June 22, 2011

In a landmark ruling issued on Monday, June 20, 2011, the U.S. Supreme Court rejected a climate change lawsuit against major power companies Monday, ruling that the U.S. Environmental Protection Agency (EPA), not the federal courts, should impose curbs on greenhouse gas emissions.

The unanimous Supreme Court opinion 8 to 0, with Justice Sotomayor not taking part, is a victory for the power companies involved in the suit and the Obama Administration, which has called on the Supreme Court to give deference to EPA’s pending climate regulations. A copy of the U.S. Supreme Court’s decisions is found at: http://www.supremecourt.gov/opinions/10pdf/10-174.pdf.

In the case — American Electric Power Co. v. Connecticut, 10-174 — five major power companies and the federally operated Tennessee Valley Authority opposed six states – California, Connecticut, Iowa, New York, Rhode Island and Vermont – New York City and several private land trusts. New Jersey and Wisconsin withdrew from the case this year after Republicans replaced Democrats in those Governor’s offices. The states and other plaintiffs sued the Tennessee Valley Authority and four power companies — American Electric Power Co. of Ohio, Cinergy now a part of and Duke Energy Corp. of North Carolina, Southern Co. inc. of Georgia and Xcel Energy Inc. of Minnesota — in hopes that the federal courts would compel the companies to reduce their greenhouse gas emissions.

But in an opinion delivered by Justice Ruth Bader Ginsburg, the Supreme Court rejected an appeals court decision that would have allowed federal judges to effectively put limits on greenhouse gas emissions. According to Justice Ginsburg, that responsibility, should be left in the hands of the EPA. EPA said in December that it would issue new regulations concerning power plants’ emission of carbon dioxide which is classified as a greenhouse gas.

In a key holding the U.S. Supreme Court found: “The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation displaces federal common law.” According to the opinion, the Clean Air Act gives the EPA authority to regulate carbon dioxide emissions from power plants but leaves no room for a separate track of “control of greenhouse gas emissions by federal judges.” Judge Ginsburg noted that the states and other parties will have the option of seeking review of the EPA’s eventual decision in federal court.

The U.S. Supreme Court’s decision reverses a ruling by the 2nd U.S. Circuit Court of Appeals in New York. Because Justice Sonia Sotomayor sat on the appeals court panel that heard that case, she did not take part in the U.S. Supreme Court’s decision.

The ruling follows a 2007 decision in Massachusetts v. EPA in which the Supreme Court said that greenhouse-gas emissions could be regulated under the Clean Air Act if the EPA found they endanger public health and welfare. EPA later made such a finding and has begun phasing in a series of rules aimed at reducing emissions. The climate regulations have set off a major political debate with Republicans and some moderate Democrats pushing legislation to block EPA from implementing the rules. The Obama administration has stood by its regulations, vowing to veto any bill that seeks to halt them.

During oral argument earlier this year Justice Ginsburg expressed skepticism with the arguments advanced by the states and other parties. In April of this year Ginsburg asked: “You want the court to start with the existing sources, to set limits that may be in conflict with what an existing agency is doing? …Do we ignore the fact that the EPA is there and that it is regulating in this area?”

The ruling — which effectively closes off an avenue for climate advocates to seek mandatory greenhouse gas curbs — highlights the high stakes of the legal and political battles over EPA rules. The decision comes at a time when climate legislation is politically dead for now on Capitol Hill.

The U.S. Supreme Court did not rule on the state common law claims which Justice Ginsburg noted were best decided by lower courts. As a result, this issue was remanded.

The environmental law attorneys at Hessian & McKasy track important decisions that affect our clients. We advise our clients as to the impact of these decisions on their operations. The views here are my own and do not reflect those of my employer, Hessian & McKasy, a Professional Association.

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