Latest / Columbia Energy Exchange / Michael Gerrard and Jeff Holmstead on Next Chapter in US Climate Policy

Transcript

Michael Gerrard and Jeff Holmstead on Next Chapter in US Climate Policy · Columbia Energy Exchange

• 0:00
  Bill Loveless:
• 0:01
  Just a quick note before we start today's episode. We've been responding quickly to the conflict in Iran, including with a new limited series called the Iran Conflict Brief. That work meant delaying the release of this episode, which we're glad to bring to you today
• 0:02
  Jeff Holmstead:
• 0:03
  In this Boulder case, Boulder, Colorado case. If it does come to the merits, we'll almost certainly be decided before we know the fate of the endangerment finding.
• 0:04
  Michael Gerrard:
• 0:05
  There are going to be a whole lot of motions over the next several months. A whole lot of lawyers are going to be kept very busy.
• 0:06
  Bill Loveless):
• 0:07
  The climate policy landscape in the US is in flux. Last month, the Environmental Protection Agency repealed its own power to regulate greenhouse gases. Two weeks later, the Supreme Court said it will hear a case which the city of Boulder, Colorado brought against the oil company's ExxonMobil and Suncor that could determine the fate of lawsuits brought by cities and states against fossil fuel companies over damages from climate change.
• 0:08
  Since its adoption in 2009, EPA's endangerment finding, which says that greenhouse gases harm public health and welfare, had formed the legal foundation for major federal climate regulations. In announcing its rescission, EPA administrator Lee Zeldin called it the largest single deregulatory event in US history. But the repeal may be held up in courts for years, and it's just one piece of a complicated regulatory puzzle.
• 0:09
  So how might these major policy swings play out in practical terms, what are the near and long-term stakes at the federal and state level? What are the reactions from and the preferences of industry? And how might all of this play out in terms of US greenhouse gas emissions?
• 0:10
  This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I'm Bill Loveless. Today on the show, Michael Gerrard and Jeff Holmstead.
• 0:11
  Michael is the founder and faculty director of Columbia University Sabin Center for Climate Change Law. Before joining Columbia in 2009, Michael practiced environmental law in New York for three decades. Jeff is a partner and co-chair of the Environmental Strategies Group at Bracewell, LLP, an international law firm. From 2001 to 2005, he served as the assistant administrator for air and radiation in the US Environmental Protection Agency, during the administration of President George W. Bush. We talked about the significance of the endangerment finding and the potential legal arguments for and against EPA’s decision as it works its way through the courts. Michael and Jeff also discussed how different industrial sectors are reacting to the repeal of the endangerment finding and what impact it might have on the regulation of emissions across the US. And they laid out the stakes for fossil fuel companies, now that the high court has agreed to take up the Colorado case.
• 0:12
  Here's our conversation. Michael Gerrard. Jeff Holmstead. Welcome back to Columbia Energy Exchange.
• 0:13
  Michael Gerrard (03:25):
• 0:14
  Good to be with you.
• 0:15
  Jeff Holmstead (03:26):
• 0:16
  Thank you. Pleasure to be here.
• 0:17
  Bill Loveless (03:28):
• 0:18
  Well, I always appreciate the opportunity to speak to each of you about environmental law, regulation and policy, and there's certainly a reason to do that these days with what has been happening most recently here in Washington DC. And so I know this will be a great conversation. And when it comes to emissions policy, there have been two big developments lately that are getting a lot of attention. One, of course, is the Environmental Protection Agency's decision to repeal the endangerment finding, which for years has been the basis for regulation of greenhouse gas emissions in the United States. And the other is a decision by the Supreme Court to hear an attempt by the oil industry to fend off dozens of lawsuits in states and cities seeking compensation for the impacts of climate change. Michael, then Jeff, just how significant are these two developments coming so close together?
• 0:19
  Michael Gerrard (04:28):
• 0:20
  Well, I think the revocation of the endangerment finding is extremely important. It wipes out EPA’s perceived authority to regulate greenhouse gases, and the recent action by the Supreme Court could wipe out all of these dozens of lawsuits brought by cities and states, but the revocation of the endangerment finding interacts negatively with that possibility in ways we can talk about.
• 0:21
  Jeff Holmstead (04:56):
• 0:22
  I would just add, I think at least so far, people have exaggerated the importance of the endangerment finding, at least when it comes to actually reducing emissions. It's been in place since 2009. The EPA has tried multiple times to impose pretty aggressive regulations, but they've been upended either by the courts or by the Trump administration. And Michael and I can certainly talk about this, but I've tried to walk through and figure out what emission reductions have occurred because of EPA’s regulation. I think it's very, very modest, especially when you consider what they could have done anyway under the CAFE program and by regulating VOCs under the Clean Air Act, which would include the regulation of methane. So I think people have exaggerated its importance so far. I think certainly in the environmental community, people are hopeful that in the future it could be more meaningful. But other things like the revocation of the IRA tax credits are much more important when it comes to impacts on US greenhouse gas emissions.
