The Supreme Court Decides Five Environmental Cases in Its 2006-2007 Term

Congressional research reportJun 29, 2007

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Prepared for Members and Committees of Congress

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The Supreme Court decided five environmental cases during its 2006-2007 term, a significant

proportion of the 72 cases it heard. Two decisions involve the Clean Air Act: one ruling that the

act allows the Environmental Protection Agency (EPA) to regulate vehicle emissions based on

their global warming impacts; the other, that EPA regulations validly impose an annual, as

opposed to hourly, emissions change test in determining whether a modification of a stationary

source makes it a “new source” requiring a permit. A Superfund Act decision held that liable

parties who incur cleanup costs beyond their fair share may sue for reimbursement, despite

another provision in the act restricting contribution actions. Another case dealt with the

relationship between the Clean Water Act and Endangered Species Act, holding that the former’s

mandate that EPA “shall” delegate a permitting program to a state when statutory criteria are met

is not subject to the equally unqualified command in the latter that consultation with federal

wildlife-protection agencies occur. The remaining case involves a constitutional issue. It held that

two counties’ “flow control” laws, requiring that solid waste generated within the counties be

taken to processing facilities within the counties, did not offend the Constitution’s “dormant

commerce clause” because the facilities were publicly owned.

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The Clean Air Act and Greenhouse Gas Emissions from New Motor Vehicles.............................. 1

The Clean Air Act and New Source Review ................................................................................... 2

The Superfund Act and “Contribution” Suits .................................................................................. 3

The Clean Water Act/Endangered Species Act Relationship........................................................... 4

Solid Waste “Flow Control” ............................................................................................................ 5

Author Contact Information ............................................................................................................ 6

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he Supreme Court in recent years has accepted for argument only about 70 to 80 cases

each term, so it is a matter of some note when several of them fall into a single area. Such

was the situation in the Court’s 2006-2007 term, with the Court accepting for oral

argument five environmental cases out of 72 altogether. This interest in environmental cases

continues a pattern of several years’ duration; indeed, the Court also decided five environmental

cases in its 2003-2004 term.

The five environmental cases in the 2006-2007 term were a varied lot: two involving the Clean

Air Act, one the Superfund Act, one the relationship between the Clean Water Act and

Endangered Species Act, and one the federal constitutional limits on local solid-waste “flow

control.” The Court’s decisions in these cases were equally varied, ranging from two unanimous

decisions (Duke Energy and Atlantic Research) to two that were 5-4 (Massachusetts and National

Association of Home Builders). In both of the 5-4 decisions, Justice Kennedy was the decisive

fifth vote.

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Massachusetts v. EPA, 127 S. Ct. 1438 (Apr. 2, 2007)

This case marks the debut of global warming in the Supreme Court. It arose from a petition

asking EPA to regulate emissions from new motor vehicles under the Clean Air Act (CAA) on a

novel ground: their status as greenhouse gases (GHGs) promoting global warming. In 2003, EPA

denied the petition, arguing principally that CAA section 202 does not authorize EPA to regulate

vehicle emissions on that basis. Twelve states and several environmental groups then challenged

the denial in the D.C. Circuit.

In 2005, the D.C. Circuit rejected 2-1 the challenge to EPA’s denial. The two judges voting to

reject did so for different reasons, however. One judge agreed with EPA that the section 202

phrase “in his judgment” allows the agency to inject policy considerations into its decision

whether to regulate vehicle emissions—for example, the Administration’s preference for

economic incentives over regulatory mandates. The other judge held that petitioners had not

suffered the injury requisite for federal-court standing, a ubiquitous issue in global warming

litigation.

The Supreme Court decided 5-4 in favor of the petitioner states and environmental groups,

reversing the court below. At the outset, the majority opinion by Justice Stevens held that

petitioners had standing, explaining that the required “injury in fact” for standing was provided

by Massachusetts’s loss of shoreland through global-warming-induced sea level rise, and that

states seeking to establish standing in federal court are entitled to “special solicitude.” On the

merits, the Court held that CAA section 202 empowers EPA to regulate emissions from new

motor vehicles based on their global warming impacts, the statute being “unambiguous” on this

score. Also, EPA may not inject policy considerations into its decision to reject regulating such

emissions, as the agency had done. The section 202 phrase “in his judgment” was not “a roving

license to ignore the statutory text”; EPA’s judgment must relate to whether an air pollutant might

endanger public health and welfare. In two four-justice dissents, Chief Justice Roberts rejected

standing and Justice Scalia denied that EPA had the requisite authority under the CAA.

