In a unanimous decision issued on June 20, 2011, the U.S. Supreme Court held that federal legislation within the Clean Air Act displaces federal common law claims brought by eight states and New York City in a lawsuit against five major utility power companies. The Court decided that federal courts do not have jurisdiction to hear federal common law nuisance claims relating to greenhouse gas (GHG) emissions because federal regulation lies with the jurisdiction of the U.S. Environmental Protection Agency (EPA). The Supreme Court also affirmed, with a 4 to 4 split vote, the Second Circuit Court of Appeal’s decision that the states bringing the lawsuit had Article III standing. Justice Sonia Sotomayer had presided over the Second Circuit’s ruling and recused herself when the case was brought to the Supreme Court. Because the Second Circuit did not address the subject of whether state common law claims should be barred from federal court and the parties did not brief the Supreme Court on the matter, the Court remanded that issue.

AEP v. Connecticut was filed in July 2004 by a group of eight states and New York City. Three separate land trusts also filed their own suit against the defendants. The plaintiffs claimed that Tennessee Valley Authority and four private electric power companies were the five largest emitters of GHGs, particularly carbon dioxide, in the United States.  The plaintiffs also maintained that the 650 million tons of carbon dioxide emitted by the five utilities contributed to global warming and under the federal common law of public nuisance caused a “substantial and unreasonable interference with public rights." The eight states and New York City claimed that the global warming caused by the GHG emissions the utilities are producing have contributed to the loss of state-owned land and have put its citizens’ health at risk. The plaintiffs sought injunctive relief that would cap the amount of carbon dioxide emitted by the utilities. In addition, each year thereafter, for ten years, the utilities would be required to lower their emissions by a specified percentage. 

The District Court dismissed both cases citing non-justiciable political questions. In order for the District Court to rule, it would have to make widespread policy decisions, something the lower court said it was not prepared to do.  However, in 2007 the Second Circuit Court of Appeals reversed this decision on the grounds that the suits did not raise the political question doctrine. The plaintiffs’ claims were found to be governed by federal common law of nuisance. Additionally, the Second Circuit found the plaintiffs to have Article III standing, citing Illinois v. Milwaukee, 406 U.S. 91, 93 (1972) (Milwaukee I) which held that a state may file  suit to stop air and water pollution caused by another state or out-of-state industry. The Second Circuit further decided that the Clean Air Act did not displace any federal common law claims brought by the plaintiffs. At the time of this decision, there were no EPA regulations on GHG emissions.

American Electric Power (AEP) and the other four utilities filed a petition for certiorari, or judicial review, arguing that the plaintiffs had no standing to raise state nuisance claims. They also argued that the Clean Air Act authorizes the EPA to regulate GHG emissions which displaces the federal common law claims brought by the plaintiffs. 

In an opinion written by Justice Ruth Bader Ginsburg, the Supreme Court ruled in a 4 to 4 vote that this was not a political issue. They also affirmed the Second Circuit’s decision that the States had Article III standing to bring the lawsuit. “Four members of the Court would hold that at least some plaintiffs have Article III standing under Massachusetts…We therefore affirm, by an equally divided Court, the Second Circuit’s exercise of jurisdiction and proceed to the merits.”

In Erie R. Co. v. Tompkins, the Court stated that “there is no federal general common law.” However, Erie prompted the creation of a “federal decisional law in areas of national concern” which addresses “subjects within national legislative power.” According to Justice Ginsburg, environmental protection is an issue that is certainly within this power. Furthermore, the Court cited Milwaukee I which held when dealing with air and water in their natural states “there is a federal common law." This led the Court to grant standing to the States.

However, the Court argued that just because there is standing for the plaintiffs does not mean the Court should “create the controlling law.”. Based on this reasoning, as well as the Milwaukee v. Illinois, 451 U.S. 304 (1981) (Milwaukee II) ruling, which states that a statutory law will displace a common law, the Court rejected the plaintiffs’ federal common law nuisance claims. The Court stated, “Any such claim would be displaced by the federal legislation authorizing EPA to regulate carbon-dioxide emissions.” In Massachusetts v. EPA, the Court decided that GHGs, including carbon dioxide, were air pollutants subject to the EPA’s regulation. In addition to regulation of pollutants from motor vehicles, the EPA has put into motion a rule that would regulate GHG emissions from fossil-fuel fired power plants. Justice Ginsburg noted that the pertinent question is “whether the field has been occupied, not whether it has been occupied in a particular manner.” The EPA is authorized to regulate GHGs, and is able to choose the best way to do this. This legislation is enough to displace the plaintiffs’ federal common law nuisance claims. Justice Ginsburg adds that it would be more efficient for a knowledgeable and trained agency like the EPA to set emission standards, rather than federal judges who know less about the topic.

Furthermore, the Court explained that the plaintiffs had other options if they were dissatisfied with the EPA’s standards. The Clean Air Act provides several ways to enforce the EPA’s regulations. “If EPA does not set emissions limits for a particular pollutant or source of pollution, States and private parties may petition for a rulemaking on the matter, and EPA’s response will be reviewable in federal court.” The Act provides a way for complainants to seek an emissions limit without sending the case to federal court.   

The plaintiffs also filed claims under state laws, mainly the states in which the defendants’ utilities are located. The Second Circuit ruled that federal common law governed this case and this issue was not addressed in the lower court. The Supreme Court, however, decided that the Clean Air Act did displace the plaintiffs’ federal common law claims. Because of this, the question of whether or not the plaintiffs held valid state law nuisance claims was remanded.

In light of the Court’s ruling, it is apparent that the Supreme Court has decided to leave all matters dealing with GHG emissions to the EPA. Instead of creating laws based on State’s complaints, the Court has decided to leave all rule-making regarding GHG regulations to the experts of the EPA. If the EPA’s authority to create emission standards was revoked, it would be interesting to see if more claims like AEP v. Connecticut were brought before a federal court. For the time being, however, it is up to the Court to review regulations that are set by the EPA.   

For more information about this decision, please contact any member of Taft's Environmental Practice Group.

The author acknowledges the able assistance and analysis of Kira Johnson, a Taft summer intern.