On June 20, 2011, the U.S. Supreme Court, in an 8-0 decision, held that federal public nuisance claims seeking to enjoin the emission of “greenhouse” gases are barred (or, in the Court’s language, “displace[d]”) by the provisions of the federal Clean Air Act (the “Act”) and the Environmental Protection Agency’s (“EPA”) regulatory authority over greenhouse gases. See Am. Elec. Power Co., Inc. v. Connecticut, 564 U.S. ___, slip op. at 10 (2011) (“AEP”). The decision, which reversed a contrary ruling of the United States Court of Appeals for the Second Circuit, rejected attempts to resolve through the courts the complex scientific, technical, and policy issues surrounding global warming and greenhouse gas emissions, finding those issues already entrusted to, and better resolved by, the legislative branch and specialized federal agencies. While the AEP decision creates significant obstacles to litigation against utilities and other entities that emit greenhouse gases, open questions remain regarding the viability of such claims under theories different than those pursued in AEP.

Procedural Background

The AEP plaintiffs -- several state governments, a municipality, and three private land trusts -- brought suit against five major electric power companies in 2004, alleging that the defendants’ carbon dioxide emissions placed public lands, infrastructure, and health at risk, and that such emissions accordingly violated the federal common-law of interstate nuisance, a judge-made doctrine that has been applied to prohibit certain types of pollution or dumping of waste across state lines. Slip op. at 3-5. Plaintiffs sought injunctive relief to impose caps on each defendant’s emissions of carbon dioxide. Id. at 4-5. As previously reported, the district court dismissed plaintiffs’ claims, but the Second Circuit reversed. Slip op. at 5 (citing Connecticut v. Am. Elec. Power Co. Inc., 582 F.3d 309, 358, 371 (2d Cir. 2009)); see also Client Alert, “‘Climate Change’: Litigation- and Regulatory Update” (Mar. 31, 2010); Client Alert, “Recent Decisions Permit Claims That Private Companies Are Contributing to ‘Climate Change’ (Nov. 5, 2009).

The U.S. Supreme Court granted certiorari review of the Second Circuit’s decision with respect to three questions: (1) whether states and private parties have standing to seek injunctive relief against utility companies for their alleged contribution to harms claimed to arise from global climate-change; (2) whether a cause of action to cap carbon dioxide emissions can be implied under federal common-law; and (3) whether plaintiffs’ claims present non-justiciable political questions. See Client Alert, “‘Climate Change’ Litigation Update -- U.S. Supreme Court Grants Certiorari in Climate Change Lawsuit -- Will Decide Whether Companies May Be Sued for Their Greenhouse Gas Emissions and Resultant Contribution to Global Warming” (Dec. 20, 2010). As explained below, the Court’s answer to the second of these questions proved dispositive.

The Supreme Court’s Decision and Analysis

In an opinion written by Justice Ruth Bader Ginsburg, the Court held that plaintiffs’ claims were barred by the Clean Air Act, insofar as the Clean Air Act displaced the federal common-law of nuisance with respect to carbon-dioxide emissions. In reaching this conclusion, the Court noted at the outset that in Massachusetts v. EPA, 549 U.S. 497 (2007), the Court had held that the Clean Air Act authorizes the EPA to regulate emissions of carbon dioxide and other greenhouse gases. Slip op. at 10. The Court then noted that “[t]he test for whether congressional legislation excludes the declaration of federal common law is simply whether the statute ‘speak[s] directly to [the] question’ at issue.” Id. (citation omitted). Because the Court’s decision in Massachusetts v. EPA “made plain that emissions of carbon dioxide qualify as air pollution subject to regulation” under the Clean Air Act, the Act “‘speaks directly’ to emissions of carbon dioxide from the defendants’ plants,” thereby barring plaintiffs’ federal common-law claims. Slip op. at 10 (citing 549 U.S. at 528-29).

The Court rejected plaintiffs’ argument that because the EPA had not yet promulgated final regulations limiting greenhouse gas emissions, the federal common-law of nuisance remained applicable to such emissions. Slip op. at 12. The Court held instead that applicable federal statutes displace the federal common-law regardless of whether, or how, administrative agencies exercise their authority, stressing that “[t]he critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law.” Id. “Indeed,” the Court continued, even were the “EPA to decline to regulate carbon-dioxide emissions altogether at the conclusion of its ongoing [ ] rulemaking, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency’s expert determination.” Id. The Court additionally noted that “[i]t is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions . . . Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order.” Id. at 14.

