ClimateIntel.com

The DC Circuit Court held oral arguments yesterday in State of North Carolina v. EPA, (No. 05-1244), a case challenging the EPA’s Clean Air Interstate Rule (CAIR). The CAIR program modifies the Title IV Acid Rain Program for 28 Midwestern and eastern states, establishing a cap-and-trade program to achieve reductions in sulfur dioxide and nitrogen oxide emissions from power plants.

CAIR requires that states cut sulfur dioxide (SO₂) emissions by an amount greater than required under the acid rain program, which also uses a cap-and-trade system. A potential consequence of mandating deeper emissions cuts is that the emissions allowances could lose their value due to excess supply in the market. CAIR addresses this situation by requiring emitters to surrender allowances at an accelerated rate. For example, if a state chose to regulate only electric generating units (EGUs), the surrender ratio will initially be two Title IV credits per ton of SO₂ emissions. If a facility had a 10,000 ton Title IV allowance, the facility would then be authorized to emit only half that amount - 5,000 tons and would be required to surrender the other 5000 credit tons, thereby preserving the value of other allowances.

Petitioners representing several states and industry parties claimed that this portion of the CAIR program violated the Clean Air Act (CAA), and that EPA did not have authority to change the allocation and surrender procedures specified in Title IV. Petitioners argued that Section 404 of the CAA specifies the initial allowance allocations for individual power plants. The petitioners, led by South Carolina Electric and Gas Co., argued that because Congress was so specific in establishing the program, EPA had no authority to change the allocation and surrender program.

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A federal court in California today issued a major ruling in the battle between states and the auto industry over who has the authority to regulate emissions from motor vehicles.

In Central Valley Chrysler-Jeep v. Goldstone, Judge Ishii of the Federal District Court for the Central District of California ordered that California may properly enact emissions regulations that are more strict than the federal fuel economy standards. The Plaintiffs, led by the Association of International Automobile Manufacturers, had argued that such regulations were pre-empted by federal law, specifically the Energy Policy and Conservation Act (EPCA). (more…)

Seven states and the City of New York filed suit in July 2004 against the five electrical utility companies alleged to be the country’s largest emitters of carbon dioxide. In Connecticut v. American Electric Power, Inc., the plaintiffs alleged that the power plants’ carbon emissions cause a public nuisance by contributing to climate change.

Plaintiffs argue that “Defendants’ emissions of carbon dioxide, by contributing to global warming, constitute a substantial and unreasonable interference with public rights in the plaintiffs’ jurisdictions, including, inter alia, the right to public comfort and safety, the right to protection of vital natural resources and public property, and the right to use, enjoy, and preserve the aesthetic and ecological values of the natural world.” As relief, the plaintiffs sought an order capping and eventually reducing the emissions generated by defendants’ plants.

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Automakers and dealers challenged California’s 2004 rules mandating emissions standards for new cars stricter than those required under federal law. Citing the Clean Air Act and the Energy Policy and Conservation Act, the plaintiffs argued that federal emissions regulations preempted the California regulations. Central Valley Chrysler-Jeep v. Witherspoon.

The Clean Air Act authorizes California to seek a waiver from EPA to create its own regulations. Plaintiffs argued, however, that Energy Policy and Conservation Act preempts a state agency from regulating fuel efficiency because any regulation requiring reduction in tailpipe carbon dioxide emissions is equivalent to the regulation of fuel efficiency. Accordingly, plaintiffs claimed, Energy Policy and Conservation Act effectively trumped the waiver provisions of the Clean Air Act.

In January 2007, the district court stayed the case and enjoined implementation of California’s regulations pending the Supreme Court’s decision in Massachusetts v. EPA. The parties briefed that issue in July 2007. California moved to dismiss the suit based on the results of the Massachusetts v. EPA decision, arguing that the remaining issues in the case are moot. The plaintiffs argue that the California rules would cause severe impacts and are still pre-empted by federal law.

Oral arguments on the motion to dismiss were heard on November 19, 2007, and a decision is expected shortly.