EPA Regulations and the Nuisance Cases on Climate Change - Where Do We Go From Here?

Posted Dec. 18, 2009

After the issuance of three long-awaited rulings in nuisance cases from the Second Circuit, Fifth Circuit, and Northern District of California federal courts, industry and insurers may be reassessing potential liabilities related to climate change and greenhouse gas (GHG) emissions. Their analysis will necessarily involve recent regulatory activity by the U.S. Environmental Protection Agency ('EPA') and developing legislation on Capitol Hill. While the losing parties in all three cases have requested review, we do not expect proposed EPA regulations on GHGs to eliminate nuisance causes of action, and proposed federal GHG legislation may not have that result either.

The Cases: Native Village of Kivalina v. ExxonMobil Corp., State of Connecticut v. American Electric Power Co., and Comer v. Murphy Oil Co.

1. Background
   • What is Nuisance? Nuisance is understood to be one of the first causes of action developed under common law. It is based on the notion that a right of 'quiet enjoyment' has been infringed by the actions leading to the nuisance. The common law recognized both 'private nuisance' where there is infringement of the rights of specific individuals bringing suit, and 'public nuisance,' where the disturbance is to the public as a whole. The cause of action of nuisance (private, public, or both) is now codified in the statutes of a number of states, though it generally remains based on the common law doctrine. The U.S. Supreme Court has also recognized that a federal common law of nuisance may apply in some instances where state laws are insufficient to address an interstate problem, and a federal statute or comprehensive regulatory scheme has not displaced it.
   • What is the Political Question Doctrine? The political question doctrine is grounded in the separation of powers provided for in the U.S. Constitution. When another branch of government is better suited to address an issue, a court may resort to the political question doctrine to deem a matter nonjusticiable. In Baker v. Carr, 369 U.S. 186, 217 (1962), the Supreme Court outlined six factors that a court should consider in assessing whether a case should be dismissed for presenting a political question: (1) 'a textually demonstrable constitutional commitment? to a coordinate political branch of government,' (2) lack of judicially discoverable and manageable standards for resolving it, (3) the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial determination, (4) impossibility of a court's resolution without expressing lack of respect for the other branches of government, (5) an unusual need for 'unquestioning adherence' to a political decision already made, or (6) the possibility of multiple differing pronouncements from different branches of government on the same issue.
   
   
2. 2. The Three Recent Cases. The three recent rulings involving nuisance claims are State of Connecticut v. American Electric Power Co., (2d Cir. Nos. 05-5104-cv, 05-5119-cv, filed Sept. 21, 2009) ('AEP'), Native Village of Kivalina v. ExxonMobil Corp., (N.D. Cal., No. C 08-1138 SBA, filed Sept. 30, 2009) ('Kivalina'), and Comer v. Murphy Oil Co., (5th Cir. No. 07-60756, filed Oct. 16, 2009) ('Comer'). Kivalina was a District Court decision dismissing an action based on the political question doctrine and standing grounds. AEP and Comer were both from Courts of Appeal decisions reversing District Court dismissals of actions based on the political question doctrine; both of these Courts of Appeal additionally found that the plaintiffs had standing. Kivalina has now been appealed to the Ninth Circuit Court of Appeals, and the defendants in the AEP and Comer cases have filed motions with their respective courts of appeals for rehearing en banc. This report addresses the situation as it stands with the Northern District's dismissal and the panel opinions of the Second and Fifth Circuits.
• AEP. In AEP, a number of states and some land and open space conservancies brought suit under the federal common law of nuisance and alternatively the state law of nuisance. The District Court, asserting that the nuisance theory the plaintiffs articulated was 'unprecedented,' dismissed the complaints based on the political question doctrine, citing in particular the third Baker v. Carr factor (that the plaintiffs' claims were impossible to decide 'without an initial policy determination of a kind clearly for nonjudicial discretion'). The Second Circuit Court of Appeals reversed. It found that public nuisance and the federal common law of nuisance could extend to the plaintiffs' claims despite the complex route of causation involved. And it relied on precedent to the effect that where a case involves 'an ordinary tort suit, there is no impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion' (internal quotations omitted). Moreover, the Court noted, if there were a later policy determination by a coordinate branch - specifically, regulation by EPA or direct Congressional legislation on the question - such actions could displace the application of federal common law.
• Kivalina. In Kivalina, the governing body of an Inupiat Eskimo village of 400 (a federally recognized Indian tribe) and the City in which the villagers reside brought an action under the federal common law of nuisance as well as under applicable state law of public and private nuisance against twenty-four oil, energy and utility companies for damages from global warming due to excessive emissions of greenhouse gases. The plaintiffs alleged that due to an already developing loss of sea ice which previously protected the village from storms and wave surges, they would be forced to abandon their traditional home and way of life, and sought damages relating to this harm. The District Court ruled that the federal common law cause of action presented a nonjusticiable political question based upon Baker v. Carr's third factor, and found that the plaintiffs lacked Article III standing, and it then dismissed the additional state law claims. The District Court explicitly disagreed with the reasoning of the Second Circuit in its recently filed AEP opinion.
• Comer. In Comer, a group of Mississippi Gulf Coast residents filed a putative class action in District Court based on Mississippi's law of public and private nuisance, relying on the District Court's diversity jurisdiction. The District Court dismissed the complaint on the basis of political question and standing. The Fifth Circuit Court of Appeals reversed on both points. With regard to the political question doctrine, the Court wrote that the doctrine should not be invoked simply 'to abstain from deciding politically charged cases like this one,' and found instead that the District Court had a duty to exercise jurisdiction unless the moving party can identify a constitutional provision or federal law that arguably commits a material issue in the case exclusively to a political branch. Noting that the Supreme Court has only dismissed two cases as presenting political questions since Baker v. Carr, and that a 'federal court's dismissal of litigation between private citizens based on state common law, as presenting a nonjusiticable political question, has rarely, if at all, been affirmed by a federal court of appeals,' (citations and internal footnote omitted), the Fifth Circuit panel found that political question considerations did not warrant dismissal. (The Comer complaint added an additional level of complexity in that they sought recovery for damages to their property due to Hurricane Katrina, on the theory that the GHG-induced climate change had caused or contributed to the severity of that event. One of the members of the panel indicated that he would have favored dismissal of the complaint on this alternative ground had the panel chosen to address it.)

How Do EPA´s Recent Actions Affect the Prospects for These Cases or Others Like Them?

As noted above, nuisance actions can be grounded under state law or federal common law. The Second Circuit panel in AEP reinstated the complaints at issue there insofar as they relied on the federal common law; the Fifth Circuit panel in Comer upheld a complaint based on Mississippi state nuisance law. Going forward, this could make a difference.

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