Noting that the EPA currently is conducting a rulemaking to set standards for greenhouse gas emissions from fossil-fuel fired power plants (set to be completed in May 2012), the Court wrote that “[i]f the plaintiffs in this case are dissatisfied with the outcome of EPA’s forthcoming rulemaking, their recourse under federal law is to seek Court of Appeals review, and, ultimately, to petition for certiorari in this Court.” Slip op. at 13.

With respect to the question of plaintiffs’ standing to bring suit, the Court was evenly divided, 4-4;1 that tie resulted in an affirmance of the decision by the Second Circuit below that plaintiffs had standing. Slip op. at 6. Though that part of the Second Circuit’s holding was thus left intact, the Supreme Court’s decision in this respect did not set a legal precedent. The Court declined to address defendants’ argument that plaintiffs’ claims were barred by the political question doctrine.

Plaintiffs had also sought relief under state nuisance law. Because the Second Circuit had not decided whether plaintiffs’ state law nuisance claims were viable, the Court declined to decide whether such claims are displaced (“preempted”) by federal law, leaving that issue open for consideration by the Second Circuit upon remand. Slip op. at 15-16.

In a concurring opinion, Justices Alito and Thomas stated that while they agreed that the Clean Air Act displaced federal common-law nuisance claims in this instance, they concurred with the majority only assuming “for the sake of argument” that Massachusetts v. EPA was correctly decided.  

The Potential Impact of the U.S. Supreme Court’s Decision in AEP

The Court’s decision in AEP significantly dampens the prospects for successful litigation against utilities and other emitters of greenhouse gases, creating substantial obstacles for plaintiffs bringing such claims. While the AEP decision does not definitively preclude all such claims (such as state nuisance claims), pursuing such claims may prove challenging in the wake of the ruling. The AEP decision expresses considerable skepticism regarding the capacity of courts to appropriately resolve, in the first instance, the scientific, technical and policy issues raised by greenhouse gas emissions.

Other Climate-Change Lawsuits

AEP is not the only pending federal court action against emitters of greenhouse gases. In Comer v. Murphy Oil USA, a group of property owners sought to hold a group of energy and fossil fuel companies liable for property damage caused by Hurricane Katrina. The district court dismissed plaintiffs’ lawsuit on the basis that it presented a non-justiciable political question. That decision remains good law. See Comer v. Murphy Oil USA, 607 F.3d 1049 (5th Cir. 2010), petition for writ of mandamus denied, In re Comer, 131 S. Ct. 902 (2011); see also Client Alert, “‘Climate Change’ Litigation Update -- Fifth Circuit Dismisses En Banc Appeal On Procedural Grounds, So District Court Decision Dismissing Claims Related To Climate Change Stands As Good Law” (June 11, 2010). On May 27, 2011, the plaintiffs in Comer re-filed their lawsuit in Mississippi federal court. See Comer v. Murphy Oil USA, Inc., No. 1:11-cv- 00220-LG-RHW (S.D. Miss.).

In another action, Native Village of Kivalina v. Exxon Mobil Corp., No. 09-17490 (9th Cir.), a federal district court dismissed the lawsuit of a village against oil, energy and utility companies claiming that their greenhouse gas emissions threatened the habitability of the village, reasoning that plaintiffs lacked standing to pursue their action, and that the court lacked subject matter jurisdiction pursuant to the political question doctrine. Unlike the plaintiffs in AEP, the plaintiffs in Kivalina did not seek injunctive relief, but instead sought damages for the cost of relocating the village. The village’s appeal before the U.S. Court of Appeals for the Ninth Circuit had been stayed pending the Supreme Court’s decision in AEP. Because the Court’s AEP decision did not address the political question doctrine and the Court divided evenly on the question of whether plaintiffs have standing to pursue their claims, it is unclear how AEP will affect the Ninth Circuit’s upcoming decision in Kivalina.