December 7, 2010
On Dec. 6, 2010, the U.S. Supreme Court granted certiorari in the case of
American Electric Power Inc. v. State of Connecticut, No. 10-174. Oral
argument is expected in March or April. This is very good news for the energy
industry. The 2nd Circuit’s ruling in this case is by far the most significant
and far-reaching victory for plaintiffs in climate change litigation. The
decision singlehandedly revived the practice of combating climate change through
the common law tort of public nuisance. In doing so, it arguably made one of the
most expansive pronouncements on standing for environmental plaintiffs in recent
jurisprudential memory.
The decision is now in significant peril, and the energy industry is poised
to rid itself of climate change litigation once and for all. It’s possible the
court might go even further – it may choose to undermine the recent holding in
Massachusetts v. EPA by restricting standing for plaintiffs in
environmental litigation, and it may fundamentally change the relationship
between the common law and statutory claims in environmental litigation by
restricting the future use of common law suits.
Lower Court Decision
In 2004, eight states (California, Connecticut, Iowa, New Jersey, New York,
Rhode Island, Vermont and Wisconsin) and New York City sued five electric
utility companies on a public nuisance theory for greenhouse gas emission. The
district court, following the precedent of other related decisions, had
dismissed the case on political question grounds, noting the "the impossibility
of deciding [the case] without an initial policy determination of a kind clearly
for non-judicial discretion.”
On Sept. 21, 2009, a two-judge panel of the 2nd Circuit Court of Appeals
ruled that defendants can be sued, holding that: (1) the district court erred in
dismissing the complaints on political question grounds; (2) all plaintiffs had
standing; (3) plaintiffs stated claims under the federal common law of nuisance;
and (4) plaintiffs’ claims were not displaced by federal legislation. In doing
so, the court reinstated the suit and remanded to the district court for further
proceedings.
Possible Outcomes
Outcome #1: Narrow Reversal
The most likely outcome is that the court reverses the 2nd Circuit’s ruling
and does so on a narrow basis. The court dealt with similar issues in the 2007
case of Massachusetts v. EPA, and Chief Justice Roberts and Justices Scalia,
Thomas and Alito in that case all took positions that strongly suggest they will
vote to reverse here. If they’re able to pick up only one more vote, they’ll
have the votes to reverse.
The two justices to watch are Kennedy and Kagan. Kennedy was the deciding
vote in Massachusetts v. EPA, and the majority opinion which he joined made some
fairly far-reaching statements that have been cited by climate change plaintiffs
ever since. Has he changed his mind at all? Kagan has a reputation as a strong
proponent of executive power, and we know that the Solicitor General’s Office,
which she headed up prior to becoming a justice, filed a brief on behalf of the
TVA supporting reversal this summer. Will she side with conservatives here? No
one knows, because there is no judicial track record for her.
The key question is will the court rule narrowly or broadly? Unless either
Kennedy or Kagan defects to the conservative bloc, a narrow ruling is more
likely. The Solicitor General’s brief on behalf of the TVA argued that because
the EPA has adopted GHG regulations since the 2nd Circuit’s decision, the
federal common law of nuisance has been displaced. If the court rules narrowly,
this is the most likely basis for a reversal.
Outcome #2: Affirmance
It’s not outside the realm of possibility that the court could end up
affirming the 2nd Circuit’s ruling. Justice Sotomayor recused herself from this
case, because she originally sat on the 2nd Circuit panel that heard it. That
sets up potential for a tie vote which would result in the 2nd Circuit’s
decision being affirmed.
If this occurs, then not only would climate change litigation have new life,
but it would largely be inoculated from dismissals prior to discovery. There
could be an explosion of new climate change litigation. Thus, contrary to
conventional wisdom, the recusal of Sotomayor does little to affect the possible
outcome. For those in favor of affirming the 2nd Circuit, a 4-4 vote is almost
as good as 5-4.
Outcome #3: Broad Reversal
It’s also possible that instead of reversing on a narrow basis, the court
could reverse by issuing a broad proclamation that radically alters the
environmental litigation landscape. For instance, it could choose to revisit
Massachusetts v. EPA and undermine that decision’s position on standing, either
explicitly or in dicta.
In addition, the court could declare climate change a political question and
re-establish the political question doctrine as a viable defense in certain
types of litigation. Moreover, the court could restrict the use of common law
remedies in environmental litigation going forward, by strengthening the
displacement and preemption doctrines. Though a broad ruling on any of these
issues is unlikely given the current makeup of the court and its past votes, it
is a possibility.
Potential Significance
This case immediately becomes one of the most important cases of the term,
for several reasons.
1. Final Word on Climate Change Litigation
Climate change litigation has existed for more than six years and has been
quite a roller coaster ride. It went from the depths of all the district courts
dismissing various actions on political question grounds to the heights of two
federal courts of appeal allowing the suits to proceed – at least until the
Comer decision by the 5th Circuit was vacated due to not having a quorum. To
call the current law of climate change litigation murky is an understatement.
But the U.S. Supreme Court will decide once and for all this spring, whether
this type of litigation should be allowed to proceed. If the court reverses, it
will drive a stake in the heart of climate change litigation, and it will cease
to exist. However, if it affirms the 2nd Circuit’s decision, there will likely
be many more of these suits. Either way, there will be a great deal more clarity
than there is now.
2. The Future of Environmental Common Law Litigation
This case has the potential to significantly rewrite environmental law. At
issue is whether the federal common law of nuisance has been displaced by
statutes and regulations related to greenhouse gas emissions. But underlying
that issue is a larger question: To what extent should any environmental common
law tort claims, state or federal, be permitted in today’s world where there are
federal and state statutes as well as regulations regarding every conceivable
subject matter?
The fact that the cert. petition relied so heavily on a recent 4th Circuit
decision (State of North Carolina v. TVA) in which state common law was held to
be preempted by the Clean Air Act, is proof. The court’s ruling could
potentially bolster the law of both preemption and displacement, and limit the
number of future common law environmental claims.
3. Standing
Another issue likely to be decided in this case is the scope of federal
standing. Massachusetts v. EPA opened the door to this type of litigation by
expanding the scope of federal standing – at least with regard to statutory
causes of action challenging agency decisions. This case has the potential to
rollback that expansion and make it harder for plaintiffs in environmental
litigation to move forward with such suits in the future. In particular, the
court will likely address how speculative a potential injury is permitted to be,
in order for a plaintiff to establish an “injury in fact.”
The petitioners argued that one consequence of the 2nd Circuit’s holding was
“to permit any plaintiff claiming global warming injuries to sue virtually any
entity in the world, limited only by the reach of personal jurisdiction.” Many
in the defense bar will look for the court to establish a rational framework for
standing in complex litigation such as this going forward.
This case is extremely important for not only the energy industry, but also
for any business with potential exposure to environmental litigation. It will
bear close watching as the court hears oral argument this spring and likely
issues a decision in early summer.