On December 6, 2010, the Supreme Court granted certiorari in American Electric Power Co. v. Connecticut, No. 10-174, to decide whether states and private parties can seek to impose emissions caps on greenhouse gases based on public nuisance claims under federal common law.

The Court’s resolution of this issue is likely to have significant consequences for utilities and other industries that emit greenhouse gases. If the Court allows plaintiffs to limit greenhouse gas emissions through common law tort claims, the scope of industry liability and court-mandated abatement remedies could be substantially expanded.

The case arose when eight states, three nonprofit land trusts, and a municipality brought suit to hold four private utilities and the Tennessee Valley Authority jointly and severally liable for emitting carbon dioxide, which, the plaintiffs allege, creates a public nuisance by contributing to global warming. Plaintiffs sought injunctive relief to reduce the defendants’ carbon dioxide emission levels. Applying the criteria set forth in Baker v. Carr, 369 U.S. 186 (1962), the district court dismissed the suit as presenting non-justiciable political questions.

In the decision below, a two-judge panel of the Second Circuit reversed and permitted the plaintiffs’ suit to proceed. Describing the case as “an ordinary tort suit,” the Second Circuit held that the plaintiffs’ claims did not involve political questions because they could be decided based on common law nuisance principles “‘constitutionally committed’” to the judiciary. 582 F.3d at 331, 325. The court further held that the plaintiffs’ allegations were sufficient at the pleading stage to establish standing and to state a claim under the federal common law of nuisance.

The Supreme Court granted certiorari on three questions. The first is whether states and private parties have standing to seek emissions caps based on defendants’ alleged contribution to global climate change. The defendants contend that the plaintiffs do not have standing to assert claims for damages resulting from climate change because the alleged injury is not traceable to the defendants and because it would not be redressed by imposing emission caps on them. The plaintiffs argue, and the Second Circuit held, that standing is conferred by plaintiffs’ allegation that the defendants are contributing to a common-law nuisance.

The second question is whether a cause of action to cap carbon dioxide emissions can be implied under federal common law. The defendants contend that the Clean Air Act establishes a comprehensive statutory scheme that displaces any federal common law nuisance claim seeking to enjoin the emissions of greenhouse gases. By contrast, the plaintiffs argue, and the Second Circuit held, that the Clean Air Act does not displace their common-law claims unless and until the Environmental Protection Agency takes regulatory action to control such emissions.

The third question the Supreme Court will decide is whether the plaintiffs’ suit presents a non-justiciable political question. Arguing that it is impossible to balance the potential risks of climate change against the socioeconomic utility of defendants’ conduct using “judicially discoverable and manageable standards” and without “initial policy determination[s] of a kind clearly for nonjudicial discretion” (Baker, 369 U.S. at 217), the defendants contend that determining a reasonable level of carbon dioxide emissions involves the type of policy trade-offs specifically reserved for the political branches, while the plaintiffs contend, and the Second Circuit agreed, that common law nuisance claims such as those asserted in plaintiffs’ suit have always been considered justiciable.

Justice Sotomayor has recused herself in American Electric because prior to her nomination in 2009 she served on the Second Circuit panel that heard the case (although she did not participate in the ruling itself). As a result, the case will be decided by only eight Justices. If the Justices are ultimately divided 4-4, the lower court decision will be affirmed.

Absent extensions, amicus briefs in support of the petitioners will be due on January 27, 2011, and amicus briefs in support of the respondents will be due on March 1, 2011.

For more information on this legal update, please contact Tim Bishop at +1 312 701 7829.

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