Reversing the Second Circuit, the Supreme Court on June 20, 2011 held, in American Electric Power Company v. Connecticut, that the Clean Air Act, along with EPA regulatory action that it authorizes, displaces any federal common-law right to seek abatement of emissions of greenhouse gases (GHGs) from power plants. The Court’s decision means that for the foreseeable future, the debate over the proper scope of federal GHG regulation will take place in the executive and legislative branches and not the courts. It also leaves unanswered the question whether traditional state common-law remedies still have a role to play in GHG regulation.
The case began as two separate lawsuits filed in the Southern District of New York by eight States and the City of New York, and by three nonprofit groups, against five power companies that, according to the complaints, are the five largest emitters of carbon dioxide in the country. The plaintiffs sought injunctive relief in the form of orders to cap and reduce the emissions, invoking both the federal common law of interstate nuisance and state common law. The district court dismissed both actions as presenting non-justiciable political questions, but the Second Circuit reversed. The appellate panel (which included then-Circuit Judge Sonia Sotomayor) held that the suits were not barred by the political question doctrine, that the plaintiffs had standing to bring their claims, and that the Clean Air Act did not displace federal common law. Recognized that EPA has the authority under the Clean Air Act to regulate carbon dioxide as an air pollutant, and the principle that federal common law is displaced when Congress has spoken directly to a particular issue, the appellate court held that at least until EPA takes some specific regulatory action — beyond its then proposed (but not final) finding that greenhouse gases endanger public health and welfare, the statute does not regulate greenhouse gas emissions, or does not regulate such emissions from stationary sources. Subsequent to the appellate decision, in December 2009, EPA issued its final GHG Endangerment Finding, identifying six GHGs in the atmosphere to be a threat to public health and welfare of current and future generations. Although the Endangerment Finding does not impose any requirements on industry, it is a prerequisite to such regulation.
On the threshold questions of justiciability and standing, the Supreme Court affirmed the Second Circuit’s exercise of jurisdiction by an equally divided court. (Justice Sotomayor did not participate, but in future cases it is likely that she would provide the fifth vote to affirm similar determinations). Proceeding to the merits, the Court, in an 8-0 opinion written by Justice Ginsburg, acknowledged that it had upheld the application of “specialized federal common law” to claims of interstate pollution, but did not decide whether it was appropriate to do so in this instance, for it found that any federal common-law claim would be displaced by the Clean Air Act, which authorizes EPA to regulate GHG emissions.
The Court built upon its 2007 holding in Massachusetts v. EPA, which held that carbon dioxide, the principal GHG, is an air pollutant subject to EPA regulation under the statute. After outlining the authority granted to EPA by the Clean Air Act, as well as a pending rulemaking procedure under §7411 of the statute to set standards for power plant emissions of GHGs, the Court concluded,
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. We see no room for a parallel track.
Significantly, the Court explained put that it was the authority granted to EPA by the Clean Air Act, and not EPA’s exercise of that authority, that caused the displacement of federal common-law. “Indeed,” wrote Justice Ginsburg, “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.” She hastened to add, however, that EPA’s decision would be subject to judicial review, and sent an unmistakable signal to the agency that any decision not to regulate GHG emissions would be closely scrutinized.
The Second Circuit never considered the plaintiffs’ state-law claims, because it held that federal common law governed. Nor did any of the parties brief or otherwise address before the Supreme Court the applicability of state common law to the issue of GHG emissions, or whether it is preempted by the federal statute. Those issues will need to be considered on remand.
All eyes will now be on Congress and EPA. The new Republican majority in the House of Representatives — and a failure to pass climate-change legislation even when the Democrats controlled both chambers — make significant congressional action unlikely in the foreseeable future. But EPA will decide whether and how to regulate power plant emissions by May 2012. And the parties in American Electric Power will be briefing and arguing the issue of federal preemption of state common law. So it is likely that the Supreme Court will have another climate-change case on its docket before long.