In a 5-4 decision, the court said the Clean Air Act gives the Environmental Protection Agency the authority to regulate the emissions of carbon dioxide and other greenhouse gases from cars.
Ever since the Bush Administration came to power, the EPA has refused all regulation of global warming emissions — emissions from cars and power plants — saying it lacked the authority, reports CBS News correspondent Wyatt Andrews.
But Monday's decision was a hard slap to the administration.
Greenhouse gases are air pollutants under the landmark environmental law, Justice John Paul Stevens said in his majority opinion.
"The justices told the White House it hasn't been correctly interpreting the Clean Air Act when it comes to trying to stop global warming, that it has been applying the law too restrictively, not aggressively enough, and that people affected by it have a right to go to court to challenge the way the Bush administration is regulating greenhouse gases," said CBS News legal analyst Andrew Cohen. "So it's a major blow to the White House."
The court's four conservative justices — Chief Justice John Roberts and Justices Samuel Alito, Antonin Scalia and Clarence Thomas — dissented.
Many scientists believe greenhouse gases, flowing into the atmosphere at an unprecedented rate, are leading to a warming of the Earth, rising sea levels and other marked ecological changes.
The Supreme Court ruling has turned the auto industry upside down, reports CBS News correspondent Anthony Mason.
From the outset, U.S. automakers have resisted tougher emissions standards, and the EPA has been on their side. Now, suddenly, the picture has changed.
"It's gonna be more difficult to sell large pickups, sport utilities, the big vehicles on which they make most of their money," said John Casesa, a veteran industry analyst.
The politics of global warming have changed dramatically since the court agreed last year to hear its first global warming case.
"In many ways, the debate has moved beyond this," said Chris Miller, director of the global warming campaign for Greenpeace, one of the environmental groups that sued the EPA. "All the front-runners in the 2008 presidential campaign, both Democrats and Republicans, even the business community, are much further along on this than the Bush administration is."
Democrats took control of Congress last November. The world's leading climate scientists reported in February that global warming is "very likely" caused by man and is so severe that it will "continue for centuries." Former Vice President Al Gore's movie, "An Inconvenient Truth" — making the case for prompt action on climate change — won an Oscar. Business leaders are saying they are increasingly open to congressional action to reduce greenhouse gases emissions, of which carbon dioxide is the largest.
Carbon dioxide is produced when fossil fuels such as oil and natural gas are burned. One way to reduce those emissions is to have more fuel-efficient cars.
The court had three questions before it.
The court said yes to the first two questions. On the third, it ordered EPA to re-evaluate its contention it has the discretion not to regulate tailpipe emissions. The court said the agency has so far provided a "laundry list" of reasons that include foreign policy considerations.
"As a result of this ruling now the EPA will have to more fully justify its reasons not to regulate greenhouses gases — something the White House has so far been unwilling to do," Cohen said. "And don't forget that the new Democratically-controlled Congress can put even more pressure on the administration by changing the Clean Air Act to make it more explicit that greenhouses gases ought to be regulated."
The majority said the agency must tie its rationale more closely to the Clean Air Act.
"EPA has offered no reasoned explanation for its refusal to decide whether greenhouse gases cause or contribute to climate change," Stevens said. He was joined by his liberal colleagues, Justices Stephen Breyer, Ruth Bader Ginsburg and David Souter, and the court's swing voter, Justice Anthony Kennedy.
The lawsuit was filed by 12 states and 13 environmental groups that had grown frustrated by the Bush administration's inaction on global warming.
In his dissent, Roberts focused on the issue of standing, whether a party has the right to file a lawsuit.
The court should simply recognize that redress of the kind of grievances spelled out by the state of Massachusetts is the function of Congress and the chief executive, not the federal courts, Roberts said.
His position "involves no judgment on whether global warming exists, what causes it, or the extent of the problem," he said.
The decision also is expected to boost California's prospects for gaining EPA approval of its own program to limit tailpipe emissions of greenhouse gases. Federal law considers the state a laboratory on environmental issues and gives California the right to seek approval of standards that are stricter than national norms.