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The Court’s ruling is likely to have several effects. Most obviously, EPA may find it difficult to

avoid regulating GHGs from new vehicles. According to the Court, “EPA can avoid taking further

action only if it determines that greenhouse gases do not contribute to climate change or if it

provides some reasonable explanation as to why it cannot or will not exercise its discretion.”

Section 202 says that once EPA makes the “judgment” that a pollutant might endanger public

health or welfare, it must issue regulations. Beyond the implications for new vehicles, the Court’s

decision pressures EPA to move against GHG emissions from stationary sources, under Title I of

the CAA. (Indeed, a lawsuit seeking to compel just that was stayed by the D.C. Circuit pending

the Supreme Court’s decision in Massachusetts v. EPA.) The decision also could influence

Congress to act on global warming, partly because the default regulatory structure of the CAA

does not easily accommodate a global phenomenon like climate change. In the courts, the

decision could affect many GHG-related cases now pending, as by supporting a finding of

standing, and could encourage new suits to be brought.

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Environmental Defense v. Duke Energy Corp., 127 S. Ct. 1423 (Apr. 2, 2007)

This case arises from a CAA enforcement action brought by EPA against Duke Energy, charging

it with carrying out 29 “modifications” to its coal-fired power plants without obtaining Prevention

of Significant Deterioration (PSD) permits required for “new sources” under the act.

Environmental groups, including Environmental Defense, intervened as plaintiffs. The dispute

centers on how to measure the emissions from a stationary source of emissions so as to determine

whether a physical or operational change in that source “increases the amount,” in the CAA’s

words, of emissions. The existence of such an emissions increase is pivotal, since it brands the

physical or operational change as a “modification” and the modified source, in turn, as a “new

source” requiring a PSD permit and state-of-the-art pollution controls.

In the district court, the United States argued that Duke’s refurbishment of its aging plants would

allow them to operate more of the time, resulting in increases in annual emissions and triggering,

under EPA’s PSD regulations, new source requirements. However, the district court held that

those regulations impose an hourly standard. Under an hourly standard, a project modification

allowing a plant to operate for more hours but without increasing emissions per hour, as Duke

Energy had done, would not count as an increase in emissions, and so would not trigger new

source requirements. The Fourth Circuit affirmed, explaining that since the CAA states that

“modification” for PSD purposes means the same as for New Source Performance Standards

(NSPS) purposes, EPA regulations elaborating on the statutory definitions also had to be the

same. Thus, it read the agency’s PSD regulations as turning on hourly emissions, just as the

earlier-promulgated NSPS regulations had done.

Environmental Defense—but not EPA—filed a petition for certiorari. Indeed, the United States

opposed the petition, presumably because EPA had adopted the hourly standard in the Fourth

Circuit ruling in its new PSD regulations (70 Fed. Reg. 61081). Then, too, the Bush

Administration had long been unenthusiastic about the PSD enforcement effort against utilities

set in motion in the prior administration. In any event, the Supreme Court took the case over the

United States’ opposition, one of the very few times the Court has accepted a case solely at the

request of an environmental group.

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As with its global warming decision handed down the same day, the Supreme Court ruled for the

“environmental” side—this time unanimously. The Court concluded that just because the CAA

states that “modification” under PSD means the same as under NSPS does not require that EPA

regulations, in elaborating on the statutory definition, also have to be identical. Thus the Fourth

Circuit’s effort to stretch the meaning of the PSD rules to conform them with the earlier NSPS

rule was misguided. The wording of the PSD rule, said the Supreme Court, does not support an

hourly-rate reading. Accordingly, the Court vacated the Fourth Circuit decision and remanded the

case to the Circuit.