• 0:23
  Michael Gerrard (06:05):
• 0:24
  Right? I mean, so far EPA’s efforts to regulate stationary sources under the invasion of fighting have mostly been foiled either by elections or by courts. But of course, on the same day that EPA and the president announced that they were taking away the endangerment finding, they also announced a very serious rollback in the greenhouse gas emission standards for motor vehicles. And so those kinds of standards from EPA and a separate set of standards from the National Highway Traffic Safety Administration did achieve significant emissions reduction. So I think from a pure quantitative standpoint, that part is much more important.
• 0:25
  Jeff Holmstead (06:43):
• 0:26
  Yeah, although, well, lemme just quickly say, even with those, they were both heavily weighted in the out years, so in the early years that those didn't get significant emission reductions and they could have been gotten anyway under the CAFE program, but I've not attempted to quantify it, but I just think that's a point that's worth making. You'd have to look seriously at what they've actually accomplished.
• 0:27
  Michael Gerrard (07:13):
• 0:28
  And in a related issue is to what extent are the automakers really going to change what they make as a result of this? Automakers are put in a tough spot, but that's another thing we can talk about.
• 0:29
  Jeff Holmstead (07:22):
• 0:30
  Yep, yep.
• 0:31
  Bill Loveless (07:23):
• 0:32
  Yeah, certainly we can get to that. And CAFE, of course, is a corporate average fuel economy standards that have been in place for some years here in the US. To be clear, the endangerment finding stems from the US Supreme Court's decision in 2007, which held that greenhouse gases are pollutants under the Clean Air Act. Then in 2009, the EPA determined that greenhouse gases endanger public health and welfare forming the legal backbone of most federal climate regulations. We'll get into this more. We've started already, but Michael, why has the endangerment finding been considered so central to climate regulation in the United States?
• 0:33
  Michael Gerrard (08:06):
• 0:34
  Well, the Clean Air Act says that language, the administrator administrator of EPA shall by regulation prescribe standards applicable to the emissions of any air pollutant from any class of new motor vehicles, which in his judgment cause or contribute to air pollution, which may reasonably be anticipated to endanger public health or welfare. So there needs to be an endangerment finding before there is regulation of greenhouse gases. But once there is an endangerment finding, there has to be regulation from particular sources. It's really the foundation. And without that, the EPA doesn't have the authority to regulate greenhouse gases under the Clean Air Act. There are other things EPA can do, but the Clean Air Act is the most important legal basis and it hinges on the endangerment finding.
• 0:35
  Jeff Holmstead (08:56):
• 0:36
  Yeah, absolutely. That's correct. And what this administration has tried to do is, I think to the surprise of many people is they've revoked it entirely on legal grounds based on a new reading of the Clean Air Act, and they argued that under the Loper Bright decision of the Supreme Court, this is the best reading of the Clean Air Act, and this is an attempt to not only justify eliminating current regulations but preventing EPA in the future from regulating greenhouse gas emissions again. So no, it's enormously important, and if it were to be upheld, DPA would be out of the business of regulating greenhouse gas emissions unless Congress takes action to give them that authority.
• 0:37
  Michael Gerrard (09:42):
• 0:38
  So one little thought on that. This will probably go to the Supreme Court and the Supreme Court. There's several different ways that the Supreme Court could come out on this, and certainly if the Supreme Court reverses the Massachusetts case and relies heavily on the major questions doctrine, then that would mean that a new president couldn't act on climate change if they wanted to. However, there are some ways that the Supreme Court could uphold this action that would be narrower, that would not be relying on the major questions doctrine. They could narrowly read the Massachusetts case in a way that would allow a later president to reissue the endangerment findings. So one of the big questions is not merely does the Supreme Court uphold the revocation, but if they do that, but how do they do that? There are different ways they can do that that would do more or less damage to the ability of future presidents.
• 0:39
  Bill Loveless (10:42):
• 0:40
  Michael, remind us of the significance of the major questions doctrine that's come up in the past couple of years in the Supreme Court decisions.
