For those of you interested in intelligent legal analysis of yesterday’s Supreme Court decision in the Massachusetts vs. EPA case, see Jonathan Adler’s post and the links he provides at Volokh. See also this thread of his earlier comments on the decision, and this extensive Google News search of articles on the decision.
I have not been following the case closely, so I will avoid saying stupid things off the top of my head and just send you to Jon. He talks a lot about legal standing, and whether or not the states do have legal standing to sue the EPA in cases like this. Chief Justice Roberts dissented from the opinion on precisely this point.
I encourage you to read Jon’s NRO column, which does a very nice job of laying out the implications of the decision. After skimming the opinions and some of the news articles, my primary concern is that this ruling will lead to lots of money spent in federal bureaucratic processes and climate change litigation that may or may not lead to improved outcomes, and I think that money would be better spent in figuring out ways to reduce transaction costs and make Coasian bargaining among the various parties easier.
As with so many things, the lawyers will see most of the benefit from this, and as Jon points out, it’s not even clear that we can meet the climate-related policy objectives that this ruling is meant to serve.
And as much as I usually agree with John Whitehead, I disagree with him when he says
… you should think that CO2 is a pollutant, since it is an outcome of production and consumption that harms a third party (i.e., it is a negative externality). This gives government the, er, obligation to regulate to improve economic efficiency (i.e., social welfare).
Now, John may come back and tell me that he has some hidden sarcasm HTML code around that statement … but I’m gonna take it at face value. That statement is way, way, way too Pigouvian for my taste, and way, way, way too Pigouvian to be good public policy. Particularly with something like CO2, which is an organic by-product of organic processes (yes, I am classifying combustion as an organic process), it is all the more important to remember Coase’s characterization of the problem as reciprocal, because it’s about conflicting uses of a scarce resource over which property rights are insufficiently well-defined to resolve the conflict.