Introduction

On June 20, 2011, the United States Supreme Court issued a decision by a vote of 8-0 in American Electric Power Co., Inc. (“AEP”) v. Connecticut, a climate change public nuisance case on appeal from the Second Circuit Court of Appeals. Our briefing on the Second Circuit decision can be reviewed here. Justice Ginsburg authored the unanimous opinion. Justice Sotomayor had recused herself from the case and took no part in the decision because she was a member of the Second Circuit when it heard arguments and issued the decision that was appealed.

Background

The AEP case was filed in 2004 as two separate complaints by a group of states, the City of New York, and three non-profit land trusts against six electric utility companies. The plaintiffs’ alleged that climate change, resulting from carbon dioxide emissions from the defendants’ fossil fuel combustion, constituted a public nuisance under federal common law, or, in the alternative, under state law. The state plaintiffs sought a permanent injunction against the defendants requiring them to cap and reduce their carbon dioxide emissions. The district court dismissed the complaints as presenting non-justiciable political questions. The plaintiffs appealed to the Second Circuit Court of Appeals, which held that: 1) the actions did not present non-justiciable political questions; 2) the plaintiffs had standing; 3) the plaintiffs had stated a claim under the federal common law of public nuisance; and 4) federal legislation including the Clean Air Act (“CAA”), and Environmental Protection Agency (“EPA”) regulations, had not displaced the plaintiffs’ federal common law nuisance claims.

Supreme Court Decision

The Supreme Court held that the plaintiffs’ federal common law claims were displaced by the CAA and EPA regulations under the CAA. The Court did not dispose of the case on jurisdictional grounds because it was evenly split on the issue of whether the plaintiffs had Article III standing. Due to the Court’s inability to resolve the standing issue, it affirmed the Second Circuit’s exercise of jurisdiction and proceeded to the merits.

The Supreme Court first acknowledged the “academic question” of whether the plaintiffs could state a claim under the federal common law of public nuisance to abate greenhouse gases (“GHGs”). The plaintiffs had cited cases in which states were allowed to sue under the federal common law of nuisance to abate pollution from beyond their state boundaries. The Court noted that it has not yet decided whether private citizens and municipalities may raise federal common law nuisance claims. The Court also noted that it has never held “that a State may sue to abate any and all manner of pollution originating outside its borders.” The Court determined that it was unnecessary to decide whether the plaintiffs could state a federal common law nuisance claim, because the CAA and EPA regulations under the CAA have displaced such claims.

The Court said that the test for whether federal legislation has displaced federal common law is “simply whether the statute ‘speak[s] directly to [the] question’ at issue.” The Court cited Section 111 of the CAA, which requires EPA to list categories of stationary sources that cause or contribute significantly to air pollution; set standards of performance for pollutant emissions from new or modified sources in the listed categories; and, particularly relevant to the plaintiffs’ claims, issue emissions guidelines for existing sources in the listed categories, as authorizing EPA to regulate carbon dioxide emissions from the defendants’ fossil fuel-fired power plants. The Court reasoned that plaintiffs are authorized by the CAA to petition EPA to establish emissions limits for particular pollutants and sources, and to challenge EPA’s failure to act in federal court. The Court also noted that EPA is currently conducting a rulemaking under Section 111 to set GHG limits from fossil fuel-fired power plants, in settlement of the litigation brought by many of the same plaintiffs in the AEP case. Since the CAA authorizes EPA to regulate GHGs from fossil fuel-fired power plants, and authorizes plaintiffs to sue EPA in federal court for failure to act, the Court saw “no room for a parallel track” under federal common law.

The Supreme Court rejected the plaintiffs’ argument, which had been accepted by the Second Circuit, that federal common law was not displaced because EPA has not yet set standards regulating GHGs from the defendants’ plants. The Court held that it is not the actual regulation of GHGs by EPA that would displace federal common law, but the fact 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.” As such, even if EPA decided not to regulate GHGs, “federal courts would have no warrant to employ the federal common law of nuisance to upset the agency’s expert determination.” The Court noted that if EPA failed to regulate carbon dioxide from power plants, its refusal to act would be subject to judicial review under an arbitrary and capricious standard. The Court reasoned that the process set forth in the CAA for regulating pollutants, including GHGs, requires EPA to balance environmental benefits with costs, non-air quality health and environmental impacts, and energy requirements. This regulatory regime is more appropriate for regulating GHGs than judicial decision making. Judges lack technical expertise, are not able to commission scientific studies, obtain expert advice or public comments, are confined by the record of a particular case, and federal district judges lack the authority to bind other judges. Because the CAA’s regulatory regime is far superior to individual judicial decisions setting GHG limits, and the CAA provides for judicial review of EPA action or inaction, the Court overturned the Second Circuit’s ruling that the federal common law claims were not displaced.

Finally, the Court addressed the fact that the plaintiffs also sought relief under state law. The Court stated that the availability of any state law claims would depend on whether they have been preempted by the CAA. These state law claims were not addressed by the Second Circuit, and none of the parties had briefed the preemption issue or the availability of state law claims. As a result, the Court left the preemption issue for the district court to consider on remand.  

Conclusion

The Supreme Court’s decision addresses squarely the issue of whether federal common law claims regarding GHG emissions have been displaced by the CAA. Notably, the Court held that the actual promulgation of EPA regulations limiting GHG emissions is not required for displacement; rather, it is the Congressional delegation of authority to EPA to determine whether and how to regulate GHGs that displaces federal common law. As a result of the Court’s ruling, federal common law claims regarding GHG emissions would be foreclosed even if GHG regulations are never finalized by EPA. Instead, plaintiffs seeking GHG emission limits would be limited to seeking judicial review of EPA’s failure to act.