• 0:41
  Michael Gerrard (10:49):
• 0:42
  So the basic idea is that despite what the text of a statute says, an agency can't regulate something of enormous political or economic significance without explicit authorization from Congress. So the idea has been around for years, but in 2022, in the case of West Virginia versus EPA, the Supreme Court used that to throw out a version of the Clean Power Plan. And the nature of the major question doctrine is it's sort of looming over all of administrative law. We don't know what it'll apply to, and it has been applied in a bunch of places, sometimes unpredictably, but if it's applied here by the Supreme Court, again, it would say that explicit congressional action would be needed for future regulation under the Clean Air Act.
• 0:43
  Bill Loveless (11:43):
• 0:44
  Jeff, what's the most plausible case or the strongest legal case for repeal of the endangerment finding? I mean, what legal vulnerabilities in the 2009 finding does the administration believe it has identified?
• 0:45
  Jeff Holmstead (11:59):
• 0:46
  So at least notionally, they don't ask the court to overrule Massachusetts versus EPA, they point to another Supreme Court decision that we refer to as the UARG case for Utility Air Regulatory Group versus EPA where the court said that the term air pollutant needs to be read in the context of the statute and something that is an air pollutant under the general definition that the Supreme Court was dealing with. It could be different in other parts of the statute. And in that case, it dealt with whether a facility was a major source and they said, well, for those purposes, CO2 and greenhouse gases are not air pollutants within the meaning of that. Then they go on to say that for purposes of section 202, which is EPA’s authority to regulate, we find that the term air pollutant and air pollution read in context is only designed to deal with pollution that they call local or regional air pollution. I refer to it as sort of through direct exposure. EPA can only regulate when air pollution harms people or things when they're exposed to it. They go to great lengths to explain sort of the history and what Congress intended. And there's various indications that Congress really was only thinking about those types of pollution. And then they say that under Loper Bright, we think the best reading of the term air pollution in this context does not include greenhouse gases because they only affect human health indirectly. So that I think that's their leading argument. I think that's their primary argument. They have several other ones that are somewhat related, but I think that's at the heart of what they're trying to do.
• 0:47
  Bill Loveless (14:04):
• 0:48
  Michael, I recall when we spoke last summer, when EPA first proposed the repeal of the endangerment finding, you said their case might be plausible or was plausible as I recall. Do you feel still feel that way?
• 0:49
  Michael Gerrard (14:21):
• 0:50
  Plausible is different from likely or correct
• 0:51
  Bill Loveless (14:24):
• 0:52
  Yeah, right, exactly. And I recall you said that too at
• 0:53
  Michael Gerrard (14:28):
• 0:54
  The time. Yeah, let me just say that Jeff is quite right in describing what the utility or regulatory group decision said, which that decision was surprising in a number of respects. I mean, the text of the Clean Air Act in its definition of aspects of welfare that should be considered includes the word climate. And all over the legislative history of the Clean Air Act of 1970 are references to climate and greenhouse gases. So it's not as if it was something that Congress was not aware of, but the utility or regulatory group found an indirect way of coming out the way they wanted to.
• 0:55
  Bill Loveless (15:08):
• 0:56
  Jeff, you have some personal experience with this issue from when you were EPA's assistant administrator for air during the administration of President George W. Bush, his first term, and that was when the agency denied a petition to regulate emissions from vehicles under the Clean Air Act. At the time, you said “Congress must provide us with clear legal authority before we can take regulatory action to address a fundamental issue such as climate change.” Is the Trump administration's view on this similar to that of the Bush administration back in 2003?
• 0:57
  Jeff Holmstead (15:43):
• 0:58
  I think it's exactly the same, and I like to believe that we anticipated the major questions doctrine because the court in the West Virginia Case essentially adopted that view. But one of the problems that the Trump administration has is that's what George W. Bush had argued. It's one of the things they argued for the Supreme Court and the Supreme Court explicitly rejected that argument. So that certainly is a hurdle they have to deal with. And again, I think the crux of their argument depends on basically what the court said in the UARG case that the term air pollutant or air pollution can mean different things in different parts of the statute. There are certainly problems with that, as Michael already pointed out, and it will be litigated fiercely. But I do think it's possible that they have come up with legal arguments that could get five votes on the Supreme Court, and we can do a lot of speculating between now and then, and there's some other things that can happen along the way in the DC circuit that might affect that, but sometimes my friends in the environmental community say, this is dead on arrival. It will never be upheld. And I think, well, I agree there's good arguments on both sides, but I think we'll have to wait and see what the Supreme Court does.
• 0:59
  Michael Gerrard (17:18):
• 1:00
  Right and of course, the Massachusetts case was a five to four decision. None of the five in the majority are still on the court. They're all either deceased or retired. Three of the dissenters are on the court still Chief Justice Roberts and Justices Thomas and Alito, and we have the three Trump appointees. And Justice Kavanaugh has already expressed his unhappiness with the Massachusetts case, so it's quite plausible that there would be at least five votes to uphold this. As we said, they don't have to explicitly overturn the Massachusetts case. And as Jeff said, the EPA announcement on revocation went out of its way to say that they're not asking for repealing the Massachusetts case. They're coming up with various theories to shoehorn a different kind of ruling that doesn't force them to overturn it.
