Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

Developers have cheered in recent years as the Supreme Court has tightened its standing rules. In a decision issued on Friday in National Association of Home Builders v. EPA, the Court of Appeals for the District of Columbia may have hoist the developers on their own petard. 

After EPA and the Army Corps of Engineers issued a determination that two reaches of the Santa Cruz River constitute “traditional navigable waters” under the Clean Water Act, the National Association of Home Builders sued. The complaint appears to have attached declarations referring to individuals who own property along tributaries of the two reaches, and who asserted that they are have applied for permits under the CWA. None of this was enough for the Court, which made four important points:

·         The NAHB itself did not have organizational standing. The Court made clear that an organization does not have standing unless it has credibly asserted that the challenged action “’perceptibly impaired’ a non-abstract interest.”

·         NAHB’s effort to assert representational standing for its members generally failed, because it contained no assertions linking this site-specific TNW determination to any broader impacts that would affect developers away from the Santa Cruz River.

·         NAHB’s effort to assert standing on behalf of owners in the vicinity of the Santa Cruz River failed because none of the declarations filed with the complaint alleged any harm specifically tied to the issuance of the TNW determination.

·         NAHB did not have “procedural standing” to challenge the agencies’ failure to provide notice and an opportunity to comment before issuing the TNW determination. Quoting from the Supreme Court decision in Summers v. Earth Island Institute, the Appeals Court stated that “deprivation of a procedural right without some concrete interest that is affected by the deprivation – a procedural right in vacuo – is insufficient to create Article III standing.” As the Court further noted, allegations of procedural violations may be relevant in assessing the redressability issue, but they cannot loosen the requirement that plaintiffs demonstrate that they have suffered a substantive injury traceable to the procedural violation.

The NABH decision appears plainly correct in light of Supreme Court standing jurisprudence. Moreover, it does not substantially narrow access to the courts. In fact, I think it provides a useful roadmap regarding the types of declarations that will be required to establish standing for developers. What it does make clear is that the courts are not simply discouraging environmental plaintiffs in their standing jurisprudence. Instead, the courts are discouraging each side equally – or at least requiring the same demonstrations from developers as well as environmentalists.

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Yesterday, the Supreme Court announced its decision in American Electric Power v. Connecticut, holding that EPA’s authority to regulate greenhouse gases under the Clean Air Act displaced federal common law nuisance claims. I have always thought that the displacement argument was correct, so the decision is not really a surprise (and the 8-0 decision and crisp opinion only confirm that view). The decision is nonetheless important and, notwithstanding a few limitations, rather sweeping.

The Court’s analysis was straightforward. The creation of federal common law by courts is “unusual” and

[W]hen Congress addresses a question previously governed by a decision rested on federal common law,” the “need for such an unusual exercise of law-making by federal courts disappears.”

Next, displacement of federal common law is not the same as preemption of state law, because there are no federalism issues. Thus, the test for displacement is “simply whether the statute ‘speak[s] directly to [the] question’ at issue.” Therefore, what EPA does in response to the congressional mandate is irrelevant to displacement. It is the CAA that matters. As the court noted, if EPA does not set emission limits, the CAA allows the plaintiffs to petition EPA to do so and EPA’s response to that petition is subject to judicial review. In short,

the relevant question for purposes of displacement is “whether the field has been occupied, not whether it has been occupied in a particular manner.”

The Court also provided a forceful argument for judicial restraint in these kinds of cases:

            It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions. The expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions. Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order.

The decision did not address whether these or other plaintiffs could bring actions under state nuisance law, but I would not put a lot of money on those cases succeeding. The decision also does not address cases such as Kivilina v. ExxonMobil, in which the plaintiffs do not seek regulation, but only damages. However, I’m skeptical about the survival of those cases as well.

