November 17, 2009
Recent federal appellate court decisions have undermined a major defense to claims alleging that power companies, oil companies and other industrial concerns are liable in nuisance for economic consequences of climate change. Companies in those industries can no longer assume that nuisance-based climate change actions will be dismissed on grounds that those claims present non-justiciable "political questions."
Since early 2005, federal courts had reliably dismissed suits alleging that businesses emitting greenhouse-gas emissions had created a public nuisance. These dismissals were based on the "political question" doctrine, which allows a federal court to decline to hear a case, where the court's decision would inappropriately interfere with the business of another branch of government. The rationale was that imposing tort liability on large greenhouse-gas producers requires a "balancing of economic, environmental, foreign policy and national security interests," which should be conducted by the legislature or a regulatory agency, not a court.
All that changed on September 21, 2009, when a two-judge panel of the U.S. Court of Appeals for the Second Circuit reversed a trial court decision, thus allowing a nuisance-based claim seeking damages for greenhouse-gas emissions. In Connecticut, et al. v. American Electric Power Company, et al, Nos. 05-5104 and 05-5119 (2d Cir 2009) the Second Circuit held that the "political question" doctrine did not bar claims by eight states, the City of New York and three land trusts against electric power companies that had reportedly produced ten percent of annual U.S. man-made carbon dioxide emissions. The Second Circuit found that the suit, which sought to limit emissions from six coal-fired electricity plants, did not seek establishment of a national or international greenhouse-gas emissions policy, and did not interfere with activities of other federal government branches. The court noted that the U.S. EPA had proposed, but not finalized, an "endangerment" finding regarding six greenhouse gases (a step toward regulating those gases as potentially-dangerous air pollutants), and there was no federal legislation in effect to limit greenhouse-gas emissions.
The U.S. Court of Appeals for the Fifth Circuit followed suit, in an October 16, 2009 decision in Comer v. Murphy Oil, No 07-60756 (5th Cir. 2009). In Comer, Mississippi residents and property owners asserted private nuisance claims against several oil, coal and chemical companies on the theory that defendants' greenhouse-gas emissions had magnified the severity of adverse weather events including Hurricane Katrina, causing property damage. Reversing a trial court decision dismissing the case, the Fifth Circuit found that the "political question" doctrine (among others) did not bar plaintiffs' claims. In a potentially-controversial aspect of its opinion, the Fifth Circuit held that the "political question" defense only applies if a specific constitutional provision or federal law commits a material issue exclusively to a political branch of government, and the plaintiffs had identified no such law or constitutional provision.
There are eddies in the recent tide against the "political question" defense, as applied to nuisance-based climate change claims. One trial court decision, issued September 30, 2009 by the U.S. District Court for the Northern District of California, represents a legal counter-current. In Village of Kivalina v. ExxonMobil Corporation, et al., No. 08-1138 (N.D. 2009) an Alaska village brought suit against several oil, energy and utility companies, alleging that the companies' greenhouse-gas emissions had contributed to diminution of arctic sea ice protecting the village, and required relocation of the village at significant cost (estimated at between $95 million and $400 million). The District Court dismissed the action, on grounds that the case was barred under the "political question" doctrine, and the alleged harm to plaintiffs that was not fairly traceable to the defendants' alleged conduct.
The many interests involved in the judicial, legislative and regulatory responses to predicted climate change, complicate the future of climate-change litigation.
However, this much is clear: The two federal appellate courts to reach the question, have held that the "political question" doctrine does not bar public-nuisance suits. This may encourage filing of more such suits in the future. The plaintiffs' bar has signaled its view of climate-change litigation as the "next asbestos." The trend toward increased litigation could be accelerated if Kivalina is reversed on appeal by the Ninth Circuit Court of Appeals (which has jurisdiction over the Northern District of California).
Tempering these factors is the possibility that a majority of judges of the Second or Fifth Circuit Courts of Appeal (upon en banc review) could overturn the decisions recently issued by the two and three-judge panels issuing Connecticut and Comer. Further, the U.S. Supreme Court may at some point permit an appeal, and would likely make the ultimate decision on the "political question" issue (although a Ninth Circuit decision reversing the District Court in Kivalina could delay U.S. Supreme Court review of the "political question" defense). Further, federal legislative or regulatory developments may preempt nuisance litigation, or at least strengthen the "political question" defense. The EPA has reportedly submitted an "endangerment finding" to the White House for final approval, potentially paving the way for pre-emptive federal greenhouse-gas regulation. And Congress is considering a greenhouse-gas "cap and trade" bill, which may reach the Senate floor in early 2010. Finally, other legal defenses, including defenses based upon lack of standing or absence of proximate causation, could gain judicial acceptance as alternative defenses to climate-related nuisance actions.
If you have any questions regarding any of these developments, or would like to know more about our environmental law practice group, feel free to contact Michael Case at (212) 634-5030 or by email:mcase@brhr.com.
