Order Code RS22618
March 8, 2007
The Supreme Court Takes
Five Environmental Cases
for Its 2006-2007 Term
Robert Meltz
Legislative Attorney
American Law Division
Summary
The Supreme Court has accepted five environmental cases for argument during its
2006-2007 term, a significant proportion of the 72 cases it will hear during the term.
Two cases involve the Clean Air Act: one asking whether the act allows EPA to regulate
vehicle emissions based on their global warming impacts; the other, whether an hourly
or annual test must be used in determining whether a modification of a stationary source
makes it a “new source” requiring a permit. A third case asks whether an EPA decision
to delegate the Clean Water Act discharge permitting program to a state is subject to
Fish and Wildlife Service consultation under the Endangered Species Act. The fourth
case deals with whether a liable party under the Superfund Act may seek contribution
under one section of the act even though barred from doing so under another section
because no EPA civil actions have been filed at the site. And the fifth case addresses
whether county “flow control” ordinances evade the strict scrutiny test for compliance
with the dormant commerce clause or indeed evade the clause entirely, owing to the fact
that the designated collection facility is publicly rather than privately owned.
The 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 is the situation in the Court’s 2006-2007 term, with the Court having accepted five
environmental cases out of the 72 it will hear 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. Here we summarize each case that has been
or will be argued (and likely decided) during the current term and speculate on the issues
likely to concern the Court.

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The Clean Air Act and Greenhouse Gas Emissions from New Motor Vehicles:
Commonwealth of Massachusetts v. EPA
Procedural history:1 Commonwealth of Massachusetts v. EPA, 415 F.3d 50 (D.C. Cir.
2005), rehearing en banc denied, 433 F.3d 66 (D.C. Cir. 2005), pet. for cert. granted,
126 S. Ct. 2960 (June 26, 2006) ( No. 05-1120). Argued Nov. 29, 2006.
This case marks the debut of global warming in the Supreme Court. It arose as a
challenge by 12 states and several environmental groups to EPA’s denial of a petition
under the Clean Air Act (CAA). The petition, filed in 1999, asked the agency to regulate
emissions from new motor vehicles on a hitherto novel ground: their impact on 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.
In 2005, the D.C. Circuit rejected the challenge to EPA’s denial by split (2-1)
decision. The two judges voting to reject did so for different reasons, however. One
judge agreed with EPA that section 202 allows the agency to inject policy considerations
— for example, the Administration’s preference for economic incentives over regulatory
mandates — into its decision whether to regulate motor vehicle emissions. The other
judge held that petitioners had not suffered the injury requisite for federal-court standing,
a ubiquitous issue in global warming litigation.
There are three issues before the Supreme Court. First, do petitioners have standing?
Second, does CAA section 202 confer authority on EPA to regulate emissions from new
motor vehicles based on their potential global warming impacts? Third, if so, may EPA
inject policy considerations into its decision whether to proceed against such emissions?
Note that these issues are of a threshold nature. That is, the Court, even if it rules for the
petitioners, is not likely to order EPA to regulate greenhouse gas emissions from vehicles,
or even to initiate a proceeding to determine whether such rules are required. Rather, a
ruling for petitioners would at most require EPA to decide whether it must initiate such
a proceeding, given the clarified legal basis provided by the Court as to section 202
authority and the relevance of policy considerations.
Notwithstanding the preliminary nature of the issues before the Court, the decision
could be significant beyond the four corners of mobile-source emission regulation. Most
immediately, it could affect the viability of arguments as to whether EPA has authority
under the CAA to regulate greenhouse gas emissions from stationary sources of emissions
(factories, power plants, etc.) The Court’s decision could also affect resolution of the
standing issue in pending global warming litigation under non-CAA theories such as
nuisance or the National Environmental Policy Act.
1 The “procedural history” provided for this and following cases in this report is only that
contained in reported court decisions.

