ACRU

Court Rejects Judicially Mandated Cap and Trade

This excerpt by ACRU Senior Legal Analyst Ken Klukowski was published June 20, 2011 on The Washington Examiner website.

Judges cannot make their own cap-and-trade system for carbon emissions, but only because the U.S. Environmental Protection Agency is already doing it, the Supreme Court ruled Monday in a major global-warming case.

Several states, led by New York and Connecticut, pursued a tenuous theory in court, arguing that, since carbon emissions cause global warming, which in turn leads to natural disasters, misery and death, then courts ought to be able to fix it as a public nuisance.

The states sued five of America’s largest power companies in the case American Electric Power v. Connecticut, seeking a court order that they cut their carbon emissions by whatever amount the judge thought appropriate. The lower court dismissed the case, but the U.S. Court of Appeals for the 2nd Circuit sided with the states.

Public nuisance is a tort governed under common law (i.e. judge-made law). But Congress passed the Clean Air Act and charged EPA with administering it.

When President Obama took office, even his Democrat-controlled Congress didn’t pass a cap-and-trade law because they understood a $2 trillion burden would strangle our economy.

In the months since, Obama’s EPA decided to create a cap-and-trade system through regulations, neatly sidestepping the dual impediments of democracy and the separation of powers.

EPA is still making those regulations. So one issue was whether EPA’s rulemaking displaces any federal common-law nuisance claim.

The Supreme Court unanimously held that it does. Writing for the court, Justice Ruth Bader Ginsburg said that since Congress has empowered the EPA to make regulations under the Clean Air Act, this matter is now one for agency experts.

Courts still have a role, but it’s not to design cap-and-trade. Instead, EPA’s regulations are subject to judicial review after they’re issued to determine whether they’re arbitrary or capricious, just like other regulations. But it’s a role of reviewing policy instead of making policy.

This part of the court’s decision is great news; we don’t have to sit through decades of judges creating different systems in all 94 judicial districts in America.

But the Supreme Court split on whether it even had jurisdiction to hear this case, either because of lack of standing or because this presents a political question.

Before addressing the merits, the court examined whether the states had standing to sue. Article III of the Constitution requires plaintiffs to have standing, meaning that they must have suffered a concrete injury, traceable to the defendant, that a court can redress by granting the requested relief.

In one of the worst administrative law cases in history, Massachusetts v. EPA, the Supreme Court held 5-4 that states do have standing to sue over global warming. This case raised that issue again.

AEP also argued that the district court was correct that this case could not be decided by courts because it falls within the political question doctrine. Several political question factors were present here, such as the lack of judicially manageable standards for a cap-and-trade system.

The justices split 4-4 on jurisdiction. Four justices (the conservatives) argued the states lacked standing. Four justices (Anthony Kennedy and three liberals) argued the court had jurisdiction and that this was not a political question.

With an evenly divided court, the 2nd Circuit’s decision on that issue stands, so jurisdiction exists in this case. Justice Sonia Sotomayor was recused from this case.

With her vote, there would be a majority for court jurisdiction of cap-and-trade. So this case is an alarming sign of expanding judicial power over the economy.

Although we dodged a bullet this time regarding public nuisance claims, more cases are coming. There will be more global warming cases, and five justices think they’re fit to make these decisions.