For a number of years, the U.S. federal tax code has imposed a tax on petroleum that finances the Oil Spill Liability Trust Fund, an earmarked fund to help cover the costs of oil spills. BP’s massive 2010 oil spill in the Gulf of Mexico provided an unprecedented test for the Trust Fund and underscored the question of who pays for the costs of oil spills. The BP spill taught important lessons about the role of the tax and the Trust Fund, and the federal regulatory regime governing the responsible parties’ liability.

Natural resources, such as clean air and water, are public resources shared by all, yet owned by no one in particular. Since public resources are not sold in a free marketplace, they have no free market value that takes into account factors such as scarcity and environmental degradation. However, if such public goods are carelessly used without any rules governing their use, such resources inevitably succumb to the “tragedy of the commons,”2 under which resources that are free or available to everyone may be ruined by abuse or overuse.

Like a tripartite juggernaut, all three branches of the U.S. federal government are actively grappling with climate change in kind: legislation from the U.S. Congress; regulation from the U.S. Environmental Protection Agency (EPA); and litigation in the judiciary all may come to bear on carbon emissions as a causal genesis of climate change. When all three branches of the federal government concurrently engage in questions of the same subject matter, interesting separation-of-powers concerns are implicated.

For those interested in the intersection of global greenhouse gas (GHG) regulation and responsible energy policy, December 23, 2010, was a day worth remembering. Over at the U.S. Environmental Protection Agency (EPA), regulators were announcing a schedule for rulemaking for new source performance standards (NSPS)1 for GHG emissions from refineries and power plants. Meanwhile, the Wall Street Journal2 ran a lead editorial reflecting upon an apparent division in the ranks among power companies.

The political opponents of regulation addressing climate change claim that the Clean Air Act (CAA) is a “fossil” neither intended nor suitable for addressing the challenges of climate change. Legal and historical analysis suggests otherwise. Both the text of the Act, as interpreted by the U.S. Supreme Court in Massachusetts v. U.S. Environmental Protection Agency (EPA), and the legislative history indicate a congressional intent to regulate emissions of pollutants that pose a risk of causing changes in worldwide climate.