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The Clean Air Act and New Source Review: Environmental Defense v. Duke Energy
Corp.
Procedural history: United States v. Duke Energy Corp., 278 F. Supp. 2d 619
(M.D.N.C. 2003), affirmed, 411 F.3d 539 (4th Cir. 2005), pet. for cert. granted, 126
S. Ct. 2019 (May 15, 2006) (No. 05-848). Argued Nov. 1, 2006.
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 powerplants
without obtaining Prevention of Significant Deterioration (PSD) permits required for
“new sources” under the Act. Environmental Defense intervened as a plaintiff. The
dispute centers on how to measure the emissions from a stationary source so as to
determine whether a physical or operational change in that source “increases the amount”
of pollution emitted, in the words of the statute. Such a pollution 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 plants
would allow aging facilities to operate more of the time, resulting in increases in annual
emissions and triggering of new source requirements. However, the district court agreed
with Duke’s argument that the CAA, in using the same definition of “modification” for
the PSD program as used elsewhere in the act in connection with New Source
Performance Standards (NSPSs), intended an hourly emissions rate test. Under this
hourly standard, a project modification allowing a plant to operate for more hours but
without increasing the emissions rate would not count as an increase in emissions, and
thus would not trigger new source requirements. The Fourth Circuit affirmed, explaining
that EPA could not construe its PSD definition of “modification” differently than its
NSPS definition of the same term, which imposed an hourly test.
Environmental Defense — but not EPA — filed a petition for certiorari. Indeed, the
United States opposed the petition, presumably because EPA had adopted 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.
In the Supreme Court, two issues are presented. The first has been at the heart of the
case since the beginning: does the CAA definition of “modification,” which turns on
whether there is an “increase” in emissions, allow EPA to define emission increases for
PSD purposes by reference to actual, annual emissions? The second issue is raised in the
case for the first time and asks whether the Fourth Circuit had jurisdiction. The CAA says
that nationally applicable regulations under the act, like those at issue here, may be
challenged only in the D.C. Circuit within 60 days of their promulgation and that CAA
regulations may not be reviewed in enforcement proceedings. The underlying question:
was the Fourth Circuit addressing a challenge to an EPA regulation subject to this
jurisdictional rule or merely to an EPA interpretation of its rules.

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The Clean Water Act/Endangered Species Act Relationship: National Association
of Home Builders v. Defenders of Wildlife
Procedural history: Defenders of Wildlife v. U.S. EPA, 420 F.3d 946 (9th Cir. 2005),
rehearing en banc denied, 450 F.3d 394 (9th Cir. 2006), pet. for cert. granted, 127 S.
Ct. 852 (Jan. 5, 2007) (No. 06-340). To be argued April 17, 2007.
This case addresses the relationship between Clean Water Act (CWA) section 402
and Endangered Species Act (ESA) section 7. CWA section 402 establishes the
permitting program for point-source discharges into waters of the United States that lies
at the heart of the CWA. EPA “shall approve” delegation of the program to a state, says
the act, if the state applies therefor and satisfies nine criteria stated in section 402, none
of which mentions endangered species. ESA section 7 requires federal agencies to
consult with the Fish and Wildlife Service (or, for marine species, NOAA Fisheries)
before taking actions that may jeopardize endangered and threatened species or adversely
affect designated critical habitat.
The case here arose when Arizona applied to EPA for delegation of the permitting
program to that state (the 45th state to do so). In deciding whether to approve the request,
EPA initiated consultation with the Fish and Wildlife Service — because once a state
takes over the program, section 7 consultations no longer occur, with potential
consequences for listed species. EPA took the seemingly inconsistent position, however,
that it is not permitted under CWA section 402 to take into account the impact on listed
species in making its transfer decision. The Ninth Circuit thus remanded the transfer
decision to EPA for a “single, coherent interpretation of the statute.” More
controversially, it held that EPA’s ESA section 7 duty to ensure that its actions are not
likely to jeopardize listed species is in addition to its authority under CWA section 402.
That is, even though it was undisputed that Arizona met all the CWA criteria for approval
of a transfer decision, EPA could deny transfer based on the agency’s ESA section 7 duty.
A petition for rehearing en banc was denied by the Circuit, prompting a strong dissent by
six of the circuit’s judges.
The National Association of Home Builders and the United States filed separate
petitions for certiorari; both were granted. The key question presented to the Court is
whether ESA section 7 constitutes an independent source of authority, requiring federal
agencies to comply with its consultation and “no jeopardy” requirements even though the
program statute states that the agency “shall” act when enumerated criteria are satisfied.

