U.S. Supreme Court Rejects Climate Change Nuisance Claims

In an 8-0 opinion, the U.S. Supreme Court held on June 20 that federal courts do not have jurisdiction to hear federal common law nuisance claims relating to greenhouse gas (“GHG”) emissions, because the authority to regulate GHGs has been delegated to EPA – not to federal courts. American Electric Power Co. v. Connecticut (“AEP”).[1] The AEP decision reverses a ruling by the Second Circuit Court of Appeals. See S. Jones Supreme Court to Decide Whether Nuisance Action for GHG Emissions May Proceed, Marten Law Environmental News (December 10, 2010). While rejecting the merits of the plaintiffs’ claims, the Court held that the plaintiffs had standing to bring them on a 4-4 split among the Justices. Justice Sotomayer, who had participated in the Second Circuit decision, recused herself.[2]

The Court did not decide whether state common law claims would also be barred. The Second Circuit had not reached that issue, and the parties did not brief it to the Court; consequently, the Court remanded that issue.

The opinion may be viewed at this link.[3]

Background

AEP was brought in 2004 by eight States, three nonprofit land trusts and the City of New York. The suit sought to hold the five named defendants – four private utilities and the Tennessee Valley Authority – “jointly and severally liable for … global warming.”[4] The plaintiffs claimed the defendants[5] “are the five largest emitters of carbon dioxide in the United States.”[6] The plaintiffs maintained that, by contributing to global warming, the defendants’ GHG emissions created a “substantial and unreasonable interference with public rights” in violation of the federal common law of interstate nuisance, or alternatively, under state tort law.[7] The plaintiffs sought an injunction capping the defendants’ GHG emissions and imposing a requirement that those emissions be reduced by a specified percentage each year for a decade.[8]

The district court dismissed the case on the grounds it raised non-justiciable political questions. The lower court found that the plaintiffs’ claims could not be adjudicated without the court making wide-sweeping policy determinations regarding the level at which to cap the defendants’ emissions, the appropriate emission reductions to impose upon the defendants and a schedule for doing so. The district court also found that in order to adjudicate the plaintiffs’ claims it would need to balance the implications of the requested 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.[9]

Three years later, in 2007, the Second Circuit concluded: (1) that the case did not present non-justiciable political questions; (2) that the federal common law on nuisance governed the plaintiffs’ claims and that the plaintiffs had stated claims under the federal common law; and (3) that the claims were not preempted by either EPA regulation or Congressional action.[10] See S. Jones Second Circuit Allows Federal Nuisance Claims for Global Warming to Proceed, Marten Law Environmental News (September 23, 2009).

American Electric Power and the other defendants (the “Utilities”) filed a petition for certiorari, maintaining that the States and other plaintiffs lacked standing to raise nuisance claims. They argued that the Clean Air Act directs that regulation of GHG emissions be undertaken by the EPA and that climate change regulation presents a non-judiciable political question.[11]

The Solicitor General filed a brief on behalf of the Tennessee Valley Authority supporting the Utilities’ request for certiorari. See S. Jones, Solicitor General Sides With Utilities, Asking Supreme Court to Block Common Law Climate Change Lawsuit, Marten Law Environmental News (September 2, 2010). The Solicitor General 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 claims 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 GHGs under the Clean Air Act.

Political Questions and Standing

While rejecting the availability of federal common law nuisance claims, the AEP decision affirmed the Second Circuit’s decision to exercise jurisdiction, as well as the Circuit Court’s rejection of the district court’s ruling that the case raised non-justiciable political questions. The affirmance came as a result of a 4-4 division among the Court:

The petitioners contend that the federal courts lack authority to adjudicate this case. Four members of the Court would hold that at least some plaintiffs have Article III standing under [EPA v.] Massachusetts, which permitted a State to challenge EPA’s refusal to regulate greenhouse gas emissions, and, further, that no other threshold obstacle bars review. Four members of the Court, adhering to a dissenting opinion in Massachusetts, or regarding that decision as distinguishable, would hold that none of the plaintiffs have Article III standing. We therefore affirm, by an equally divided Court, the Second Circuit’s exercise of jurisdiction and proceed to the merits.[12]

Displacement of Federal Common Law by Congressional and Agency Action

While the Court stated in Erie R. Co. v. Tompkins[13] that “there is no federal common law,”[14] opinions issued since Erie have noted “the emergence of a federal decisional law in areas of national concern.”[15] Justice Ginsberg noted that environmental protection is “undoubtedly an area ‘within national legislative power,’ one in which federal courts may fill in ‘statutory interstices’ and, if necessary, even ‘fashion federal law.’”[16]

Notwithstanding this fact, the “[r]ecognition that a subject is meet for federal law governance, however, does not necessarily mean that the federal courts should create the controlling law.”[17]

