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Focus: No political bar to US power companies being sued for emitting carbon dioxide

30 November 2009

In brief: Two recent decisions of Federal Courts of Appeal in different Circuits in the United States have reversed the trend in lower US Courts to allow claims for damages based on climate change to be brought under federal common law nuisance principles. A more recent third decision of a lower federal District Court in a different Circuit, however, is a reminder of the hurdles for any potential climate change plaintiffs. Partners Matthew Skinner and Annette Hughes and Lawyer Julie-Anne Pearce report.

How does it affect you?

  • The US continues to lead the way in considering the potential liability of greenhouse gas emitters for damages.
  • While many participants in the global warming debate may prefer policy regarding climate change to be imposed by the legislature, the two US Court of Appeal decisions support a trend towards all branches of government assuming a role in the legal framework.
  • It may happen that new federal laws or regulations, in time, pre-empt causes of action under the common law of nuisance and so displace some part of the role of courts regarding global warming matters in the US.
  • In Australia, climate change litigation has focused upon planning disputes. While these cases have used public law mechanisms, they indicate that Australians may also think that the judiciary has a role to play in developing climate change law. Indeed, there have been suggestions that private law actions could be brought in Australia against local councils and company directors who fail to take steps to address climate change. Whether this develops into claims against fossil fuel users for past damage remains to be seen.

Connecticut v American Electric Power Company

Over the past few years, US courts have considered a number of climate change cases, and we have commented on several of these (see, for example, Focus: Climate Change Litigation – California takes carmakers to court, and Focus: United States Supreme Court hands down important climate change decision, where we reported on a US Supreme Court decision with potentially significant implications for greenhouse gas emitting industries).

The case of Connecticut v American Electric Power Company (the AEP case) was an appeal to the US Court of Appeals for the Second Circuit, in New York, from a 2005 decision of the US District Court for the Southern District of New York that global warming raised issues that were inherently political.

The facts

In 2004, two groups of plaintiffs, one consisting of eight States and New York City, and the other consisting of three land trusts (the plaintiffs), separately sued the same six electric power companies that own and operate fossil-fuel-fired power plants in 20 States (the defendants). The plaintiffs sought abatement of the defendants' ongoing contribution to the public nuisance of global warming, claiming that the defendants, who together operate 174 power plants that emit approximately 650 million tonnes of carbon dioxide annually, cause a public nuisance because they contribute to global warming. The plaintiffs argued that global warming is causing, and will continue to cause, serious harm, affecting human health and natural resources. The land trusts identified nine properties held for public education and recreation purposes that are at particular risk from heightened sea level. The government plaintiffs sought to protect public property, the property of their citizens and public health.

At first instance, the defendants moved to dismiss the case on a number of grounds. The District Court held that the plaintiffs' claims presented a non-justiciable political question and dismissed the complaints.

On appeal, the plaintiffs argued that:

  • the political question doctrine did not bar adjudication of their claims;
  • they had standing to assert their claims;
  • they had properly stated claims under the federal common law of nuisance; and
  • their claims were not displaced by federal statutes.
The decision
The political question doctrine

The political question doctrine is a jurisdictional doctrine that is primarily a function of the separation of powers, and is designed to restrain the judiciary from inappropriate interference in the business of the executive and legislative branches of government, where another branch is better suited to resolve the issue. Where a court determines that a question before it is a political question, it has discretion to refrain from exercising its jurisdiction to hear the claim raising the question. The Court of Appeal held that the District Court erred when it dismissed the plaintiffs' complaints on the ground that they presented non-justiciable political questions and, further, that the judiciary can be an appropriate forum for resolving issues surrounding the harm caused by global warming.

Standing

The Court of Appeal held that both the lands trusts and state government plaintiffs had standing to sue. The land trusts' standing is derived from their interest in real property that can be harmed by global warming-related weather events. The States' standing stems from their ability to represent the interests of their citizens.

The court was also of the view that the standing of the land trusts can be rooted in future injury because injuries are 'already in process as a result of the ongoing emissions by defendants that contribute to increasing temperatures'. At this point in the litigation, the plaintiffs were not required to present scientific evidence to prove that they face future injury or increased risk of injury, that the defendants' emissions cause their injuries, or that the remedy they seek will redress those injuries.

Public nuisance cause of action

A public nuisance is 'an unreasonable interference with a right common to the general public' and the Court of Appeal held that it is appropriate to bring a damage action based on the common law of public nuisance. The court stated that the 'serious magnitude' of the nuisance caused by climate change, as it has been alleged, is 'apparent'.