• 1:01
  Bill Loveless (18:13):
• 1:02
  Well, why would they not take on the Massachusetts case here?
• 1:03
  Michael Gerrard (18:16):
• 1:04
  Well, the legal concept is statutory stare decisis that when you have a decision by a court interpreting a statute that holds, and it's harder to overturn that than something that is based on constitutional grounds, like whether there's a right to abortion, which obviously the Supreme Court reversed on. So I think that usually the Supreme Court would rather not overtly reverse itself, although sometimes as we see, sometimes they do.
• 1:05
  Jeff Holmstead (18:46):
• 1:06
  Yeah, I was going to point out the same thing that the concept of statutory decisis sort of depends on the theory that if the court makes a mistake, then Congress can come along and fix that mistake. And that's why they've been even more reluctant to overrule their prior statutory interpretations. They have done it a few times usually many, many years later, but they could conceivably do that here. I think the other reason that they would like to leave, or at least have made the case to leave Massachusetts versus EPA in place is that may help industries that are subject to these tort suits, whether it's under federal common law or state common law. There's an argument that as long as Massachusetts versus EPA is in place, that those kind of lawsuits would be displaced or preempted. And that's an argument that has been successful in many of these climate change cases where courts have agreed with the oil companies that the claims brought by state and local governments have been displaced by the Clean Air Act. So I think that's a second reason for leaving Mass v EPA in place.
• 1:07
  Michael Gerrard (20:02):
• 1:08
  And a third is that the aviation industry wants to leave the endangerment finding in place for the aviation industry. It's a separate endangerment finding, but Boeing in order to sell its airplanes to a lot of other countries needs a certification of compliance with greenhouse gas standards. And if the US is no longer issuing the certification, then they would've difficulty selling the airplanes, which would be a big problem for them.
• 1:09
  Jeff Holmstead (20:30):
• 1:10
  But let me point out, I don't think EPA is compelled to revoke the endangerment finding for aircraft, and I've been trying to think out if anybody could sue them to try to force them to do that. But yeah, I'm aware of that. And it's really the same thing with methane regulation from the oil and gas operations. They've been pretty clear in saying that they think they're better off with federal regulation than having to deal with regulation in many different states. And they're certainly lobbying for a few changes to the Biden methane regulations, but they've, I think both publicly and privately been urging EPA to leave those in place. And there is a separate endangerment finding for methane emissions from oil and gas operations.
• 1:11
  Bill Loveless (21:15):
• 1:12
  That's sort of, well, let's think for a moment about who's suing over this EPA decision and for that matter who's not. And Jeff, what suits have we seen so far challenging the decision by EPA to repeal the endangerment finding and what is the basis for those complaints?
• 1:13
  Jeff Holmstead (21:37):
• 1:14
  So as far as I know so far, it's only been a very large coalition of the environmental community. They were the first ones, I think, at the courthouse door after the decision was published. We certainly expect that there will be many others, different groups in different states. So I'm sure that by the time the 60 day period for filing challenges is up, there will be many, many petitioners filing their own cases, and those will be consolidated into one case. At this point, they don't, in their pleadings, they don't have to make any arguments. They essentially just put the court on notice that this is what they want to challenge. So what we know about their arguments is mostly from press releases and some of the things that they've argued in their comments.
• 1:15
  Michael Gerrard (22:30):
• 1:16
  Right. There's that one suit that was filed immediately by the American Public Health Association is the lead plaintiff, but a bunch of public health and environmental groups. Then another lawsuit was filed around the same time by the group, Our Children's Trust, which is the group that brought the Juliana case. And I think that they're probably going to raise constitutional arguments, but we're expecting more lawsuits. I think that a coalition of Democratic state attorneys general is probably going to sue, and I'm sure that a coalition of Republican state attorneys general is going to come in on the opposite side. I think the Supreme Court is going to be swamped with amicus brief – or rather the DC circuit. Well, and as Jeff said, when the utility or regulatory group case came up before the DC circuit back in 2010 and 2011, there were also challenges to the endangerment finding there and a bunch of other lawsuits, I think more than a hundred lawsuits, but the DC circuit, I heard them all together in a two day argument extravaganza.
• 1:17
  Bill Loveless (23:33):
• 1:18
  Right. I recall that. And the endangerment finding has been upheld by the courts in recent years. Right, Michael?
