It's Red States vs. Blue in Legal War Over EPA Greenhouse Gas Rules

Published: October 12, 2010

Just like the cap-and-trade bills that narrowly cleared the House and floundered in the Senate, challenges to the Obama administration's climate program have highlighted a bitter divide between industry-heavy states and their environment-minded counterparts. All of them are now lined up for a high-stakes legal showdown that will allow a few federal judges to decide what 535 members of Congress have not.

The states involved in the litigation are closely divided. Seventeen are asking to review EPA regulations, while 20 are supporting one or more EPA rules, according to a Greenwire analysis of federal court records. Thirteen states have not taken a side.

Pat Parenteau, an environmental law professor at Vermont Law School, said he cannot think of any environmental case that has gotten so much attention from the states. Just more than 20 states got involved in Massachusetts v. EPA, the 2007 case in which the Supreme Court ruled that EPA had to consider regulating greenhouse gases under the Clean Air Act.

One reason is that the political stars have aligned to make environmental regulations a hot-button issue on the campaign trail, Parenteau said. And while the Supreme Court's 2007 decision had huge implications for the states, "the stakes are higher here," he said. "After all, we are talking about all of the major economic sectors being affected by these regulations."

Though it is only in the preliminary phase, the court battle is already daunting in terms of paperwork. About 90 legal challenges to the climate program have been filed so far, drawing filings from more than 140 businesses, trade groups, advocacy groups and lawmakers.

Lawmakers were warned about this scenario, experts say.

Rep. John Dingell (D-Mich.), one of the architects of the Clean Air Act, often told his colleagues that if they did not reach an agreement, the climate debate would become a "glorious mess" of regulations and litigation. That is where things are headed now, said Eric Pooley, the deputy editor of Bloomberg BusinessWeek, during a Washington, D.C., panel discussion last week on the future of U.S. climate policy.

There is a feeling that as greenhouse gas regulations begin to take effect, environmentalists and businesses are likely to end up battling with the states over permits for every plant, said Pooley, who chronicled the cap-and-trade debate in his book "The Climate War."

"I recall that when the folks at the Environmental Defense Fund were just starting off, their unofficial motto was 'sue the bastards,' and they may be dusting that one off," he said. "The action is very much going to be moving now from the legislative arena to the legal arena, and I think that it may take several years of combat before the various parties are ready to get back to the table and try to work out a legislative solution."

Climate geography

Placed on a map, the states' stances in the court battle look familiar -- they closely mirror their votes in the last presidential election.

In 32 of the 37 states that have taken sides, states that gave their electoral votes to Obama in 2008 are now supporting EPA's climate program, and vice versa.

A state's presidential vote in 2008 provides a better indicator of the state's position in the court battle than the party affiliation of the state's governor or attorney general. It also predicts a state's stance better than the state's emissions of greenhouse gases per capita as compared to the national average.

The states' positions hew closely to a broader split in sentiments on climate change, said Matthew Kahn, an economist at the University of California, Los Angeles, who studies the geography of climate politics.

After looking over a map of the breakdown in the court battle, Kahn said the data seem to reflect what he called the "Prius factor" -- the divide between wealthier, more educated states that are sympathetic to green causes and blue-collar, more carbon-intensive states that would stand to lose the most if greenhouse gas regulations ended up imposing heavy costs on the economy.

That divide could also be called the "Obama factor," Kahn said, because the Prius-loving contingent was a major force behind the president's 2008 victory. On the flip side, studies have shown that representatives of conservative voters, poor communities and districts with high per capita emissions are the least likely to vote for carbon regulations, he said.

"The question is, are they thumbing their nose at what Al Gore wants, or is it explained by a simple economic theory of self-interest?" Kahn asked. "These are not the richest states to start with, and you're potentially making these people even poorer."

The opposition to EPA has been led by Alabama, Texas and Virginia, all of which claim that the agency's rules violate the Clean Air Act and upend the partnership between state and federal authorities.

EPA's regulations have provided campaign material for state officials such as Texas Gov. Rick Perry and Attorney General Greg Abbott, two Republicans who are up for re-election this year. Even if EPA's new regulations take effect as scheduled on Jan. 2, 2011, Texas will not "pledge allegiance to its rules," Perry and Abbott wrote this summer in a letter to the agency.

Those states have faced resistance from a coalition that includes Arizona, California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.

The supporters, many of which were plaintiffs in Massachusetts v. EPA, are arguing that the climate regulations are justified by the previous Supreme Court decision and by the scientific evidence that greenhouse gases endanger human health and welfare.

Though most of the states backing EPA's climate regulations have praised the program, they will not necessarily echo EPA's arguments in court, California Attorney General Jerry Brown (D) wrote in a June filing that was joined by more than a dozen states.

