On June 20, 2011, the United States Supreme Court issued a decision barring state and private parties from bringing federal common law nuisance actions based on alleged contribution to climate change through greenhouse gas emissions. American Electronic Power Co. v. Connecticut, 546 U.S. ___ (2011). The Court held 8–0 that the federal Clean Air Act displaces any federal common law cause of action that may have existed against greenhouse gas emitters. Justice Sotomayor recused herself from the case, having previously served on the panel that heard oral arguments in the case when it was before the U.S. Court of Appeals for the Second Circuit.

In American Electric Power Co., eight states, the city of New York, and three private land trusts originally filed suit against a group of utility companies in the U.S. District Court for the Southern District of New York. The district court dismissed the lawsuit in 2005, holding that the claims were nonjusticiable political questions that could not properly be adjudicated by federal courts. See Connecticut v. American Electric Power Co., 406 F. Supp. 2d 265 (S.D.N.Y. 2005). In 2009, the Second Circuit reversed. 582 F.3d 309 (2d Cir. 2009). The Supreme Court granted certiorari on December 6, 2010, and oral arguments were held on April 19, 2011.

Writing for the Supreme Court, Justice Ginsburg first addressed the claim that the federal courts lacked the authority to hear the case. On the question of plaintiffs' Article III and prudential standing, the Court was equally divided. Four members of the Court concluded that at least some of the plaintiffs had Article III standing and that neither prudential standing nor political question considerations would bar a court from asserting jurisdiction over the case, while four other justices held a contrary view. The 4–4 tie resulted in a nonprecedential affirmance of the Second Circuit's exercise of jurisdiction.

On the merits, the Court began by noting that federal common law, in the past, had provided a cause of action "by one State to abate pollution emanating from another State," but recognized that the Supreme Court had never decided whether private citizens or political subdivisions of a state could "invoke the federal common law of nuisance to abate out-of-state pollution." The Court elected not to reach the issue of whether such a federal common law cause of action could exist, because such a claim would be displaced by the Clean Air Act, which the Court, in Massachusetts v. EPA, 549 U.S. 497 (2007), held authorizes U.S. EPA to regulate greenhouse gas emissions.

Justice Ginsburg began her displacement analysis by discussing the boundaries of statutory displacement of federal common law causes of action. Unlike preemption of state law, displacement does not rest on legislative intent. Rather, the focal point of displacement analysis is whether Congress has enacted legislation that "speaks directly to the question at issue." Justice Ginsburg concluded that the various statutory provisions of the Clean Air Act governing pollutant emissions from existing stationary sources covered the very type of emitters that plaintiffs had sought to enjoin in the instant case. Accordingly, the Court held that:

[T]he 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.

The Supreme Court also rejected the Second Circuit's rationale that EPA must actually exercise its regulatory authority for displacement to occur. Relying on Milwaukee v. Illinois, 451 U.S. 304 (1981), the Court reaffirmed that the proper test for displacement is legislative occupation of the field. The EPA's decision to regulate or not to regulate greenhouse gas emissions is immaterial: "The critical point is that Congress delegated to the EPA whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaced federal common law."

Although the Court explicitly eschewed the question of whether the Clean Air Act also preempts state law nuisance claims, the opinion highlighted several reasons why courts are ill-suited to set emission standards by judicial fiat. Picking up on one of the petitioners' arguments, the Court noted that regulation of greenhouse gas emissions requires a careful assessment of competing economic and social interests. An expert agency is entrusted with performing this complex balance, because "federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order.... Judges may not commission scientific studies or convene groups of experts for advice, or issue rules under notice-and-comment procedures inviting input from any interested person, or seek the counsel of regulators in the States where the defendants are located." However, noting that none of the parties had briefed preemption or otherwise addressed the availability of state nuisance claims, the Court remanded the case for further consideration of this issue.

Justice Alito wrote an opinion, which Justice Thomas joined, concurring in part and concurring in the judgment agreeing with the Court's displacement analysis on the assumption that the Court's interpretation of the Clean Air Act in Massachusetts v. EPA was correct.

What Happens Next?

The Supreme Court's decision will certainly have ramifications for other pending climate change litigation. For example, in Native Village of Kivalina v. ExxonMobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009), a native Alaskan village brought a suit against two dozen defendants (including some of the same utilities named as defendants in American Electric Power Co.) alleging that severe weather generated by climate change caused injuries related to coastal erosion. Unlike American Electric Power Co., the Kivalina case seeks damages rather than injunctive relief. The district court dismissed the case as involving a nonjusticiable political question and for lack of standing. The village appealed to the Ninth Circuit Court of Appeals. While the American Electric Power Co. decision should mandate affirmance for lack of a federal common law cause of action, the Kivalina appellants have requested an opportunity to brief the impact of the Supreme Court's decision.

Meanwhile, the plaintiffs in Comer v. Murphy Oil USA refiled their suit in the Southern District of Mississippi on May 27, 2011. The case was previously dismissed by the district court, and plaintiffs' appeal was dismissed by the Fifth Circuit Court of Appeals. Comer v. Murphy Oil USA, 607 F.3d 1049 (5th Cir. 2010). A petition for a writ of mandamus to the Supreme Court also was denied. In re Comer, U.S. No. 10-294 (Jan 10, 2011). No answers or responsive motions have yet been filed in the refiled case, as plaintiffs are still attempting to effectuate service or process on the numerous defendants against whom they assert federal and state common law claims.