MORE ON THIS STORY: On the Massachusetts v. EPA sidelines

TEXT OF STORY

KAI RYSSDAL: Global warming reaches the nation's highest court tomorrow. Or at least the legal wrangling does with oral arguments in "Massachusetts versus the EPA." The case actually involves a dozen states and other plaintiffs trying to force a reluctant Environmental Protection Agency to regulate carbon dioxide emissions.

Environmental groups are allied with the states. Industry is generally siding with the EPA. But notice we said "generally." That's because climate change is producing cracks not only in Arctic glaciers, but also big business as well.

Sarah Gardner joins us with more from the Marketplace Sustainability Desk.

---

SARAH GARDNER: The case before the court tomorrow centers on this question: Does the EPA have authority under the Clean Air Act to regulate carbon dioxide as a pollutant? The plaintiffs say yes and hope the court will push the EPA to start regulating CO2 emissions. The EPA says no, the law never intended to give it the power to curb greenhouse gases. Of course, the legal arguments aren't that simple. Neither is corporate America's position.

BRENT DORSEY: Entergy is supportive of mandatory greenhouse gas regulation because we feel the voluntary has not been successful.

Carmakers, though, beg to differ.

BERQUIST: Carbon dioxide is not a pollutant and it's not regulated under the Clean Air Act.

Big business can't agree on greenhouse gas regulation. Many utilities are dead set against caps on CO2. But others are begging the government to set some limits.

DORSEY: We're just trying to get the certainty for planning.

Brent Dorsey is with Entergy, a major power company based in New Orleans. Entergy broke ranks with its own trade association when it came out in favor of carbon regulation. And it's not because it wants to save the world. Entergy is the country's second-largest generator of nuclear power. That doesn't emit CO2 so if carbon is taxed or capped, it could put nuclear at a competitive advantage. But before Entergy invests in more nuclear plants, company execs wants that "if" resolved.

DORSEY: Until there is certainty in terms of regulation, decisionmakers are going to be faced with either flawed decisions or wrong decisions.

Some companies, like the Aspen Skiing Company, want CO2 regulated because they believe climate change will destroy their industry. Others, like GE, are investing heavily in green technology and may profit from carbon regulation. And then, says regulation critic Marlo Lewis, there's Wall Street.

MARLO LEWIS: Y'know if you're a trader, whatever the commodity is, whether it's pork bellies or stock or carbon credits, you make a percentage on the sale or the purchase of every trade that you handle. And so you have, unsurprisingly, companies like Goldman Sachs, that are really enthusiastic about a cap and trade program.

But Goldman Sachs' position on greenhouse gas regulation won't likely affect the outcome of Massachusetts versus EPA. Nor will any other company's. Big business, however, does carry weight in Congress where their lobbying efforts speak loudly.

Mindy Lubber is president of CERES, a coalition of investors and environmentalists.

MINDY LUBBER: We are seeing very new players saying we must act sooner rather than later. We're talking about Wal-Mart, we're not talking about Ben & Jerry's or Timberland. So the times are a'changing.

No matter what the Supreme Court decides in "Massachusetts versus EPA," the pressure to regulate CO2 in the United States is building.

MOON: Sarah Gardner from the Marketplace Sustainability Desk. Before I let you go, Sarah, play this Supreme Court case out for me. What if the justices rule that the EPA does have the authority to regulate CO2?

GARDNER: Well, just to make clear, Bob, the justices won't rule on this case until the spring. But several things could happen. If the justices rule that the EPA must regulate carbon dioxide — and that's a very big if — then that would be earth shaking. It would repudiate the Bush administration view that capping greenhouse gases should be voluntary. Car makers would be under pressure to improve fuel economy and, long-term, it would have implications for cutting emissions at power plants as well.

The court could, however, issue a more fuzzy ruling. That, yes, the EPA has the authority to regulate carbon but that the Clean Air Act doesn't compel it to. So, if that happens, then I doubt we'd see the EPA — under this Administration at least — leaping at the chance to regulate.

MOON: OK, now, what about the flip side? What if the justices reject the plaintiffs' arguments completely, and basically they affirm the EPA's view: the agency can't and shouldn't be regulating greenhouse gases?

GARDNER: That would be an immediate blow to California, actually. California has issued new vehicle emission standards and automakers are suing to block them. The car companies could then be able to argue, Look, if a federal agency like the EPA doesn't have the authority to regulate CO2, how can a state do it? So it would not bode well for California and some other states that want to impose stricter fuel economy standards in the name of cutting greenhouse gases.

MOON: And it wouldn't be good for controlling greenhouse gases in general.

GARDNER: True, it would deal a blow to groups fighting for any kind of government action to fight global warming. Especially if the court takes the very hard-line position that the plaintiffs in this case don't even have legal standing to bring this lawsuit because they can't prove that greenhouse gases are causing them harm. That would be devastating to environmental groups. But if the justices simply reject their arguments and rule that the EPA has no business regulating carbon, I think environmentalists and other advocates of regulation will just increase pressure on Congress to do it.

MOON: Sarah Gardner, thank you.

GARDNER: Thank you.