Supreme Court to hear arguments today on EPA authority over GHG

New York (Platts)--29Nov2006

The Supreme Court will hear arguments today on whether the Environmental
Protection Agency has the authority to control greenhouse gas emissions and
whether it should exercise that authority.

The arguments will revolve around carbon dioxide emissions from the automobile
industry, but the case could have implications for the coal and utility
industries if the court agrees that EPA should regulate CO2.

While the environmental community and states suing the federal agency are
hopeful the justices will direct EPA to cap automobile CO2 emissions under
current law, the electric utility industry expects a far-reaching decision
that would send the debate over climate change regulations to Congress and the
White House.

Jeffrey Holmstead, former EPA assistant administrator of the Office of Air and
Radiation, said he believed the Supreme Court took the case, Massachusetts v.
EPA [No.05-1120], to address the fundamental question of when an agency can
deal with an issue on its own and when must it wait until Congress clearly
addresses the issue.

"The question before the Supreme Court, depending on how they decide it, is
likely to be pretty important to the utility industry," Holmstead said in an
interview last week. "What we said while I was at EPA -- and what I think the
court will say -- is for an issue of this magnitude, it is inappropriate for
EPA to go in and find new authority" under the Clean Air Act.

Holmstead, who now heads the Environmental Strategies Group at the Bracewell &
Giuliani law firm in Washington, wrote the EPA regulatory decision in 2003
denying petitions from the environmental groups to regulate the CO2. The
denial concluded that EPA lacked authority to control greenhouse gases, which
are not defined as "air pollutants" under the Clean Air Act. Even if the
agency had the authority, its control of GHG would not be effective or
appropriate, according to EPA at that time. Further, Holmstead said, Congress
never intended for EPA to try to control climate change under the Clean Air
Act.

Other legal experts said that the Supreme Court could potentially provide
direction for the debate on GHG regulations in the country.

"The debate is really no longer about whether or not climate change is
occurring or whether or not it is caused by human activities," said Ann Klee,
former EPA general counsel who now works as an attorney at Crowell & Moring in
Washington, in a statement. "The real question is whether we, as a country,
can come together in support of an approach that will reduce greenhouse gas
emissions responsibly, while maintaining our dynamic economy and energy
security."

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