On April 2, 2007, the Supreme Court made a 5-4 landmark ruling in Massachusetts v. EPA that may have long term implications for the automobile industry. The court ruled that the Environmental Protection Agency (EPA) has the authority to and should consider actions to establish emissions regulations for new automobiles under the provisions of the Clean Air Act.

Massachusetts, along with other states, local governments and organizations sued the EPA on the grounds that by refusing to regulate the automobile industry for greenhouse gas emissions, the EPA was not fulfilling its obligations under the Clean Air Act, a case which Massachusetts and the others had lost in the lower courts. The Clean Air Act is a federal law regulating air emissions from multiple sources and giving the Environmental Protection Agency the authority to enact National Ambient Air Quality Standards (NAAQS) for the sake of public health as well as the environment. When Massachusetts v. EPA reached the Supreme Court, in question was whether the Clean Air Act gave the EPA the power to regulate new vehicle emissions, and if so, whether the reasons given by the Environmental Protection Agency for neglecting to do so were in accordance with the Clean Air Act.

The EPA’s main argument was that it did not interpret the language of the Clean Air Act as giving the EPA authority to establish regulations for new car emissions, adding that even if it had the authority, the agency did not believe that regulating emissions in the automobile industry would be a sensible decision. The EPA reasoned that a definite causal relationship between greenhouse gas emissions and global warming had not been established, among other reasons for believing that regulating car emissions would be unwise.

The court ruled in a 5-4 decision that the EPA did in fact have the authority to regulate such matters, asserting that greenhouse gases fall well into the definition of “air pollutant" as it is defined within the text of the Clean Air Act. Further, the court ruled that the EPA had cited policy conflicts as justification for its claim that it would not be a wise decision to regulate the automobile industry, while reasons for the claim should have relied on scientific findings.

The court did not oblige the EPA to take actions regulating the industry, rather it determined that the EPA does in fact have the authority to do so, and must provide reasons for not regulating which are in accordance with the Clean Air Act.