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Second Circuit Rules Parties May Bring Climate Change Nuisance Actions

Beveridge & Diamond, P.C., November 13, 2009

Update: The Defendants-Appellees in Connecticut v. American Electric Power filed a petition for panel rehearing or rehearing en banc on November 5, 2009.

Article originally published by Beveridge & Diamond, P.C. on September 22, 2009.

On September 21, 2009, the Second Circuit issued a long delayed climate change decision, Connecticut v. Am. Elec. Power Co., holding that public nuisance actions can be brought against private emitters of greenhouse gasses. As discussed below, this is a major decision. The immediate impacts are likely to include:

    • A flood of similar nuisance actions against greenhouse gas emitters (and possibly others, as the standing logic may apply equally well in other environmental cases);
    • Major proof problems for the plaintiffs in this and similar cases should they reach trial; and
    • A boost for the prospects of Congress adopting comprehensive federal climate change legislation which would preempt such claims.

The Second Circuit’s decision overturned a 2005 district court decision, Connecticut v. Am. Elec. Power Co., 406 F. Supp. 2d 265, 268 (S.D.N.Y. 2005), which had dismissed the claims on the ground that they presented a non-justiciable political question. The Court of Appeals took up the case in 2006, but remained silent until yesterday. The Court, consisting of one judge appointed by President George H.W. Bush and one by President George W. Bush, sided with the eight states, one city, and three environmental groups that brought the suit. Relying heavily though not exclusively on the U.S. Supreme Court’s 2007 decision in Massachusetts v. EPA, 549 U.S. 497 (see our alert about that decision here), the two-judge panel rejected all of the arguments put forth by the five power company defendants, holding that:

    • The claims do not present non-justiciable political questions;
    • All of the plaintiffs have standing to bring their claims;
    • Current federal statutes do not "displace" the claims; and,
    • The claims were rightly brought under the common law doctrine of nuisance.

As a result of the decision, the case was remanded to the district court. A link to the opinion can be accessed here.

It is likely that all of the electric utility defendants will petition the Second Circuit to review the decision en banc. To win en banc review, they need only a majority of the circuit judges in regular active service and who are not disqualified to recognize that this case "involves a question of exceptional importance." (Fed. R. App. Pro. Rule 35(a)(2).)

If en banc review should be denied or if the en banc panel should uphold the decision, then it is likely that the plaintiffs would file certiorari petitions to the U.S. Supreme Court. If the Supreme Court decides to hear the case, it is not clear what role Justice Sotomayor will play. Justice Sotomayor was the presiding Second Circuit judge on the case when it was argued in June 2006, but the panel’s opinion expressly states that she was not involved in the determination of the matter in the three years since. Neither was she replaced by a third judge, however, which is why the case was decided by a two-judge panel instead of three. In the event that Sotomayor recuses herself, the defendants’ chances for success will increase greatly. In the only other climate change case decided by the Supreme Court to date, Massachusetts v. EPA, the Court ruled 5-4 in favor of the Massachusetts and a similar coalition of states and environmental groups, holding that greenhouse gasses are subject to regulation under the Clean Air Act. Justice Souter, now retired, sided with the majority in that case. If his replacement, Justice Sotomayor, recuses herself, Justice Kennedy likely will find himself in the familiar role of casting the decisive swing vote. A 4-4 split leaves the Second Circuit decision intact, whereas he could make it 5-3 to overturn it. As the Second Circuit’s decision expands significantly upon the Massachusetts v. EPA decision, the plaintiffs cannot be very certain of prevailing on appeal.

The Second Circuit expanded the definition of climate change standing articulated in Massachusetts v. EPA, which found State standing under the parens patriae doctrine. The Court here, while recognizing parens patriae, also found that all of the plaintiffs had standing under traditional standing principles in the context of environmental law, relying on Lujan v.
Defenders of Wildlife,
504 U.S. 555 (1992), and its progeny. Thus, states, local governments and especially environmental groups are likely to bring similar lawsuits. Indeed, it is possible that the Second Circuit opinion, if left unchanged by the Supreme Court, will open the floodgates to nuisance lawsuits against all types of greenhouse gas emitters. The power generation, transportation, manufacturing and agricultural industries are potential targets for these nuisance suits. It is important to note, however, that although the Second Circuit’s may pave the way for many lawsuits, it will be difficult for plaintiffs to prove causation given the global and indirect nature of climate change impacts. In addition, proving at trial potential future impacts that are based on scientific modeling, no matter how good they are, is a far different matter than generating the scientific support needed to promulgate regulations. Nonetheless, the specter of proliferating nuisance litigation, no matter how unlikely it may be that the cases will succeed on the merits, may well change the legal landscape of climate change.

In addition to prompting new lawsuits, the ruling may influence other climate change nuisance actions that are pending. One case pending in district court in San Francisco, Kivalina v. ExxonMobil Corp., et al., No. CV-08-1138 (N.D. Cal. 2008), was filed by the Inuit village of Kivalina, Alaska against over twenty oil and power generation companies. While the prospects for the Kivalina plaintiffs were uncertain prior to the Second Circuit’s ruling, the Second Circuit’s decision may have breathed new life into the case. Another case is pending before the Fifth Circuit Court of Appeals. That case, Comer v. Murphy Oil USA, Inc, et al., No. 05-CV-436LG (S.D. Miss. 2007), was filed by a group of property owners on the Gulf Coast against energy companies for their alleged contribution to climate change. The plaintiffs argued that climate change increased the intensity of Hurricane Katrina, which in turn damaged their property. The district court found that the plaintiffs did not have standing and that the case raised non-justiciable political questions. The plaintiffs appealed and the Fifth Circuit heard oral arguments in November of 2008 but has yet to issue a decision. (A final case, California v. General Motors, et. al., 2007 U.S. Dist. LEXIS 68547 (N.D. Cal. 2007), was on appeal before the Ninth Circuit after the district court ruled that it too raised non-justiciable political questions, but in June this year the State of California voluntarily dismissed the appeal, citing the Obama Administration’s increase in fuel economy standards for vehicles and the EPA’s endangerment finding for greenhouse gases.)

If EPA regulates greenhouse gasses, or if Congress adopts comprehensive climate change legislation, it is likely that federal climate change nuisance lawsuits will be "displaced" (i.e., preempted.). The Second Circuit notes that EPA’s existing greenhouse gas regulations are only proposed — and only apply to mobile sources in any event —and thus nuisance actions against stationary sources like power plants are not "displaced." The Court’s ruling means that until the EPA actually regulates specific sources of greenhouse gasses, nuisance actions against those sources will not be preempted. The reverse also is true: actual EPA regulation would preempt such nuisance suits, and the same likely would hold true for comprehensive federal legislation such as that now being considered in the U.S. Senate. For many this presents a Hobson’s choice, and some may decide to support Congressional action as the lesser of two evils.

For more information, please contact Nico van Aelstyn at (415) 262-4008, nvanaelstyn@bdlaw.com or Russ LaMotte at (202) 789-6080, rlamotte@bdlaw.com.  

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