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United States Supreme Court Holds that Federal Common-Law Claims Against Emitters of Greenhouse Gases are "Displaced" by the U.S. EPA's Regulatory Authority

But the Ruling Leaves Open, For Now, Other Potential Claims Based on GHG Emissions, Including State-Law Tort Claims
July 07, 2011

On June 20, 2011, the United States Supreme Court ruled unanimously (with Justice Sotomayor not participating) in American Electric Power v. Connecticut that the Clean Air Act displaces federal common law nuisance claims against greenhouse gas emitters, thus barring those claims. The plaintiffs in AEP are eight states, New York City, and three private land trusts; the defendants are four private power companies and the Tennessee Valley Authority, which together make up the five largest emitters of carbon dioxide in the country. The plaintiffs claimed that the defendants' emissions of greenhouse gases contributed to global climate change and therefore created a "'substantial and unreasonable interference with public rights,' in violation of the federal common law of interstate nuisance." The plaintiffs also brought nuisance claims under state tort law. The plaintiffs requested an injunction setting caps on greenhouse gas emissions for each defendant.

The Supreme Court noted that under its previous decision in Massachusetts v. EPA, greenhouse gas emissions are air pollutants within the regulatory scope of the Clean Air Act, and that Congress has delegated to EPA the authority to determine whether and how to regulate greenhouse gases. This delegation of authority alone (not the extent to which EPA exercises its authority to regulate greenhouse gases) was the critical fact in the Court's displacement analysis. The Court held that the test for whether federal legislation "displaces" federal common law is whether the legislation "speak[s] directly to [the] question at issue." Analyzing the Clean Air Act's provisions delegating authority to the EPA, including the EPA's authority to identify sources of air pollution, set performance standards for emissions, issue guidelines to states, inspect and monitor regulated sources, and enforce its standards, including through penalties and civil actions, the Court determined that the Clean Air Act "speaks directly" to the issue of greenhouse gas emissions. Accordingly, the Court held that the Clean Air Act displaces the authority of federal courts to fashion a common-law solution to the injuries that the plaintiffs alleged are caused by greenhouse gas emissions.

The Court noted, however, that even though they may not proceed under federal common law, the plaintiffs are not without remedies. For example, the Court observed that once the EPA has issued regulations limiting greenhouse gas emissions (a proposed rule will be issued by July 2011 and a final rule by May 2012), the plaintiffs may challenge those limits in federal court. The Court further noted that the Clean Air Act provides for private enforcement of emissions that violate the EPA's regulations (once those regulations become effective). Moreover, and most significantly, the AEP decision does not shut the door on climate change tort litigation. As the Court commented, its decision does not address whether the plaintiffs' state law nuisance claims are preempted by the Clean Air Act. Therefore, although the Court recognized that the preemption defense likely will be addressed on remand, for now, state common-law tort claims still may be viable.

In addition, AEP leaves unanswered other questions about claims based on climate change that were not before the Court, such as whether a claim for money damages might be cognizable under state tort law where a claim for injunctive relief is not. (Clearly, after AEP, all claims based on federal common law, whether seeking injunctive relief or money damages, are displaced and cannot be brought.) For example, in discussing Congress' delegation of regulatory authority over greenhouse gases to the EPA, the Court indicated that the EPA is better equipped to make decisions on greenhouse gas limits than are federal judges, commenting:

"It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions. The expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions. Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order."

Lower courts may well share such skepticism and therefore be reluctant to entertain state common-law tort claims seeking injunctive relief. For example, a district court might interpret the Court's deference to the EPA's expertise as an indication that a primary jurisdiction defense is appropriate. The Court's observation about the EPA's expertise, however, may apply with less force to claims seeking money damages rather than injunctive relief: Because money damages arguably would not require a court to possess any particular scientific expertise or knowledge and would be easier for a court to determine and administer than injunctive relief setting caps on emissions, some of the justifications for the Court's ruling in AEP would be absent in a lawsuit brought under state tort law and seeking only money damages. That issue might be addressed soon: a suit seeking money damages, Kivalina v. ExxonMobil, currently is pending in the Ninth Circuit Court of Appeals.

Although AEP provides energy producers, heavy industry, and their insurance carriers with some protection from climate change litigation based on greenhouse gas emissions, until the federal preemption issue is finally resolved, the potential for this litigation remains.




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