Environmental Business Alert: U.S. Supreme Court to States: No Federal Climate Change Nuisance Suits!

Date: Jun 27, 2011

In a closely watched decision, the U.S. Supreme Court unanimously held that the Federal common law of public nuisance does not provide a basis for abating injuries from climate change.[1] Although the decision resolves any question about the role of federal common law in the climate change debate—none—it may be most instructive for the Court's view of EPA's discretion in regulating carbon dioxide and other greenhouse gas emissions.

In American Electric Power Co. v. Connecticut, eight states (CA, CT, IA, NJ, NY, RI, VT, WI) and New York City filed suit against five electric utilities and the Tennessee Valley Authority, which they alleged to be the five largest emitters of carbon dioxide ("CO2") from coal-fired power plants in the U.S. In the absence of federal regulations or limits, the states sought to compel the companies to reduce their CO2 emissions on federal and state common law theories of public nuisance. Three land trusts, seeking to protect land they alleged is threatened by climate change, filed a similar suit against the same utilities (but with an added private nuisance claim), which was consolidated with the state suit.[2]

The utilities sought to dismiss the lawsuits on various grounds, including that there is no federal common law cause of action for climate change. Even assuming the existence of such a cause of action, the defendants argued that Congress displaced the federal courts' authority in this area by enacting the Clean Air Act's comprehensive scheme of air pollution regulation. The district court, however, dismissed the complaint on grounds that the claims raised questions of political and national interests that are better left to the legislature than the courts. The Second Circuit disagreed and reversed the decision. The utilities appealed to the Supreme Court.[3]

In a unanimous opinion written by Justice Ginsburg, the Court acknowledged that environmental protection "is undoubtedly an area ‘within national legislative power,' one in which federal courts may fill in ‘statutory interstices,' and, if necessary, even ‘fashion federal law.'" Indeed as the Court notes, it has previously upheld federal common law suits brought by one State to abate pollution from another State. Nevertheless, the Court held that it is an "academic question" whether the plaintiffs could use federal common law to curtail greenhouse gas ("GHG") emissions because of their contribution to climate change, because such law has been displaced by the Clean Air Act.

Federal common law comprises the body of decisions fashioned by federal judges when adjudicating matters of federal concern, such as disputes between the states and foreign relations, where state law does not govern. According to the Court, the Clean Air Act, delegates to the U.S. Environmental Protection Agency ("EPA") the decision of whether and how to regulate GHG emissions from power plants, and this delegation of authority displaces any remedy arising under federal common law. Once Congress addresses a question, "the need for such an unusual exercise of law-making by federal courts disappears." There is simply "no room for a parallel track."

The fact that EPA had not actually exercised its regulatory authority, i.e., had not yet promulgated standards governing CO2 and other GHG emissions from the utilities' power plants, did not matter. Relying on the precedent set in Milwaukee v. Illinois ("Milwaukee II"),[4] the Court explained that for purposes of displacement of federal common law, "the relevant question is whether the field has been occupied, not whether it has been occupied in a particular manner." As the Court noted:

Of necessity, Congress selects different regulatory regimes to address different problems. Congress could hardly preemptively prohibit every discharge of carbon dioxide unless covered by a permit. After all, we each emit carbon dioxide merely by breathing.

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…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, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination.[5]

The Court hastened to add that such a decision (i.e., whether or how to regulate) would not escape judicial review, and could be reversed if it was demonstrated to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."[6] Nevertheless, the prescribed order of decisionmaking under the Clean Air Act, first by EPA as the expert administrative agency, then by federal judges upon judicial review, is another reason to resist setting emissions standards by judicial decree under federal common law. In the Court's view, a federal agency equipped with scientific expertise and institutional resources is in the best position to set emissions limits. A contrary decision would precipitate a flooding of the courts with plaintiffs asking judges to act as a mini-EPAs and tailor GHG emission limits to every large emitter:

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.

Critically, the Court did not address the state law claims or discuss whether such claims were preempted by the Act, as the issue had not been briefed. These issues may be decided on remand. The decision is also important, however, for the Court's underscoring that other factors, including, especially the economy, must be weighed when considering regulation to address climate change concerns. EPA may even listen.

For more information, please contact J.C. Walker (202) 434-4181, walker@khlaw.com or Trent Doyle (202)434-4161, doyle@khlaw.com.


[1] American Electric Power Co. v. Connecticut, No. 10-174, slip op. (June 20, 2011). Available from the Court's website at: http://www.supremecourt.gov/opinions/10pdf/10-174.pdf.

[2] Connecticut v. American Elec. Power Co., Nos. 05-5104-cv, 05-5119-cv, slip op. (2d Cir. Sept. 21, 2009).

[3] See Keller and Heckman LLP, Environmental Advisory, U.S. Climate Change Mitigation Efforts: The Story So Far & Looking Ahead (November 25, 2009).

[4] Milwaukee v. Illinois ("Milwaukee II"), 451 U.S. 304 (1981) (holding that amendments to the Clean Water Act displaced the federal common law public nuisance claim recognized in Milwaukee I).

[5] Internal citations omitted.

[6] 42 U.S.C. § 7607(d)(9)(A).