Supreme Court Dismisses Common Law GHG Case Against Energy Producers
On June 20, 2011, the U.S. Supreme Court issued an opinion on American Electric Power Co., Inc., et al. v. Connecticut, et al.
This case is significant because it dismissed a lawsuit in which several states and environmental groups sought court orders requiring large electrical utilities (alleged to be “the five largest emitters of carbon dioxide in the United States”) to reduce their greenhouse gas emissions because the emissions were alleged to be a public nuisance. Plaintiffs alleged that the emissions violated federal common law (nuisance) or state tort law. The plaintiffs were thereby requesting a court decree setting a cap for C02 emissions to be reduced annually.
The Supreme Court in a fairly short opinion touched upon a number of significant issues. The Court first dealt with the issue of jurisdiction and then with the issue of whether there is a federal common law cause of action of nuisance. The Court split on the issue of whether the plaintiffs had Article III standing, i.e., whether there was sufficient specific injury to the plaintiffs such that the Article III Claims and Controversies requirement would be met, allowing the plaintiffs to avail themselves of the jurisdiction of the federal court system. Half of the Court believes that there was no standing, the other believes (assuming the prior cases are an indication) that some of the plaintiffs (the states) had sufficient standing that the case could be brought. This issue was addressed in the Massachusetts v. EPA case in which the Court held that greenhouse gases were regulated under the Clean Air Act. In that case the state of Massachusetts was found to have had sufficient standing to allow the case to be heard.
The Court held that the federal common law nuisance which had been recognized in several interstate environmental cases was displaced by the statute even absent the setting of emission standards (EPA’s CO2 regulations are due in May 2012.) The Court also indicated that the agency should be allowed to act first, before the judiciary, as the expert agency is better equipped to do the job then the judiciary who typically lack the economic technological resources to cope with these issues. Plaintiffs’ proposal to have federal judges determine these emission limits in the first instance could not be reconciled with the statute.
Finally, the Court did not reach the issue of the viability of the state nuisance claims because they had been dropped by the lower courts when they held that the federal common law governed over state law. Because there was no briefing on the state law preemption issue, the issue was left for consideration on remand. The Court did indicate that the issue of whether there was preemption of the federal common law by federal legislation, as in this case, did not require “the same sort of evidence of a clear and manifest (congressional) purpose” required for preemption of state law. (Citing City Milwaukee II 451 U.S. at 304, 317 (1981)).
This decision, while sending the case back to the lower courts, raises several unresolved issues. Will the courts continue to allow plaintiffs, particularly non-states such as the industry groups in the Massachusetts case, and the environmental groups in this case, Article III standing where there is an argument that no specific injuries have been pled? Will the courts find that state common law claims are also pre-empted by the federal Clean Air Act? Will this theory of agency primacy be applied at other levels? What happens if the EPA or Congress decides not to issue greenhouse gas regulations? We’ll be continuing to monitor the case as it works its way back through the lower courts—stay tuned for updates.
California Court Enjoins Implementation of Cap-and-Trade
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Legal News Alert from Stoel Rives Environmental Law Group
March 23, 2011 San Francisco Superior Court has issued a final decision in Association of Irritated Residents v. California Air Resources Board. For the moment, the California Air Resources Board (CARB) is enjoined from further rulemaking to implement the California Global Warming Solutions Act (A.B. 32), including for the cap-and-trade program. The Court upheld the validity of CARB’s Scoping Plan for implementation of A.B. 32, saving CARB from having to revise the Plan. But, the Court found flaws with CARB’s environmental review of the Scoping Plan under the California Environmental Quality Act (CEQA), in particular its analysis of alternatives to the Plan’s recommended greenhouse gas (GHG) reduction measures, such as cap and trade. CARB is enjoined from further rulemaking until the agency has come into compliance with CEQA by amending its environmental review of the Scoping Plan. For entities facing regulation under A.B. 32, this decision has important implications. Scoping Plan GHG reduction measures that have already made their way through the rulemaking process appear unaffected. But CARB’s cap-and-trade program never made it out of the formal rulemaking process. While the Board members of CARB approved the cap-and-trade program in December 2010, it left it to the Executive Officer to take final action to adopt the proposed regulation (or bring it back to the Board) after more details were finalized. CARB had a packed schedule this year to finalize cap and trade prior to its January 1, 2012 start date. Under the Court’s final decision, these activities will have to be shelved if they fall within the rubric of further rulemaking or implementation. Regulated entities may thus have a temporary reprieve from the onset of cap and trade in 2012. But continued uncertainty over the details of CARB’s planned GHG regulation of stationary sources is a less than ideal situation for regulated sources. For more background and information on the decision and its implications, click here. If you currently subscribe to Stoel Rives legal updates, click here to update your contact information and preferences. To join the Stoel Rives mailing list and ensure direct delivery of future alerts, click here to subscribe. To unsubscribe, send an email to unsubscribe@stoel.com. |
