On June 20, 2011, the United States Supreme Court issued its decision in a landmark global climate change case, American Electric Power Company, Inc. v. Connecticut. The Court held that under the federal Clean Air Act ("Act"), actions taken by the United States Environmental Protection Agency ("EPA") displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants.

The Court previously held in Massachusetts v. EPA, 549 U.S. 497 (2007), that carbon-dioxide and other greenhouse gases qualified as air pollutants under the Act, and therefore could be regulated by the EPA. Following the Massachusetts decision, the EPA issued final rules regulating vehicle emissions, began implementing new regulatory requirements for major facilities emitting greenhouse gases, and began rulemaking under Section 111 of the Act to set limits on greenhouse gas emissions from new, modified, and existing fossil-fuel fired power plants. At the same time, private and public plaintiffs including eight states, the City of New York, and several nonprofit land trusts filed complaints against five major electric power companies asserting various federal and state common law theories. The plaintiffs alleged that the defendants' carbon-dioxide emissions created substantial and unreasonable interference with public rights. The plaintiffs requested that the courts not only establish caps on the amount of carbon-dioxide being emitted from defendants' facilities, but also implement further reductions in emissions from these facilities every year for the following ten years.

The United States District Court for the Southern District of New York dismissed the suits under the political question doctrine, holding that the plaintiffs' complaints presented non-justiciable political questions. On appeal, the United States Court of Appeals for the Second Circuit reversed the district court's decision and held that the plaintiffs' suits were not barred by the political question doctrine. The Second Circuit found that the plaintiffs had alleged sufficient standing and could proceed with their claims under the federal common law of nuisance. The Second Circuit also held that the Clean Air Act did not displace federal common law and that federal judges could set limits on greenhouse gas emissions.

The United States Supreme Court reversed the Second Circuit's decision. The Court explained that carbon-dioxide emissions qualified as air pollutants pursuant to the Massachusetts decision, and that the Clean Air Act speaks directly to regulating these emissions. Although the Supreme Court agreed that "[e]nvironmental protection is undoubtedly an area...in which federal courts may fill in statutory interstices," the Court made clear that federal courts need not create controlling law at every opportunity. The Court acknowledged that it does not have the same law-making authority as that vested in Congress, nor does it possess the same technical and subject-matter expertise maintained by administrative agencies. The Court explained that when Congress addresses an area previously controlled by federal common law, the need for the courts' law-making abilities disappears.

The test whether congressional legislation, such as the Clean Air Act, excludes federal common law is whether the statute speaks directly to the question at issue. Here, the Court examined whether the Act provides a mechanism to limit greenhouse gas emissions from power plants, and whether the field of regulating carbon-dioxide from facilities had been occupied. The Court concluded that the Act spoke directly to the plaintiffs' issues, as the Act outlines multiple avenues for setting greenhouse gas emissions limits.

Although the plaintiffs argued that federal common law is not displaced until the EPA actually exercises its regulatory authority and sets emissions standards, the Court disagreed. Instead, the Court found that "Congress delegated to the EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law." The Court stated that other factors aside from the environmental benefits associated with greenhouse gas regulation must be considered, including the Nation's energy needs and possible economic disruption. The Court explained that the Act entrusts the EPA with balancing such complex issues and that the EPA is best suited for this task, not individual district court judges. Finally, the Court noted that state-based common law claims also must be examined against the preemptive effects of the federal Act and left the issue of state-based claims open for consideration on remand.

The opinion may be found here: 
http://www.supremecourt.gov/opinions/10pdf/10-174.pdf.

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