For industrial companies, the most important regulatory issue is the conflict over the control of greenhouse gas (GHG) emissions. The battle will be waged in all three branches of government, and the outcome will have major impacts on corporate costs and investment decisions.
Legislative Branch: Senate Democrats have abandoned efforts to establish a comprehensive statutory scheme to limit GHG emissions. Proponents are trying to identify scaled-down, sector-specific approaches to GHGs that might be able to pass before Congress adjourns.
Executive Branch: The Administration has refused to accept the legislative stalemate and will drive the policy process forward. It will exercise existing regulatory authority to impose GHG limits on the most important sources of emissions and force opponents of its policies to overturn them in court.
Starting January 2nd, EPA will regulate GHG emissions under the Clean Air Act and will ultimately require every major industrial polluter to obtain a permit limiting its emissions. EPA has established an incremental, phase-in process that will apply immediately to the largest sources (electric generating plants) and will later be expanded in steps to include other facilities.
In May, the Administration adopted a rule that regulates GHG emissions and increases the minimum mileage requirement for cars and light-duty trucks. In August, the White House began deliberations on emission limits and enhanced fuel economy standards for medium- and heavy-duty trucks. In late September, the Administration is scheduled to announce a new regulatory process to tighten regulations on cars and light trucks through 2025.
Judicial Branch: The Administration's major GHG initiatives have been challenged in court. These include EPA's finding that carbon dioxide emissions endanger the public health and welfare and its adoption of a phased-in process for GHG permitting, rather than a requirement that applies immediately to all GHG emitters, large and small alike.
In turn, the Administration has sought to minimize judicial involvement and reserve to the political branches the authority to make the critical policy decisions concerning GHG regulation. In August, the Department of Justice intervened in a case in which electricity generators sought Supreme Court review of a decision which held that eight States had standing to seek to force utilities to limit GHG emissions under the federal common law of nuisance. Justice argued that the Court should vacate the lower court decision, on the ground that the States lack "prudential standing" to ask that a court make the multiple policy judgments that would be necessary to regulate GHG emissions appropriately. It argued that these decisions should be made by politically accountable officials with expertise and who can pursue a coherent national strategy.
The simultaneous battles in all three Branches will generate substantial uncertainty concerning the basic ground rules surrounding GHG regulation. This will deprive many companies of the certainty they need to plan rationally their future operations and investments.
John F. Cooney is a partner in the Washington, D.C., office of Venable.
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