The real question following yesterday’s decision is whether Republicans in Congress will read it carefully. Will they continue to press to eliminate EPA’s authority to regulate greenhouse gases? Doing so would revive public nuisance suits, unless the legislation also barred federal courts from hearing such cases.

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Last month, in discussing the Administration’s brief in the American Electric Power case, I praised the nuanced and persuasive approach that the Administration took in seeking reversal of the 2^nd Circuit opinion allowing the states' public nuisance climate litigation to go forward. The states seeking to prosecute the law suit have now filed their brief and it turns out that they also do nuance. I still think that the Supreme Court will reverse, however.

I’m not going to get into the standing issue. I don't believe that the states should have standing, but it’s not obvious, given the result in Massachusetts v. EPA, that the Supreme Court will agree.

I find the displacement issue more interesting. The 2^nd Circuit held that the Clean Air Act had not displaced federal common law, because EPA wasn’t actually regulating GHG. Of course, EPA has reversed course and, at least until the GOP in the House has its way, it does now regulate GHG under the CAA. As a result, as the Administration put it in its brief:

Although EPA has not yet done precisely what plaintiffs demand here…, that is not the relevant test. … The question is whether the field has been occupied, not whether it has been occupied in a particular manner.

The plaintiff states disagree. In what is probably a shrewd concession, the states acknowledge that, were EPA to issue new source performance standards for GHG, such standards would displace federal common law, because, while they would not directly subject existing facilities to controls, they would lead to follow-on regulation by EPA requiring states to impose GHG standards on existing plants. Until existing plants are regulated, according to the states, common law has not been displaced. Thus, the states argue, the Supreme Court should either affirm the 2^nd Circuit or simply dismiss the appeal – the states further acknowledge that, on remand, the District Court could reasonably stay the nuisance case to see if EPA in fact issues NSPS for GHG.

Shrewd and nuanced, but I’m still not buying it. I think that once EPA’s GHG regulatory program came into effect, federal common law was displaced. Of course, I don’t get a vote, so we’ll have to wait for the Supreme Court to decide the case.

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This week, the United States filed its brief in American Electric Power v. Connecticut. The brief is a nicely nuanced and persuasive argument for dismissal of plaintiffs’ public nuisance claims against five large power generators. The brief is nuanced in that it acknowledges that plaintiffs have Article III standing – allowing the Court to avoid reaching a constitutional standing issue – and provides a vehicle for the Court to avoid reaching the political question doctrine issue.

Instead, the brief makes two fairly simply points – and makes them convincingly. First, the brief argues that plaintiffs’ lack “prudential standing,” because their complaint raises “generalized grievances more appropriately addressed in the representative branches.” As the brief notes:

Global climate change will potentially affect the property interests of most landowners. And the effects of climate change will not be limited to landowners; they will also be felt by individuals, corporations, and governmental entities throughout the Nation and around the world. … The problem is not simply that many plaintiffs could bring such claims and that many defendants could be sued. It is also that essentially any potential plaintiff could claim to have been injured by any (or all) of the potential defendants.

A court – when no statute or regulation is in place to provide guidance – is simply not well-suited to balance the various interests of, and the burdens reasonably and fairly to be borne by, the many entities, groups, and sectors of the economy that, although not parties to the litigation, are affected by a phenomenon that spans the globe.

The brief is even more convincing in demonstrating that the common law claims have been displaced by the regulatory actions that EPA has taken under the Clean Air Act since Massachusetts v. EPA.   Specifically, it doesn’t matter that EPA’s regulation doesn’t do what the plaintiffs are seeking in the litigation:

Although EPA has not yet done precisely what plaintiffs demand here…, that is not the relevant test. … The question is whether the field has been occupied, not whether it has been occupied in a particular manner.

Moreover, and this is the crux of the displacement argument, the brief notes that:

Plaintiffs’ attempt to secure court-ordered emissions reductions from emitters of their choosing on their own schedule would be plainly inconsistent with EPA’s systematic, phased approach.

