October 24, 2017

Is the emission of greenhouse gases tortious?

By Damien M. Schiff Senior Attorney

“Yes,” argue several complaints recently filed in California superior court by five cities and counties. The plaintiffs (San Francisco, Oakland, Imperial Beach, Marin County, and San Mateo County) contend that the defendant energy companies—the ten or so largest in the world, who together are responsible for about one-fifth of all greenhouse gas emissions over the last fifty years—are liable under nuisance and other tort theories for having substantially contributed to global warming. The local governments seek damages to pay for the adaptive measures (such as seawalls) that they as coastal communities will have to undertake as a result of climate change. Similar private-party efforts to seek recovery for greenhouse-gas-related injuries have failed (see Native Village of Kivalina v. ExxonMobil Corp.). Will these lawsuits fare any better?

To answer that question, we must begin with the Supreme Court’s seminal greenhouse-gas decision, Massachusetts v. EPA. In Massachusetts, a coalition of states and other entities had petitioned EPA under Section 202(a) of the Clean Air Act to (i) determine that greenhouse-gas emissions from U.S. motor vehicles “cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare,” and (ii) promulgate emission regulations for such vehicles. When EPA declined to respond to the petition, the coalition sought review in the D.C. Circuit but lost in a split 2-1 panel decision. The Supreme Court then granted review and held that (a) the state petitioners had Article III standing to sue EPA over its failure to regulate greenhouse gases, and (b) because greenhouse gases are a “pollutant” within the meaning of the Clean Air Act, EPA acted illegally by failing to respond to the petition. On remand, EPA did in fact determine that greenhouse gas emissions endanger public health and welfare. The agency therefore proceeded to issue greenhouse-gas-emission standards for new motor vehicles.

An important aspect of Massachusetts is the rationale by which the Supreme Court upheld the standing of the state petitioners. The Court has interpreted the “Case or Controversy” clause of Article III to require that a federal plaintiff demonstrate (i) a discrete and cognizable injury-in-fact that (ii) is fairly traceable to the challenged action and that (iii) is likely to redressed by a favorable judicial decision. In Massachusetts, EPA argued that the petitioners lacked standing because, among other things, none of the alleged global-warming-related injuries could plausibly be tied to EPA’s failure to regulate greenhouse gases from U.S. motor vehicles. After all, even if such emissions were to be eliminated entirely, it is very probable that the already emitted gases in the atmosphere, combined with anticipated emissions from non-American sources, would override any emissions savings from EPA regulation. The Court rejected this argument by relying on a new theory of standing peculiar to state litigants—the “special solicitude” rationale. According to this variant of the parens patriae doctrine, states are entitled to a “special solicitude” from the federal courts when they seek to vindicate their sovereign interests—here, the protection of their territory and residents from global-warming-related harms. The Court in Massachusetts acknowledged that EPA rule-making could not reverse global warming, but that didn’t matter:  “A reduction in domestic emissions would slow the pace of global emission increases, no matter what happens elsewhere.”

Massachusetts addressed an attempt by non-federal actors to precipitate federal regulation of greenhouse gases through the Clean Air Act; it did not determine whether non-statutory means are available as well. Although the Supreme Court for generations has held to the view that there is no federal general common law, the Court has consistently acknowledged that a federal common law of interstate nuisance persists, which more recently has been developed in the context of water pollution. Relying on this body of case law, another coalition of states and other entities brought suit in 2004 against a group of five major energy companies, contending that their production of greenhouse gases constituted an interstate nuisance under federal common law. Styled in the Supreme Court as American Electric Power Co. v. Connecticut, the case raised the question of whether EPA’s ability to regulate greenhouse gases under the Clean Air Act displaces the federal common law of interstate nuisance. The Court held unanimously that the Clean Air Act’s authorization of EPA regulation of greenhouse gases does displace any otherwise applicable federal common law cause of action. But the Court did not address whether the Clean Air Act also pre-empts state analogues to such a cause of action.*

The Constitution’s Supremacy Clause provides that federal statutes are the supreme law of the land. Hence, Congress can through legislation preclude, i.e., pre-empt, the states from regulating. The Supreme Court has identified a few broad categories of pre-emption. First, there is “express pre-emption,” meaning that Congress has explicitly stated that state regulation pertaining to a certain subject is impermissible. Second, there is “implied pre-emption” which, as the name indicates, means that Congress has legislated in such a way that the clear, but nevertheless unstated, inference is that certain state regulation is impermissible. Such pre-emption is further divisible into what one might call “impossibility” pre-emption—it would be impossible for a regulated party to comply with both federal and state law—and what one might describe as “frustration” pre-emption—state regulation would frustrate the purpose underlying a federal law. Lastly, there is “field pre-emption,” by which Congress federalizes an entire area of law—for example, bankruptcy law.

