All posts tagged 'AEP'

Ninth Circuit Displaces Kivalina v. ExxonMobil Climate Change Liability Case

September 21, 2012 16:22
by J. Wylie Donald
In litigation concerning liability for the emission of greenhouse gases, the federal common law of nuisance is displaced by the Clean Air Act.  This is not news.  It was established by the Supreme Court over a year ago in American Electric Power v. Connecticut, 131 S. Ct. 2527 (2011). This morning, the Ninth Circuit Court of Appeals acknowledged the rule and applied it to the plaintiffs in Native Village of Kivalina v. ExxonMobil Corp. ("Opinion") and affirmed the dismissal by the Northern District of California.  See Native Vill. of Kivalina v. ExxonMobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009). In a nutshell, a native Alaskan village on the shores of the Chukchi Sea brought suit against electric utilities, oil companies and one coal company.  The complaint asserted the defendants are responsible for excess emissions of greenhouse gases, which have led to global warming, which has resulted in delayed formation of arctic sea ice and early melting of the ice, which has accelerated the erosion caused by winter storms.  The plaintiffs sought damages for the cost of relocating their village.  See Opinion 11648-49.  The Court of Appeals dutifully explained the federal common law of nuisance and the doctrine of displacement.  Plaintiffs had hoped to avoid the application of American Electric Power by arguing that it was a case about injunctive relief.  Kivalina was different:  the plaintiffs there sought damages.  The Court was unmoved.  It stated simply:  “under current Supreme Court jurisprudence, if a cause of action is displaced, displacement is extended to all remedies.”  Opinion at 11655.  It did not matter that EPA had not acted before the damage was incurred; "Congressional action, not executive action, is the touchstone of displacement analysis.”  Opinion at 11656.  Nor did it matter that the Court’s decision would be applied retroactively.  Id.  The concurrence (Judge Pro of the District of Nevada, sitting by designation) was not as unequivocal as the Court, and explicated a tension between the Supreme Court’s rulings in Middlesex County Sewerage Authority v. National Sea Clammers Ass’n., 453 U.S. 1, 4 (1981), and Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008).  Middlesex expressly stated that “where a federal common law nuisance claim for injunctive relief is displaced, a federal common law nuisance claim for damages claim likewise is displaced”, but, according to Judge Pro, Exxon’s “overall holding suggests that severing rights and remedies is appropriate as between damages and injunctive relief in some circumstances.” Opinion at 11663, 11665. In the end, however, Judge Pro agreed that the doctrine of displacement shuts the door on federal common law claims for nuisances allegedly caused by greenhouse gas emissions whatever remedy is sought. More interesting and of more moment we think are two points made by the concurrence; the first will give heart to greenhouse gas plaintiffs, while the second may empty their sails. Judge Pro acknowledged that the Supreme Court’s decision and the 9th Circuit’s decision did nothing to affect the plaintiffs’ state law nuisance claims.  He wrote: Once federal common law is displaced, state nuisance law becomes an available option to the extent it is not preempted by federal law. AEP, 131 S. Ct. at 2540 (“In light of our holding that the Clean Air Act displaces federal common law, the availability vel non of a state lawsuit depends, inter alia, on the preemptive effect of the federal Act.”). The district court below dismissed Kivalina’s state law nuisance claim without prejudice to refiling it in state court, and Kivalina may pursue whatever remedies it may have under state law to the extent their claims are not preempted.  Opinion at 11671. We predicted this next phase when the case was argued back in November of last year.  Accordingly, the Kivalina case is not dead yet. However, judicial skepticism of climate change plaintiffs’ current liability theories is expanding.  Judge Guirola, in Comer v. Murphy Oil USA Inc in the Southern District of Mississippi, was dubious of the causation story:  “the tenuous nature of the causation alleged is readily apparent at the pleadings stage.”  Judge Pro went one further: Kivalina has not met the burden of alleging facts showing Kivalina plausibly can trace their injuries to Appellees. By Kivalina’s own factual allegations, global warming has been occurring for hundreds of years and is the result of a vast multitude of emitters worldwide whose emissions mix quickly, stay in the atmosphere for centuries, and, as a result, are undifferentiated in the global atmosphere. Further, Kivalina’s allegations of their injury and traceability to Appellees’ activities is not bounded in time. Kivalina does not identify when their injury occurred nor tie it to Appellees’ activities within this vast time frame. Kivalina nevertheless seeks to hold these particular Appellees, out of all the greenhouse gas emitters who ever have emitted greenhouse gases over hundreds of years, liable for their injuries.  Opinion at 11675.  To be sure, the Supreme Court approved an action by various States to challenge EPA’s failure to regulate greenhouse gases.  See Massachusetts v. EPA, 549 U.S. 497 (2007).  But “[i]t is quite another [thing] to hold that a private party has standing to pick and choose amongst all the greenhouse gas emitters throughout history to hold liable for millions of dollars in damages.”  Opinion at 11676. Judge Pro would have dismissed the case on standing grounds as well. Finally, notwithstanding our foresight above, it is rarely worth getting out the crystal ball to predict the outcome of a case or cases.  If we could do that with any reliability, we wouldn’t be sitting at this keyboard.  So rather than a prediction, we think offering some context is appropriate.  Will states be receptive to climate change liability suits as currently cast?  We are skeptical.  The environmental organization, Our Children’s Trust, orchestrated over a dozen lawsuits seeking to force state regulators to address greenhouse gas emissions.  With only one exception (New Mexico), those cases have been dismissed in jurisdiction after jurisdiction (Alaska, Arizona, Colorado. Minnesota, Montana, Oregon, Texas, Washington and the District of Columbia).  And even in the case that is moving forward, all the court permitted was an action to pursue whatever recourse was in place under current law, which is no more than the Supreme Court ruled in Massachusetts v. EPA. 