Interestingly, the brief makes the point that:

Displacement also occurs when an agency, whose comprehensive statutory authority to regulate the subject matter has been triggered, decides to postpone or even forgo the imposition of regulatory standards, where the decision is made through the exercise of that authority on the basis of a weighing of relevant considerations under the statutory scheme. [My emphasis.]

This is one issue that could come back to haunt both the government and global warming skeptics in Congress. As you will probably infer from my description of the brief, I expect the United States to win this case. However, while the prudential standing issue is persuasive, I think that the displacement is much the stronger argument – but only because EPA has in fact done something about GHG. What’s notable about the language in the brief is that, even if EPA were to make a formal decision to postpone GHG regulation under the CAA, such an decision would justify continued displacement of public nuisance claims, under the theory of the government’s brief. On the other hand, if Congress were to amend the CAA to preclude EPA regulations – and unless the legislation specifically precluded nuisance claims as well – such action would then revive the potential for nuisance claims, which is probably the last outcome that power generators would want to see.

As I have said before on this issue, be careful what you wish for.

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I have previously expressed my distaste for public nuisance litigation to require reductions in GHG emissions. It cannot be more than a tactic in a war to the plaintiffs, because the chaos resulting from regulation of a global problem through a series of individual law suits has to be obvious to everyone. Now, apparently, that chaos is also obvious to the Obama administration, because it has filed a brief with the Supreme Court, asking the Court to accept a certiorari petition filed by the defendants in American Electric Power v. Connecticut, the 2^nd Circuit case in which the Court of Appeals held that the nuisance claims could proceed. 

The United States cited two reasons why the government should take the case and vacate the appellate decision. First, the brief states that the petitioners failed to demonstrate “prudential standing.” In other words, while they may have Article III standing, federal courts should “refrain from adjudicating ‘generalized grievances more appropriately addressed in the representative branches.’” As the brief notes:

The problem is not simply that many plaintiffs could bring such claims and that many defendants could be sued. Rather, it is that essentially any potential plaintiff could claim to have been injured by any (or all) of the potential defendants. The medium that transmits injury to potential plaintiffs is literally the Earth’s entire atmosphere – making it impossible to consider the sort of focused and more geographically limited effects characteristic of traditional nuisance suits….

Second, and perhaps more importantly, the administration has argued that EPA’s recent regulatory efforts with respect to GHG, including the mobile source rule and the PSD / Title V rules for stationary sources – which occurred after the 2^nd Circuit decision – have “displaced” federal nuisance law. Since the Second Circuit specifically addressed the displacement argument and found for the plaintiffs in part precisely because EPA had not yet regulated GHG, EPA’s intervening regulatory actions certainly would seem to provide a basis for remanding the 2^nd Circuit decision. I think that’s an easy call for the Supreme Court to make.

Perhaps not surprisingly, the plaintiffs’ attorneys were dismayed by the filing of the brief.  According to GreenWire, Matt Pawa, one of the plaintiffs’ attorneys, said that:

We feel stabbed in the back. This was really a dastardly move by an administration that said it was a friend of the environment. With friends like this, who needs enemies?"

My take is a little different. Why don’t the plaintiffs’ attorneys thank the administration for promulgating the various GHG regulations, admit that the nuisance cases were a tactic to move Congress and the administration, claim a partial victory, because they at least got EPA moving, fold up their tents, and go home.

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Two more decisions were released last week concerning whether nuisance claims could be brought with respect to harm alleged to have resulted from private conduct contributing to climate change. First, in Village of Kivalina v. ExxonMobil Corporation, the District Court dismissed nuisance claims. Second, in Comer v. Murphy Oil, the Fifth Circuit Court of Appeals reversed a District Court dismissal of nuisance claims related to damage resulting from Hurricane Katrina.

