In another major legal victory for states pressing for controls on industry emissions of carbon dioxide, a federal appeals court has reversed a lower court decision and ruled that eight states and the city of New York City could bring “nuisance” suits against five coal-burning utilities to curb greenhouse gas discharges that the states claim are causing damage to their natural resources.

The ruling (PDF) by the U.S. Court of Appeals for the 2nd Circuit overturned a 2005 decision by the U.S. District Court for the Southern District of New York that dismissed the states’ nuisance suit on several grounds. Most notably, the district court said the suit raised a “non-justiciable political question” that had to be resolved by Congress and the executive branch because it involved far-reaching policy and cost issues related to greenhouse gas controls.

In its decision, the appeals court agreed that Congress and the executive branch clearly faced major policy questions in trying to map out a national response to climate change.

However, the appeals court said the suit brought by the states was permissible under federal common law principles and legal precedents that allow aggrieved parties to sue over obvious public “nuisances”—in this case, pollution that the states claim is creating bothersome environmental damage affecting their property and citizens.

In a key finding, the appeals court said the states were not seeking a national greenhouse policy, but rather discrete measures that would reduce carbon dioxide (CO2) emissions from specific coal-burning power plants that the states said were contributing to specific greenhouse-related damage, such as a reduction in Sierra Mountain snowpack that California says is leading to water shortages and disruption of sensitive ecosystems within its borders.

Given that finding, the appeals court remanded the states’ lawsuit back to the New York district court to determine whether the states had made their case that the pollution from the plants was a cause of the claimed environmental damage and whether remedies targeted to abate that alleged nuisance were possible.

The appeals court rejected as “overstated” the utilities’ main argument that the states were improperly trying to have the New York district court set complex and politically sensitive greenhouse policy.

The states, said the appeals court, “do not ask the district court to decide overarching policy questions such as whether other industries or emissions sources not before the court must also reduce emissions or determine how across-the-board emissions reductions would affect the economy or national security.

“In adjudicating the federal common law of nuisance claim pleaded here, the district court will be called upon to address and resolve the particular nuisance issue before it, which does not involve assessing and balancing the kind of broad interests that a legislature or a president might consider in formulating a national emissions policy,” the appeals court said in its exhaustive 139-page decision.

“The question presented here is discrete, focusing on the [utilities’] alleged public nuisance and [states’] alleged injuries. As the states eloquently put it, ‘that [states’] injuries are part of a worldwide problem does not mean [utilities’] contribution to that problem cannot be addressed through principled adjudication.”

On another key point, the court said the nuisance suits were not pre-empted by federal policy—as utilities contended—because Congress had not directly legislated on the matter of capping CO2 emissions from power plants.

The case was brought by state officials in California, Connecticut, Iowa, New Jersey, New York, Rhode Island, Vermont, Wisconsin and New York City against American Electric Power Co.; Cinergy Corp., which is now part of Duke Energy; Southern Co.; Tennessee Valley Authority; and Xcel Energy Inc.

The appeals court ruling—if it stands—would open another legal avenue for states and cities such as New York to push for greenhouse gas controls through nuisance laws, which date back to colonial times and which have been invoked in many other pollution-related cases in recent decades.

The court also opened the same door for private entities by ruling that three land trusts also had standing to bring a nuisance suit against the utilities similar to that filed by the states.

The appeals court ruling follows the landmark greenhouse gas case decided by the Supreme Court in 2007 in which states successfully sued the U.S. Environmental Protection Agency to force regulation of greenhouse gas emissions from motor vehicles by arguing that such regulation was required under the Clean Air Act.

Beyond its legal significance, the greenhouse case before the 2nd Circuit ruling had been of considerable interest because it was heard by a three-judge panel of the appeals court that initially included Sonia Sotomayor, the new Supreme Court justice; there had been some anticipation that the case would reveal some of her thinking on pollution and greenhouse issues. However, Sotomayor apparently was elevated before the decision was finalized, and the two remaining judges on the three-judge panel said they were in agreement and thus were able to issue the opinion.

While the states’ lawsuit is now remanded to the New York district court for further consideration, the practical impact of the 2nd Circuit ruling would appear somewhat limited in that the EPA under the Obama administration is moving swiftly to impose CO2 controls in line with the 2007 Supreme Court decision.

In addition, Congress may pass climate legislation in the near future, which the 2nd Circuit acknowledged would preempt greenhouse nuisance suits by setting clear national policy on those issues.

—George Lobsenz (globsenz@accessintel.com) is the editor of COAL POWER’s sister publication, The Energy Daily.