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Supreme Court to Decide Whether Nuisance Action for GHG Emissions May Proceed

December 9, 2010

The Supreme Court this week granted certiorari in a widely-watched environmental case addressing whether states and/or private parties can use the federal common law of nuisance as a vehicle to collect damages for injury due to greenhouse gases (“GHGs”), and impose court-ordered emissions caps – something Congress has been reluctant to do. American Electric Power Co. v. Connecticut, No. 10-174 (AEP). Resolution of the AEP case will have major implications for utilities and other large emitters of GHGs – the initial case named the Tennessee Valley Authority (TVA) and four other large electric utilities as defendants, all of which operate a large number of coal-fired power plants.

Background

AEP was brought by eight States, three nonprofit land trusts, and the City of New York, seeking to hold the five named defendants “jointly and severally liable for … global warming.”[1] American Electric Power and the other defendants (the Utilities) filed a petition for certiorari on August 2, maintaining that the States and other plaintiffs lacked standing to raise nuisance claims. The Utilities argued the Clean Air Act directs that regulation of GHG emissions be undertaken by the EPA, and also because climate change regulation presents a non-judicial political question.[2]

The Solicitor General filed a brief on behalf of TVA supporting the Utilities’ request for certiorari, though for different reasons than those advanced by the Utilities. Acting Solicitor General Neal Kumar Katyal grounded his request for certiorari on EPA’s issuance of a number of new regulations since the initial suit was filed, maintaining that the newly-finalized regulations displaced the type of common-law claim that the Second Circuit had sanctioned. The Solicitor General urged the Court to vacate the Second Circuit’s decision and remand the case for further proceedings, this time taking into account the Administration’s push to regulate greenhouse gases under the Clean Air Act.

The AEP decision was reviewed in this newsletter when it was initially issued by the Second Circuit,[3] as was the Solicitor General’s joinder in the Utilities request for certiorari. See Second Circuit Allows Federal Nuisance Claims for Global Warming to Proceed, Marten Law Environmental News (September 23, 2009); Solicitor General Sides With Utilities, Asking Supreme Court to Block Common Law Climate Change Lawsuit, Marten Law Environmental News (September 2, 2010).

The Second Circuit’s AEP Decision

The AEP lawsuits (two consolidated actions) were originally brought in the Southern District of New York by the States of Connecticut, New York, California, Iowa, New Jersey, Rhode Island, Vermont, Wisconsin, the City of New York, the Open Space Institute, the Open Space Conservancy, and the Audubon Society of New Hampshire. The plaintiffs sought an injunction curbing the carbon dioxide emissions of six major power producers: the American Electric Power Company, the American Electric Power Service Company, the Southern Company, TVA, XCel Energy, Inc., and the Cinergy Corp.

The plaintiffs maintained that the defendants constituted the “five largest emitters of carbon dioxide in the United States and … among the largest in the world.” The plaintiffs alleged that the defendants’ combined annual emission of over 650 million tons of carbon dioxide contributed to global warming and, as a result, constituted a public nuisance. Part of the plaintiffs’ nuisance claim rested on their assertion that the defendants had “practical, feasible and economically viable options for reducing carbon dioxide emissions without significantly increasing the cost of electricity.”[4]

District Court Judge Loretta A. Preska dismissed both lawsuits on the grounds that they raised non-justiciable political questions. Judge Preska found that the plaintiffs’ claims could not be adjudicated without the court making wide-sweeping initial policy determinations regarding: (1) the level at which to cap the defendants’ carbon dioxide emissions; (2) the emission reductions to impose upon the defendants and a schedule for doing so; and, (3) determining and balancing the implications of such relief on the United States’ ongoing negotiations with other nations concerning global climate change and the implications of the requested relief on the United States’ energy sufficiency and national security.[5]

After taking more than three years to review Judge Preska’s decision, the Second Circuit concluded: (1) that the case did not present non-justiciable political questions; (2) that federal common law on nuisance governs the plaintiffs’ claims and that the plaintiffs had stated claims under the federal common law; and (3) that the plaintiffs’ claims were not preempted by either EPA regulation or Congressional action.[6]

Fourth, Fifth and Ninth Circuit Decisions Will Be Affected by a Supreme Court Decision in AEP

The grant of certiorari in AEP will have consequences for similar suits in the Fourth, Fifth and Ninth Circuits. The Solicitor General’s position in his brief in support of certiorari echoes a Fourth Circuit ruling last July in another case involving TVA, North Carolina v. Tennessee Valley Authority.[7] In that case, the State of North Carolina and other plaintiffs argued that emissions of conventional air pollutants (nitrogen oxides, sulfur dioxide, and particulates) from TVA’s power plants constituted a public nuisance. The district court agreed and issued an injunction that would have required TVA to immediately install additional air pollution controls on a number of power plants. TVA appealed, and the Fourth Circuit reversed the district court’s decision and vacated the injunction.[8]

In October 2009, in Comer v. Murphy Oil, the Fifth Circuit joined the Second Circuit in reversing a dismissal of common law tort claims based on actions alleged to have caused climate change. While the Fifth Circuit’s initial ruling in the case would have allowed the common law nuisance claims to proceed on similar grounds to the Second Circuit’s AEP decision, the Fifth Circuit vacated that opinion and agreed to rehearing en banc. After agreeing to en banc consideration, however, the Court dismissed the appeal on grounds that it lacked a quorum to transact judicial business based on the disqualification and recusal of one of the nine judges who had vacated the panel opinion and judgment.[9]

