December 20, 2011
2011 U.S. SUPREME COURT DECISION ON CARBON DIOXIDE EMISSION REGULATION
By: Kristen L. Miller, Legislative Analyst II
This report summarizes American Electric Power Co. v. Connecticut, 564 U.S. ___ (2011).
In American Electric Power Co. v. Connecticut, the U.S. Supreme Court reinforced a 2007 decision holding that the Clean Air Act (CAA) (42 USC § 7401 et seq.) authorizes the U.S. Environmental Protection Agency (EPA) to regulate carbon dioxide and other greenhouse gases as air pollutants (see Massachusetts v. EPA, 549 U.S. 497 (2007)).
In Massachusetts, the Supreme Court found that carbon dioxide emissions qualify as air pollution under the CAA and are subject to EPA regulation.
American Electric involves two plaintiff groups (the first comprising eight states and New York City, and the second, three nonprofit land trusts) that sued five electric power companies to limit carbon dioxide emissions. The suits were based on federal common law of public nuisance.
The District Court dismissed both cases as non-justiciable political questions, but the U.S. Second Circuit Court of Appeals reversed. The Second Circuit, relying on Supreme Court precedent, allowed the suit to proceed under federal common law.
But the Supreme Court reversed the Second Circuit, holding that there is no federal common law claim because the CAA “displaced” federal common law in this case. It remanded the case for further consideration of state law claims.
According to the Supreme Court, legislative displacement occurs when Congress directly addresses an area in which federal common law previously governed. The Court also found the “critical point” for determining if displacement has occurred is the point at which Congress delegates regulatory authority to EPA, not EPA's exercise of that authority, as the Second Circuit reasoned.
Justice Ginsberg wrote the Court's majority opinion. Justice Alito wrote a separate concurring opinion in which Justice Thomas joined.
FACTS OF THE CASE AND LOWER COURT PROCEEDINGS
EPA began regulating greenhouse gases after the Supreme Court's ruling in Massachusetts, proposing limits on greenhouse gas emissions from fossil-fuel fired power plants. A final rule on the emissions is expected by May 2012.
But the lawsuits at issue began in 2004, prior to Massachusetts, when two plaintiff groups claimed that the carbon dioxide emissions of five major electric power companies were a public nuisance. The first group included eight states (California, Connecticut, Iowa, New Jersey, New York, Rhode Island, Vermont, and Wisconsin) and New York City. The second group included three nonprofit land trusts (Open Space Institute, Inc.; Open Space Conservancy, Inc.; and Audubon Society of New Hampshire). The power companies included four private companies (American Electric Power Company, Inc.; Southern Company; Xcel Energy, Inc.; and Cinergy Corporation) and the Tennessee Valley Authority, a federally-owned corporation.
The plaintiffs maintained that the defendants were the nation's five largest carbon dioxide emitters and their emissions represented (1) 25 percent of the nation's electric power industry's emissions, (2) 10 percent of emissions from domestic human activity, and (3) 2.5 percent of emissions from worldwide human activity. Their complaints alleged that the defendants' emissions violated federal common law or, alternatively, state law by subjecting public lands, infrastructure, health, habitat, and rare species to the risks of climate change. The plaintiffs asked the District Court to require the defendants to cap carbon dioxide emissions and reduce them annually for at least ten years.
The District Court dismissed both cases as non-justiciable political questions, but the Second Circuit reversed. The Second Circuit held that the plaintiffs stated a claim under the federal common law of nuisance and the CAA did not displace federal common law because EPA had no rule regulating greenhouse gases at the time of its decision.
SUPREME COURT DECISION
The Supreme Court overruled the Second Circuit. The Court held that the CAA and any EPA action it authorizes displace federal common law. It remanded the state law nuisance claims for further consideration. (The Court noted that it did not adhere to any “particular view of the complicated issues related to carbon dioxide emissions and climate change.”)
Federal Common Law
The Supreme Court stated that federal common law exists in areas of national concern where Congress directed national legislative power or the Constitution requires it. The Court said that environmental protection is one of these areas and federal courts may fill in statutory holes or develop federal common law as necessary.
But the Court also stated that even though an issue is subject to federal governance, federal courts may not be the best entity to develop the controlling law. Often, federal courts adopt existing state law as the federal rule until Congress decides differently.
The Supreme Court did not rule on the plaintiff's federal common law claim based on carbon dioxide emissions. It ruled instead that the CAA displaces the plaintiffs' claim.
In Massachusetts, the Court held that carbon dioxide emissions qualify as “air pollution” and are subject to regulation under the CAA. Here, the Supreme Court held that the CAA and the EPA actions it allows displace any federal common law right for the prohibition of carbon dioxide emissions from fossil-fuel fired power plants. The Court stated that the test for determining whether Congress has displaced federal common law is whether Congress enacted a law that “speaks directly to the question.” The Court found that the CAA directly addresses these emissions and provides a procedure for limiting power plant emissions.
As summarized by the Court, the CAA directs the EPA administrator to, among other things, list categories of stationary sources that contribute significantly to air pollution which may be dangerous to public health or welfare. Once listed, EPA must establish emission performance standards for pollutants from new or modified sources and regulate existing sources. EPA issues emissions guidelines for existing sources that states follow when setting performance standards. The CAA also provides several enforcement methods such as inspection and monitoring, administrative penalties, and civil and criminal court action. EPA can delegate some authority to the states and the CAA allows for private enforcement under certain circumstances. If EPA does not set emissions limits for a pollutant or its source, its decision not to act is reviewable in federal court.
The Court noted that EPA is engaged in rulemaking under the CAA to set standards for greenhouse gas emissions from fossil-fuel power plants. EPA agreed to complete the rulemaking by May 2012.
The Court also disagreed with the plaintiffs' argument that federal common law is not displaced until EPA uses its regulatory authority. “The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon dioxide emissions from power plants; the delegation is what displaces federal common law,” the Court said.
Further, the Court explained that it is appropriate that Congress designated EPA as the primary regulator of greenhouse gas-producers and their emissions because the regulation is complex and involves balancing many interests. It stated, “[t]he expert agency is surely better equipped to do the job than individual judges issuing ad hoc, case-by-case injunctions. Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order.”