• 1:19
  Michael Gerrard (23:39):
• 1:20
  Right. The DC circuit upheld it in its decision in 2011, and the Supreme Court has not wanted to hear it ever since. There have been several attempts to get it to the Supreme Court before then, but the Supreme Court hasn't taken any of those cases.
• 1:21
  Bill Loveless (23:58):
• 1:22
  And the DC Circuit is seen as generally favorable to these sorts of the cases that would be brought by, say, environmental groups in this instance. But as we've discussed, the Supreme Court's makeup has changed as well. Is that a reason to think that the favorable view of the endangerment finding in the past may not carry forward?
• 1:23
  Michael Gerrard (24:22):
• 1:24
  Let me just say about the DC circuit, there are 11 active judges on it. Seven are appointed by Democratic presidents, four nominated by Republican presidents. The way most of those judges decide probably correlates with whether they're going to support or not support what the Trump administration has done. I ran the numbers. There is a 28.11% chance that the three judge panel that's randomly chosen has at least two Republican members. So there's probably a 28.11% chance that the Trump administration wins here at the DC circuit. Now, if we –
• 1:25
  Jeff Holmstead (25:06):
• 1:26
  Can, I just point out that in some ways that's the worst possible outcome for the Trump administration because then it would almost certainly go to the en banc court, and the banc court is likely to be much less sympathetic to the Trump administration. That process would take long enough that the Trump administration likely would not have the chance to appeal it to the Supreme Court. I think they must be hoping that they don't draw what would otherwise be viewed as a favorable panel because I think they've been pretty clear in saying that their goal here is to get this back before the Supreme Court.
• 1:27
  Michael Gerrard (25:42):
• 1:28
  And that then raises a very important timing question because in the ordinary course, it would take the DC circuit probably a year, year and a half to decide if there's an on banc effort that's another, I don't know, six months. And then in the ordinary course, the Supreme Court would take a year or a year and a half, and so the clock might run out on the Trump administration. So the big question is, is there going to be the use of the, will there be emergency motions? Will there be the use of a shadow docket to try to speed it up? Which is what happened in 2016 when the Supreme Court stayed the Clean Power Plan under President Obama. They jumped in much faster than anybody expected, and so we didn't have that long wait. So it's possible that that'll happen here as well. If it seems to be taking too long and somebody wants to speed it up.
• 1:29
  Bill Loveless (26:37):
• 1:30
  Well, timing's an important consideration. Are we looking at something that changes regulatory reality now or something that will be tied up in litigation for years? Jeff?
• 1:31
  Jeff Holmstead (26:49):
• 1:32
  We are unlikely to have a final answer to that question before maybe the last year of the Trump administration, because I think the litigation will take at least, at least that long, and I think that's the soonest we would have a final answer. There's also a question of whether the opponents of the rule of revoking the endangerment finding actually asked the DC Circuit to stay that pending review because ordinarily when a regulation is issued, it stays in place until the court makes a decision on it. But in unusual cases, the court can basically, for various reasons, based on irreparable harm and sort of the likelihood of success on the merits, they can put the regulation on hold while the appeals are pending. So far, we've not seen a motion for a stay pending review, and I don't know if we will. I suspect there's some people who would like to seek that. But on the other hand, as Michael points out, that could give the Supreme Court a reason to jump in and get involved sooner rather than later. So I think strategically the next big thing we'll see is whether someone asked the DC Circuit to stay this pending review.
• 1:33
  Michael Gerrard (28:12):
• 1:34
  I think that most of the groups will not want to stay because in reality, the Trump administration is not using any of the regulatory authority that depends on the endangerment finding. They're not going to be issuing major new rules on stationary sources or anything like that. So I don't really see why the environmental groups would really need a stay, which is not to say that one or two of 'em might break off and seek one.
• 1:35
  Bill Loveless (28:38):
• 1:36
  But Michael, what about for the auto industry executives there wonder what will be the status of these emissions regulations given the challenges taking place in the courts.
• 1:37
  Michael Gerrard (28:49):
• 1:38
  Right, now, taking away or weakening the CAFE standards does not prohibit the auto industry from building cleaner or raw efficient cars. They can still do it if they want to, but it certainly changes the market dynamics and they're in a very tough position. We know that China is making terrific, highly effective, very inexpensive electric cars, which can't be sold over the US, but are going to flood much of the rest of the world. So the auto industry is in a tough shape here, but has some tough decisions to make.
• 1:39
  Jeff Holmstead (29:24):
• 1:40
  Can I just point out, the auto industry did not support the reversal of the endangerment finding. They actually, in the written comments and in the public statements, urge the administration not to revoke the endangerment finding. They did say the Biden rules are unreasonable and perhaps unachievable, and we'd like you to relax those to make them more reasonable. But they said we'd much prefer durable, reasonable regulations than having the endangerment finding revoked.