"EPA and the states may have different interests," Brown wrote, referring specifically to greenhouse gas emissions standards for cars and light-duty trucks. "This is made evident by the fact that the states had to sue EPA in Massachusetts v. EPA to force action that led to the endangerment findings and these vehicle rules."

The polarized response to the greenhouse gas regulations is a defeat for the Obama administration, which has taken heavy flak from the right as it has tried to frame climate change as a nonpartisan issue. Democrats and Republicans alike support environmental protection for its economic and public health benefits, EPA Administrator Lisa Jackson has often said in her speeches.

"We have to meet people where they are, and talk to them about environmental issues in a way that they will understand. That includes rising above partisanship," Jackson told the Commonwealth Club of San Francisco last year. She was in the Bay Area to attend a climate summit sponsored by California Gov. Arnold Schwarzenegger -- a Republican whose state has backed EPA in court.

"If we're slipping in the polls, we can't ask climate change to wait," Jackson added. "We can't say that human health is next year's issue."

Path forward

The nexus of the current court battle stands two blocks from the Capitol at the U.S. Circuit Court of Appeals for the District of Columbia. Once decisions come down from the D.C. Circuit, which has jurisdiction over challenges to Clean Air Act regulations, only the Supreme Court is able to review them.

And as long as the Obama administration moves forward with its plan to regulate greenhouse gases, the chaos at the courtroom on Constitution Avenue will turn up the heat on Capitol Hill, said William Antholis, managing director of the Brookings Institution.

"When the courts weigh in on something, they can change the front, back and center of the regulatory structure. That presents enormous uncertainty, particularly to business, but also to environmentalists and other people who care about the issue," said Antholis, who recently co-authored a book on the politics of climate change. "That said, amid legislative uncertainty, people are going to rush to the courts to modify the playing field to best advantage their team. This is going to become the battleground for the near future."

With the challenges in the preliminary phase, the judges in the case must first consider requests to place a temporary stay on EPA's regulations. Filings are being submitted on that point right now.

The court will eventually have to decide broader questions, such as whether EPA complied with the Clean Air Act when it issued regulations to limit greenhouse gas emissions from cars, light-duty trucks and large stationary sources such as power plants.

States may end up making the difference in the case, which could eventually follow Massachusetts v. EPA to the Supreme Court. The previous court battle, which started with a lawsuit from environmental advocacy groups, probably would have turned out differently if states had not led the charge, said Parenteau of Vermont Law School.

That is because Justice Anthony Kennedy, who provided the fifth vote for EPA's authority to regulate greenhouse gases, seemed particularly sympathetic to the argument that the states were acting parens patriae -- as "parents of the nation" -- to protect their citizens from the harm caused by climate change. While questioning the attorney for the state of Massachusetts, Kennedy suggested the states had that special role, Parenteau said.

"If it had been the Sierra Club, I don't think you get that vote," he said. "I have to give the environmental groups credit -- they had the good sense to get out of the way and let the states take the lead."

It is still unclear what role states will play in the current round of lawsuits, which is still taking shape. States, businesses and environmental groups have taken sides on every aspect of EPA's climate program, which consists of five rules finalized in 2009 and 2010.

Many legal experts agree that one rule -- the "tailoring rule" -- is the weakest link in the chain. But few people are venturing guesses about what would happen if the D.C. Circuit were to strike down a decision to spare smaller sources such as schools, restaurants or apartment buildings.

The tailoring rule is far more vulnerable than the science behind EPA's decision, said Kevin Holewinski, an environmental attorney at Jones Day LLP who represents utilities in several climate change-related cases.

Texas and Virginia Attorney General Ken Cuccinelli (R) have focused much of their attention on the "endangerment finding," in which EPA concluded that greenhouse gases pose a threat to human health and welfare. They say the agency should have rethought its endangerment finding in light of the discovery of errors in the 2007 report by the Intergovernmental Panel on Climate Change, as well as the controversy over leaked e-mails from climate researchers at the United Kingdom's University of East Anglia.

"It is doubtful that the agency had the authority to set higher thresholds than the Clean Air Act allows, but it is hard to imagine how a court would respond," Holewinski said, referring to the tailoring rule. "It's not that frequently ... that parties are successful in having an entire rulemaking invalidated. Looking at the challenges to the endangerment finding as an example -- good luck there. I just don't see any of those challenges succeeding, though I see why people are making them."

Tough decisions in 13 states

In places where voters have a solid stance on climate change, taking a side allows governors, attorneys general and other state officials to score easy political points. But in many of the 13 states that have chosen not to weigh in, the calculus is not so easy.

In most of these neutral states, the governor's party is at odds with the state's presidential vote in 2008. Presented with the choice of alienating their party base or their voters, some governors have apparently made the easier choice of staying out of the fray.

