by the Clean Air Act's deference to mileage standards being handled on the federal level. On the other hand, in discussing the Massachusetts role in terms of standing the court mentioned that there are some aspects potentially involving greenhouse gases where the states may be preempted. Why did they say that? I don't know, but there's grist for both sides on that. I think we're going to see it play out. That's another reason Monica why I think there's going to be more impetus for congressional action. The courts are going to have a hard time actually applying this opinion I think in that transportation context. And that, combined with the concern that the Clean Air Act on the stationary source side is an awkward device to regulate on an economy wide basis greenhouse gases will provide strong impetus for serious congressional action I think.
Monica Trauzzi: I want to get this final question in. Does the decision indicate a shift in any way of the justices, what they're thinking compared to what we've seen in the past? Is there a shift among any of the justices?
David Hayes: I think you can look at this case and essentially say on the merits the court took a very traditional approach of strict construction of the language. And it found that the Clean Air Act had a sweeping, was the word Justice Stevens used, a sweeping definition of air pollutants. And they concluded it includes greenhouse gases. And then the second piece of the equation, also the court did I think a good job of basically saying, look, we're reading the language for what it says. Meaning whether EPA could essentially, even if it were an air pollutant, take a pass on regulating it. And the court said the way I read this language it's says if the agency says there's a serious environmental impact associated with these greenhouse gases it has to regulate. It's fairly straightforward. So it's not surprising in that regard that there were five votes for that result. What I think is interesting is the attention that was given to the standing issue and the platform that was used by the justices when talking about standing on the majority side, to make the point, that this is a good problem that needs to be addressed. It's OK to address it incrementally. And we're not going to require a plaintive, and certainly not the Commonwealth of Massachusetts, to show some direct immediate impact in the traditional sense. And that made the dissenters go crazy because they thought that in fact the majority was being too liberal with standing. And perhaps they weren't buying into the science as well. They watch E&ETV and read the New York Times and the Wall Street Journal, just like the rest of us. I think you saw a little mini-debate there going on the science question up by the court.
Monica Trauzzi: Very interesting stuff. Thanks for coming on the show David.
David Hayes: My pleasure Monica.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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