Carbon Dioxide | Climate Change Litigation

Oral Argument in Kivalina: Winds of Change or Climate Change Liability Suits Becalmed?

December 4, 2011 20:16
by J. Wylie Donald
On November 8-9, 2011 an Arctic gale bore down on the peninsulas, islands, salt marshes and beaches of the Alaska littoral.  Named the Bering Sea Superstorm it pounded Alaska with 8-10 foot storm surges, wind gusts up to 75 mph and blizzard conditions.  One small community was particularly fearful.  Many readers already know of whom we are speaking:  Kivalina.  The National Weather Service wrote:  "WIDESPREAD MAJOR COASTAL FLOODING AND SEVERE BEACH EROSION IS EXPECTED IN THE FOLLOWING AREAS: ... 4. THE CHUKCHI SEA COAST FROM CAPE KRUSENSTERN TO POINT HOPE. THIS INCLUDES THE VILLAGES OF NOME AND KIVALINA WHERE MAJOR DAMAGE FROM COASTAL FLOODING AND STRONG WINDS IS EXPECTED.  Fortunately, the seawall at Kivalina held. While unusual, this was one storm of thousands that have visited high winds and storm surge upon Alaska's shoreline over the millennia.  Last Monday a storm of a different sort broke. Although not even rated on the Saffir-Simpson scale, the verbal gusts exhaled before the Ninth Circuit Court of Appeals in Native Village of Kivalina v ExxonMobil Corp. may have substantially more effect than any Arctic storm.  Or they may not. (Click here for the video or audio link or oral argument.) Kudos must be extended to Matt Pawa (Appellant Kivalina) and Daniel Collins (Defendants/Appellees) for masterful argument.  Both were completely on top of their game, whether it was jousting with the Court or each other over the Restatement (Second) (and sometimes Third), laying out their key arguments or responding to pointed questions from Judges Thomas, Clifton or Pro (on temporary assignment from the District of Nevada). (For those to whom Kivalina is not familiar, in a nutshell, a native Alaskan village on the shores of the Chukchi Sea has brought suit against electric utilities, oil companies and one coal company.  The complaint asserts the defendants are responsible for excess emissions of greenhouse gases, which have led to global warming, which has resulted in delayed formation of arctic sea ice and early melting as well, which has accelerated the erosion caused by winter storms.  The plaintiffs seek damages for the cost of relocating their village.  The suit was dismissed on political question grounds by the District Court for the Northern  District of California; it is now on appeal to the Ninth Circuit.) Mr. Pawa opened his argument with the proposition that it is black letter law that no balancing of interests is needed where an intentionally caused nuisance is causing a claimant serious harm.  He cited numerous Restatement sections in support.  The Court seemed skeptical.  Judge Clifton asserted in his question that balancing was called for in the Restatement.  Judge Pro wanted to know what instructions Mr. Pawa would give to the jury.  Judge Clifton queried:  "Why is it so difficult to find a case that remotely resembles this one?"  Mr. Pawa pointed to People v. Gold Run Ditch & Mining Co., 66 Cal. 138, 4 P. 1152 (1884), which established, he said, that valid nuisance claims lie against all polluters of a common resource.  (We, of course, take strong exception to any referral to carbon dioxide as pollution in light of its ubiquity, natural presence, and lack of toxicity in the atmosphere.  The parallels to water vapor - the most prevalent greenhouse gas and in no one's estimation a pollutant - are striking.) Although  there was not enough time in argument to fully develop Gold Run Ditch, it is worth a moment to consider.  There the California Supreme Court was asked to enjoin hydraulic mining which was despoiling California's rivers and threatening agricultural interests.  In holding that an injunction against the hydraulic mining operator should issue, the Court wrote: But a legitimate private business, founded upon a local custom, may grow into a force to threaten the safety of the people, and destruction to public and private rights; and when it develops into that condition, the custom upon which it is founded becomes unreasonable, because dangerous to public and private rights, and cannot be invoked to justify the continuance of the business in an unlawful manner. Every business has its laws, and these require of those who are engaged in it to so conduct it as that it shall not violate the rights that belong to others. Accompanying the ownership of every species of property is a corresponding duty to so use it as that it shall not abuse the rights of other recognized owners ... Upon that underlying principle, neither State nor Federal legislatures could, by silent acquiescence, or by attempted legislation ... divest the people of the State of their rights in the navigable waters of the State for the use of a private business, however extensive or long continued .... As we have already said, the rights of the people in the navigable rivers of the State are paramount and controlling.  