The Superfund Act and Contribution Suits: United States v. Atlantic Research Corp.
Procedural history: Atlantic Research Corp. v United States, 459 F.3d 827 (8th Cir.
2006), pet. for cert. granted, 127 S. Ct. 1144 (Jan. 19, 2007) (No. 06-562). To be
argued April 23, 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, a liable party (such as the site owner) waits for the government to clean up the
site and then seek reimbursement from the liable party, or the government may order 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

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is, without waiting for a government cleanup order or cost-recovery effort — and then
seeks contribution from other CERCLA-liable parties.
Two provisions of CERCLA authorize, or arguably authorize, such contribution
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 when EPA has filed the requisite civil action against the liable party
(ordering cleanup or seeking reimbursement). However, the Court expressly reserved the
question 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 will be more willing to clean up without waiting
for EPA attention (which, given the large number of contaminated sites, often never
comes) if they can get reimbursement for cleanup costs beyond their fair share.
The Eighth Circuit decision squarely presents the Supreme Court with this section
107(a)(B) question, holding as it did 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).
Solid Waste “Flow Control”: United Haulers Ass’n v. Oneida-Herkimer Solid Waste
Management Authority.
Procedural history: United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste
Management Auth.,261 F.3d 245 (2d Cir. 2001), on appeal from remand, 438 F.3d
150 (2d Cir. 2006), pet. for cert. granted, 127 S. Ct. 35 (Sept. 26, 2006) (No. 05-
1345). Argued Jan. 8, 2007.
The interstate flow of municipal solid waste has long interested the courts, which
have repeatedly struck down state and local efforts to restrict this flow as incompatible
with the “dormant commerce clause.” The dormant commerce clause, held to be implicit
in the Constitution’s Commerce Clause, bars states and localities from imposing undue
burdens on interstate commerce. The interstate-waste court rulings, including no fewer
than five by the Supreme Court, have involved both state/local restrictions on import of
solid waste from other states and typically local requirements, called “flow control,” that
all waste generated within the jurisdiction be disposed of at a designated solid waste
facility.
United Haulers concerns flow control. In 1994, the Supreme Court struck down a
county flow control ordinance, applying the “strict scrutiny” test under which explicit
discriminations against interstate commerce are almost always found to violate the
dormant commerce clause. C&A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383
(1994). The designated transfer facility in Carbone was privately owned, however, while

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the designated facilities in the present case are public. The question is, does this public-
private distinction make a difference to the dormant commerce clause analysis?

The district court found the flow control laws unconstitutional under Carbone.
However, the Second Circuit reversed, finding the public-private distinction to be
dispositive. First, said the circuit court, the public nature of the designated facility here
meant that no in-state private facility was favored over an out-of-state private facility.
This, it concluded, meant that the strict scrutiny used in Carbone must give way here to
the much laxer balancing test used when the state/local impact on interstate commerce is
only incidental. Under that test, the impacts on interstate commerce are constitutional
unless “clearly excessive” in relation to the putative local benefits. The court found the
clearly excessive standard not met here and upheld the flow control ordinances. Second,
given that the balancing test was satisfied, there was no need to address the “market
participant exemption” to the dormant commerce clause. Under this well-settled
exemption, a government regulation does not implicate the dormant commerce clause if
the government, instead of regulating the market, is itself a participant in it. The rationale
is simple enough: because private actors may choose to discriminate against interstate
commerce, the government when participating in a market as a private actor (arguably the
county-owned waste collection facilities) may do the same.
What might the Supreme Court do? Looking to the past, each of the Supreme
Court’s five decisions in the waste-flow restriction area struck down the restriction on
dormant commerce clause grounds, each time applying strict scrutiny. This suggests that
the Court in the present case will be interested in whether heightened scrutiny applies
notwithstanding the public ownership of the designated facility, perhaps on the ground
that haulers of curbside trash in the affected counties are still locked out of the interstate
market in selecting a receiving facility. If the ordinances are held to fail the applicable
constitutional test, the Court likely will pursue whether the market participant exemption
applies. The argument against application of the exemption is that although a private
owner of a trash collection facility could freely discriminate among recipients of the
processed waste, it could not demand that haulers collecting the waste curbside bring it
to that facility. Thus, this argument concludes, neither can a public owner of a collection
facility under the market participant exemption.

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