“[W]hen Congress addresses a question previously governed by a decision rested on federal common law,” the Court has explained, “the need for such an unusual exercise of law-making by federal courts disappears.” Legislative displacement of federal common law does not require the “same sort of evidence of a clear and manifest [congressional] purpose” demanded for preemption of state law. [18]

Relying on this logic, the Court rejected plaintiffs’ federal common law claims for nuisances caused by GHGs, since “[a]ny such claim would be displaced by the federal legislation authorizing EPA to regulate carbon-dioxide emissions.”[19]

When the plaintiffs filed their initial claims in 2004, there had been no regulation of GHGs by EPA, a fact that the Second Circuit considered dispositive: “Until EPA completes the rulemaking process, we cannot speculate as to whether the hypothetical regulation of greenhouse gases under the Clean Air Act would in fact ‘spea[k] directly’ to the ‘particular issue’ raised here by Plaintiffs.”[20]

In 2007, the Supreme Court held in Massachusetts v. EPA that the Clean Air Act authorizes federal regulation of emissions of carbon dioxide and other GHGs.[21] Subsequent to the Massachusetts decision, the U.S. Environmental Protection Agency expressed the view that GHGs are “without a doubt, physical chemical substances emitted into the ambient air.” This language comes from EPA’s “Endangerment and Cause or Contribute Findings for Greenhouse Gasses under Section 202(a) of the Clean Air Act at 80 (December 7, 2009) (quoting Massachusetts v. EPA, 549 U.S. at 529).[22] Since makings its Endangerment Finding, EPA has issued its Tailpipe Emission Standards (Mobile Source Rule), its Tailoring Rule, Rules Authorizing EPA to Limit GHG Emissions under State PSD Permit Programs, and two regulations narrowing implementation of the Tailoring Rule. For a review of EPA’s regulatory actions on GHGs subsequent to Massachusetts, see R. Prugh, Proposed Legislation Seeking to Block EPA Greenhouse Gas Regulation Picks Up Speed, Marten Law Environmental News (February 17, 2011).

Relying on these actions, the Court held that Congress’ delegation under the Clean Air Act and EPA’s regulatory efforts have “displaced” any federal common law nuisance claims the plaintiffs might have had:

We hold that the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants. Massachusetts made plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act. And we think it equally plain that the Act “speaks directly” to emissions of carbon dioxide from the defendants’ plants.[23]

The Court rejected the notion that federal common law is not displaced until EPA actually exercises its regulatory authority. Instead, the question for displacement purposes is “whether the field has been occupied, not whether it has been occupied in a particular manner.” Here, Congress delegated to EPA the decision whether and how to regulate carbon dioxide emissions from power plants.[24]

EPA’s Regulatory Actions Are Still Subject to Judicial Review and Other Enforcement

While rejecting their federal common law claims, the Court made clear that the plaintiffs had other available means to force restrictions on GHGs. These remedies include both direct judicial review of EPA’s regulatory actions, civil enforcement in the event EPA fails to act, or rulemaking petitions.[25] Pointing to these “multiple avenues for enforcement,” the Court stated that “[t]he Act itself thus provides a means to seek limits on emissions of carbon dioxide from domestic power plants – the same relief the plaintiffs seek by invoking federal common law. We see no room for a parallel track.”[26]

But while judicial review provides oversight on EPA’s actions, it does not allow the federal courts to supplant EPA’s role as the place where regulations should be initially developed. “The Clean Air Act entrusts [the] complex balancing [of policy, environmental benefits and potential economic disruption] to EPA in the first instance.”[27]

The judgments the plaintiffs would commit to federal judges, in suits that could be filed in any federal district, cannot be reconciled with the decisionmaking scheme Congress enacted. The Second Circuit erred, we hold, in ruling that federal judges may set limits on greenhouse gas emissions in face of a law empowering EPA to set the same limits, subject to judicial review only to ensure against action “arbitrary, capricious, … or otherwise not in accordance with law.”[28]

Validity of Plaintiffs’ State Law Claims Not Addressed

In the case below, the plaintiffs asserted claims under state law, namely, the law of each state where the defendants operated their power plants. Based on its holding that the federal common law governed, the Second Circuit did not reach these claims.[29] Because the Court held the plaintiffs’ federal common law claims had been displaced by EPA’s regulation under the Clean Air Act, the Court remanded the question of whether or not the plaintiffs retained valid claims under state nuisance law.[30]

Conclusion

In rejecting the Second Circuit’s decision, the Court made clear that Congress’ decision to entrust the development of GHG regulation to EPA in the first instance means it is not for the federal courts to create ad hoc rules via case-by-case adjudication. Given the current Congressional debate over EPA’s ability to undertake climate change regulation, the decision raises an interesting question, namely, whether cases such as these would be revived in the event Congress removed EPA’s regulatory authority. At least for the time being, however, the Court’s view is that it is EPA’s job to fashion regulations, and the courts’ responsibility to review them, not vice versa.

For more information, please contact Steve Jones or any member of our Climate Change practice group.