On September 21, 2009 — more than three years after the case was briefed and argued — the Second Circuit decided Connecticut v. American Electric Power, holding that state governments and private environmental organizations may pursue nuisance claims based on federal common law against companies that emit carbon dioxide from their facilities (Connecticut v. Am. Elec. Power Co., Civ. No. 05-5104 (2d Cir. September 21, 2009)). While this decision is important in its own right, it may also trigger an avalanche of litigation asserting similar theories against a broad array of other companies, both within and outside the electric utility industry targeted in this specific case. This issue bears close monitoring by any entity that operates an industrial facility that emits significant quantities of greenhouse gases.

In this litigation, eight states, New York City, and three environmental land trusts allege that emissions of carbon dioxide from power plants contribute to global warming, and seek to use federal common law nuisance claims to require that the defendants cap and then reduce their carbon dioxide emissions over time (Am. Elec. Power Co. at 9-10). The federal district court in which the lawsuit was brought dismissed the claims on the basis of the political question doctrine, which provides that certain kinds of legal claims present non-justiciable political questions that cannot, by their nature, be decided by courts (Am. Elec. Power Co. at 12-13). The Supreme Court has identified six factors that may identify such political questions; the district court determined that one of these factors — that the case is “impossible to decide without an initial policy determination of a kind clearly for nonjudicial discretion” — was particularly pertinent because the determination of how to balance the need to reduce pollution with the economic impacts of emissions reductions required an initial policy determination to be made by the elected branches of government (Id.).

The Second Circuit disagreed and reversed this decision. Characterizing the political question doctrine as “only rarely” applied by the Supreme Court to bar adjudication of an issue (Am. Elec. Power Co. at 16), the court examined each of the six factors that implicate the political question doctrine and concluded that they did not apply to the federal common law nuisance claims. Of particular interest, the court rejected the defendants’ arguments that allowing the claims to go forward would result in a national emissions policy or would undermine the executive branch’s ability to seek international agreement regarding climate change (Am. Elec. Power Co. at 23). The court also rejected defendants’ arguments that the complex issues presented by climate change made it impossible for the court to apply meaningful legal standards to the case. Analogizing the plaintiffs' claims to past interstate nuisance cases, the Second Circuit held that the issues presented were judicially manageable (Am. Elec. Power Co. at 24-25). Finally, rejecting the specific grounds on which the district court had identified a political question, the court held that just because Congress had not yet legislated on carbon dioxide emissions did not suggest that otherwise-available federal remedies were barred on political question grounds (Am. Elec. Power Co. at 33).

While the Second Circuit’s determination that the claims at issue in Connecticut v. Am. Elec. Power did not present political questions would be itself significant, the Second Circuit’s opinion goes beyond this question and resolves several key legal issues in a way that opens the door to the claims presented in this case, and likely will prompt additional litigation against new defendants. The Second Circuit determined that state governments have standing to bring this lawsuit to protect the interests of their citizens (the parens patriae doctrine), and, more significantly, allowed several environmental land trusts that own real property to assert claims on their own behalf due to alleged future injuries to that property (Am. Elec. Power Co. at 49). The court also determined that the allegations of current and future injury associated with climate change were sufficient to establish judicial standing to assert claims against particular electric utilities (Am. Elec. Power Co. at 50-56). 

Also important, the Second Circuit recognized the continued vitality of federal common law nuisance claims and their applicability to the complex issues associated with climate change — an issue that had been hotly contested in the district court. The court rejected the defendants' arguments that federal common law nuisance claims are a limited remedy available only to state governments to address relatively simple nuisance issues (Am. Elec. Power Co. at 76-80, 93). Rather, the court held that courts could apply the general standards for nuisance as set forth in the Restatement of Torts to such claims, and held that private actors, such as the land trusts, were able to bring such claims (Am. Elec. Power Co. at 69). Finally, the court determined that the common law claims were not preempted by the Clean Air Act, although it left open the question of whether specific climate change legislation might ultimately have that effect (Am. Elec. Power Co. at 119).  

Ultimately, the Second Circuit’s decision represents a major, although preliminary, victory for the state governments and the land trusts on the issue of whether their claims against the utility defendants can go forward. Even so, many of the issues considered in the Second Circuit’s opinion are more complex and debatable than the court's discussion implies, and the decision will likely be appealed by the utility defendants. Importantly, the Second Circuit's opinion sets a precedent that could both stimulate and support additional litigation against industrial emitters of greenhouse gases: it held that nuisance claims related to greenhouse gas emissions and global warming are available under federal common law; that such claims sufficiently allege injury to establish judicial standing; that such claims may be brought by states and private entities; and that such claims are neither preempted by environmental statutes nor barred by the political question doctrine. The Second Circuit’s opinion should be studied closely by industrial operators that emit significant quantities of greenhouse gases, both from the perspective of understanding the potential for future litigation and from the perspective of whether comprehensive federal regulation of greenhouse gases might be preferable to facing unpredictable litigation regarding such issues.

For more information, please contact Vinson & Elkins lawyer Ben Lippard. To learn more about V&E’s Climate Change practice, visit our website.