On June 20, 2011, the United States Supreme Court handed down its 8-0 decision in American Electric Power Co., Inc., et al. v. Connecticut, et al., No. 10-174. In an Opinion written by Justice Ginsburg, the Supreme Court decided that federal common law public nuisance claims could not be maintained against carbon-dioxide and greenhouse gas (GHG) emitting entities. The Court held that such claims were barred because the federal Clean Air Act (Act) displaces such common law nuisance claims. The Court found that Congress had entrusted the United States Environmental Protection Agency (EPA) to decide how GHGs should be regulated, and that federal courts are not entitled to issue their own rules.

The plaintiffs in this case (several states, New York City, and three private land trusts) had brought public nuisance claims against entities that emitted large amounts of carbon dioxide (four private power companies and the Tennessee Valley Authority). The plaintiffs had requested abatement of the alleged nuisance conditions by a decree setting carbon-dioxide emission limits for each defendant at an initial cap, to be further reduced annually.

The District Court had dismissed the suit as presenting a non-justiciable political question, but the Second Circuit had reversed, finding that the State plaintiffs had adequately alleged Article III standing and that the suits were not barred by the political question doctrine.

Initially, the Supreme Court affirmed the Second Circuit’s exercise of federal court jurisdiction by an equally divided court. Four members of the Court held that at least some plaintiffs have Article III standing under the Court’s prior holding in Massachusetts v. EPA, 549 U.S. 497 (2007), which permitted a State to challenge EPA’s refusal to regulate greenhouse gas emissions. The other four members of the Court held that none of the plaintiffs have Article III standing. Therefore, the Court affirmed the Second Circuit’s exercise of jurisdiction.

However, the Court then held unanimously that the plaintiffs could not state a federal common law claim for curtailment of GHG emissions because of their alleged contribution to global warming because the Act as implemented by EPA displaces any federal common law right to seek abatement of carbon dioxide emissions from fossil-fuel fired power plants. The Court noted that the test was whether the Act spoke directly to the question at issue. Here, the previous Massachusetts case made it clear that emissions of carbon dioxide are subject to regulation under the Act. Because the Act directs EPA to establish emissions standards and performance standards, and provides for enforcement of those standards, the Act itself provides a means to seek limits on emissions of carbon dioxide from domestic power plants – the same relief that the plaintiffs sought by invoking federal common law. Accordingly, the Court held that the Act displaced federal common law nuisance claims—at least where the relief requested is abatement.

In reversing the Second Circuit, the Supreme Court held that the federal common law claims had been replaced by the Clean Air Act despite the fact that EPA has not yet issued emission standards for GHGs. The Court reasoned that because the Act sets into place the procedures for EPA to promulgate GHG standards as well as the procedures for judicial coercion if EPA does not, is ample evidence that Congress has “occupied the field” and the use of federal common-law should be foreclosed. The Court further explained that courts setting emission standards with judicial decrees was inappropriate given that experts at EPA are more qualified to develop and promulgate standards given their knowledge of science, economics and technological resources. How this decision impacts Congress and EPA regulation of GHGs also will be very important to follow in the coming months.

As to the future of climate change-related litigation, some have speculated that the Supreme Court’s decision preventing the AEP case from going forward will put an end to climate change-related tort litigation. Others have opined that this outcome is only a temporary setback, and additional legal theories will be developed and tested. The Supreme Court specifically did not decide whether the Act preempts state public nuisance litigation over GHGs. Thus, some plaintiff groups likely will press state common law claims in the future, but may still be met with defenses of “political question” and “preemption” based on the AEP case and other precedent. The implications of this decision on other environmental “toxic tort” litigation where there are statutory programs addressing the contested conduct also will be important to watch.