A Massachusetts muddle

Nov. 29, 2010
When business people have to guess about the future, they become cautious about activities crucial to economic welfare, such as investment and hiring.

When business people have to guess about the future, they become cautious about activities crucial to economic welfare, such as investment and hiring. Thanks to the adjudication of science, business people in the US must guess about their legal and statutory liabilities for greenhouse-gas (GHG) emissions. Implications for national prosperity and employment are obvious.

Behind the mystery is a 2007 Supreme Court decision that essentially declared GHGs to be pollutants subject to regulation by the Environmental Protection Agency under the Clean Air Act. Although the case addressed issues of legal standing and definitions, the ruling had the effect of giving judicial sanction to one position in a political dispute and therefore to controversial scientific arguments on which it was based. It also bred regulatory and legal initiatives remarkable not only for their potential to prevent work but also for their jolts to reason.

EPA's new step

The Obama administration's frenetic EPA, having made the requisite finding in 2009 that GHGs threaten public health, this month took another step toward takeover of the energy economy. It issued guidance for large emitters of GHGs that require use of "best available control technology" in new or greatly modified facilities. EPA acted under its "tailoring rule," which concentrates GHG regulation to large emitters in a distinction of convenience not mentioned in the law.

The tailoring rule might not survive legal challenges filed against it. But industrial GHG emitters can't afford to wait out judicial machinery. EPA's regulations take effect Jan. 2. In fact, the agency left so little time between issuance of its guidance and the effective date of regulation that compliance might be impossible. "The EPA is railroading job-killing regulations onto states, localities, and America's businesses during a time of uncertain economic recovery, without giving those affected adequate time to review, provide comments, or even implement the new regulations," said Howard Feldman, American Petroleum Institute director of regulatory and scientific affairs.

While EPA storms the industrial wall, a litigious siege lurks over the horizon. Hinging arguments to the Massachusetts decision, plaintiffs in a number of lawsuits claim to have been harmed by natural events intensified by global warming caused by GHG emissions of defendants, typically oil and gas companies and coal-burning utilities and industries. The obviously opportunistic lawsuits force courts to decide questions of scientific causation in an area on which science itself remains indecisive. A few cases somehow have survived defendants' righteous attempts to have them dismissed for lack of merit.

One such case is being closely watched. Called Comer v. Murphy Oil, it relates to damage from Hurricane Katrina, which Murphy, 32 other energy companies and utilities, and API are alleged to have worsened. Although the original court dismissed the case, a panel of judges ruling on a plaintiffs' appeal let it proceed. After defendants won a rehearing by the full court, judges started recusing themselves because of relationships with one or more of the many defendants. By April, the court had lost its quorum. In May, it issued a surprise ruling vacating the earlier decision that had let the case advance and noting that parties had the right to appeal to the Supreme Court.

Costly muddle

So tort hazard looms while industrial emitters of GHGs find themselves under regulatory pressure from EPA. Much about future business conditions thus depends on legal challenges to the agency's offensive and on resolution of issues left open in the Comer case. Meanwhile, business decision-makers must guess when they plan. And guessing means investing more cautiously than they otherwise would—and employing fewer people.

The Supreme Court created this costly muddle with a decision in which it encased in legal certitude scientific assertions that are anything but certain—that are, in fact, altogether disputable. Lawsuits now vining up the legal lattice grow out of distortions that the court cannot have intended when it decided the Massachusetts case. Justices must recognize the dimensions of their mistake and act accordingly.

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