The Clean Air Act has one example of express pre-emption. Section 209(a) expressly pre-empts “any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines subject to the [Act].” Interestingly, it also expressly preserves from pre-emption those claims “under any statute or common law to seek enforcement of any emission standard or limitation or to seek any other relief.” The question that the California cases raise is, between the aforementioned pre-emptive bookends, does the Clean Air Act override any state-based emission regulation?

The Supreme Court has yet to resolve that question, but it has done so with respect to the analogous Clean Water Act. In International Paper Co. v. Ouellette, Vermont plaintiffs brought a Vermont nuisance claim against International Paper for its New York-based discharges of pollutants into Lake Champlain. Because such discharges are regulated under the Clean Water Act, the company argued that the Act pre-empted the plaintiffs’ state-based cause of action. The Supreme Court agreed in part. Relying mainly on the structure of the Clean Water Act’s citizen suit provision (which is quite similar to the Clean Air Act’s), the Court held that state-based claims concerning water pollution are pre-empted, except for such claims that arise under the law of the jurisdiction where the pollution occurs. Hence, although the Vermonters could not sue International Paper for violation of Vermont law, they could sue the company for violation of New York law. Most courts have concluded that the rule of International Paper applies to stated-based claims over air pollution.  See Bell v. Cheswick Generating Station, Freeman v. Grain Processing Corp., and Merrick v. Diageo Americas Supply, Inc. Thus, according to these decisions, the Clean Air Act does not pre-empt state-based claims arising under the law of the emitter’s jurisdiction.** Yet, none of these cases addressed global-warming-based claims.

That, however, is precisely what is at issue in the California greenhouse gas cases. The suits brought by San Francisco and Oakland contain only one claim, for public nuisance. In contrast, the suits brought by Imperial Beach, Marin County, and San Mateo County, contain several causes of action in addition to nuisance, including negligence and products liability. The defendant energy companies have removed the cases to the Northern District of California, and a hearing on the local governments’ remand motion is set for February, 2018. Some points to ponder about these cases:

First, what is the proper forum? One of the defendants’ main arguments for why these cases should be in federal court is that the state-based claims are pre-empted. Now, the general rule of removal to federal court is that the federal issue must be present on the face of the well-pleaded complaint. Given that pre-emption is a defense, it should follow that the mere possibility of the claims’ pre-emption should not make them removable. That being said, a subject matter can be so heavily regulated at the federal level that no state-based claim is possible. In such circumstances, the same set of facts that otherwise would be operative as a state-based cause of action is cognizable—if at all—only as a federal claim. That is in fact what the energy companies assert in the California greenhouse gas cases. One difficulty with this argument is that, if federal law (whether statutory or common law) did pervasively regulate greenhouse gas emissions, then the Supreme Court in American Electric Power had no reason to remand the plaintiffs’ state-based claims. Rather, the Court should have declared that these existed only as federal claims which, given the Court’s displacement holding, could no longer exist. Also, the argument for removal based on pre-emption would be in tension with Bell, Freeman, and Merrick, which held (although again not with respect to claims based on greenhouse gases) that some state-based emission claims are not pre-empted and thus, necessarily, that an emission-based set of operative facts is not only and inevitably a federal claim.

