Originally published as a Schiff Hardin Environmental Update newsletter

The Supreme Court decided the case American Electric Power Co. v. Connecticut, U.S. 10-174, in favor of the petitioner utility companies. Several states, a municipality and three nonprofit land trusts filed suit against AEP and other utilities in 2004, alleging that significant greenhouse gas emissions from their plants caused specific and identifiable harm to state resources. The Second Circuit held in favor of the plaintiffs, holding that the case can proceed under the federal common law of nuisance. Today, the Supreme Court reversed, holding that the Clean Air Act displaces any such federal common law claim. The Court left open, and remanded, the question of whether the Clean Air Act preempts similar state common law claims. While this case specifically addressed greenhouse gas emissions from fossil-fuel fired power plants, the case will likely have much wider-reaching implications.

Judicial standing: On the question of whether the states and environmental groups have standing to sue, an evenly divided Court (Justice Sotomayor recused herself from this case) affirmed the Second Circuit’s holding that at least some of the plaintiffs had standing. The Court did not provide further guidance on the standing issue and moved on to the merits of the case.

USEPA Displacement of Common-Law Nuisance Claims: The Court held that the Second Circuit erred in holding that the federal common law of nuisance governed the action. “We hold that the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants.” The Court held that the United States Environmental Protection Agency (“USEPA”) has the power to regulate — but still has discretionary power not to regulate. “But recognition that a subject is meet for federal law governance does not necessarily mean that federal courts should create the controlling law.” If USEPA fails to promulgate standards, litigants have avenues established by the Clean Air Act for enforcement. “There is no room for a parallel track” through court-ordered standards.

Even if USEPA decided not to regulate, this would not automatically give the courts the obligation to fashion remedies for individual litigants at “large sources” of greenhouse gases. “The appropriate amount of regulation in any particular greenhouse gas producing sector cannot be prescribed in a vacuum: as with other questions of national or international policy, informed assessment of competing interests is required. Along with the environmental benefit potentially achievable, our Nation’s energy needs and the possibility of economic disruption must weigh in the balance. The Clean Air Act entrusts such complex balancing to EPA in the first instance, in combination with state regulators. . . . The expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions.”

State Law Claims: The Court remanded to the Second Circuit the question of whether the federal law preempted state common law claims. The Second Circuit had not reached this issue in its opinion, nor had the parties briefed it for the Court. The Court noted, however, that the availability of state law claims depends on the preemptive effect of the Clean Air Act.

Political Question Doctrine: The court did not decide the case based on the political question doctrine.

The Supreme Court’s action today will likely impact the hundreds of cases alleging climate change-related common law claims that have been filed across the country. Many courts have expressed dismay at fashioning a remedy for climate change when the international community cannot even agree on remedies and the Supreme Court resoundingly agrees. Because the state common law nuisance grounds are still open and will be open in each state, court challenges will likely continue.