California Court Enjoins Implementation of Cap-and-Trade
|
Legal News Alert from Stoel Rives Environmental Law Group
March 23, 2011 San Francisco Superior Court has issued a final decision in Association of Irritated Residents v. California Air Resources Board. For the moment, the California Air Resources Board (CARB) is enjoined from further rulemaking to implement the California Global Warming Solutions Act (A.B. 32), including for the cap-and-trade program. The Court upheld the validity of CARB’s Scoping Plan for implementation of A.B. 32, saving CARB from having to revise the Plan. But, the Court found flaws with CARB’s environmental review of the Scoping Plan under the California Environmental Quality Act (CEQA), in particular its analysis of alternatives to the Plan’s recommended greenhouse gas (GHG) reduction measures, such as cap and trade. CARB is enjoined from further rulemaking until the agency has come into compliance with CEQA by amending its environmental review of the Scoping Plan. For entities facing regulation under A.B. 32, this decision has important implications. Scoping Plan GHG reduction measures that have already made their way through the rulemaking process appear unaffected. But CARB’s cap-and-trade program never made it out of the formal rulemaking process. While the Board members of CARB approved the cap-and-trade program in December 2010, it left it to the Executive Officer to take final action to adopt the proposed regulation (or bring it back to the Board) after more details were finalized. CARB had a packed schedule this year to finalize cap and trade prior to its January 1, 2012 start date. Under the Court’s final decision, these activities will have to be shelved if they fall within the rubric of further rulemaking or implementation. Regulated entities may thus have a temporary reprieve from the onset of cap and trade in 2012. But continued uncertainty over the details of CARB’s planned GHG regulation of stationary sources is a less than ideal situation for regulated sources. For more background and information on the decision and its implications, click here. If you currently subscribe to Stoel Rives legal updates, click here to update your contact information and preferences. To join the Stoel Rives mailing list and ensure direct delivery of future alerts, click here to subscribe. To unsubscribe, send an email to unsubscribe@stoel.com. |
Will California be Able to Regulate GHG Tailpipe Emissions?
The California Air Resources Board may soon get its wish. Back in 2005, ARB first requested a waiver from the U.S. Environmental Protection Agency, to allow California to regulate motor vehicle greenhouse gas emissions. EPA denied the waiver two years later, after California threatened to sue EPA to force the agency to take action on the request. The very day after President Obama's inauguration into office, ARB filed with EPA a request for reconsideration of its waiver request. Several days later, President Obama himself signed a Presidential Memorandum directing EPA to assess whether denial of the waiver was appropriate in light of the Clean Air Act. Last Friday, Lisa Jackson, head of the EPA, issued a Notice for Public Hearing and Comment on California's request for consideration of the previous waiver denial, which officially initiates reconsideration by EPA. Discussion at the public hearing on March 5, 2009 may get interesting, as the Notice's 'supplementary information' included a brief discussion on how the waiver denial had "significantly departed from EPA's longstanding interpretation of the Clean Air Act's waiver provisions and from the Agency's history, after appropriate review, of granting waivers to California for its new motor vehicle emission program." Stay tuned.
California ARB's request for a waiver is premised on the Clean Air Act provision that allows states to enact stricter motor vehicle emission standards than the federal government's, provided EPA has approved a waiver for the state to do so. Under the Clean Air Act, EPA must grant a waiver unless it finds that the state:
- was arbitrary and capricious in its finding that its proposed standards are in the aggregate at least as protective of public health and welfare as applicable federal standards,
- does not need such standards to meet compelling and extraordinary conditions, or
- has proposed standards not consistent with section 202(a) of the Clean Air Act.
In denying ARB's original waiver request, the EPA administrator at the time, Stephen Johnson, noted that President Bush had just signed an energy bill that would work to reduce emissions throughout the U.S. and that increased fuel economy standards. The energy bill increased fuel efficiency for new cars and light trucks by 40% by 202, to an average of 35 mpg. This is in fact the biggest increase by Congress in fuel economy standards since the program was created in 1975. As Johnson announced in December 2007, "The Bush administration is moving forward with a clear national solution, not a confusing patchwork of state rules." It's true that if the waiver is granted, California would enact a more stringent fuel economy standard than in any other state. But, 16 other states have pledged that if California can move forward with its higher standard, they would in turn adopt California's standard as their own.