The defendants sought to impose on the federal common law of nuisance the requirement that the nuisance must be 'poisonous' or 'noxious' in order to be actionable. They argued that, because carbon dioxide is neither, the plaintiffs' claim must fail. The court rejected this argument, finding that the federal common law of nuisance does not impose this requirement. Nor does public nuisance theory require that the harm caused must be immediate, as even threatened harm is actionable.

Displacement by federal statutes

The court held that, although a cause of action under federal common law is displaced when federal statutory law governs a question previously the subject of federal common law, that doctrine had no application to the plaintiff's nuisance claims. This is because, the court explained, while the Clean Air Act regulates pollutants, the Act does not regulate the subject greenhouse gas emissions because the US Environment Protection Agency (the EPA) has not yet made the requisite finding that greenhouse gases are a pollutant. Accordingly, the problem of which the plaintiffs complain has certainly not been 'thoroughly addressed' by the Clean Air Act. Importantly, however, the court explicitly declined to express any opinion as to whether the actual regulation of greenhouse gas emissions by the EPA under the Clean Air Act would displace the plaintiffs' cause of action under the federal common law.

The District Court's judgment was vacated and the case remanded for further proceedings.

Subject to a further possible appeal and other interlocutory matters that may be considered, to the extent these proceedings continue, it remains to be seen what effect they will have on litigants seeking to bring similar claims in the US and other common law jurisdictions such as Australia.

Comer v Murphy Oil

The facts

In August 2007, a group of property owners on Mississippi's Gulf Coast who had suffered damage in Hurricane Katrina (the plaintiffs) sued various companies (the defendants), alleging that their operation of energy, fossil fuels and chemical industries caused greenhouse gas emissions that contributed to climate change and the ferocity of the hurricane. The plaintiffs asserted claims for compensatory and punitive damages based on common law actions of public and private nuisance, trespass, negligence, unjust enrichment, fraudulent misrepresentation and civil conspiracy. Like the defendants in the AEP case, the defendants moved to dismiss the plaintiffs' claims on the grounds that the plaintiffs lacked standing and that the claims presented nonjusticiable political questions. The US District Court for the Southern District of Mississippi granted the motion and dismissed the claims. The plaintiffs appealed to the US Court of Appeals for the Fifth Circuit.

The decision

The Court of Appeals reversed the District Court's judgment and remanded the case to the District Court for further proceedings.

Standing

For the purpose of its standing analysis, the Court of Appeals found it helpful to divide the plaintiffs' claims into the following two groups: 

  • the public and private nuisance, trespass and negligence claims, all of which relied on a causal link between greenhouse gas emissions, global warming and the destruction of the plaintiffs' property during Hurricane Katrina (the nuisance claims); and
  • the plaintiffs' unjust enrichment, civil conspiracy and fraudulent misrepresentation claims based on the plaintiffs' alleged injuries caused by the defendants' public relation campaigns and pricing of petrochemicals (the conspiracy and fraud claims).

The court found that the plaintiffs satisfied their standing requirements as to the nuisance claims. The court also indicated that the defendants' challenge to the plaintiffs' case on the basis that the plaintiffs' theory tracing their injuries to the defendants' actions was too attenuated, and was 'misplaced at this threshold standing stage of the litigation' to the extent that it called upon the court to evaluate the merits' of the plaintiffs' causes of action. In relation to the plaintiffs' conspiracy and fraud claims, however, the court held that the plaintiffs' did not satisfy the standing requirements. This was because the plaintiffs failed to identify a particularised injury that affected them in a personal and individual way, and instead essentially alleged a massive fraud on the political system resulting in the failure of environmental regulators to impose proper costs on the defendants. The court found that such a generalised grievance is better left to the representative branches of government.

The political question doctrine

The Court of Appeal determined that, because the plaintiffs' nuisance, trespass and negligence claims do not present any specific question that is exclusively committed by law to the discretion of the legislative or executive branch, they are justiciable. Indeed, the court noted that 'common law tort claims are rarely thought to present nonjusticiable political questions'.

