Second Circuit Allows Tort Action Against Utilities to Proceed Based on Greenhouse Gas Emissions by DLAPiper


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7 OCT 2009

Second circuit allows tort action against utilities to proceed based on greenhouse gas emissions

LeAnn M. Johnson-Koch Melissa Anne Hearne

In a month full of momentous developments in the quest for a national climate change policy, the Second Circuit announced a decision with considerable political and legal implications. The same week that the Senate published a draft bill on climate change and the Environmental Protection Agency (EPA) announced proposed thresholds for regulating greenhouse gas emissions under the Clean Air Act, the Second Circuit delivered a lengthy opinion in Connecticut v. American Electric Power Co., Inc. allowing common law nuisance claims to proceed against utilities, based on their emissions of greenhouse gases. The decision raises serious questions: what is the role of the courts in this developing area of law? What are the potentially far-reaching implications of the decision if Congress and EPA do not act quickly to develop policy that preempts the common law claim? What if Congress fails to statutorily bar such claims? At least in the short term, the decision is likely to bolster common law claims regarding greenhouse gas emissions currently before other circuits and embolden other environmental groups to bring additional claims. Background The initial lawsuits in Connecticut v. American Electric Power Co., Inc. were brought by eight states, the City of New York and several non-governmental and quasi-governmental agencies. The plaintiffs sought an injunction to curb the carbon dioxide emissions of five major power producers, which plaintiffs contended were the five largest emitters of carbon dioxide in the US and some of the largest producers in the world. The plaintiffs identified a long list of threatened injuries, including increased numbers of 10/8/2009

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fatalities due to changes in weather patterns, increased smog related illnesses, changes to coastal areas and weather-related threats to property and health. The lawsuits were dismissed in 2005, when the District Court ruled the claims were political questions that the courts could not adjudicate without inappropriately entering the policy arena by determining appropriate caps on carbon dioxide emissions, setting schedules for imposing reductions on emissions and foreseeing the implications for future negotiations internationally and domestically on climate change. Nearly four years to the day after the lawsuits were dismissed, the Second Circuit reversed. The court held that the case, although having political implications, did not present a non-justiciable political question; the plaintiffs had pled sufficient claims under the federal common law on nuisance; and the claims were not preempted by Congress or EPA. The defendants are expected to seek review of the decision by the full panel of the Second Circuit. Political Question The Second Circuit noted in its decision that courts rarely dismiss an otherwise justiciable controversy on the grounds that it is a political question. The court felt that this was an extreme outcome that should only be sparingly used. Applying a six-factor test to determine whether the matter was a political question, the court ultimately determined that judicial resolution of the matter would not interfere with Congressional or Executive Branch policymaking, contradict any established national policies or require the court to interfere with matters left by the Constitution to the other branches of the government. The court indicated that although a matter may have some political ramifications, a court should not generally decline to hear such matters absent extraordinary circumstances. As such, the court held that the plaintiffs’ claims were not a political question. Preemption The court specifically rejected the argument that existing federal statutes, in particular the Clean Air Act and Global Climate Protection Act of 1987, displace the federal common law on nuisance as it applies to emissions of greenhouse gases. Congressional and EPA inaction were noted by the court as indicating that the statutes do not currently control greenhouse gas emissions; therefore, federal policy and statutes do not currently address the plaintiffs’ alleged injuries. The court noted, however, that the time may come when Congress and EPA have acted in such a manner on climate change that the federal common law will be preempted. But the court held that, at present, no national policy preempts the application of the federal common law on nuisance to greenhouse gas emissions. Thus, the court allowed the case to proceed. Implications The Second Circuit ruling will increase pressure on both Congress and EPA to fill the void in developing a national climate change policy and to preempt further court action on the matter. In the interim, it may also be possible for Congress to statutorily bar such claims through a comprehensive climate change bill. Although passage of a broad and comprehensive climate change bill may implicitly preempt such common law claims in the future, it is believed that industry will push for explicit Congressional action in the passage of a climate bill to head off additional claims. 10/8/2009

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Should Connecticut v. American Electric Power move forward prior to Congressional action on a comprehensive climate change bill or before a statutory bar to such claims is passed, the case is likely to raise a number of questions about the effectiveness of suits against greenhouse gas emitters for common law claims at redressing the injuries alleged. For example, if a nuisance is found and the utilities are held liable, how would the court craft an appropriate remedy when even reducing the five defendants’ emissions to zero would not halt the nuisance? Would every potential source of greenhouse gases need to be brought into the action as an indispensible party to craft a workable remedy to the tortuous injury? Because the alleged injuries in the US could be contributed to by emissions half a world away, could any foreign company with sufficient ties to the US that emits greenhouse gases, no matter where, be at risk for litigation in the federal courts? These difficult procedural and substantive questions may overwhelm the courts. In the long run, the courts may find that common law theories of nuisance are not a workable arena for addressing environmental issues that are global in nature. But Congressional action to either fill void and preempt the courts or statutorily bar the claims prior to resolution of the existing claims in the courts seems more likely in the interim. 10/8/2009

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