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U.S. Supreme Court Holds that States Cannot Use Federal Common Law to Limit Utilities’ Greenhouse Gas Emissions

Beveridge & Diamond, P.C., June 21, 2011

On June 20, 2011, the Supreme Court issued its decision in Connecticut v. American Elec. Power Co., unanimously holding that, for now, the Clean Air Act (the “Act”) and EPA rulemaking under the Act displace federal common law nuisance actions to limit greenhouse gas (“GHG”) emissions from electric power plants. 

The Supreme Court’s decision overturned the Second Circuit, which had held that such public nuisance actions could currently be brought against private emitters of GHGs.  Connecticut v. American Elec. Power Co., 582 F.3d 309 (2009).  At the time of the Second Circuit’s decision, EPA had not promulgated any rules regulating GHGs.  See the Beveridge & Diamond client alert regarding this the Second Circuit decision, available at http://www.bdlaw.com/news-669.html.  The plaintiffs – six states, New York City and several land trusts – brought suit against private utilities operating fossil fuel-fired electric power plants to reduce GHG emissions by invoking federal “public nuisance” common law.  They argued that the power companies are contributing to a public nuisance by releasing GHGs into the atmosphere.

The Supreme Court explained that the test to determine legislative displacement of federal common law is whether a federal statute speaks directly to the question at issue.  Citing its previous opinion in Massachusetts v. EPA, 549 U.S. 497, 528-529 (2007), which held that GHGs qualify as air pollutants subject to regulation under the Clean Air Act, the Court concluded that the Act  “speaks directly” to the carbon dioxide emissions from the defendants’ power plants.  Specifically, the Court determined that Section 111 of the Act provides a means to set limits on GHG emissions from power plants, and EPA’s current efforts to complete a Section 111 rulemaking to set standards for GHG emissions from fossil-fuel power plants leave “no room for a parallel track” using the federal common law.  The Court went on to state that EPA – and not the federal courts – is “best suited to serve as primary regulator of greenhouse gas emissions” due to its scientific, economic, and technological resources.  And if the plaintiffs’ were not satisfied with EPA’s rulemaking efforts, the proper initial recourse would be to submit a petition for review of EPA’s rulemaking under the Clean Air Act.

Notably, the Court rejected the plaintiffs’ argument that federal common law is not displaced until EPA actually exercises its regulatory authority in adopting standards, holding that the legislative displacement test is “whether the field has been occupied, not whether it has been occupied in a particular manner.”

While the holding that the Clean Air Act and current regulatory plan for controlling GHG emissions displaces federal common law was unanimous, the Court was split 4-4 on the issue of whether the plaintiffs have standing to bring the suit at all.  The split means that the Second Circuit’s finding that the plaintiffs do have standing survives, leaving open the possibility of future lawsuits involving issues not displaced by the Act or the federal government’s continued efforts to regulate GHG emissions (note, though, that the Second Circuit’s ruling does not apply to other federal circuits).  In addition, the Court remanded the question of whether the plaintiffs could proceed under state nuisance law, because the parties did not brief this issue.  The Court stated, in dictum, that the availability of a state common law suit would, however, depend, in part, on the preemptive effect of the Clean Air Act.

The full Supreme Court opinion is available at:  http://www.supremecourt.gov/opinions/10pdf/10-174.pdf.

For more information, please contact David Friedland at (202) 789-6047, dfriedland@bdlaw.com, Laura K. McAfee at (410) 230-1330, lmcafee@bdlaw.com, or Linda Tsang at (202) 789-6073, ltsang@bdlaw.com.

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