The Obsolescence of Environmental Common Law

Displacement and Preemption

Although there is no
general federal common law, in certain areas of national concern, such as
environmental protection, federal courts have the power to fill in “statutory
interstices” and if necessary, even “fashion federal law,”[4] thus creating federal common law in
those specific areas. Although federal common law is
uncommon compared to other types of environmental litigation, federal courts
are particularly likely to invoke this body of law in environmental
contamination cases.[5]

Two legal
doctrines are responsible for the recent decline of environmental common law.
The first is displacement, a defense that bars the application of federal
common law when a federal statute or regulation directly addresses the question
at issue. In such a case, the statute displaces the prior federal common law.
Because Congress has primacy in “prescrib[ing] national policy in areas of special federal interest,”
the courts lose their power to apply judge-made law when Congress “‘speak[s]
directly to [the] question’ at issue.”[6]

The second doctrine, preemption, invalidates common law when
it conflicts with a federal statute. Preemption and displacement operate
similarly.[7]
However, preemption applies less frequently because it requires congressional
intent to override state law, whereas displacement requires only a statutory or
regulatory act that substitutes for federal common law, regardless of intent.[8]
There are two types of preemption: express and implied.[9] Express preemption applies only when
a federal statute explicitly states it preempts state law.[10] Implied
preemption can be further divided into conflict and field preemption.[11]
Conflict preemption applies when a party is unable to comply with both the
common law and the federal statute governing the issue or when the common law
claim made by plaintiffs is an obstacle to the purposes of Congress in enacting
the federal statute.[12] Field preemption applies when the
federal regulatory scheme enacted by Congress is so pervasive as to “occupy the
field” in that area of the law.[13]
Both types of implied preemption, however, still require intent.

Setting the Stage for Obsolescence

Two recent cases lay out the groundwork for the obsolescence
of environmental common law.

North Carolina v. Tennessee Valley Authority

In 2010 the U.S. Court of Appeals for the Fourth Circuit
decided North Carolina v. Tennessee
Valley Authority, finding preemption of state common law by the Clean Air
Act (CAA) and reversing the trial court’s finding that emissions from four
Tennessee Valley Authority (TVA) power plants in nearby states constituted a
public nuisance to residents of North Carolina.[14] The Fourth Circuit found that the trial court’s ruling was flawed for
several reasons, as follows.

The Tennessee Valley Authority's Paradise Power Plant in Kentucky. Photo credit to TVA Web Team.

First, the trial court’s
injunction, if allowed to stand, would “encourage courts to use vague public
nuisance standards to scuttle the nation’s carefully created
system for accommodating the need for energy production and the need for clean
air.”[15]
“The result,” the Fourth Circuit went on to say,
“would be a balkanization of clean air regulations and a confused patchwork of
standards, to the detriment of industry and the environment alike.”[16]
 

It had long been true that federal
common law as applied to environmental cases was on life support. After International Paper Co. v. Ouellette,[17]
federal statutes often preempt air and water emissions
claims seeking injunctive relief based on the common law. However the Fourth
Circuit’s decision in North Carolina v.
TVA went one step further, holding that the regulatory regime preempts
common law claims made under source state law[18]
that would undermine its purpose. While the court said it “need not hold flatly
that Congress has entirely preempted the field of emissions regulation,”[19]
its decision, in effect, did exactly that.

This decision has enormous
implications for environmental litigation. It suggests that federal preemption
is conceivable in every type of common law air and water emissions case. More
importantly, it opens the door for defendants to convincingly argue preemption
in other types of environmental common law cases and gives them the ammunition
of an intelligent opinion from a well-respected court.

American Electric Power v.
Connecticut

In 2011, the U.S. Supreme Court
decided American Electric Power Inc. v. Connecticut (“AEP”).[20] By a vote of eight to zero, the
Court reversed a Second Circuit ruling and held that a lawsuit against five
electric utilities to reduce greenhouse gas emissions could not proceed under a
federal common law public nuisance theory because it was displaced by the CAA.[21]

