U.S. Supreme Court justices on Monday unanimously decided that the Clean Air Act (CAA) and other efforts by the Environmental Protection Agency (EPA) to regulate greenhouse gas (GHGs)  “displace” any federal common-law right to “seek abatement of carbon dioxide emissions” from fossil fuel–fired power plants—including claims that GHG emissions constitute a “public nuisance.”

In an opinion delivered for the court by Justice Ruth Bader Ginsburg for the pivotal case American Electric Power Co. v. Connecticut (No. 10-174), the court said that a primary question under debate was “who decides”—the courts or the EPA, the federal agency to which Congress delegated authority.

Ginsburg cited the high court’s 2007 decision in Massachusetts v. EPA, saying, “Massachusetts made plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act. And we think it equally plain that the Act ‘speaks directly’ to emissions of carbon dioxide from the defendants’ plants,” she wrote.

The court acknowledged that state governments had previously invoked federal common law to curb pollution from other states, but the Supreme Court had not decided whether private citizens or cities could invoke federal common law of nuisance to “abate” out-of-state pollution. “Nor have we ever held that a State may sue to abate any and all manner of pollution originating outside its borders,” Ginsburg wrote.

Carbon Dioxide: A Public Nuisance?
The high-profile lawsuit had been brought against five coal-burning utilities—American Electric Power (AEP), Southern Co., Duke Energy, Xcel Energy, and the Tennessee Valley Authority (TVA)—by eight states, the City of New York, and three private land trusts. The states had sought an injunction requiring emission reductions from fossil fuel–fired facilities owned by the defendants, citing a variety of climate change–related injuries, including that carbon dioxide emitted by the power plants constituted a “public nuisance.”

The U.S. District Court of the Southern District of New York had in 2005 dismissed the case, saying claims presented a “political question,” which the court did not have the jurisdiction to decide. But in September 2009, a two-judge panel of the U.S. Court of Appeals for the Second Circuit reversed the district court’s decision in a 139-page opinion, rejecting the defendant’s claim that the litigation presented a “political question.”

The power companies—supported by the Obama administration, which filed a separate brief on behalf of the federally owned TVA—in August 2010 petitioned the U.S. Supreme Court to hear the case.

On Monday, the Supreme Court reversed the decision, 8-0, by the Second Circuit, but it remanded the case to that court to consider whether the CAA also preempts the plaintiffs’ claims under state nuisance law. Justice Sonya Sotomayor recused herself from the case because she had heard the case as a Second Circuit judge.

Experts said that the Supreme Court’s decision could lead to the dismissal of similar pending lawsuits in which plaintiffs have sued for damages, claiming global warming–causing greenhouse gases have caused climate change–related harms. The impact may also be felt in Congress, where lawmakers have introduced legislation to curtail the EPA’s authority to regulate GHG emissions.

Experts: Not Over Yet
However, warns toxic tort and environmental attorney R. Trent Taylor, though a lot of corporate defendants had hoped that this decision would drive a stake through the heart of not only climate change litigation but public nuisance litigation—“it failed to do so,” he told POWERnews on Tuesday.

“Though the result is considered a win for the defendants, it has to be considered a bit of a disappointment for them. The case was decided on the narrowest possible grounds—on the arcane and rarely invoked doctrine of displacement,” he said. “In fact, environmental groups and the plaintiff’s bar are calling this result ‘as good as could have been hoped for’ and stating that they ‘can breathe a sigh of relief that the justices didn’t adopt a more sweeping ruling.’”

Taylor, a public nuisance case specialist at McGuireWoods LLP, said one reason that the decision could leave the door open for more climate change litigation is that while the decision barred recovery under the federal common law of nuisance, it made no ruling on whether a climate change suit could proceed under state common law.

“In fact, the court remanded the case to the Second Circuit on this issue,” he said. “Much of the commentary on the decision in this case in the mainstream media has incorrectly stated that the AEP suit was dismissed or ‘tossed out.’ It was not.”

The plaintiffs in the suit sued under state common law in the alternative and will now be given an opportunity to litigate those claims, Taylor said. “Most likely, the case will be briefed and reheard on the issue of whether the state law claims are preempted by the Clean Air Act by the same two-judge panel on the Second Circuit that issued the original decision. Considering that panel rejected displacement, it is unlikely that it would perform an about-face and embrace a preemption argument, which is generally considered to be more difficult to invoke than displacement is.

“Thus, it is possible that this case could be back in front of the U.S. Supreme Court at some point in the next couple of years on the preemption issue, or even perhaps back at the trial court level,” he said.

Power Companies “Pleased”
AEP spokesperson Pat D. Hemlepp told POWERnews on Tuesday that the company was “pleased” with the court’s decision. “As we’ve said since the day the lawsuit was filed in 2004, states and private parties should look to Congress and not the courts to set policies on climate change and greenhouse gas regulation,” he said. “This decision by the Supreme Court ensures that power generators and other companies can continue to operate in accordance with environmental regulations without the threat of incurring substantial costs defending against climate change litigation.”

TVA spokesperson Barbara Martocci also told POWERnews that the TVA is “pleased with the result,” but said the company was reviewing the decision.

Sources: POWERnews, U.S. Supreme Court