2nd Circuit Rejects “Political Question” Dismissal of Key Climate Change Case

September 23, 2009

On Sept. 21, 2009, a two-judge panel of the 2nd Circuit Court of Appeals sounded a second significant shot in the complicated climate change litigation fight, ruling that defendants can be sued on a public nuisance theory for greenhouse gas emission.

A U.S. district court in New York previously ruled that whether carbon dioxide released as part of fossil-fueled utility stack emissions could be a public nuisance was a “political question,” and thus beyond the reach of the federal courts. This 2nd Circuit reversal follows on the heals of the landmark 2007 U.S. Supreme Court decision, Massachusetts v. EPA, in which the court found carbon emissions to be a “pollutant” under law, compelling EPA to make a finding if greenhouse gases endangered human health. A proposed EPA “endangerment finding,” now out for comment, concludes in the affirmative.

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. Connecticut v. American Electric Power Co., Civ. No. 04 CV 05669 (S.D.N.Y. filed July 21, 2004). Plaintiffs brought the claim both on their own behalf – to protect state-owned property (e.g., the hardwood forests of the Adirondack Park in New York) – and as the parens patriae protecting the public health and well-being of citizens and residents.

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.”

A rare two-judge panel of the 2nd Circuit disagreed, holding that: (1) the district court erred in dismissing the complaints on political question grounds; (2) all plaintiffs have standing; (3) plaintiffs have stated claims under the federal common law of nuisance; and (4) plaintiffs’ claims are not displaced by federal legislation. In doing so, the court reinstated the suit and remanded to the district court for further proceedings.

Judge Sonia Sotomayor heard arguments in the case, but was elevated to the Supreme Court pre-decision. Judge Peter W. Hall, who wrote the 139-page opinion, found there was no need for the trial court to defer to the political branches and refrain from hearing the suit until there is a definitive policy statement on global warming from Congress and the president.

“A decision by a single federal court concerning a common law of nuisance cause of action, brought by domestic plaintiffs against domestic companies for domestic conduct, does not establish a national or international emissions policy (assuming that emissions caps are even put into place),” Hall wrote. “Nor could a court set across-the-board domestic emissions standards or require any unilateral, mandatory emissions reductions over entities not party to the suit.” Moreover, federal courts have “successfully adjudicated complex common law nuisance cases for over a century,” and Judge Hall concluded that the court did not “agree that there are no judicially discoverable and manageable standards for resolving this case.”

The court also weighed in on standing issues, finding that the plaintiffs had pled “concrete” injury by alleging that the melting of the California mountain snowpack, which has resulted in flooding and property damage, was caused by global warming; and that they had also properly alleged future injury by attributing to global injury the possible lowering of the water level of the great lakes, as well as a possible rise in sea level near New York City, among other problems. More importantly, the court held that the plaintiffs had sufficiently alleged that their injuries “are fairly traceable” to the defendants’ emissions.

In addition, the court blessed the use of federal common law nuisance in the global warming litigation context. Defendants set forth a number of arguments as to why this legal theory should not apply, including that principles of constitutional necessity should limit the scope of “transboundary nuisance disputes between the states, and that federal common law nuisance is available only to abate nuisances of ’the simple type’ that are ’so immediately harmful and so readily traced to an out-of-state source that they would have justified war at the time of the founding,’” but the court analyzed each argument and in great detail explained why these arguments were unavailing.

The decision’s implications are substantial, and will unfold as other jurisdictions, including the 5th and 4th Circuits, consider similar issues.

First, one 2nd Circuit panel has now determined that well-pleaded nuisance claims alleging climate change by-product litigation will not be cut off at pleadings stage by dispositive jurisdictional or procedural motions.

Second, one circuit has now signaled that its trial courts will have to grapple with the procedural, evidentiary, and expert questions attendant to discovering and proving specific versus general causation of emissions-originated nuisances with regional, national and even worldwide airborne inputs, and will have to deal with damage-apportionment issues as expansive as the sources of emissions themselves.

Third, the decision creates exposure for a wider group of industrial emitters to potentially expensive and long-lasting by-product liability litigation over climate-impacting emissions, with the costs of this litigation ultimately borne by shareholders and rate payers. This raises the specter of preemption or other types of legislative relief working their way into pending debates over Waxman-Markey, and competing cap and trade proposals in Congress.

We will follow this advisory with further analysis of this important issue. For more information contact the authors.