The Supreme Court ruled today that six states cannot, for now, try to limit emissions of greenhouse gases under federal common law.
The court ruled 8-0 -- Justice Sonia Sotomayor was recused -- that the Clean Air Act and the Obama administration's efforts to regulate emissions had displaced the states' federal common law argument.
But the court split, 4-4, on the potentially key issue of whether federal courts even had jurisdiction to hear the claims. The split means the 2nd U.S. Circuit Court of Appeals' finding that it did have jurisdiction stands, although that conclusion would not apply to other federal circuits. Sotomayor sat on that panel; hence her recusal.
The ruling was therefore not a total victory for the utilities, including American Electric Power Co. Inc., that were sued by the states because the court left open the possibility of future lawsuits if the federal government were to cease efforts to regulate greenhouse gases.
That could occur if, for example, the U.S. Circuit Court of Appeals for the District of Columbia strikes down the Obama administration's climate rules -- an issue that is currently before it -- or if Congress were to amend the Clean Air Act so that it does not cover greenhouse gases.
The decision does little to affect the political standoff between the Obama administration and members of Congress who want to limit EPA's authority to regulate greenhouse gases.
The plaintiffs -- six states, New York City and several land trusts -- wanted utilities that operate fossil fuel-fired electric power plants to reduce emissions by invoking federal "public nuisance" common law.
They argued that the power companies are contributing to a public nuisance by releasing greenhouse gases into the air.
Therefore, the states maintained, they can turn to the courts to require the defendants to reduce emissions.
The 2nd Circuit, which decided the case before the Obama administration's climate rules were issued, agreed.
In reversing the appeals court by focusing on federal law displacing common law, the Supreme Court resolved the case in the narrowest possible way.
Such an outcome was not unexpected based on April's oral argument (Greenwire, April 19).
"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," Justice Ruth Bader Ginsburg wrote in the majority opinion.
'Huge disappointment to industry groups'?
Under Ginsburg's analysis of the Clean Air Act, there are "multiple avenues for enforcement" and, she noted, even if EPA does not set emissions limits, states can petition for a rulemaking.
"The act itself thus provides a means to seek limits on emissions for carbon dioxide from domestic power plants -- the same relief the plaintiffs seek," Ginsburg wrote.
The court rejected the plaintiffs' argument that the federal common law is not displaced until EPA actually sets emissions standards.
What displaces common law, Ginsburg said, is Congress' delegation of responsibility, not how EPA chooses to address it.
Whatever rules EPA does issue are then subject to review in federal court anyway, she added.
AEP spokeswoman Melissa McHenry said the company is pleased with the decision. Though the company lent its support to the climate bill that passed the House in 2009, it argued in court that judges are not well-equipped to set emissions limits for power plants.
"We've said since the day the lawsuit was filed that Congress, and not the courts, should set policies on climate change and greenhouse gas regulations," McHenry said in an interview.
Although the states lost, the ruling was something of a relief for environmentalists, some of whom were concerned that the court might use the opportunity to revisit Massachusetts v. EPA, the key 2007 case in which the court held on a 5-4 vote that the Clean Air Act could be used to regulate greenhouse gases.
The ruling does not say which four justices would have concluded that the states did not have standing, but experts assume it was the same four who ruled that way in the earlier case. Today's ruling also indicates that Justice Anthony Kennedy, the swing vote in 2007, has not changed his position.
"It's basically a reaffirmation of Massachusetts v. EPA," said Michael Gerrard, director of the Center for Climate Change Law at Columbia Law School.
Robert Percival, an environmental law professor at the University of Maryland School of Law, likewise described the outcome as "a huge disappointment to industry groups."
The ruling also leaves open the door to public nuisance claims under state law.
Today's decision is also likely to affect another case on the same issue, Kivalina v. Exxon Mobil Corp., which is before the 9th U.S. Circuit Court of Appeals.
Implications for Congress, EPA
Though it blocks the common law claims from moving forward, today's ruling will largely maintain the status quo inside the Beltway.
The Obama administration is promising to set emissions limits for coal-fired power plants next year, but Congress -- no longer interested in passing a climate bill -- is deciding whether EPA should be allowed to come out with the new regulations.
Environmental groups still want EPA to order major emissions cuts from the power sector. Today's ruling does not change that, said Vickie Patton, general counsel at the Environmental Defense Fund.
The ruling reasserts that the Clean Air Act covers greenhouse gases and that EPA is the "expert agency" that must decide how to address them. It cites the New Source Performance Standards that EPA agreed to set for existing coal plants under a settlement with states and environmental groups.
If the agency decides not to limit greenhouse gases from existing coal plants and gives a good reason for that decision, the federal common law claims would still be pre-empted, experts say.
"A critical factor in the court's analysis was that the EPA has charted a course of action under existing law to address the harmful, climate-destabilizing pollution from the power sector, and is in fact moving forward," Patton said in an interview. "We hope the agency continues to take its responsibilities with the full weight that the court recognizes the agency has."
Should the Clean Air Act be changed to exclude greenhouse gases, it would upend the ruling and perhaps give new life to common law cases.
That is because the court upheld the decision that the appeals court had jurisdiction over the case, and that it did not pose a "political question" that needed to be left to Congress. If Congress takes away EPA's authority, federal common law cases would "come roaring back," said Matt Pawa, an attorney who represented land trusts that were seeking emissions cuts.
Raymond Ludwiszewski, a lawyer at the Gibson Dunn & Crutcher law firm, who filed an amicus brief on behalf of the Association of International Automobile Manufacturers in the case, conceded that groups challenging the administration's climate rules in the D.C. Circuit now find themselves in a delicate situation.
If the current rules are found wanting by the appeals court and EPA -- perhaps under another administration -- and Congress declines to take further action, "it's difficult to see what is displacing the common law," Ludwiszewski said.
The court did not decide today whether federal common law could require cuts in greenhouse gas emissions, saying it was an "academic question" in light of the 2007 ruling that greenhouse gases are pollutants under the Clean Air Act.
But critics of the rules, including industries that rely on fossil fuels, hope it is not an academic question for long. Earlier this year, the House passed a bill to strip EPA's ability to regulate greenhouse gases. Several similar bills were narrowly rejected in the Senate.
Attorneys for utilities argue that if Congress decides to block EPA, it would still displace lawsuits under federal common law.
Other legal experts point out that Congress could also include language in its legislation that would prevent federal courts from hearing federal public nuisance claims concerning greenhouse gases.
Click here to read the ruling.
Want to read more stories like this?
E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.
Click here to start a free trial to E&E -- the best way to track policy and markets.