66 Cal. at 152. The effect of Gold Run Ditch and a parallel decision in federal court, Woodruff v. North Bloomfield Mining Co., 18 F. 753 (1884), effectively ended hydraulic mining in California.  Whether a similar ruling could be used against entities emitting carbon dioxide into the atmosphere remains to be seen. Another interesting argument broached by Mr. Pawa concerned what he referred to as trivial emitters.  Judge Thomas played into his hand with a question about whether his driving to work made him a defendant.   According to Mr. Pawa Section 36 of the Restatement  (Third) takes care of that issue and negates liability to trivial emitters.  That section provides:  "When an actor’s negligent conduct constitutes only a trivial contribution to a causal set that is a factual cause of physical harm under § 27, the harm is not within the scope of the actor’s liability."  Mr. Pawa would permit the defendants to demonstrate that they constitute trivial contributors to the global warming problem. In closing, Mr. Pawa cited the substantial precedent in his clients' favor.  The Second Circuit reversed the trial court and found standing for the plaintiffs in Connecticut v. AEP, 582 F.3d 309 (2d Cir. 2009), which was not reversed by the Supreme Court.  Likewise the appellate panel in Comer v. Murphy Oil USA, 585 F.3d 855 (5th Cir. 2009), also reversed the trial court and found standing for the climate change liability plaintiffs.  (Mr. Pawa acknowledged that the decision had been vacated and cited the decision for the panel's thinking, not as precedent.)  Last, in Massachusetts v. EPA, 127 S.Ct. 1438 (2007), the Supreme Court also found standing for an entity alleging damage from greenhouse gas emissions. Mr. Collins responded to Mr. Pawa's arguments and knocked down plaintiffs' claim that black letter law established that balancing was not required.  Mr. Collins pointed to comment e of section 821B of the Restatement (Second) which requires an assessment of reasonableness whether the allegation is an intentional, reckless or negligent nuisance.  Further, the balancing required by plaintiffs' claims is "utterly without precedent."  "But balancing is what courts do all the time," interjected Judge Pro.  "Nothing on this scale has ever been remitted to a court," rejoined Mr. Collins.  This is not a case about a discreet pollution site; it is a case of global dimensions and there is no traceability of the emitted carbon dioxide (as the plaintiffs conceded). The Court was not so easily put off and brought up AEP, where the Second Circuit had permitted plaintiffs to proceed with their greenhouse gas liability claim, and the Supreme Court had not reversed.  Mr. Collins had seen that softball coming:  AEP is different because some of the plaintiffs were sovereigns, which was not the case here. Mr. Collins closed with strong points on his clients' primary position:  displacement of the federal common law applies to both injunctive and damages remedies.  This was established in Middlesex County Sewerage Auth. v. Sea Clammers, 453 U.S. 1, 13 (1981).  The reason is simple.  When Congress crafted the regulatory framework establishing the Clean Air Act, which displaced injunctive remedies, see American Electric Power v. Connecticut, Congress did not provide for any compensatory relief to an aggrieved private party.  Accordingly, a damages remedy is also displaced and the plaintiffs' claim is barred.  As the Ninth Circuit had itself held in In re Exxon Valdez, 270 F.3d. 1215 (9th Cir. 2001):  "a nuisance theory would enable a federal district judge to substitute a different balancing of interests from the one made by the agency to which Congress assigned the job".  In our view the Court's decision is not likely to be the final curtain.  If it goes in favor of the plaintiffs, the defendants will certainly appeal.  And if the defendants prevail, the state law claims (dismissed by the federal district court without prejudice) are likely to be refilled, particularly with the invitation set forth in by the Supreme Court in AEP:  "None of the parties have briefed preemption or otherwise addressed the availability of a claim under state nuisance law. We therefore leave the matter open for consideration on remand."

