Courts are currently grappling with the tough legal and policy questions posed by large-scale climate change litigation across the country. In the last month, federal courts issued three significant decisions about the viability of nuisance claims relating to climate change impacts: two appellate court decisions open the door to broad legal claims against utilities and other greenhouse gas (GHG) emitters for injunctive relief and compensatory and punitive damages, and the third, issued by a district court, shut such claims down but will likely be appealed.
What are the implications of these decisions for corporate liability, climate change claims and environmental claims in general?
Second Circuit Decision. On September 21, 2009, the Second Circuit issued a much anticipated decision in Connecticut v. American Electric Power. In the massive 139-page opinion, the court resurrected lawsuits brought by New York City, several states, and private land trusts against electric utilities that allegedly emit 10% of America's man-made greenhouse gases. Under federal nuisance theories, the plaintiffs seek an injunction forcing the utilities to cap and then reduce emissions.
The district court had dismissed the suits in 2005 as too entangled in political and regulatory matters to be justiciable. The Second Circuit disagreed, finding that federal courts "have long been up to the task of assessing complex scientific evidence." The court broadly invoked traditional Restatement doctrines of tort relief as providing manageable standards for litigating the dispute.
The Second Circuit also found the plaintiffs had standing since they alleged that actual destruction had begun and that emissions have a cumulative effect. By alleging the utilities "contributed" to the kinds of injuries they suffered, the plaintiffs demonstrated that the injuries were "fairly traceable" to the defendants' actions. At this early stage, the plaintiffs need not pinpoint specific harms caused by particular utilities or show that the utilities' emissions alone caused their injuries.
Additional Significant Decisions. Less than a month later, the Fifth Circuit weighed in with a similar decision in Comer v. Murphy Oil. There, a putative class of Gulf Coast residents and property owners sued numerous energy, fossil fuel, and chemical companies for Hurricane Katrina damage. Instead of an injunction, the plaintiffs sought compensatory and punitive damages, contending that the defendants' combined emissions increased global surface air and water temperatures, thus raising sea levels, thus compounding the storm, thus destroying plaintiffs' property. The Fifth Circuit agreed with the Second Circuit that such claims need not be resolved by the political branches, and likewise found the plaintiffs had "clearly satisfied" standing requirements by merely alleging "actual, concrete injury." (The Fifth Circuit did, however, refuse to revive a set of unjust enrichment, civil conspiracy, and fraudulent misrepresentation claims, which the district court had similarly dismissed.)
Meanwhile, on September 30, 2009, the Northern District of California issued a decision in Native Village of Kivalina v. ExxonMobil Corp., dismissing an Alaskan native village's claims for the cost of future relocation necessitated by global warming. Alleging federal nuisance, the Village sued 24 oil, energy and utility companies for contributions to "excessive" emissions of GHGs. Expressly disagreeing with the Second Circuit, the Kivalina court concluded that nuisance concepts provided no real guidance for resolving global problems caused by GHGs and that the Village had no standing. "It is illogical to conclude," the court held, "that the mere contribution of greenhouse gases into the atmosphere is sufficient to establish that a plaintiff's injury is fairly traceable to a defendant's conduct."
The Combined Effect of these Decisions. First, none of these cases has yet to progress beyond the pleadings stage. An appellate decision that a complaint meets the low threshold for survival is a far cry from one upholding a verdict or injunction. Indeed, the Fifth Circuit expressed skepticism that the Katrina case could survive to trial, noting that the "worldwide effects of greenhouse gas emissions may ... make it difficult ... to show proximate causation."
Moreover, before the cases proceed to discovery, the defendants in Connecticut and Comer are likely to seek en banc circuit review, and possibly a Supreme Court appeal.
Another possible scenario is that Congress or EPA will intervene to regulate GHG emissions. This may not have much impact on the Katrina claims for past damages, but it could impact the injunctive relief sought in Connecticut and limit the potential for similar future lawsuits. Industry can take comfort that the Second Circuit's expansion of federal nuisance appears confined to climate change issues. In particular, the court's analysis contrasting the current lack of federal GHG regulations with the breadth of federal clean water regulations supports a growing belief that federal common law nuisance cannot exist in the clean water context. As Congress did with the 1972 Clean Water Act amendments, here, Congress or EPA could later displace federal GHG nuisance claims through direct regulation of emissions.
Nevertheless, the two appellate decisions present the possibility that judges and juries, rather than legislatures and agencies, could exact a "price" on GHG emissions in the short term, either by capping prospective emissions or ordering damages for past emissions.
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