A New Tool for Combating Climate Change?

21 Nov 2009

Getting sued for greenhouse gas emissions
By Sarah A.W. Fitts, Stuart Hammer & Harry Zirlin

A recent Court of Appeals decision is opening a new front in the battle to curb emissions of greenhouse gases (“GHGs”). To date, proponents of efforts to curb GHG emissions have focused on the potential passage of comprehensive climate change legislation by the US Congress and regulation of GHGs by the US Environmental Protection Agency (“EPA”). However, the recent decision raises the possibility of judicially imposed regulation of GHG emissions.

Second Circuit decision 
On September 21st, 2009, the United States Court of Appeals for the Second Circuit reversed a lower court ruling and held that a public nuisance suit brought against large emitters of GHGs could proceed. In Connecticut v. American Electric Power, eight states, New York City, and three land trusts (“Plaintiffs”) sued six large electric utilities that, in the aggregate, annually emit approximately 650 million tons of carbon dioxide (“Defendants”). Plaintiffs filed suit in 2004 claiming that Defendants’ carbon dioxide emissions contributed to climate change, which threatened public health and natural resources, resulted in environmental damage, and constituted a public nuisance.

Plaintiffs sought a court order directing the power companies to reduce their carbon dioxide emissions by 3% annually for 10 years. The US District Court for the Southern District of New York dismissed the case on the basis that granting Plaintiffs’ requested relief would require legislation, making the issue a political question outside the court’s jurisdiction. Reversing the lower court’s decision, the Second Circuit found that Defendants’ contributions to climate change interfered with a “public right in protecting natural resources.” As a result, the Court declared the federal common law of nuisance governed Plaintiffs’ claims.  

The lack of a federal regulatory scheme addressing climate change was a key factor in the Second Circuit’s decision. The Court found that while the federal Clean Air Act addresses pollution and climate change, it does not yet require regulation of carbon dioxide emissions. In 2007, the US Supreme Court held in Massachusetts v. EPA that the EPA had the authority to regulate carbon dioxide under the Clean Air Act. The EPA subsequently proposed an endangerment finding that carbon dioxide is a threat to human health. However, the EPA’s proposed endangerment finding is not final and, more importantly, the EPA has not yet started regulating all sources of carbon dioxide. Therefore, the Court concluded that the federal common law of nuisance governed Plaintiffs’ claims as no comprehensive federal framework existed to displace the nuisance claim.

In addition to the activities on Capitol Hill, the EPA has taken steps to regulate GHG emissions. On September 30th, 2009, the EPA announced its intention to regulate GHG emissions from large stationary sources. The EPA and certain other federal agencies previously released a proposed rule establishing GHG emission and fuel economy standards for motor vehicles. In addition, on September 22nd, 2009, the EPA finalized its rule requiring certain emitters of GHGs to report their GHG emissions. The EPA estimates the rule will require reporting from approximately 10,000 US facilities and cover approximately 85% of the nation’s GHG emissions. 

Looking ahead
Over the next several months, there will likely be continued discussions about curtailing GHG emissions. In December, US representatives will attend meetings in Copenhagen where developed and developing nations will try to reach agreement on an international climate change accord. In addition, depending on progress with health care reform legislation, pressure may build in the Senate to pass a comprehensive climate change bill. The EPA is also expected to continue its efforts to regulate GHG emissions.

In the meantime, the Second Circuit’s decision likely will spur other potential claimants to file suit against GHG emitters. The Court’s ruling is only binding on courts within the Second Circuit; whether courts in other jurisdictions choose to follow the reasoning of the Second Circuit is an open question. Additionally, the US Supreme Court could overrule this decision if Defendants decide to appeal. Finally, future claims of this nature could be preempted if a federal GHG emissions regulatory scheme were implemented.

Sarah A.W. Fitts is a corporate partner and co-chair of Debevoise’s Energy & Natural Resources Group. Stuart Hammer is a member of Debevoise’s Environmental Practice Group, and Harry Zirlin is a member of the firm’s Corporate Department and Environmental Practice Group. The article was written with assistance from Debevoise associate Benjamin P. Lesnak.

Debevoise & Plimpton LLP