• 1:41
  Bill Loveless (29:58):
• 1:42
  But Jeff, what happens to the emissions regulations that the administration targeted when it repealed the endangerment finding?
• 1:43
  Jeff Holmstead (30:05):
• 1:44
  So those go away. Those are gone. But as Michael says, it's not clear that the auto industry, there'll be any significant reaction from the auto industry until we have some more certainty about what's going on. Their model years are planned out years in advance. As Michael also said, it could affect their sales strategy. They may not price vehicles differently than they otherwise would've so that they're able to sell more bigger vehicles. So that may be affected in the near term, but the cars that they actually build and the cars that are available to consumers, I don't think that will change at all.
• 1:45
  Bill Loveless (30:57):
• 1:46
  Michael, is it fair to say that the reaction from various industries, energy, oil, gas, electric, as well as the auto industry has been kind of guarded so far in reaction to the decision by EPA to repeal the endangerment finding?
• 1:47
  Michael Gerrard (31:09):
• 1:48
  For one thing, many big US companies are afraid of speaking up for fear of what the Trump administration will do to them. So I think there's a lot of grumbling under the surface, but I think that there won't be many big companies that are going to jump into the litigation. I think some of them will, I think maybe the coal industry or something like that, but I think many big companies will want to stay out. Although it'll be interesting to see what the US Chamber of Commerce, the National Association of Manufacturers, the American Petroleum Institute, whether those groups which often do jump into litigation, it'll be interesting to see what they do here.
• 1:49
  Bill Loveless (31:50):
• 1:50
  What do you see Jeff, among those types of organizations and industry?
• 1:51
  Jeff Holmstead (31:54):
• 1:52
  So the three organizations that, well, at least the US Chamber and the American Petroleum Institute actually submitted comments urging EPA not to reverse the endangerment finding, but I think I would be surprised if they actually challenged it in court again for the reasons Michael mentioned. I think they don't necessarily want to be publicly attacking the administration on this, even though I think in their comments and privately they were urging the administration not to do this, but I doubt they will join in any lawsuits challenging the revocation.
• 1:53
  Bill Loveless (32:34):
• 1:54
  So Jeff, they were looking for, I mean they wanted to see EPA sort of temper its regulatory approach to emissions, but not necessarily pull the rug out from under the endangerment finding.
• 1:55
  Jeff Holmstead (32:43):
• 1:56
  That's correct, yes.
• 1:57
  Bill Loveless (32:45):
• 1:58
  Well, among the developments that are being watched closely is a decision by the US Supreme Court just the other day to hear a major climate lawsuit in which the oil industry is claiming it should not be sued in state courts, in municipal courts over its role in global warming. Michael, what's happening there and why is that important?
• 1:59
  Michael Gerrard (33:07):
• 2:00
  So these cases began more than 20 years ago and for several years, the big issue was whether they belong in state court or federal court. They've finally landed in state court, the oil industry and others have been trying for years to get the Supreme Court to knock it out. There was a case from Baltimore that the Supreme Court took but ruled on very narrow procedural grants. Then the Supreme Court rejected an effort to take a case out of Hawaii, and then there was an effort by Alabama. But here they just granted cert. And the relevance, one of the relevances to the endangerment finding is in these cases, one of the major defenses that the defendants are raising is preemption of saying that if EPA is regulating greenhouse gases, then there's no role for the state courts. And so the revocation of the endangerment finding creates an argument for the plaintiffs that, well, if EPA is not regulating greenhouse gases anymore, then the preemption argument goes away. There's some more subtleties there. There's some arguments on both sides, but I think clearly the revocation of the endangerment finding helps the case of the plaintiffs states and cities that are suing the oil companies.
• 2:01
  Bill Loveless (34:29):
• 2:02
  Yeah. Jeff, how do you view this decision by the court to take up this case?
• 2:03
  Jeff Holmstead (34:34):
• 2:04
  Well, it's hard to read because as Michael pointed out, the oil industry has been trying for years to get the Supreme Court to weigh in and basically say climate change is an international issue. The courts have no business trying to seek damages for emissions that are greenhouse gas emissions that contribute to global climate change that come from all over the world. So I think that that's certainly their hope. And I think with the Supreme Court, it wouldn't be surprising to see that kind of an outcome, but there's some indication that the court may not actually want to reach the merits because in addition to granting cert on the question that the oil companies presented, it also raise the second issue, and that was whether the court even has statutory or Article III jurisdiction to hear the case, and that creates the possibility that they could essentially decide that they don't have jurisdiction at this point.
