On June 20, 2011, the United States Supreme Court rendered its much-anticipated decision in Connecticut v. American Electric Power Company (No. 10-174) (“AEP”), holding in an 8-0 decision that the plaintiffs’ federal common law nuisance action was displaced by the Clean Air Act. (Justice Sotomayor took no part in the consideration or decision of the case having sat on the original Second Circuit panel.) The Supreme Court’s decision can be found here.

In AEP, eight states, three nonprofit land trusts, and a municipality sued the alleged five largest emitters of carbon dioxide in the United States, claiming that their greenhouse gas emissions constitute a nuisance because they contribute to global climate change.  The plaintiffs sought injunctive relief capping and then reducing the defendants’ carbon dioxide emissions. In an opinion published at 582 F.3d 309 (2009), the Second Circuit reversed the district court’s dismissal of the action on political question grounds, holding that (a) the plaintiffs had standing to bring their action, (b) the action did not present the types of far-reaching and complex policy questions that would implicate the political question doctrine, and (c) the plaintiffs’ federal common law nuisance claims were not displaced by the Clean Air Act since at the time EPA had not promulgated any regulations controlling carbon dioxide emissions under the Act. Each of these questions was raised by the defendants in their petition for writ of certiorari.

The Supreme Court reversed the decision of the Second Circuit, holding that the plaintiffs’ claims have been displaced by the Clean Air Act. On the threshold question of standing, the Court noted, without any discussion or dissent, that it was equally divided: four members would hold that at least some plaintiffs have Article III standing under Massachusetts v. EPA, 549 U. S. 497 (2007), and four members would either adhere to a dissenting opinion in Massachusetts on that question or find that decision distinguishable, and would hold that none of the plaintiffs has Article III standing.  Consequently, the Court left the Second Circuit’s decision on standing intact.

On the merits, the Court held 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.” Decision at 10. This result flowed directly from the Court’s earlier decision in Massachusetts that “emissions of carbon dioxide qualify as air pollution subject to regulation under the Act.” Id.

Departing from the reasoning of the Second Circuit, the Court held that the question of displacement does not turn on whether EPA has or has not yet exercised its authority under the Act.  Rather, the Court held that displacement arises solely from the action of Congress in enacting the Clean Air Act and delegating that authority to EPA in the first place. Consequently, the Clean Air Act would displace these claims even if EPA were to decide not to regulate GHGs.

The 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.  Indeed, were EPA to decline to regulate carbon-dioxide emissions altogether at the conclusion of its ongoing §7411 rulemaking [to set limits on greenhouse gas emissions from new, modified, and existing fossil-fuel fired power plants], the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency’s expert determination.

Decision at 12. Because the Clean Air Act “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”—the Court saw “no room for a parallel track” under common law.  Id. at 11. 

The Court did not address whether the political question doctrine would also bar the plaintiffs’ action. However, its discussion of the displacement question suggests that it would be sympathetic to the arguments raised by the petitioners on that point.  For example, the Court recognized that deciding the plaintiffs’ lawsuit would require a court to balance a number of competing policy considerations:

The appropriate amount of regulation in any particular greenhouse gas-producing sector cannot be prescribed in a vacuum: as with other questions of national or international policy, informed assessment of competing interests is required. Along with the environmental benefit potentially achievable, our Nation’s energy needs and the possibility of economic disruption must weigh in the balance.

Decision at 13. Although the Court did not cite the political question test articulated in Baker v. Carr, 369 U.S. 186 (1962), a political question can be found if the action presents the “impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion.” Id. at 217. The Court also recognized that it may be impossible from a practical standpoint to litigate which among the countless emitters of greenhouse gases may be liable in tort, since “[s]imilar suits could be mounted...against ‘thousands’...of other defendants fitting the description ‘large contributors’ to carbon-dioxide emissions.” Decision at 15.

The court did not address the question of whether a lawsuit brought under state tort law would be preempted under the Clean Air Act, noting that the Second Circuit did not reach the state law claims because it held that federal common law governed. Accordingly, the Court left this question open for consideration on remand.

This decision will no doubt impact other cases that similarly allege that greenhouse gas emissions constitute a nuisance under federal common law. In Native Village of Kivalina v. ExxonMobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009), for instance, the Northern District of California dismissed on political question grounds a lawsuit brought by a city and the governing body of an Eskimo village alleging that as a result of global warming, the Arctic sea ice protecting the Kivalina coast from winter storms has diminished and resulted in erosion and the destruction of their land, and seeking to hold a collection of oil, energy and utility companies liable for the cost of relocating the city and tribe. That action is pending before the Ninth Circuit Court of Appeals, and oral argument had been held in abeyance pending the Supreme Court’s decision in AEP.

In Comer v. Murphy Oil USA, No. 05-436, 2007 WL 6942285 (S.D. Miss. Aug. 30, 2007), the district court likewise dismissed an action brought by residents of the Gulf Coast seeking money damages from a collection of oil, chemical and power companies, based on the allegation that the defendants’ emissions of greenhouse gases contributed to global warming that in turn added to the ferocity of Hurricane Katrina. A three-judge panel of the Fifth Circuit initially reversed, agreeing with the Second Circuit that climate change nuisance actions do not present non-justiciable political questions, and that the plaintiffs asserted viable causes of action under common law. However, the Fifth Circuit subsequently granted a rehearing en banc and vacated the panel opinion, 598 F.3d 208 (5th Cir. 2010). Subsequently, because of an intervening recusal, the Fifth Circuit determined that it no longer had a quorum and dismissed the appeal, leaving the district court’s decision standing, 607 F.3d 1049 (5th Cir. 2010). After the Supreme Court denied the plaintiffs’ writ of mandamus, the plaintiffs recently filed a new lawsuit against dozens of oil, chemical and power companies, alleging a claim under the federal common law of nuisance as well as several state-law tort claims.

The Supreme Court's decision in AEP should effectively end these plaintiffs' claims under the federal common law. Although these actions seek damages for past emissions of greenhouse gases (in contrast to AEP where the plaintiffs sought prospective injunctive relief), the broad language of this decision would appear to forestall such actions as well.  Federal common law was displaced as soon as Congress enacted the Clean Air Act, even though EPA had not moved to regulate GHG emissions until relatively recently. See Decision at 12 (“The Clean Air Act is no less an exercise of the legislature’s ‘considered judgment’ concerning the regulation of air pollution because it permits emissions until EPA acts.”) Consequently, any tort claim against emitters of greenhouse gases would have to be brought under state law, and may only be maintained to the extent that they have not been preempted by the Clean Air Act.