Native Village of Kivalina v ExxonMobil Corporation and others

The facts

In February 2008, residents of Kivalina, an Alaskan village of about 400 Native Inupiat located 70 miles north of the Arctic circle (the plaintiffs), filed suit in the US District Court for the Northern District of California against two dozen oil, coal and power companies. Among the defendants were ExxonMobil, BP, Chevron, American Electric Power and Peabody Coal (the defendants). The action was brought in public and private nuisance and sought damages for the defendant's contributions to global warming. The plaintiffs alleged that global warming is destroying Kivalina and, as a result, the village must be relocated soon or it will cease to exist. The cost of relocation is estimated as being between US$95 million and US$400 million. The plaintiffs further asserted claims for conspiracy and concert of action with the intent to further the defendants' abilities to contribute to global warming. To this end, the plaintiffs alleged that the defendants have used 'front groups' to mislead the public about the science of global warming. The defendants were also alleged to have funded critics of global warming and used misleading advertising to undermine the public's awareness of the gravity of the threats posed by climate change. The defendants argued that the plaintiffs' claims presented inherently political questions and that there were no judicially manageable standards available to adjudicate such issues. They also argued that the plaintiffs lacked standing to pursue their global warming claims under nuisance theory on the ground that their injury is not 'fairly traceable' to the conduct of the defendants.

The decision

The District Court dismissed the action on the basis of the political question doctrine and the lack of standing.

The political question doctrine

The District Court considered the Second Circuit's recent decision in the AEP case but refused to be guided by it, asserting instead that 'this Court is not so sanguine. While such principles may provide sufficient guidance in some novel cases, this is not one of them'.

The court was concerned to establish whether it had the legal tools to reach a ruling that was 'principled, rational and based on reasoned distinctions'. It found that it did not; neither the environmental nuisance cases cited by the plaintiffs, nor the AEP case, offered any guidance as to precisely what judicially discoverable and manageable standards were to be employed in resolving the global warming nuisance claim at issue. The court took this opportunity to allude to the hurdle of causation for global warming plaintiffs, and distinguished between global warming claims and other nuisance claims on the basis of the extended causal chain that is characteristic of the former:

the harm from global warming involves a series of events disconnected from the discharge itself. In a global warming scenario, emitted greenhouse gases combine with other gases in the atmosphere which in turn results in the planet retaining heat, which in turn causes the ice caps to melt and the oceans to rise, which in turn causes the Arctic sea ice to melt, which in turn allegedly renders Kivalina vulnerable to erosion and deterioration resulting from winter storms.

 

The court also held that it was not feasible for the judiciary to decide this case in the absence of an initial policy determination by another branch of government. The resolution of the plaintiffs' nuisance claim required the balancing of the social utility of the defendants' conduct with the harm that it inflicts. That process entails a determination of what would have been an acceptable limit on the level of greenhouse gases emitted by the defendants. These are matters essentially political in nature.

The court focussed on the global nature of climate change and rejected the call to make a policy decision about who should bear the cost of global warming. 'Plaintiffs acknowledge that virtually everyone on Earth is responsible on some level for contributing to [greenhouse gas] emissions. Yet, by pressing this lawsuit, plaintiffs are in effect asking this Court to make a political judgment that the two dozen defendants named in this action should be the only ones to bear the cost of contributing to global warming.'

Standing

The standing dispute in this case was concerned with whether the plaintiffs could establish that the losses suffered by them were caused by the defendants. The plaintiffs were required to show that there was a substantial likelihood that the defendants' conduct caused the plaintiffs' injury. The court found that the plaintiffs 'have not and cannot show' that the defendants' conduct was the 'seed of their injury' and went so far as to state that 'to the contrary, there are, in fact a multitude of 'alternative culprits' allegedly responsible for the various chain of events allegedly leading to the erosion of Kivalina'. As such, 'there is no realistic possibility of tracing any particular alleged effect of global warming to any particular emissions by any specific person, entity, group at any particular point in time'. Causation has long been thought of as the big question in climate change litigation.

Conclusion

As these cases demonstrate, the law relating to climate change litigation continues to be a developing area. While the US courts are leading the way in the area of common law nuisance claims, and Australian courts have entertained claims involving planning and the appropriate exercise of authority, it appears that courts in most common law nations may be available for nuisance claims of various sorts as this area, and the science surrounding it, develops.

Interestingly, at this point, none of the cases has involved consideration of whether climate change is actually happening. Rather, it seems to be assumed that it is. It nevertheless remains the case that establishing a link between the conduct of any entity, or group of entities, and particular climate events and associated damage, is likely to be a very persistent barrier to ultimate success of many such claims.

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