• 2:05
  (35:43):
• 2:06
  It wouldn't be that we can never hear this case, but this particular case comes from a Colorado Supreme Court ruling that denied a motion to dismiss and is viewed as sort of interlocutory, meaning that the case hasn't really decided. And there's an argument that the Supreme Court doesn't even have jurisdiction to hear the case until it makes its way all the way through the Colorado courts. So it's very interesting and complicated as Michael says, by the fact that the endangerment finding has been reversed, and in this Boulder case, Boulder, Colorado case that if it does go to the merits will almost certainly be decided before we know the fate of the endangerment finding. So that might be another reason that they could decided on jurisdictional grounds and kind of wait to see what happens with the endangered finding.
• 2:07
  Michael Gerrard (36:35):
• 2:08
  Right. The court took a very long time to decide whether or not to grant cert. They had four announced conferences on it, which clearly meant that there was a lot of disagreement within the court. And so we don't know whether there are enough vote – whether there are five votes there to actually get to the merits. And if there are, they probably say, no, these cases can't go forward. And if that's the way they come out, then that would be very bad news for these other two dozen or so cases that are pending around the country. Meanwhile, I think one thing that's going to happen is now that the Supreme Court has granted cert in the Boulder case, I think in most or all of these other cases, the defendants are going to ask the state courts to put the litigations on hold until the Supreme Court has decided, and that will then be up to each state court judge whether to put the cases on hold. The defendants would very much like to put them on hold for one thing, and some of these cases discovery is going forward, and I think they really don't want to have to engage in discovery and other things could happen. So I think there are going to be a whole lot of motions over the next several months. A whole lot of lawyers are going to be kept very busy on these stay motions.
• 2:09
  Bill Loveless (37:48):
• 2:10
  Boy, there's so much uncertainty and complexity over these issues which leave things in such an uncertain state for so many of the parties that have a stake in these cases, whether they be in industry or state officials, municipal officials, or just about anyone else who cares about these things. If federal authority recedes, Jeff, will we see more aggressive state action? Does this EPA decision, for example, strengthen the hands of states like California?
• 2:11
  Jeff Holmstead (38:26):
• 2:12
  As you might've guessed, the answer is a little bit complicated because there is a difference between regulating motor vehicles and regulating stationary sources under the Clean Air Act. There's a savings clause that explicitly allows states to have regulations that are more stringent than federal regulations. And that's why we do have the California cap and trade system as well as the RGGI system in the Eastern US. And I think there certainly will be environmental advocates who are pressing states to be more aggressive in regulating the sources within their states. I think it's a little bit complicated right now just because of concerns about affordability and the increasing demand for electricity. Is this the time politically that even Blue states will be wanting to wade in to regulatory programs that would likely increase the cost of electricity? So yeah, I think there will certainly be pressure and states do retain authority to regulate industrial sources within their own states.
• 2:13
  (39:42):
• 2:14
  On vehicles. It's more complicated because California has taken the position that if EPA is not regulating these, then, well, I should take a step back. Ordinarily under the Clean Air Act, it's very clear that only EPA is allowed to regulate. So there's not a patchwork of different states. There's one exception for California and the EPA can grant a waiver to California that allows them to have more stringent standards, and then other states can adopt that. So there wouldn't be more than two different standards. There was a waiver granted for California to have its own very aggressive program that was overturned by Congress using the Congressional Review Act, and California has argued that if EPA doesn't regulate CO2 emissions, and that means that it doesn't need a waiver, that it can be whatever it wants, I think that argument has some real problems. But that's yet one other piece of litigation that we're likely, that we're likely to see.
• 2:15
  Michael Gerrard (40:44):
• 2:16
  Yeah, and that's an additional grounds of uncertainty for the auto industry. Is California going to try to impose these standards if California does, are the 14 or so other states that have usually tacked onto the California standards going to adopt the same thing? Because the California standards that were taken away under the Congressional Review Act, really we're going to force a widespread move to electric vehicles. So the auto industry really doesn't know what rules are going to apply, and it's a tough situation for them
• 2:17
  Bill Loveless (41:18):
• 2:18
  If the repeal of the endangerment finding stands in court, but then there's a change in administrations in three years, can a future EPA simply reinstate the finding? Jeff?
• 2:19
  Jeff Holmstead (41:31):
• 2:20
  It depends on how it's upheld. As Michael says, there are ways that the court could rule. Let's assume it's the Supreme Court. They could rule in a way that would certainly prevent future EPA's from regulating, but they could also decide the case on narrower grounds. My own view is that it's kind of an all or nothing thing. I think the Supreme Court is either likely to find one way or another, but as Michael points out, there are intermediate ways that would still allow a future EPA to regulate.
