Global Climate Change Law Under Review: The U.S. Supreme Court Declares That The EPA Is Better Suited Than The Judiciary To Regulate Greenhouse Gas Emissions Standards
July, 2011
On June 20, 2011, the U.S. Supreme Court rejected a global warming lawsuit against five major power companies that sought to force the coal-burning utilities to reduce their greenhouse gas emissions. In Connecticut, et al. v. American Electric Power Company, Inc., et al., No. 10-174, the Court unanimously determined that federal common law public nuisance claims could not be maintained against carbon dioxide and greenhouse gas emitting entities in light of the federal Clean Air Act and the Environmental Protection Agency (the "EPA")'s efforts to implement the Act. The Court's ruling prevents lawsuits against power companies in federal court over their greenhouse gas emissions. However, the Court did not rule on whether plaintiffs can seek relief under state nuisance law.
Facts
The Court's decision stems from a 2004 lawsuit alleging that five electric power companies - American Electric Power Co., Duke Energy Corp., Xcel Energy Inc., Southern Company, and the government-owned Tennessee Valley Authority - created a public nuisance by contributing to global warming and climate change. These power utilities allegedly account for 25 percent of all greenhouse gas emissions from domestic power plants, and approximately 10 percent of all U.S. carbon dioxide emissions.
The states of California, Connecticut, Iowa, New York, Rhode Island and Vermont, as well as New York City and several land trusts, alleged that their citizens had been harmed by global warming caused by greenhouse gas emissions.
The lawsuit was originally dismissed by the Federal District Court of Manhattan on the grounds that the political branches of government were better suited than the judiciary to balance the economic, environmental, foreign policy and national security interests at issue. The United States Court of Appeals for the Second Circuit reversed the federal court's decision and allowed the case to proceed. The Supreme Court reversed and remanded on the issue of whether state law is preempted by the Clean Air Act.
Analysis
Writing for the 8-0 majority, Justice Ruth Bader Ginsburg wrote "the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants."
The Supreme Court relied on its 2007 decision in Massachusetts v. EPA, which gave the EPA the authority to regulate greenhouse emissions under the Clean Air Act. The Clean Air Act directs the EPA to establish emissions standards for categories of stationary sources that, in the Administrator's judgment, "caus[e], or contribut[e] significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare." Accordingly, the Court held that the EPA cannot decline to regulate carbon dixiode emissions from power plants if refusal to act would be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."
Justice Ginsburg noted that "Massachusetts made plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the [Clean Air] Act. And we think it equally plain that the Act ‘speaks directly' to emissions of carbon dioxide from the defendants' plants." The Supreme Court recognized the EPA's efforts to address greenhouse gas regulation under the Clean Air Act in response to the Court's decision in Massachusetts. In addition to acknowledging the consequent dangers of greenhouse gas emissions, the agency has commenced the rulemaking process to set limits on greenhouse gas emissions for new, modified and existing fossil-fuel fired power plants. Pursuant to a settlement finalized in March 2011, the EPA has committed to issuing a proposed rule by July 2011, and a final rule by May 2012.
Supporting its position that regulators, not courts, should set greenhouse emissions standards, Justice Ginsburg wrote, "[t]he 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."
Moreover, the EPA's actions, or inaction, would not escape judicial review. Federal courts may review the agency's actions to ensure compliance with the Clean Air Act. "The Act itself thus 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. We see no room for a parallel track," wrote Justice Ginsburg.
The Court did not take a position on the science behind global warming. Justice Ginsburg wrote in a footnote, "[t]he Court, we caution, endorses no particular view of the complicated issues related to carbon-dioxide emissions and climate change." Accordingly, the Court's ruling was only that any federal common law nuisance claim "would be displaced by the federal legislation authorizing the EPA to regulate carbon-dioxide emissions."
Learning Points
Importantly, the Court's decision in American Electric v. Connecticut does not end the issue of climate change liability litigation. Notwithstanding the Court's ruling, it recognized that plaintiffs also sought relief under state nuisance law, in particular, the law of each State where the utility company defendants operate power plants. The Second Circuit never reached this issue because it determined that federal common law governed. The Court stated that the availability of state nuisance law to govern emission standards will depend, inter alia, on the preemptive effect of the federal Act - an issue that has not been briefed or addressed by the parties. While the Court did not opine on how it believes the lower court should rule on this matter on remand, it did note that "the Clean Water Act does not preclude aggrieved individuals from bringing a 'nuisance claim pursuant to the law of the source State.'"
We will continue to monitor all developments and provide updates on this landmark climate change lawsuit. Please contact our Global Warming and Climate Change Liability Coverage Team if you have any questions via CM partner Amy Paulus, apaulus@clausen.com, (312) 606-7848.
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