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Supreme Court Ruling on AEP v. CT: While Round One Was Promising, Round Two Left Much To Be Desired

July 15, 2011

This article is by Vermont Law School student Nolan Riegler ‘12

Image of air pollutionJudge Peter Hall of the U.S. Court of Appeals for the Second Circuit joined Vermont Law School professors Pat Parenteau and John Echeverria for a panel discussion June 30 at VLS, where they analyzed the U.S. Supreme Court's recent decision in American Electrical Power Co. v. Connecticut. Judge Hall, a VLS trustee, authored the federal appeals court's decision in Connecticut, which was reversed by the Supreme Court.

At issue was whether stationary emitters of greenhouse gasses (GHGs) could be sued for creating a public nuisance under federal common law. The defendants were five utilities, whose power plants were responsible for nearly 25 percent of the nation's and 2.5 percent of the world's carbon dioxide emissions.

The district court held that the issue was a non-justiciable "political question" and dismissed the case. The second circuit determined the issue was not a political question; that at least some of the plaintiffs (who were an amalgamation of several states and land trusts and New York City) had standing to bring the suit; and that emitters could be sued under federal common law so long as the U.S. Environmental Protection Agency had not yet enacted regulations for GHGs as it is authorized to do under the Clean Air Act.

The Supreme Court evenly split on the issue of standing, which resulted in it affirming the Second Circuit's ruling that at least some of the parties had standing to bring the suit—without any official comment. The Court reversed the Second Circuit's holding on the merits, however, holding instead that the EPA's authorization under the Clean Air Act displaced claims made under the federal common law.

The breadth of that displacement was up for debate among the panelists at VLS. All three agreed the Supreme Court's holding only affected suits made under federal common law. Whether an entity could sue under a state's common law was left open by the Court, although that issue has been addressed in North Carolina v. Tennessee Valley Authority and will likely appear before the Court next year. In that case, the Fourth Circuit held that state law nuisance claims are also displaced by EPA regulations. The Fourth Circuits' decision distinguished Oulette v. International Paper, a case originating in Vermont, where the Supreme Court held that state common law nuisance actions are permitted under the Clean Water Act's savings clause. Thus, a state could sue an entity in federal court for public nuisance and the court would apply the law of the source state.

All of the VLS panelists agreed the factual circumstances changed dramatically between the time Connecticut was filed and the time it was heard by the Supreme Court, and these changes contributed significantly to the case's outcome. In a nutshell, the Court decided Massachusetts v. EPA, which held that the EPA did have the authority to regulate GHGs under the plain language of the Clean Air Act. As Professor Parenteau explained, Connecticut and Massachusetts were attached at the hip from the start. They were part of a two-pronged litigation strategy to pressure government and industry to take more decisive action to control GHG emissions and combat climate change. Relying on the Massachusetts decision, the Obama administration's EPA defined GHGs as pollutants and has taken steps to further regulate them. Indeed—as Justice Ginsburg pointed out in the Court's opinion—the EPA is developing regulations intended to do exactly what the Connecticut plaintiffs want to achieve under the common law: Force industry to abate its GHG emissions.Image of Pat Parenteau

Both Judge Hall and Professor Echeverria agreed that under this decision, the mere passage of the Clean Air Act displaced the federal common law. Professor Parenteau was less convinced, noting the EPA had taken some concrete steps to begin regulating GHGs since the Court's decision in Massachusetts. He believed there was some wiggle room in this opinion and that it could be argued that concrete steps by the authorized agency needed to be taken for displacement to occur.

Still, Professor Parenteau focused on nuisance claims for damages. He explained that the Connecticut Court only held that "any federal common law right to seek abatement of carbon-dioxide emissions" was displaced. Thus, a case could be made for certain claims, particularly those that can not be dealt with by any form of EPA regulation. As an example, he described the plight of the indigenous people of Kivalina village in Alaska, whose case will soon be heard by the Ninth Circuit. Due to climate change, the island upon which the village is located is being flooded by the sea and the community will soon be forced to relocate at a cost of nearly $400 million. To determine who should pay for the relocation, the Kivalina people could argue that the Connecticut decision did not displace nuisance claims for damages under the federal common law. Thus, stationary emitters of GHGs should be liable for their relocation, not the people themselves or government agencies.

Image of John EcheverriaProfessor Echeverria said this decision is another in a trend to displace common law claims in the face of administrative regulatory authority. In essence, it's another in a long line of decisions that effectively neuter the common law and shift greater authority onto administrative agencies and the rulemaking process. Federal agencies were originally empowered, he said, to combat a relatively ineffective judiciary, but nearly the opposite is true today. We continue to empower federal agencies and weaken common law causes of action even as these agencies appear to be less effective at enforcement. Even so, agency actions and lack of action can be challenged in court, and this opinion does nothing to change that. If the EPA's eventual rules for GHGs seem ineffective or the agency drags its feet long enough in promulgating them, states and individuals can bring a cause of action against the agency. But as the Kivalina case makes clear, this process does little to help the future victims of climate change, whose numbers are expected to increase in the future.

Indeed, Justice Ginsburg's opinion in Connecticut, which glossed over the complexities of GHG litigation and addressed the displacement question as a predominantly academic issue, lacked the sense of urgency Justice Stevens brought to the table in Massachusetts. While it may be true the question is academic, it does not change the fact that its answer—and the degree of GHG abatement that may result from it—will have significant global consequences. One can only hope the Court still sees the urgency of the issue as more "academic questions" probing the depth of displacement and the strength of the common law reach its hallowed halls.

While Justice Ginsburg's opinion left much to be desired, Judge Hall noted that her reasoning pressured Congress to keep the EPA's authority in place. In sum, since the Court determined the federal common law injunctive actions were displaced by the EPA's authority under the Clean Air Act, removing that authority would reinstate the common law. The result would be that stationary GHG emitters would be subject to suit for public nuisance under federal common law. Thus, some conservative members of Congress, presidential candidates and industry supporters who have called for stripping the EPA of that authority are likely in a better place to leave well enough alone.

A final positive note is best described as what the Court did not do as opposed to what it did. A novel and unprecedented standing argument made by the solicitor general—that federal courts should preemptively bar standing on prudential grounds to all federal nuisance claims—received no traction in the Court. Moreover, the Court's four-four split, with Justice Sotomayor recusing, means that a narrow but clear majority of the present Court favors recognizing standing in future GHG cases. This is good news as rounds three and four (i.e., North Carolina and Kivalina) make their way up the judicial ladder.

AEP v. Connecticut was a close case, Judge Hall noted—and one that's far from over, just as the issue of GHG abatement is far from over. The plaintiffs have the opportunity to argue the case under state common law on remand. They may not, however, as some form of that issue is being addressed in North Carolina. Indeed, as more of these cases reach the Supreme Court, we will obtain a better understanding of the exact limits of displacement.

I conclude with the words that Professor Echeverria used to open the panel as they seem particularly applicable. Quoting Justice Robert Jackson: "[w]e are not unaware that we are not final because we are infallible; we know that we are infallible only because we are final." Indeed, even as decisions become "final," the law shifts with our culture and collective experiences, and some show themselves to be blatantly wrong (i.e. Dred Scott). As impressed as we may have been with round one, and as underwhelmed as we may be by the court's apparent backpedaling in round two, we can only hope for better resolution in rounds three, four and beyond.

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