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United States v. Atlantic Research Corp., 127 S. Ct. 2331 (June 11, 2007)

The Superfund Act—more formally, the Comprehensive Environmental Response, Compensation

and Liability Act (CERCLA)—imposes liability for cleanup costs on a wide range of persons

connected with a contaminated site. Two scenarios may occur. In the first scenario, there is

government compulsion: a liable party (such as the site owner) waits for EPA to clean up the site

and then demand reimbursement, or EPA orders the liable party to do the cleanup itself. In either

case, the liable party, if made to pay more than its fair share, may turn around and sue other

parties made liable by CERCLA in a “contribution” action. In the second scenario, the liable

party cleans up voluntarily—that is, without waiting for a government cleanup order or costrecovery effort—and then seeks reimbursement from other CERCLA-liable parties.

Two CERCLA provisions authorize, or arguably authorize, such actions, and their relationship

has been heavily litigated. CERCLA section 113(f)(1) authorizes liable parties to seek

contribution from other liable parties “during or following” an EPA action seeking a cleanup or

reimbursement order. CERCLA section 107(a)(B) makes liable parties responsible for necessary

costs of response incurred by private entities. The majority view in the lower-court decisions is

that liable parties may invoke only section 113(f)(1), while innocent parties must use section

107(a)(B).

In Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004), the Supreme Court held

that contribution actions by liable parties under section 113(f)(1) may be brought only once EPA

has filed a civil action against the liable party (ordering cleanup or seeking reimbursement).

However, the Court expressly reserved the question of whether a liable party, such as one barred

from using 113(f)(1), may sue instead under section 107(a)(B). The question is fundamental to the

Superfund program: obviously owners of contaminated sites are more willing to clean up without

waiting for EPA attention if they can get reimbursement for cleanup costs they incur beyond their

fair share. Because it is typical that a contaminated site never receives EPA attention, given the

large number of such sites, this point is particularly important.

The Eighth Circuit decision held that a private party that voluntarily undertakes a cleanup for

which it may be held liable under CERCLA, thus barring it from seeking contribution under

section 113(f)(1), may seek contribution from another liable party under section 107(a)(B). In an

opinion by Justice Thomas, the Supreme Court unanimously affirmed. The availability of section

107(a)(B) actions to liable parties, said the Court, is dictated by the provision’s lack of any

express qualifiers to its reach. Nor does making section 107(a)(B) available to liable parties

render section 113(f) redundant (courts avoid readings of statutory language that make other

statutory language “mere surplusage”). Rather, said the Court, the two remedies complement each

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other: “Section 113(f)(1) authorizes a contribution action to [liable parties] with common liability

stemming from an [EPA] action instituted under §106 or §107(a). And §107(a) permits cost

recovery (as distinct from contribution) by a private party that has itself incurred cleanup costs.”

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National Association of Home Builders v. Defenders of Wildlife, 2007 Westlaw 1801745 (U.S.

June 25, 2007) (No. 06-340)

This case arises from the conflict between the literal commands of Clean Water Act (CWA)

section 402(b) and the later-enacted Endangered Species Act (ESA) section 7(a)(2). CWA section

402 is the heart of the CWA: it imposes a permit requirement for point-source discharges into

waters of the United States. This permit program is initially administered within a state by EPA,

until EPA, on the state’s request, approves delegation of the program to the state. Section 402(b)

states that EPA “shall approve” such delegation if the state satisfies nine criteria, which generally

seek to establish that the state has the legal authority in place to administer as effective a program

as EPA’s. At the same time, however, ESA section 7(a)(2) requires “[e]ach Federal agency” to

consult with the Fish and Wildlife Service (or, for marine species, NOAA Fisheries) in order to

insure that any agency action is not likely to jeopardize endangered and threatened species or

adversely affect designated critical habitat. The question is, does the ESA consultation

requirement act as a tenth precondition for permit-program delegation, even though CWA section

402(b) on its face mandates delegation if the nine criteria stated there are met.

This case arose from EPA’s ultimate position, in connection with Arizona’s request for delegation

of the permit program, that EPA’s decision was not subject to ESA consultation. The immediate

concern is whether an Arizona permitting program, and state permitting programs generally, are

as effective in protecting federally designated endangered and threatened species as the EPAadministered permit program, given that only EPA-issued permits are subject to ESA

consultation. More broadly, how much contraction in the scope of ESA consultation would occur

if other federal programs using nondiscretionary language are exempt from ESA consultation?