Finally, the case of Native Vill. of Kivalina v. ExxonMobil Corp.,[10] is currently making its way through the Ninth Circuit. Kivalina was brought in 2008 by the Alaskan coastal village of Kivalina, which maintained that a loss of sea ice caused by climate change threatened the land where the village is located. Kivalina sued numerous oil and power companies, asserting federal common law claims of public nuisance, as well as private and public nuisance claims under California state law. The Northern District of California dismissed the suit on political question grounds, and Kivalina is seeking reversal of that decision by the Ninth Circuit.[11]

Questions Accepted for Resolution by the Court

In AEP, the Supreme Court accepted three questions for resolution:

  1. Whether states and private parties may seek emissions caps on utilities for their alleged contribution to global climate change;
  2. Whether a cause of action to cap carbon dioxide emissions can be implied under federal common law; and
  3. Whether claims seeking to cap carbon dioxide emissions based on a court’s weighing of the potential risks of climate change against the socioeconomic utility of defendants’ conduct would be governed by “judicially discoverable and manageable standards” or could be resolved without “initial policy determination[s] of a kind clearly for nonjudicial discretion.”[12]

The first question requires a determination of whether states and private parties have standing to seek emissions caps based on defendants’ alleged contribution to global climate change. On this issue, the Utilities argue that the plaintiffs cannot demonstrate sufficient causation to tie their claims for damages to the Utilities’ actions, nor would their alleged injury be redressed by imposing GHG emission caps on them. For their part, the plaintiffs argue, and the Second Circuit held, that standing is conferred by plaintiffs’ allegation that the defendants are contributing to a common-law nuisance.[13]

The second question is whether there is a federal common law cause of action which would allow a court to cap GHG emissions. The Utilities rely on the statutory scheme under the Clean Air Act, which they argue has preempted any federal common law nuisance claims under which the plaintiffs could seek equitable relief to curb GHG emissions. At the time it issued its opinion in AEP, the Second Circuit held that the Clean Air Act does not displace the plaintiffs’ common-law claims, unless and until the Environmental Protection Agency took regulatory action to control such emissions.[14]

The third question is whether the plaintiffs’ suit presents a non-justiciable political question. This was the basis on which many of the district courts have dismissed similar cases in the Fourth, Fifth and Ninth Circuits, as well as the basis for Judge Preska’s decision dismissing the initial claim in AEP. Before the Second Circuit, the Utilities argued that it is impossible to balance the potential risks of climate change against the socioeconomic value of the Utilities’ conduct, maintaining that development of GHG emissions caps requires policy trade-offs reserved for the President and Congress. The Second Circuit rejected this position, holding that “[t]hat Plaintiffs’ injuries are part of a worldwide problem does not mean Defendants’ contribution to that problem cannot be addressed through principled adjudication.”[15]

Argument Anticipated This Spring

Justice Sotomayor has recused herself based on the fact that she served on the Second Circuit panel that heard the case (although she did not participate in the ruling itself). As a result, the case will be decided by only eight Justices. If the Justices ultimately divide 4-4, the lower court decision will be affirmed. A date for oral argument has yet to be set, but is anticipated to be in the spring.

For more information on this case please contact any member of our Climate Change or Environmental Litigation practice groups.

[1] AEP Cert. Petition at 6 (quoting Pet. App. at 178a).

[2] AEP Cert Petition at i, 13, 20 and 26.

[3] The Second Circuit’s opinion appears at 582 F.3d 309 (2nd Cir. 2009).

[4] Complaint at ¶ 5, Civ. No. 04-5669; quoted in AEP, 582 F.3d at 317.

[5] Judge Preska’s opinion appears at Connecticut v. Am. Elec. Power Co., 406 F. Supp. 2d 265 (S.D.N.Y. 2005). At the time Judge Preska issued her opinion, it was reported in this newsletter. See District Court Judge Dismisses States’ Global Warming Lawsuit, Marten Law Group Environmental News (October 15, 2005).

[6] AEP, 582 F.3d at 315.

[7] North Carolina, ex rel. Cooper v. Tennessee Valley Authority, 615 F.3d 291 (4th Cir. 2010).

[8] 615 F.3d at 311-312.

[9] See Comer v. Murphy Oil, USA, 609 F.3d 1049 (5th Cir. 2010).

[10] 663 F. Supp. 2d 863, 879-80 (N.D. Cal. 2009).

[11] The Kivalina case and the Fifth Circuit’s consideration of the Comer case were reviewed in this newsletter. See Before the Deluge: Fifth Circuit Joins Second Circuit in Allowing Climate Change Tort Suits, while District Court Dismisses Similar Claims, Marten Law Environmental News (November 4, 2009).

[12] Initial analysis of the Court’s grant of certiorari can be reviewed at the SCOTUSBlog.com: American Electric Power Co., Inc. v. Connecticut.

[13] AEP, 582 F.3d at 315.

[14] Id. At the time the Second Circuit opinion was issued, the EPA had not yet promulgated the rules upon which the Solicitor General relied in his brief supporting certiorari.

[15] 582 F.3d at 331.

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