The U.S. Supreme Court’s decision to hear arguments on the Environmental Protection Agency’s authority to regulate greenhouse gas emissions from cars and power plants will have a significant impact in Michigan, where the automobile industry still plays a crucial role in the state’s economy.

Several environmental groups filed an administrative petition in 1999 demanding that the EPA establish tailpipe emission standards for CO2 and other greenhouse gases under the Clean Air Act. The EPA, not known for quick decisions, took until August 2003 to deny the petition. In its denial, the EPA stated that even if it was determined that the agency had the authority to regulate tailpipe emissions for greenhouse gases, it did not intend to do so as a matter of policy.

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The agency’s response was not only the correct one but also refreshingly candid, standing in contrast to the typical regulatory overreach we have come to expect from federal agencies. Subsequently, several states and environmental groups appealed the agency’s decision to the U.S. Circuit Court in Washington, D.C. The court, in a split decision, ruled that the agency is only required to regulate emissions that may reasonably be anticipated to endanger public health or welfare.

The court concluded that the EPA relied on sound scientific information regarding the uncertainty about the effects of greenhouse gas emissions. Unhappy with the Circuit Court decision, states primarily from the Northeast and West Coast, along with several environmental groups, appealed to the U.S. Supreme Court.

Given the position on climate change of most environmental groups, and their general aversion to fossil fuel-powered cars, it is not surprising they would appeal the circuit court decision to the U.S. Supreme Court. The states involved in this suit, however, have a different motivation. Over several years, the Northeast states have sought and secured EPA requirements that drastically reduce power plant emissions from Midwestern and Southern states. But even with these reductions from upwind, coal-fired power plants, it has still proven difficult for high-traffic metropolitan areas in the Northeast to comply with tough new standards for ozone and fine particulate matter. A mandated nationwide reduction in CO2 would likely force people toward new and expensive technologies that would overall reduce emissions, ozone and fine particulate matter.

Having served for a number of years as Michigan’s representative to a national group of state environmental officials analyzing the movement of ozone across state lines, it was apparent to me more than once that Northeast officials had settled on a strategy to put everyone at the same competitive disadvantage they suffered as a result of their thickly congested metropolitan areas.

Under this argument, if all states had to reduce carbon dioxide emissions, the Northeast states would no longer be at a competitive disadvantage with states that more easily comply with these standards. Since the Northeast states are frequently in non-compliance with federal regulations, it would be more politically and economically feasible for these states if the federal government imposed nationwide regulations on gas emissions, spreading the pain more equally.

The fact is that carbon dioxide is not a pollutant under the Clean Air Act, and no amount of pressure from environmental groups or states, or judicial activism, should make it so.

Unfortunately for Michigan, federal mandates restricting CO2 emissions would disproportionately affect the auto industry and worsen its already precarious financial situation. While free markets allow consumers to choose, and reward manufacturers who effectively respond to those choices, government mandates often create disruptive and unworkable constraints that do more harm than good.

In hearing this case, the U.S. Supreme Court has another opportunity to define the proper role of federal agencies in interpreting statute. Whether you believe that carbon dioxide emissions from vehicles should or should not be regulated, that is not the principle in this case. The critical principle before the court is ensuring that federal agencies only regulate when they have been given specific and definitive authority by Congress to do so. Let’s hope the Supreme Court gets it right.