Village of Kivalina first. In this case, an Inupiat Eskimo village claimed that global climate change traceable to the defendants has essentially made their village uninhabitable. Notably and, I think, shrewdly, they did not seek injunctive relief, but sought only damages related to the cost of relocating the village. The District Court concluded both that the law suit raised non-justiciable political questions and that the plaintiffs did not have standing, because their harm was not fairly traceable to the defendants’ conduct.

The Fifth Circuit wasn’t buying either of these arguments in Comer v. Murphy Oil. To the Fifth Circuit, like the Second, in the American Electric Power case, the complexity of the underlying proof is not sufficient to render these types of cases non-justiciable. The cases involve tort claims; courts resolve tort claims – pretty much, end of story. I’ve got to say, from my lowly perch, that I think that the Second and Fifth Circuits got it right here. It’s easy to say that it would be better for Congress to deal with climate change than state legislatures or, as here, courts. However, that’s not that same as courts declining to exercise jurisdiction. I’d be surprised if the political question argument  has any real legs.

Standing is a different matter. I still think that both the traceability and redressability elements of standing are problematic. Plaintiffs in both Village of Kivalina and Comer v. Murphy Oil solved the redressability issue by seeking only damages, and not injunctive relief. Both the Second and Fifth Circuits noted that traceability, as a standing issue, necessitates only that the plaintiffs allege that the defendants’ conduct “contributes to” the plaintiffs’ injuries. This is not a stringent test. However, in light of the recent Supreme Court decision in Ashcroft v. Iqbal, I could imagine some courts looking askance at the types of allegations made in these complaints, even at a pleading stage.

On balance, what these cases tell me is that some of these cases are actually likely to be litigated all the way through to trial. Notwithstanding the potentially huge recoveries, it seems here that the cost to the defendants of paying out anything more than nominal damages would be high, and the prospects of successful defense of these claims are still reasonably good. That’s a recipe for trial, as far as I can tell.

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In an important decision yesterday, the Massachusetts Supreme Judicial Court ruled that the operator facility participating in the renewable portfolio standard program did not have standing to challenge a state decision authorizing other facilities to participate in the RPS program. The decision may have broad implications regarding when businesses may challenge the issuance of permits or other approvals to competitors in Massachusetts.

In Indeck Maine Energy v. Commissioner of Energy Resources, the plaintiffs operated biomass facilities which were authorized to sell renewable energy credits. When the Department of Energy Resources authorized two other biomass facilities to sell RPS credits, plaintiffs sued.

As the SJC noted up front, to establish standing, a plaintiff must “allege an injury within the area of concern of the statute or regulatory scheme under which the injurious action has occurred.” At least in Massachusetts, an injury from business competition does not confer standing. However, prior cases held that this rule “does not apply … to competitors in a regulated industry.” The question is thus: What does it mean to be in a regulated industry?

After analyzing the purpose of the RPS statute and its prior cases on this issue, the court came to a relatively simple conclusion:

The question of standing in the context of competitive injury turns not simply on whether an industry is regulated, but rather on how that industry is regulative. The common threat present in the cases in which standing has been found is regulatory schemes that contemplated some form of protection of the competitive interests of the respective plaintiffs.

Accordingly, if an industry is regulated in such a way that it can be said that the protection of competitors is within the regulatory scheme’s area of concern, such a competitor alleging harm deriving from business competition would have standing to sue.

Applying the rule here, the SJC concluded that the plaintiffs did not have standing, because the Legislature “did not seek to protect and thereby confer standing to sue on existing competitors, thereby creating a barrier to market entry.” In other words, a business does not have standing to challenge an approval issued to a competitor unless the very purpose of the regulatory scheme was to protect the competitive position of the plaintiff.

This decision has potentially significant impacts on other permitting regimes, such as those implemented by MassDEP.  Following Indeck, a business harmed by the issuance of an environmental permit issued to a competitor will not have standing to challenge the permit, because it is not the purpose of any of the environmental permitting regimes to create barriers to market entry.

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