The EPA dog may catch the climate change bus, but it probably will not end climate change regulation.
“In any area where the Commission lacks the authority to regulate, it equally lacks the power to preempt state law.”
That was the rationale behind the U.S. Court of Appeals for the D.C. Circuit’s decision in Mozilla Corporation v. FCC. The decision upheld the order of the Federal Communications Commission (FCC) to repeal its “net neutrality” rule, which required and regulated nondiscriminatory broadband internet access, but reversed the FCC’s holding that, in disclaiming its jurisdiction to regulate broadband, it was also preempting the states from doing so.
Now, the U.S. Environmental Protection Agency (EPA) has similarly ruled that it lacks jurisdiction to regulate greenhouse gases while also asserting that its actions foreclose the states from regulating greenhouse gases.
An EPA victory in disclaiming its own authority to regulate in this area is far from a certainty. The U.S. Supreme Court already found in 2007 that, under the unambiguous language of the Clean Air Act, greenhouse gases are “air pollutants.” EPA’s prior regulation of greenhouse gas emissions rested on its “endangerment finding”—its conclusion that those emissions were a significant enough “danger to public health” to trigger EPA’s duty to regulate. EPA’s proposed rule to reverse its endangerment finding thus relied heavily on a U.S. Department of Energy study suggesting that greenhouse gas regulation would have little impact on global climate change.
After a federal district court found that the study was conducted by an unlawfully formed advisory committee, however, EPA’s final rule dropped the endangerment finding rationale. Instead, EPA argued that it never had authority to regulate greenhouse gas emissions because the Clean Air Act only allowed it to regulate local and regional emissions, not global impacts of air pollutants. EPA now faces opponents who will likely argue that the Supreme Court rejected this rationale a generation ago.
But state actions in the aftermath of the Mozilla case suggest that even an EPA court victory on disclaiming its jurisdiction to regulate greenhouse gases will not preempt existing state efforts to combat climate change. It may even embolden states to go farther.
In anticipation of the FCC’s repeal of net neutrality regulation during the first Trump Administration, several states acted to preserve many of the rule’s features. Oregon, New Jersey, and Vermont all enacted laws directing state contractors to condition their purchases of telecommunications service on the providers’ agreement to net neutrality principles. Maine, California, Colorado, and Washington directly barred discrimination in service by broadband internet service providers. The U.S. Courts of Appeals for the Second and Ninth Circuits have since rejected challenges to the New York and California net neutrality laws, finding that neither law conflicted with the Federal Communications Act or other federal law so as to be preempted and rendered void.
Like the Federal Communications Act, the scope of the Clean Air Act leaves room for state law. The act provides, for example, that “air pollution control at its source is the primary responsibility of States and local governments.” For several decades, states have adopted and enforced renewable portfolio standards and guidelines that require utilities to supply increasing percentages of their electricity from renewable resources. If the Clean Air Act really left no room for state law, states could not set these priorities for renewable energy.
None of this is to suggest that states are assured success in defending against challenges to state climate change lawsuits and legislation. In late February, the Supreme Court agreed to hear Suncor Energy, a case filed by Suncor and several other oil companies. The companies’ petition challenged a decision by the Supreme Court of Colorado that upheld Bolder County, Colorado’s right to sue those companies under state nuisance law for climate-change-related damages.
But, even if the Supreme Court were to agree that the Clean Air Act directly preempts state lawsuits or state laws regulating greenhouse gas emissions, a victory on that issue might be short-lived. Assume that the Court upholds EPA’s determination that the Clean Air Act does not give the agency the power to regulate greenhouse gas emissions. In that event, the Mozilla decision would undermine the oil companies’ claim of direct conflict between state and federal authority.
To be sure, states as purchasers of fossil fuels do not have the same leverage that they enjoy as large purchasers of telecom services. It is unlikely, for example, that they would be able to condition state purchases from fossil fuel producers on the producers reducing their overall carbon emissions. The states would likely need the oil more than the sellers need the states as buyers.
Still, states are large purchasers of electric power. Some states might consider conditioning their purchases on utilities’ agreement to reduce their reliance on fossil fuels. And, since there would no longer be a conflict between direct state regulation of greenhouse emissions and the Clean Air Act, it is likely that nothing would prevent a state from implementing such measures.
There is an important caveat, though. The Mozilla holding does not assure states of the right to regulate greenhouse emissions if EPA is allowed to deregulate. The Supreme Court almost certainly agreed to hear Suncor’s case to resolve a conflict between the U.S. Court of Appeals for the Second Circuit and the Supreme Courts of Colorado and Hawaii on whether, under the Constitution’s Supremacy clause, federal common law—judge-made law—preempts state regulation of greenhouse gas emissions even if the Clean Air Act does not. The case could leave a small opening for the argument that federal common law preempts state efforts to regulate greenhouse gases.
The question presented in Suncor’s case—whether federal law precludes states from suing parties over the effects of greenhouse gas emissions—certainly encompasses any direct conflicts between state law nuisance claims and the Clean Air Act. Neither the Second Circuit, nor the Hawaii and Colorado courts, found that the Clean Air Act completely preempted state law nuisance claims. But even if Suncor convinces the Supreme Court otherwise, those direct conflicts would disappear if the EPA rule were affirmed.
But the question the Court has accepted for review also includes Suncor’s argument that Boulder’s nuisance claims are preempted by federal common law. On that point, the Second Circuit held that “state law claims were displaced by federal common law” and “transboundary greenhouse gas emissions are, by nature, a national—indeed, international—problem and therefore must be governed by a unified federal standard.” In March, the Supreme Court of Maryland also endorsed this view in a divided opinion. The Colorado and Hawaii Supreme Courts, by contrast, agreed with the plaintiffs that the enactment of the Clean Air Act would have displaced federal common law entirely. Indeed, they went a step further, concluding that before passage the Clean Air Act, there was no applicable federal common law.
Even a Supreme Court decision recognizing the applicability of federal common law limiting state nuisance claims with transnational effect would not discourage an increase in state nuisance lawsuits, the first of which predated EPA’s new rule. Nor is it likely to affect state legislatures from regulating greenhouse gas emissions emanating from within their borders. States will simply craft their claims or statutes to focus on the actions of the defendants within their borders. And, if the courts were to uphold EPA’s disclaimer of jurisdiction to regulate greenhouse gas emissions, the post-Mozilla efforts of states to regulate broadband suggest that state climate-related initiatives—in the form of legislation and lawsuits—are likely to increase.