Carbon Dioxide | Climate Change Litigation | Supreme Court

American Electric Power v. Connecticut: 8-0 the Supreme Court Rules Federal Common Law is Displaced

June 20, 2011 20:25
by J. Wylie Donald
The moment we have been waiting for since 2004 (when the first climate change liability case was filed) finally arrived. The Supreme Court today rendered its opinion in American Electric Power Co., Inc.. v. Connecticut.  As many predicted following oral argument, the use of the federal common law of nuisance to limit carbon dioxide emissions simply is not a viable theory because it has been displaced by the Clean Air Act and the EPA's steps to implement the Act. For those who have not yet read the opinion, it is straightforward. Following the Supreme Court's 2007 decision in Massachusetts v. EPA, the EPA undertook to begin the regulation of carbon dioxide emissions. AEP at 2.  Within the framework of the Clean Air Act it issued its "Endangerment Ruling" (76 Fed. Reg. 66496), and then adopted final rules regulating emissions from light-duty trucks, initiated a joint rulemaking covering medium and heavy-duty vehicles, began phasing in requirements for best available control technology for major greenhouse gas emitters, and commenced a rulemaking on emissions from fossil-fuel fired power plants. Id.at 2-3.  That rule is due to be final in May 2012.  Id.at 3. With those steps, and the comprehensive activities authorized under the Clean Air Act (id. at 10-11), the Court applied the simple test:  "whether congressional legislation excludes the declaration of federal common law is simply whether the statute 'speak[s] directly to [the] question' at issue." Id.at 10. The Court held:  "the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants." Id. The Court responded to arguments that the EPA was only beginning to regulate but had not yet finished the process by emphasizing that it was the "delegation [that] displaces federal common law.". Id.at 12 (emphasis added). That is, even if the EPA chose not to regulate carbon dioxide emissions, "the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination." Id. Some may recall that the political question doctrine was front and center in the decisions below. See id. at 5-6.  Here, however, the Court mentions it only indirectly.  In describing the "prescribed order of decisionmaking" (i.e., expert agencies and then federal judges), "the expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions." Id.at 14. Notwithstanding the apparently simple rule and its application, we do not expect AEP to end climate change liability litigation.  State nuisance law (which plaintiffs pleaded) remains. Although the Court offered no opinion on such a theory's efficacy, it did give a hint of where it might land:  "the Clean Water Act does not preclude aggrieved individuals from bringing a 'nuisance claim pursuant to the law of the source state.'" Id. at 15-16 (citing International Paper Co. v. Ouellette, 479 U. S. 481 (1987)). Accordingly, the case was remanded to the Second Circuit. Further, the significance of Justice Sotomayor's recusal (which we called in an earlier post) manifested itself. The Court split 4-4 on the issue of standing (which compelled it to hear the case on the merits).  Id. at 6.  This jurisdictional dispute could surface in the future when Justice Sotomayor is included in the full panel. She presumably would be in favor of broader standing, which is likely to support more claims of aggrieved climate change plaintiffs. Last, the Court offered some helpful commentary for future carbon-dioxide liability insurance coverage cases.  We have written often on how carbon dioxide should not fall within the meaning of pollution in a comprehensive general liability policy's pollution exclusion.  The Court appears to agree.  In discussing the scope of legislative activity needed to preempt federal common law, the Court stated:  "Congress could hardly preemptively prohibit every discharge of carbon dioxide unless covered by a permit. After all, we each emit carbon dioxide merely by breathing." Immediate effects of the decision will be filings by the defendants in the Kivalina v. ExxonMobil case before the Ninth Circuit for dismissal.  Undoubtedly the justices deciding Steadfast Insurance Co. v. AES Corp. will read the decision; how it will affect them is hard to say.  It should have no effect on the multiple climate change lawsuits orchestrated by Our Children's Trust.  And over the long term, it likely will have the effect of forcing plaintiffs' to come up with new climate change liability theories.  That will not be necessary, of course, if (as has been suggested) Congress acts to remove carbon dioxide from EPA's jurisdiction.  In that case, we just might find AEP revived.

Carbon Dioxide | Climate Change Litigation | Legislation | Supreme Court

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