Climate Change Confusion and the Supreme Court: The Misguided Regulation of Greenhouse Gas Emissions under the Clean Air Act

Abstract:     
In the spring of 2007, the U.S. Supreme Court ruled in Massachusetts v. EPA that the U.S. Environmental Protection Agency (EPA) must promulgate automobile tailpipe greenhouse gas emission standards under Section 202 of the Clean Air Act (CAA). American environmentalists hailed the Supreme Court's decision as an important victory in the battle to curb global warming. This article argues to the contrary that: 1) a large body of economic work demonstrates that the likely geographic and temporal pattern of costs and benefits to the U.S. from climate change bears no resemblance to the pollution problems that Congress intended to deal with in the Clean Air Act - with moderate climate change predominantly benefiting, rather than harming, the U.S. - so that that the Clean Air Act cannot reasonably be interpreted to cover greenhouse gas emissions; 2) By effectively forcing the EPA to regulate ghg emissions under a statute that was never intended to cover the very different problem of climate change, the Court has changed the policy status quo in a way that makes socially desirable federal climate change legislation less likely; and 3) given the global nature of the greenhouse gas emission problem, unilateral emission limits in the U.S. are likely to be worse than ineffective, in that they will likely have the perverse effect of lessening the incentive for latecomers to climate change regulation (such as China) to themselves take costly action to reduce such emissions. The article concludes by arguing that a sensible formulation of U.S. climate change policy would involve measures to respond both to the long-term threat to the U.S. and the short-term threat to developing countries. There are policy instruments appropriate to these goals: large increases in subsidies for research and development into clean coal and alternative fuels to respond to the long term threat to the U.S.; redirecting foreign aid to fund climate change adaptation in developing countries to respond to the short term threat to developing countries.

Keywords: climate change impacts, positive political theory, clean air act, law and economics

JEL Classifications: K32, Q25, Q20, Q30, D78, Q48

Accepted Paper Series