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U.S. Supreme Court Reverses AEP v. Connecticut: EPA, Not Judges and Juries, Will Decide Climate Change Policy

On June 20, 2011, the Supreme Court spoke for the second time on climate change. Observing that the Supreme Court “endorses no particular view of the complicated issues related to carbon-dioxide emissions and climate change,” a unanimous Court, in a decision written by Justice Ruth Ginsburg, held that Congress, through the U.S. Environmental Protection Agency (“EPA”) – and not a group of states and cities using federal common law – should decide national policy on climate change. The case is a welcome relief for the utility industry but not the last word on whether greenhouse gas emitters can be sued in tort.

Background

Unlike the complex facts related to global warming, the facts in this case are relatively straightforward. In July 2004, two groups of plaintiffs filed separate complaints against four major electric power companies and the TVA. The first group included eight states and New York City, and the second joined three nonprofit land trusts. According to the complaints, the defendants were the five largest emitters of carbon dioxide in the United States. By contributing to global warming, the plaintiffs asserted, the defendants’ emissions created a “substantial and unreasonable interference with public rights” in violation of the federal common law of interstate nuisance, or, in the alternative, state tort law. The states alleged the public lands, infrastructure, and health were at risk from climate change. The trusts urged that climate change would destroy habitats for animals and rare species of trees and plants.  All of the plaintiffs sought injunctive relief requiring each defendant to “cap its carbon dioxide emissions and then reduce them by a specified percentage each year or at least a decade.”  The lawsuits, in other words, attempted to cap carbon emissions from electric utilities.

The District Court dismissed both suits as presenting non-justiciable political questions, but the Second Circuit reversed. On the fundamental issues, the Second Circuit held not only that the suits were not barred by the political question doctrine, but the plaintiffs had adequately alleged Article III standing.  Specifically, the Second Circuit held the Clean Air Act did not “displace” the federal common law of public nuisance. At the time of the Second Circuit’s decision, EPA had not yet promulgated any rule regulating greenhouse gases, a fact the court thought dispositive.

The Supreme Court’s Decision

The Court decided the case based on the doctrine of legislative displacement. According to the Court, when Congress enacted the Clean Air Act, Congress spoke on who should regulate carbon dioxide and climate change. And in its Massachusetts v. EPA decision in 2007, the Supreme Court made it clear that EPA was required to regulate carbon dioxide emissions under certain provisions of the Clean Air Act. In direct response to that decision, the Court noted, in December 2009 EPA released its draft endangerment finding proposal, has committed to issuing a proposed greenhouse gas New Source Performance Standards (“NSPS”) for electric utilities by July 2011, and expects to promulgate a final rule by May 2012.

The Court found it particularly important that Section 111(d) authorizes EPA to establish greenhouse gas NSPS for existing sources. On the other hand, EPA found that federal common law tort actions were displaced even if EPA decided against issuing GHG NSPS at all. According to the court, “[t]he 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.”

The Court also noted that the Clean Air Act provides multiple avenues for enforcement. EPA may commence civil and criminal enforcement actions, and the Act provides for private enforcement through citizen suits. If EPA does not set emissions limits for a particular pollutant or source of pollution, the Court held, states and private parties may petition for a rulemaking on the matter, and EPA’s response will be reviewable in federal court. Accordingly, the Act itself 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. In its opinion, the Supreme Court saw no room for a parallel enforcement track.

In addition, for the Court, it made more sense for EPA to tackle the problem of climate change first.  Indeed, the Court held, this prescribed order of decision making – the first decider under the Act is the expert administrative agency, the second, federal judges – is a key reason to resist setting emission standards by judicial decree under federal tort law. The Clean Air Act entrusts the complex balancing of issues to EPA in the first instance, in combination with state regulators. 

In addressing concern for trial courts, the Court found that it is “fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions.”  For the Court, EPA is “surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunction.” Judges may not commission scientific studies or convene groups of experts for advice, or issue rules under notice-and-comment procedures inviting input by any interested person, or seek the counsel of regulators in the states where defendants are located.

What The Decision Did Not Decide

Several key issues on climate change tort lawsuits remain open.

First, at the end of its decision, the Court noted that its decision did not address whether state tort actions were pre-empted. The plaintiffs had brought state law tort claims, but the appellate court did not reach those issues and so neither did the Supreme Court. There were also state law claims brought in the ongoing Kivalina lawsuit now in the 9th Circuit and in the Comer lawsuit dismissed and now refilled in Mississippi. Noting that none of the parties briefed preemption or otherwise addressed the availability of a claim under state nuisance law, the Court left that matter open for consideration on remand. The unanswered question is whether displacement equates to pre-emption under the Clean Air Act when the topic is climate change.

Second, the Court did not reach the issue of whether, regardless of displacement, there is a cause of action under federal tort law for greenhouse gas emissions. This could be an important issue given efforts in Congress to repeal EPA’s authority to regulate greenhouse gases. Depending on the nature of such legislation, repealing EPA’s authority to regulate greenhouse gas emissions could mean that the displacement doctrine would not prevent federal common law tort claims. But the Court left open the issue of whether such claims might be dismissed anyway for failing to state a cause of action.

Finally, the Court split 4-4 on standing and so declined to disturb the appellate court decision finding that the case should not be dismissed on that basis. But as in Massachusetts v. EPA, which also refused to find that the case should be dismissed for lack of standing, the plaintiffs in AEP v. Connecticut were states rather than individuals or organizations. Given that the standing issue in Massachusetts v. EPA was decided in part because of the “special solicitude” that Courts accord states in having access to the federal courts in cases involving impacts originating from other states, it is possible that standing may still prevent non-state parties from pursuing climate change nuisance causes of action.

Implications

As decided, this case is less about the importance of global warming and more about which branch should decide energy and environmental policy appropriate to address climate change. The decision is not pro-business or anti-environment; the decision says nothing about what measures should be taken to address climate change, if any. Rather, the take-away is that Congress – for good or bad – should decide how the United States will respond to climate change in the United States, not Courts and not states or cities. Still, given the fact that the Court did not resolve the state law issues, it can be expected that climate change nuisance actions will continue, including on remand of AEP v. Connecticut, until that issue is resolved.