Reviving claims dismissed in 2005, the Second Circuit Court of Appeals ruled last week that two 2004 lawsuits can proceed against five of the nation's largest utilities, alleging that greenhouse gas emissions create a public nuisance under federal common law.

In its 139-page decision, the two-judge federal panel held that eight states (California, Connecticut, Iowa, New Jersey, New York, Rhode Island, Vermont, and Wisconsin), the City of New York, and three private land trusts (the Open Space Institute, the Open Space Conservancy, and the Audubon Society of New Hampshire) had Article III standing to pursue their claims against American Electric Power Co. Inc., American Electric Power Service Corp., Southern Company, Tennessee Valley Authority, Xcel Energy, and Cinergy Corp.

The decision concludes that, under the federal common law of public nuisance, claims challenging alleged continuing contribution to global warming present a justiciable matter. Rejecting the lower court's dismissal on the grounds that the complaints presented a political question with national domestic and foreign policy implications, the Second Circuit attached significance to the fact that neither Congress nor the United States Environmental Protection Agency (the "EPA") has taken action amounting to preemption of the field.

Background

In July 2004, the plaintiffs filed two separate complaints against the defendants in the United States District Court for the Southern District of New York, asserting that greenhouse gas emissions from the defendants' fossil fuel-fired operations constituted a public nuisance under the federal common law of nuisance and, alternatively, state nuisance laws.

The plaintiffs sought an abatement of the defendants' ongoing contributions to global warming. The equitable relief requested included the permanent enjoining of the defendants' continuous emissions by the imposition of a cap on carbon dioxide emissions and a reduction of emissions by a specified percentage each year for at least 10 years.

The defendants moved to dismiss both complaints on a variety of grounds, asserting that: (1) separation of powers precludes the court from adjudicating the complaints; (2) the plaintiffs lack standing to bring the claims; (3) the plaintiffs fail to state a claim because there is no recognized federal common law cause of action to abate greenhouse gas emissions that allegedly contribute to global warming; and (4) Congress has displaced any federal common law cause of action as it relates to the issue of global warming.

In 2005, the District Court granted the defendants' motions to dismiss, ruling that the complaints raised "non-justiciable" political questions for the executive and legislative branches of government. The District Court stated that "[b]ecause resolution of the issues presented here requires identification and balancing of economic, environmental, foreign policy, and national security interests, 'an initial policy determination of a kind clearly for non-judicial discretion' is required. Indeed, the questions presented here 'uniquely demand single-voiced statement of the Government's views.' Thus, these actions present non-justiciable political questions that are consigned to the political branches, not the Judiciary." State of Connecticut, et al. v. American Electric Power Company Inc., et al., 406 F. Supp. 2d 265, 374 (S.D.N.Y. 2005) (citations omitted).

The Second Circuit's Reversal

On September 21, 2009, the Second Circuit Court of Appeals vacated and remanded the complaints for further proceedings, holding that "'[i]t may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance. But until that comes to pass, federal courts will be empowered to appraise the equities of the suits alleging creation of a public nuisance' by greenhouse gases." State of Connecticut, et al. v. American Electric Power Company Inc., et al., No. 05-5104-cv, 05-5119-cv (2d Cir. 2009) (quotations omitted).

Finding that there was a justiciable political question, the Second Circuit concluded that plaintiffs' global warming claims presented legal issues that could be adjudicated and resolved by the courts without contravening any political decision or decision-making authority. According to the Second Circuit, the states, New York City, and the land trusts sufficiently alleged injury-in-fact (both current and future injuries). The Court did not review the applicability of the state laws of nuisance.

The absence of federal legislation in the area presented the opportunity for the plaintiffs' pursuit of their federal common law of public nuisance claims. The Court noted that the Clean Air Act does not thoroughly address the issues presented, and neither Congress nor the EPA has regulated greenhouse gas emissions from stationary sources.

Going Forward

The defendants may opt to seek a rehearing by the full Second Circuit Court of Appeals or appeal the Second Circuit's decision directly to the United States Supreme Court. If appealed, the Supreme Court may grant certiorari or, alternatively, the litigation can proceed at the District Court level.

The Second Circuit's decision may increase the pressure on Congress to pass climate change legislation. On the heels of the Second Circuit's release of its decision, on September 22, 2009, the EPA issued its final regulation mandating the annual reporting of greenhouse gas emissions. And earlier today, the EPA announced a proposal that will require large industrial facilities that emit at least 25,000 tons of greenhouse gas per year to obtain construction and operating permits covering such emissions. Meanwhile, as the Second Circuit observed, "the fact that the Clean Air Act ("CAA") or other air pollution statutes, as they now exist, do not provide Plaintiffs with the remedy they seek does not mean that Plaintiffs cannot bring an action and must wait for the political branches to craft a 'comprehensive' global solution to global warming. Rather, Plaintiffs here may seek their remedies under the federal common law. They need not await an 'initial policy determination' in order to proceed on this federal common law of nuisance claim, as such claims have been adjudicated in federal courts for over a century." State of Connecticut, et al. v. American Electric Power Company Inc., et al., No. 05-5104-cv, 05-5119-cv (2d Cir. 2009).

A copy of the decision is available here.