Second, do the plaintiffs have standing to pursue their claims in federal court?*** As I recall, neither the local governments nor the energy companies discuss standing in their removal and remand papers, but the district court has the independent responsibility to police its own jurisdiction, including the standing of the parties before it. None of the plaintiffs is a state, and thus the special solicitude that the Supreme Court used in Massachusetts v. EPA to overcome the standing hurdle is not available here. At least that is the conclusion of the Ninth Circuit in its 2012 decision Washington Environmental Council v. Bellon. There, a coalition of environmental groups sued EPA to increase Clean Air Act regulation of the greenhouse gas emissions of several refineries located within the state of Washington. The Ninth Circuit ruled that the plaintiffs lacked standing, reasoning that the refineries’ combined emissions represented only a tiny portion of the country’s total emissions, and therefore, based on the scale of the climate change problem, the plaintiffs could not plausibly trace any localized climate-change-related injury to those emissions. The chief basis on which the court distinguished Massachusetts v. EPA was that non-state plaintiffs are not entitled to that decision’s special solicitude. Given, however, the amount of emissions for which the California plaintiffs here contend have been wrongfully emitted (some 20% of worldwide totals), perhaps they could demonstrate that, without those emissions, a substantial amount of the global warming could have been averted, and thereby distinguish Bellon.

Third, would court-ordered relief violate the political question doctrine?  Although “[i]t is emphatically the province and duty of the judicial department to say what the law is,” on occasion the judiciary cannot say what the law is “because the question is entrusted to one of the political branches or involves no judicially enforceable rights.” The Supreme Court uses a six-part test to determine whether a legal issue is a “political question.”**** Employing those factors, the district court in American Electric Power dismissed both the federal and state causes of action, citing principally the factor of “the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion.” The court explained that resolving such questions as what is an “appropriate” amount of greenhouse gas emissions, who should bear the cost for the harms of such emissions, and how would judicial relief affect the American government’s international negotiations on climate change, amounted to judgments as to policy which would have to be answered before relief could be awarded. Although the California cases do not raise all of these concerns (because, for example, the lawsuits seek damages not ongoing relief), some factors are implicated, such as the question of the balancing of the harms from fossil fuel production with the immense good derived from such production, and the question of how to spread the cost from any harm.

Fourth, what about causation? A basic element of all tort claims is but-for causation. Can the plaintiffs here establish that, but for the work of these energy companies, the emissions that resulted from that work would not have occurred? Given the importance of fossil fuels over the last two centuries, is it realistic to think that, but for the efforts of these defendants, the fuels would have stayed in the ground? That seems unlikely.

Fifth, have the plaintiffs contributed to the problem? Presumably all of these local governments, even to this day, rely heavily on fossil fuels. Also, they and their residents have benefited tremendously from the cheap availability of such fuels. Shouldn’t any recovery therefore be substantially discounted by these contributions and benefits?

Sixth, are the suits pre-empted? (Note that the claims can be pre-empted so as to preclude relief even if not so “thoroughly” pre-empted as to justify removal to federal court). The claims are not based solely on the direct emissions caused by the defendants’ refineries in California. Rather, they depend on the aggregate emissions of all fuels created by the defendants, from both mobile and stationary sources. Recall that Section 209 of the Clean Air Act pre-empts state regulation of motor vehicle emissions. To the extent that the plaintiffs’ claims depend in part on the emissions of cars burning defendants’ fuel, shouldn’t they fall within Section 209’s bar? Also, recall that, according to the rule of International Paper, applied to the Clean Air Act, claims based on the law of any state other than that of the site of the emission are pre-empted. The bulk of the emissions forming the basis of the plaintiffs’ claims comes from outside California. Hence, per International Paper, the claims should be pre-empted on this ground as well. Or, at the very least, the plaintiffs should be required to re-plead their claims, if they can, based solely on defendants’ California stationary-source emissions.

*On remand, the plaintiffs voluntarily dismissed their state-based causes of action. Note that the Supreme Court affirmed the lower court’s ruling that the plaintiffs had standing by a 4-4 tie (Justice Sotomayor was recused because she had participated in the lower court’s panel decision).

**North Carolina ex rel. Cooper v. TVA is often cited for the proposition that the Clean Air Act pre-empts all state-based claims. Although the decision may contain language supporting that assertion, it is probably dicta, given that the claims advanced in that case did not arise under the law of the emitter’s jurisdiction.

***Given the relatively easier burden for establishing standing in California’s courts, standing should not be an issue for these cases should they be remanded to state court.

****The California courts apply the same standards.

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