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United States Supreme Court Finds Federal "Common Law” Preempted by EPA Authority

American Electric Power Co., Inc. v. Connecticut, 131 S.Ct. 2527 (2011) involved Federal common law nuisance claims against the Tennessee Valley Authority and several private power companies emitting carbon dioxide and other greenhouse gasses, asking the federal courts to set caps and to reduce those amounts annually thereafter. The Supreme Court reversed the Second Circuit and determined that the Federal Clean Air Act displaced such claims.

In Massachusetts v. EPA, 549 US 497 (2007) the Supreme Court concluded that EPA was authorized to adopt regulations limiting carbon dioxide and other greenhouse gas emissions. EPA began a rule-making process thereafter; however, the instant lawsuits were initiated prior to the commencement of that process. The District Court dismissed the suits as presuming political questions, that the Second Circuit reversed, finding no bar under the Political Questions Doctrine and finding that plaintiffs had standing to pursue a suit under the Federal common law of nuisance under previous Supreme Court authority which allowed one state to sue another to assure that federal air and water standards were met. In those cases, the Supreme Court determined that the Clean Air Act and Clean Water Act did not displace nuisance suits in federal court. The Supreme Court split evenly in this case on whether the federal courts could hear this case, with the result that the decision on that point by the Second Circuit was upheld by an evenly divided court. (Justice Sotomayor did not participate in this case).

The Court, speaking through Justice Ginsberg, stated that federal common law has been reputed to be dead under Erie R. Co. v. Tompkins, 304 US 64, 78 (1938), so that federal courts apply state law as appropriate; however, federal courts also use federal decisional law where national issues are involved and where states may be at odds with one another. In that sense, there is a federal common law. Plaintiffs in these cases contend that their rights flow from the use of federal decisional law in cases involving disputes among states. However, the Court says that it does not follow that federal courts must adjudicate these cases. The Court said that it has not yet decided whether sub-state entities may use federal courts to enforce federal environmental laws, nor that states may use federal courts to seek relief from alleged environmental damages. Defendants emphasized the scale and complexity of the area. The Court decided to avoid these issues because it recognized that Congress had given authority to the EPA to regulate carbon dioxide and other emissions, thus displacing nuisance lawsuits under federal common law.

The Court said that when Congress addresses an issue by lawmaking, decisions resting on federal common law are no longer needed under principles of federalism whereby Congress, rather than the courts, deal with policy matters. The displacement of federal courts occurred through the Clean Air Act, charging EPA with rule-making responsibilities. If EPA fails to adopt rules, the Massachusetts v. EPA decision allows states to petition for rule-making and to go to the federal courts to assure that rules are adequately considered. Because EPA has committed itself to complete rule-making by May 2012, there is no other available remedy and federal common law is displaced.

Rejecting the Second Circuit’s view, the Court said that rule-making need not be completed to displace federal common law – it is the delegation itself that causes the displacement, so that if EPA ultimately decides not to adopt the rule, federal common law is not thereby restored. The courts may review EPA’s judgment not to issue a rule under the federal Administrative Procedures Act, but there is no authority for federal courts to set emission limits or reductions therefrom on their own. Policy making is left to the expert agency, rather than to the courts, under our federal system, as courts do not have the expertise to determine a “reasonable” level of emissions nor reduction of the same that has “practical, feasible, and economically viable” impact.

The Court allowed the Second Circuit to deal on remand with common law nuisance claims under the law of the source state, which may or may not be preempted. That, however, was not an issue the Supreme Court would take on in the first instance.

Justices Alito and Thomas concurred in the judgment.

Although dealing with federal environmental law, this case has land use implications by which plaintiffs in another state may not be able to use federal common law to enforce emissions standards. There is still an open question as to whether cases may be brought in Oregon courts to enforce Oregon nuisance laws by citizens of another state.

American Electric Power Co., Inc. v. Connecticut, 131 S.Ct. 2527 (2011).

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