Report of the Judicial Review Committee

Energy Law Journal, January 1, 2012 | Go to article overview

Report of the Judicial Review Committee


This report summarizes cases reviewing decisions by the Federal Energy Regulatory Commission (FERC) and other cases pertinent to energy regulation. The time frame covered by this report is January 2011 through December 2011.*

I. ADMINISTRATIVE LAW

A. Displacement of Federal Common Law

In American Electric Power Co. v. Connecticut, the United States Supreme Court held that the statutory delegation of authority to the Environmental Protection Agency (EPA) to regulate emissions of carbon dioxide and other greenhouse gases under the Clean Air Act (CAA) displaces federal common law public nuisance claims brought by governmental and private entities against operators of fossil-fuel fired power plants. 1

In several respects, American Electric Power is a sequel to Massachusetts v. EPA, in which the Court held that the CAA2 authorizes federal regulation of greenhouse gas emissions. 3 In response to the Massachusetts decision, the EPA formally declared greenhouse gas emissions to be air pollutants that contribute to climate change and initiated rulemakings to address such emissions from certain sources.4 But the rulemaking process remained incomplete as of the Court's decision on June 20, 2011. In describing this background, the Court "caution[ed]" that it "endorses no particular view of the complicated issues related to carbon-dioxide emissions and climate change."5

In 2004, long before the Massachusetts decision and the EPA's subsequent rulemaking efforts, eight states, New York City, and three nonprofit land trust groups brought suit against four utilities - American Electric Power Company, Inc., Southern Company, Xcel Energy Inc., and Cinergy Corporation - that operate fossil-fuel fired power plants.6 The plaintiffs sought injunctive relief in the form of emissions caps and reductions, alleging that the power plants' emissions violated the federal common law of nuisance and, alternatively, state tort law.7

"The [d]istrict [c]ourt dismissed [the] suits as presenting non-justiciable political questions."8 However, the U.S. Court of Appeals for the Second Circuit reversed, holding that the political question doctrine was not a bar and that the plaintiffs had adequately demonstrated standing.9 On the merits, the Second Circuit found that the plaintiffs had stated federal common law nuisance claims and that the CAA did not displace those claims.10 In the Second Circuit's view, federal common law could not be displaced "[u]ntil EPA completes the rulemaking process."11

The Supreme Court summarily affirmed the Second Circuit's decision on standing by an equally divided Court.12 Four members of the Court would find adequate standing under the Massachusetts decision; while four members would follow the Massachusetts dissent of Chief Justice Roberts and find that none of the plaintiffs has standing.13

Turning to the federal common law claims, the Court first explained that the area of environmental protection, and interstate, ambient air quality in particular, is generally subject to governance by the federal common law.14 Earlier cases had permitted states to pursue claimed violations of the federal common law of nuisance arising from out-of-state pollution.15 But, the Court noted that it had not previously decided whether a state could challenge any out-of-state pollution source or whether private persons or political subdivisions could invoke the federal common law of nuisance.16

In this case, the Court found that it need not reach these questions because the CAA displaces any federal common law claim seeking to abate greenhouse gas emissions based on their contribution to climate change.17 The test for legislative displacement of federal common law is "whether the statute 'speak[s] directly to [the] question' at issue."18 Building upon the Massachusetts Court's holding that carbon-dioxide emissions are air pollutants subject to regulation under the CAA, the Court here held it "equally plain that the [CAA] 'speaks directly' to emissions of carbon dioxide from the [utilities'] plants. …

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