In her majority opinion, Justice
Ginsburg authored a detailed and clear exegesis that, for all practical
purposes, shut the door to any future federal common law claims involving
environmental contamination; “We hold that the CAA and the [U.S. Environmental
Protection Agency (EPA)] actions it authorizes displace any federal common law
right to seek abatement of carbon-dioxide emissions from fossil-fueled fired
power plants.”[22]
She noted that the requirements for invoking the displacement doctrine are less
stringent than those for invoking preemption; “The test for whether congressional
legislation excludes the declaration of federal common law is simply whether
the statute ‘speak[s] directly to [the] question’ at issue.”[23]
The Court found that this test was clearly met; “[The case of] Massachusetts [v. EPA] made plain that
emissions of carbon dioxide qualify as air pollution subject to regulation
under the [CAA]. And we think it equally plain that the [CAA] ‘speaks directly’
to emissions of carbon dioxide from the defendants’ plants.”[24]

Justice Ginsburg rejected the notion
that taking away federal common law would leave plaintiffs without redress,
stating that “[t]he [CAA] provides multiple avenues of
enforcement.”[25]
She noted that “[i]f States (or EPA) fail to enforce emissions limits against
regulated sources, the [CAA] permits ‘any person’ to bring a civil enforcement
action in federal court.”[26]
She further noted that “[i]f the EPA does not set emissions limits for a particular
pollutant or source of pollution, States and private parties may petition for a
rulemaking on the matter, and EPA’s response will be reviewable in federal
court.”[27]
She concluded by explaining that the CAA already provides the relief sought by
the plaintiffs and that there is no basis to permit an identical common law
action.[28]

Justice Ginsburg finalized her
displacement analysis by underscoring EPA’s suitability to regulate greenhouse
gases;[29]
“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.”[30]
She also underscored EPA’s ability to set a unified standard and drew a
contrast to federal district judges, noting that judges cannot force other
judges to follow their edicts.[31]

Finally, the Court noted that the
plaintiffs also sought relief under state law, though the Second Circuit did
not reach these claims because it held that federal common law governed.[32]
The Court left this matter “open for consideration on remand.”[33]
However, the Justices’ comments at oral argument suggest that at least some of
them would also have been inclined to find preemption of state law claims based
on the CAA. Justice Kennedy expressed doubt at the idea that there is neither
federal common law nor displacement of state law.[34] Chief Justice Roberts seemed to
believe that there was little difference between displacement and preemption;
“That sounds like . . . preemption to me and not displacement, or at least preemption
with another label.”[35]
Justice Scalia implied that he might be inclined to find preemption as well.[36]
Given that preemption was not at issue in the AEP case, the Justices seemed unusually interested in the subject,
perhaps anticipating that preemption would become an important future consideration
in similar such litigation.

Though the chief focus in AEP was displacement, the outcome also strengthened the preemption
defense because of the close relationship between the two concepts. While the Court
did not explicitly consider preemption, its language on displacement was so
resolute that it strengthened the preemption defense as well. The opinion
foretold trial courts’ receptiveness to the argument that the CAA preempted
state common law claims in other climate change litigation.[37]
But it did more than that: the opinion also suggested Supreme Court support for
the broader notion that environmental common law is not untouchable and can be
preempted by federal statutory law. The Court’s finding of displacement is
already at least halfway to preemption—all that remains is taking the
additional step of finding that Congress intended
to foreclose other avenues of relief. Given that the Court’s decision in AEP held that the CAA “speaks directly”[38]
to the issue of carbon dioxide emissions and suggested that the CAA occupies
the entire field,[39]
and given the Court’s finding that Congress “prescribed” that the first decision
maker under the CAA “is the expert administrative agency,”[40]
the additional step to preemption is a decidedly small one. Preemption has been
a popular subject for the Supreme Court in recent years, but it has largely
been confined to other areas of the law, such as pharmaceutical product
liability litigation. The AEP
decision signaled the Court’s willingness to apply preemption in environmental
law as well.

The Environmental Common Law Killer—Native Village
of Kivalina v. ExxonMobil Corp.

Decision

Most recently, Native Village of Kivalina v. ExxonMobil
Corp. (“Kivalina”) built upon the preemption
groundwork laid in North Carolina v. TVA
and AEP.[41] Similar to AEP, Kivalina was a public nuisance suit alleging
that defendants’ emissions had contributed to global warming. However, unlike
in AEP, the plaintiffs in Kivalina sought monetary damages, rather than injunctive
relief.

Kivalina Island, Alaska. Photo Credit to US Coast Guard (uscgpress)/ Lt. Cdr. Micheal McNeil

Though the District Court for the Northern District of California dismissed Kivalina on political question
and standing grounds, the Ninth Circuit focused its appellate review on
displacement.[42]
This focus was not surprising given the similarities between this case and AEP, which the Supreme Court decided
only several months earlier.