One of them is New Jersey Gov. Chris Christie, a Republican who has not taken a side in the court battle over EPA's climate program.

Just a few years earlier, when Democratic Gov. Jon Corzine was in charge and Lisa Jackson was running the state's Department of Environmental Protection, New Jersey was one of the states suing EPA in an effort to make the agency regulate greenhouse gas emissions. This time around, the state is an outpost of neutrality -- the only Northeastern state that is not supporting EPA in the legislation.

Matt Elliott, who tracks climate change and clean energy for the advocacy group Environment New Jersey, said the state's decision to avoid the federal court fight has not drawn much attention. But it is not surprising, he said.

Since taking office in January, Christie has acted as if he "is trying to figure out where he's going to come down on climate change," Elliott said.

He chose to place a hold on the state's 10-year energy and climate plan, suggesting he had more concerns about costs than his Democratic predecessor. At the same time, he has been a vocal supporter of offshore wind development, garnering him the praise of climate activists.

Even if the governor does not like EPA's greenhouse gas regulations, it might be hard to stake out that position in New Jersey, which was the second state, after California, to impose a cap on its own greenhouse gas emissions. The measure, which had a slew of Republican co-sponsors, cleared the state's assembly in 2007 by a 72-8 vote.

"The idea of reducing global warming and securing energy independence is very popular with New Jersey voters," Elliott said, but with many Republicans in other states fiercely opposed to cap and trade and federal greenhouse gas regulations, "now Governor Christie is in a spot where being a champion for global warming may not fit in with his role as an emerging leader in the Republican Party."

The opposite choice has been put before Ohio Gov. Ted Strickland and West Virginia Gov. Joe Manchin, two Democrats whose coal-dependent states would struggle more than most to adjust to constraints on carbon. Both of their states have avoided the court battle entirely, even as Strickland and Manchin have publicly criticized the Obama administration's decision to move forward with the greenhouse gas rules.

Manchin, who is running for Senate, opposed the cap-and-trade bill that was passed by the House last year, though some Republicans have sought to label him as a supporter of carbon pricing because he signed a renewable energy standard into law in West Virginia.

Strickland, who is up for re-election this fall, has repeatedly asked Congress and the Obama administration to delay EPA's greenhouse gas regulations. Last month, he gave his support to a proposal from Sen. Jay Rockefeller (D-W.Va.) that would prevent the agency from regulating greenhouse gases for two years.

Ohio's Democratic attorney general, Richard Cordray, has not taken a side in the court battle. Under his predecessors, the state had sided with EPA when the George W. Bush administration argued that it was not required to regulate greenhouse gases under the Clean Air Act.

"While I do not dispute the need to address climate change, I strongly believe that comprehensive federal legislation which accurately and fairly takes into account, and properly addresses the varying economic impacts on the diverse states is the best way to tackle the issue," Strickland wrote in a March letter to EPA. "A regulatory approach, acted upon without legislative consideration of its effect on states that have a heavy industrial base and coal-generated electric production, will be financially and economically devastating for Ohio."

Meanwhile, in a seven-state swath that stretches across the American heartland, Democratic governors have also avoided taking sides. All of the states -- Tennessee, Arkansas, Missouri, Kansas, Colorado, Wyoming and Montana -- went Republican in 2008, and all of them are among the highest-emitting half of U.S. states when it comes to greenhouse gases per capita.

Kansas, which has a Democratic governor in Mark Parkinson and a Democratic attorney general in Steve Six, has tread lightly on the issue.

The state has not taken a side on EPA's greenhouse gas regulations, but Six urged the Supreme Court last month to overturn an appeals court ruling that would enable states and environmental groups to sue power plants and other emitters themselves.

In the case, AEP v. Connecticut, the New York-based 2nd U.S. Circuit Court of Appeals decided that greenhouse gases qualified as a "public nuisance" under common law. The court's decision said a coalition of states and environmental groups could proceed with a lawsuit against large utilities, based on the idea that their emissions were harming the states through their contribution to global warming.

That case, along with a similar case from the 5th Circuit, could be heard by the Supreme Court this term. Businesses are worried that states and environmental groups will file a slew of nuisance lawsuits if Congress and the Obama administration are not perceived to be moving quickly enough, said Holewinski of Jones Day.

Six said in a statement last month that he considers the courtroom the wrong place to decide the nation's climate policies. His request to overturn the decision was joined by several states that have opposed EPA's climate program in court, as well as Wyoming, which has not taken a stance.

"Congress and the executive branch have only recently begun to debate regulating greenhouse gas emissions, and the complex question is best left to our policymakers," Six said. "Allowing the courts to short-circuit our political process could subject Kansas industry to unforeseen liability through lawsuits, and those lawsuits could be brought in courts outside of Kansas."

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