The U.S. Court of Appeals for the Second Circuit has ruled that a public nuisance suit against five of the nation's largest electric utility companies, alleging that they contribute to global warming with greenhouse gas emissions, can go forward.
The complaint against American Electric Power, The Southern Company, the Tennessee Valley Authority, XCEL Energy and Cinergy seeks to force the utilities to reduce their emissions.
In prior cases, the courts have deemed the political questions raised by public nuisance claims to be non-justiciable.
"The Second Circuit's decision is extraordinarily broad and entails major risks for all industries, not just the electric utilities," say Richard O. Faulk and John S. Gray of Gardere Wynne Sewell LLP. "Any industry that generates greenhouse gas emissions is implicated, and that category includes virtually all businesses."
The ruling in State of Connecticut v. American Electric Power Co. Inc. explicitly rejected the political question doctrine and found that the plaintiffs -- eight states, three land trusts and the City of New York -- have standing both to sue and to present common law nuisance claims. It also vacated the federal district court decision.
"The district court held that the plaintiffs’ claim raised 'political questions' that could not be decided by federal courts because of a lack of standards for determining whether the defendants’ conduct was unreasonable, and the overarching national and international policy implications of regulating greenhouse gases," Faulk and Gray recall.
The district court also said it was not equipped to determine the appropriate level of emissions, assess alternative energy resources, or consider the implications for US energy policy.
In reinstating the case, the Second Circuit observed: "It is error to equate a political question with a political case. Given the checks and balances among the three branches of our government, the judiciary can no more usurp executive and legislative prerogatives than it can decline to decide matters within its jurisdiction simply because such matters may have political ramifications."
The Second Circuit court held that the political questionsraised by the suit are justiciable in federal courts, that none of the claims are preempted by regulations or legislation, and that all of the plaintiffs have standing to bring the suit.
"Even though the case plainly concerned damages caused by global warming, the court characterized the case as an 'ordinary tort case' concerning emissions from six power plants. It concluded that the controversy involved nothing other than the localized activities described in the complaint and held that the narrowed controversy entailed no overarching national or international issues," Faulk and Gray lament.
"The court trivialized the significance and scope of the controversy and belittled the ultimate impact of its holding - even though, in fact, its ruling may serve as a 'bellwether' determination for many controversies yet to arise."
The court also applied reduced standing requirements in its ruling, holding that municipalities and even private nonprofit entities have standing to sue over the impact of global warming on properties they own.
In addition, the court ruled that global warming impacts need only be an "identifiable trifle" involving either recreational or aesthetic concerns.
"Apparently, the court decided to graft the standing requirements for statutory citizens suits seeking to protect the public from recognized harms onto the common law tort of public nuisance," Faulk and Gray conclude. "Under this reasoning, it is difficult to imagine persons who lack standing to file nuisance claims regarding greenhouse gas emissions."
The court also held that the Clean Air Act or regulations issued pursuant to it do not displace the federal public nuisance remedy.
Faulk and Gray believe that the court's ruling puts American businesses in a lose-lose situation.
"So long as industries resist regulations and legislation, they risk public nuisance liability in the courts," Faulk and Gray explain. "Hence, delaying regulation does not confer any advantages. Indeed, it may be advantageous to accept comprehensive regulations and statutes that 'displace' private tort remedies. If, however, the regulations and legislation are not sufficiently comprehensive, industries may still face lawsuits to the extent that claims are not completely preempted. Hence, the entire process must be handled carefully."