• 2:21
  Michael Gerrard (41:59):
• 2:22
  It's possible that in order to get the five votes they need, they'll decide more narrowly and that will have a concurrence by four saying, you should have gone further, very hard to predict.
• 2:23
  Jeff Holmstead (42:10):
• 2:24
  Right, right. Let me just say one other thing. I mean, it's certainly possible that three years from now, the whole entire landscape when it comes to regulation of greenhouse gases will have changed significantly because these kind of climate change lawsuits will be essentially prevented possibly by the Supreme Court and EPA will be out of the business, and that means that it will, maybe there'll be more pressure on Congress to take action. The most meaningful thing that we've seen I think in this world was the Inflation Reduction Act, which would have significantly reduced emissions in the US. US emissions will continue to go down anyway, but they won't go down as far as they would've with all the tax incentives that were included in the Inflation Reduction Act.
• 2:25
  Michael Gerrard (43:08):
• 2:26
  And meanwhile, states will still continue to try to come up with additional things that they can do. So New York and Vermont have adopted what are called State Climate Superfund laws to impose a retroactive liability on oil companies. Those are being challenged in court. Depending on how the Boulder case turns out, that may adversely affect the State Superfund laws as well. That's another related impact.
• 2:27
  Bill Loveless (43:36):
• 2:28
  Yeah, this situation in cases that have been decided by the Supreme Court in recent years all raise the question of whether Congress will finally step in and legislate on important issues like the Clean Air Act or update that law, which hasn't been updated since 1990. And of course, we've seen very little in the way of signals from Capitol Hill that Congress is willing to operate in that bipartisan way to take honest responsibilities here. So I won't ask you to hazard a guess on whether Congress is more or less likely to act, but feel free to do so if you want.
• 2:29
  Jeff Holmstead (44:14):
• 2:30
  I've made this point before. I think I, first of all, and there's certainly many people in the business community that would like to have the kind of long-term certainty that would come with bipartisan legislation. And so I think there is certainly support, and I have clients that are looking at potential legislation. I think on the sort of Democratic side and the environmentalist side with the idea that EPA can basically take care of it under the Clean Air Act. They've had little incentive to really engage with or to make the kind of compromises that are always needed to pass legislation. So I don't think there's any likelihood of that kind of legislation during the Trump administration, but I am optimistic that some sort of bipartisan climate change legislation is still possible. It would not go nearly as far as I'm sure the environmentalists would like because there would, I think, have to be compromises on all sides. But I do think there is a chance in two congresses from now that there could be bipartisan legislation.
• 2:31
  Michael Gerrard (45:32):
• 2:32
  And meanwhile, if both the House and the Senate flip and we have a Democratic president, we might see something like the Inflation Reduction Act come back because that would just require 50 votes rather than 60. It's a lot harder to get 60 than 50.
• 2:33
  Jeff Holmstead (45:46):
• 2:34
  And again, just one other thing that would be a purely carrots based approach, and I think it would be effective, and I think that's been proven, but it wouldn't be the kind of regulatory approach that EPA has tried to adopt, because you can't do that with only 50, with only 50 votes.
• 2:35
  Bill Loveless (46:02):
• 2:36
  Well, these are certainly complex issues legally, politically as well, but certainly legally, as you each have laid out so well here, and I appreciate the opportunity to sort of sort through some of these things and get a better understanding of where we might be headed in the months and for that matter, years ahead. So Michael Gerrard, Jeff Holmstead, thanks again for joining us on Columbia Energy Exchange.
• 2:37
  Michael Gerrard:Thank you, Bill.
• 2:38
  Jeff Holmstead (46:28):
• 2:39
  My pleasure. Thank you.
• 2:40
  Bill Loveless (46:35):
• 2:41
  That's it for this week's episode of Columbia Energy Exchange. Thank you again, Michael Gerrard and Jeff Homestead, and thank you for listening. The show is brought to you by the Center on Global Energy Policy at the Columbia University School of International and Public Affairs. The show is hosted by Jason Bordoff and me, Bill Loveless. Mary Catherine O'Connor produced the show. Greg Vilfranc engineered it Additional support from Caroline Pitman and Kyu Lee. For more information about the show or the Center on Global Energy Policy, visit us online at energypolicy.columbia.edu or follow us on social media at Columbia You Energy. If you like this episode, leave us a rating on Apple, Spotify, or wherever you get your podcasts. It really helps us out. You can also share it with a friend or colleague to help us reach more listeners. Either way. We appreciate your support. Thanks again for listening. See you next week.