The Ninth Circuit held that ESA section 7(a)(2) stated an independent criterion that had to be met.

420 F.3d 946 (9th Cir. 2005). By 5-4, the Supreme Court reversed. Justice Alito, writing for the

majority, recognized that in CWA section 402(b) and ESA section 7(a)(2), the Court faced “a

clash of seemingly categorical—and at first glance, irreconcilable—legislative commands.” To

set up ESA section 7(a)(2) as an independent criterion for permit-program delegations, however,

would be to countenance a repeal by implication of the mandatory “shall” in CWA section 402(b).

Repeals by implication are disfavored by courts. Moreover, the agencies charged with

implementing the ESA—again, the Fish and Wildlife Service and NOAA Fisheries—had resolved

the tension between the two statutes through a regulation stating that section 7(a)(2) “appl[ies] to

all actions in which there is discretionary Federal involvement or control.” (Emphasis added.)

Because the conflicting commands of sections 7(a)(2) and 402(b) create a genuine ambiguity, said

the Court, and because the regulation’s limitation to discretionary acts is a reasonable resolution,

it is entitled to deference.

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Thus, concluded the Court, EPA may approve state delegations of section 404 permitting

authority without ESA consultation. We are now likely to see federal government briefs filed in

litigation over other nondiscretionary federal authorities, arguing that on the basis of National

Association of Home Builders, no ESA consultation is required.

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United Haulers Ass’n v. Oneida-Herkimer Solid Waste Management Authority, 127 S. Ct. 1786

(Apr. 30, 2007)

State and local restrictions on the interstate flow of municipal solid waste have long interested the

courts, which have repeatedly struck them down as incompatible with the “dormant commerce

clause.” The dormant commerce clause, held to be implicit in the Constitution’s Commerce

Clause (Art. I, sec. 8, cl. 3), addresses state and local laws that either (a) expressly discriminate

against interstate commerce, which are tested under a “strict scrutiny” test and almost always

struck down; or (b) burden interstate commerce in a nondiscriminatory fashion, which are tested

under a lenient, balancing test and often sustained. The interstate-waste court decisions, including

five from the Supreme Court, have applied strict scrutiny to invalidate state and local restrictions

on both import of solid waste from other states and export of waste to other states—the latter

called “flow control.” Flow control ordinances typically require that all waste generated within a

locality be taken to a locally designated transfer or disposal facility.

United Haulers concerns flow control. The case arose against the backdrop of a 1994 Supreme

Court decision striking down a town flow control ordinance, applying the strict scrutiny test.

C&A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383 (1994). The designated transfer facility

in Carbone was privately owned, while the designated facilities in United Haulers were public.

The question was, does this public-private distinction make a difference to the dormant commerce

clause analysis?

The district court found the county flow control laws at issue here unconstitutional under

Carbone, reading that decision to require strict scrutiny and reject nearly all flow control laws.

The Second Circuit reversed, finding the public-private distinction to be dispositive—thus

allowing flow control in this case.

By 6-3, the Supreme Court affirmed. Writing for the majority, Chief Justice Roberts pronounced

that flow control ordinances benefitting public facilities, while treating all private companies the

same, do not discriminate against interstate commerce for purposes of the dormant commerce

clause—and thus do not trigger strict scrutiny. Treating public and private facilities differently

under the clause makes sense, the majority explained, for several reasons. First, public and private

facilities have very different objectives—only government has a duty to protect the health, safety,

and welfare of its citizens. Given this difference, laws favoring local government facilities are

less likely to be motivated by economic protectionism than those favoring private entities.

Second, treating public facilities the same as private ones under the dormant commerce clause

would lead to “unbounded interference by the courts with local government.” And third, waste

disposal has long been a traditional function of local government, suggesting that federal courts

should be “particularly hesitant” to interfere.

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Since strict scrutiny did not apply, the Court moved on to the lenient, balancing test for

nondiscriminatory burdens on interstate commerce, and found the test satisfied. Thus, the flow

control ordinances were upheld.

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(name redacted)

Legislative Attorney

[redacted]@crs.loc.gov, 7-....

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