Supreme Court Rejects Nuisance Claims In Greenhouse Gas Case Against Utilities

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Federal common law nuisance claims cannot be brought against utilities for their greenhouse gas emissions, the U.S. Supreme Court ruled June 20 in a decision that handed the utilities a victory in their effort to quash lawsuits alleging the companies contribute to climate change (American Electric Power Co. v. Connecticut, U.S., No. 10-174, 6/20/11).

The Supreme Court ruled 8-0 that the Clean Air Act and Environmental Protection Agency regulations authorized by the act displace the federal common law cause of action.

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. There is no room for a parallel track,” the court said in an opinion written by Justice Ruth Bader Ginsburg.

The U.S. Court of Appeals for the Second Circuit had ruled that eight states, New York City, and three land trusts could proceed with lawsuits in federal district court against American Electric Power Co. and other electric utilities under federal common law (Connecticut v. American Electric Power Co., 582 F.3d 309, 69 ERC 1385 (2d Cir. 2009)).

Justice Sonia Sotomayor, who sat on the Second Circuit panel that heard the AEP case, recused herself from the Supreme Court deliberations.

The lawsuit alleged that under common law, the companies' carbon dioxide emissions constitute a public nuisance in contributing to global warming. The petitioners sought injunctive relief requiring each power plant to cap carbon dioxide emissions and reduce them by a specified percentage each year for at least a decade.

The U.S. District Court for the Southern District of New York had dismissed the lawsuit in 2005, holding that the claims represented a political question not under the jurisdiction of the courts (Connecticut v. American Electric Power Co., 406 F. Supp. 2d 265, 268 (S.D.N.Y. 2005)).

Congress Delegates Authority to EPA

Peter D. Keisler of Sidley Austin LLP in Washington, D.C., who argued the case on behalf of AEP, welcomed the decision.

“Today's decision ensures that the public and private utilities named as defendants in this case, as well as other companies that provide vital services to the public, can continue to operate—in accordance with governing statutes and regulations—without the threat of federal ‘climate change tort litigation,’ and the substantial costs and risks to productivity these claims present,” Keisler said in a statement.

The Supreme Court rejected the argument by states and other petitioners that federal common law is not displaced until EPA sets standards governing emissions from power plants. The critical point, the court said, is that Congress delegated to EPA the decision whether and how to regulate carbon dioxide emissions from power plants, and it is the delegation that displaces federal common law.

The court said the test for whether legislation from Congress displaces federal common law is simply whether the legislative action “speaks directly” to the question at issue and held that the Clean Air Act “speaks directly” to emissions from power plants.

The act provides for the regulation of power plant emissions and provides multiple avenues for enforcement to achieve the same relief the states, city, and trusts sought under federal common law, the court said.

The court said EPA may delegate implementation and enforcement authorities to states, but retains the power to inspect and monitor regulated sources, impose administrative penalties for noncompliance, and initiate civil enforcement actions. In certain circumstances criminal penalties are available for knowing violations and private individuals are authorized to bring citizen suits to enforce emission limits.

If EPA does not set emission standards, then states and individuals may petition for a rulemaking and EPA's decisions are subject to judicial review in federal court.

Connecticut Attorney General George Jepsen, whose state was the lead petitioner, said in a statement that he was disappointed that the court acted before federal regulation is fully in place. “[B]ut we are pleased that as a result of our work and that of many others, federal regulation of this critical issue is now in process,” he said.

Lawsuit Filed in 2004

The lawsuit was filed in 2004, before EPA had taken any action to address greenhouse gas emissions. Since then, and with a change in administrations, the agency has initiated a number of regulatory actions to control those emissions, although it has yet to issue rules specifically addressing power plants. (See related story in this issue.)

In 2009, the court noted, EPA concluded that greenhouse gas emissions from motor vehicles cause or contribute to air pollution that may reasonably be anticipated to endanger public health. The endangerment finding laid the groundwork for a number of regulatory initiatives that EPA is now pursuing. EPA and the Department of Transportation subsequently issued a joint final rule regulating emissions from light-duty vehicles.

EPA also began phasing in requirements under its prevention of significant deterioration program that new or modified major greenhouse gas emitting facilities use the best available control technology, the court said.

EPA also has initiated a separate rulemaking under Section 111 of the act to set limits on greenhouse gas emissions specifically from new, modified, and existing fossil-fueled power plants, the court noted. Pursuant to a settlement agreement, EPA has committed to issuing proposed new source performance standards this fall and a final rule by May 2012, the court said (114 DEN A-5, 6/14/11)..

Court Splits on Standing

The victory for the power companies was tempered by the court's refusal to hold that the states and other petitioners lacked standing to sue. The Supreme Court split 4-4 on the issue of whether the petitioners demonstrated they had standing to bring the claim and affirmed the Second Circuit's ruling that they did.

Moreover, the states and environmental groups claimed a measure of relief in that the court upheld the precedent established in Massachusetts v. EPA, 549 U.S. 497, 63 ERC 2057 (2007), in which the court held that greenhouse gases are a pollutant and subject to regulation by EPA.

“Today's ruling reaffirms the [EPA]’s duty under the nation's 40-year-old Clean Air Act to safeguard public health and welfare from dangerous carbon pollution,” David Doniger, policy director of the Natural Resources Defense Council's Climate Center and the attorney who represented the trusts, said in a statement.

Doniger said that “EPA must act without delay. Power plants are the nation's biggest polluters, pumping more than two billion tons of carbon dioxide pollution into the air each year. Their pollution is driving dangerous heat waves and smog, stronger storms, floods, and droughts, and many other threats to our health and safety and our homes and communities.”

Jepsen noted that the Supreme Court “recognizes that the EPA must act to curb emissions that contribute to climate change. We will continue to work to ensure that our residents are protected, for this generation and the next.”

On the issue of standing, four justices found standing demonstrated under the court's precedent in Massachusetts v. EPA, while four found the case distinguishable or adhered to the reasoning of the dissent in Massachusetts.

The dissent argued in Massachusetts that states claiming standing based on injury to coastal lands from rising sea levels caused by global warming did not establish particularized injuries, sufficient link to power plant emissions, or that their injuries would be redressed by court action. With the equal split on standing, the court therefore affirmed the Second Circuit's finding of standing and proceeded to evaluate the merits of the nuisance claim.

Standing is one of a number of prerequisites that must be met before a claim can be brought in federal court. The court's finding of standing meant it could then proceed to address the issue of legislative displacement of federal common law.

Justice Samuel Alito wrote a concurring opinion in which Justice Clarence Thomas joined to state that he agreed with the displacement analysis on the assumption that the interpretation of the Clean Air Act adopted by the majority in Massachusetts is correct.

Sotomayor took no part in the decision. She was a member of the Second Circuit panel when it heard oral arguments in Connecticut v. American Electric Power Co. The court's Sept. 21, 2009, decision came down three years after it heard oral arguments. Sotomayor was elevated to the Supreme Court Aug. 8, 2009.

The states, city, and trusts also sought relief under state nuisance laws. The Second Circuit found that federal common law applied and did not reach the merits of the state law claims. The availability of state nuisance claims and the applicability of federal preemption of state claims were not among the issues the Supreme Court addressed, and it left the issues open on remand.

By John H. Stam

The U.S. Supreme Court decision in American Electric Power Co. v. Connecticut is available at http://www.supremecourt.gov/opinions/10pdf/10-174.pdf .