In Kivalina, Judge Sidney Thomas relied heavily on the Supreme Court’s
decision in AEP; “[the Supreme Court]
has already determined that Congress has directly addressed the issue of
domestic greenhouse gas emissions from stationary sources and has therefore
displaced federal common law.”[43]
Judge Thomas noted a key distinction in the remedies sought in Kivalina and AEP—Kivalina sought damages for harm
caused by past emissions, whereas AEP sought
abatement.[44]
Relying most heavily on the Supreme Court’s 1981 decision in Middlesex County Sewerage Authority v.
National Sea Clammers Association,[45]
he found that “the Supreme Court has instructed that the type of remedy asserted
is not relevant to the applicability of the doctrine of displacement.”[46]
Thus, Judge Thomas concluded, “under current Supreme
Court jurisprudence, if a cause of action is displaced, displacement is
extended to all remedies.”[47]

Judge Thomas then confronted one of
the plaintiffs’ arguments, namely, displacement is not a viable argument where
there is no federal statutory remedy for monetary damages as a result of
climate change. He rejected that argument, noting that “if the federal common
law cause of action has been displaced by legislation, that means that ‘the
field has been made the subject of comprehensive legislation’ by Congress” and
that “[w]hen Congress has acted to occupy the entire
field, that action displaces any previously available federal common law
action” including remedies.[48] Judge Thomas held that “AEP extinguished Kivalina’s
federal common law public nuisance damages action, along with the federal
common law public nuisance abatement actions.”[49]
While expressing sympathy for the plaintiffs, Judge Thomas stated that the
solution to their problems rested “in the hands of the legislative and
executive branches of our government, not the federal common law,”[50]
an apparent nod to the district court’s reliance on the political question
doctrine.

Image credit to www.EPA.gov

Concurrence

Judge Philip Pro’s lengthy
concurrence treated the displacement issue in much more detail. He wrote
separately because of the “tension in Supreme Court authority on whether
displacement of a claim for injunctive relief necessarily calls for
displacement of a damages claim.”[51]This
nuanced concurrence stands in marked contrast to Judge Thomas’s decision, which
resolved the displacement issue matter-of-factly and without any real
acknowledgement of discord in Supreme Court authority.

Judge Pro explained that the Supreme
Court’s 2008 decision in  Exxon Shipping
Co. v. Baker,[52]
appears to be a “departure”[53]
from Middlesex, the case relied upon
by Judge Thomas.[54]
He examined Exxon in meticulous detail
and came to an altogether different conclusion than Judge Thomas did in the
majority—that Exxon not only
does not support Middlesex as Judge
Thomas held[55]
but that Exxon “appears to depart”
from Middlesex.[56]
Despite this disagreement, Judge Pro ultimately reached the same conclusion as
Judge Thomas, albeit after much more hand wringing. He characterized Exxon an outlier, arguing that it
“stray[ed]” from Middlesex.[57] His concurrence relied instead on “Milwaukee II, Middlesex, AEP, and the comprehensive nature of the
CAA.”[58]

Judge Pro, like Judge Thomas, found
that the lack of a federal remedy is not dispositive, explaining that Congress
deliberately chose not to include a damages remedy in the CAA.[59]
He reasoned that if the trial court had permitted a damages remedy, it would be
in direct conflict with Congress’ decision not to permit such a remedy.[60]

Significance

The Kivalina decision builds on the
injunctive action decisions in North Carolina v. TVA and AEP,
and applies them to an action for monetary damages. This is an important leap.
It is particularly difficult to convince courts to apply a displacement or
preemption defense in environmental common law actions to monetary damage
claims, especially when the federal statutes, usually the CAA and Clean Water
Act, do not provide for such a remedy.[61]
However doing so may be easier after Kivalina, which makes a compelling case for why
displacement, and by implication preemption, should bar common law
environmental actions.

Displacement has not been a
particularly important legal doctrine for environmental common law. It is
narrowly construed, only applicable to federal common law suits, which are also
very rare. The Kivalina
decision is not important because of its implications for displacement, but because
of its likely effect on the related doctrine of preemption. The application of
displacement in Kivalina
was merely a stepping-stone for a much more important development—the
expansion of the doctrine of preemption in environmental common law actions.

The key holding in Kivalina is: “[w]hen Congress has acted to occupy the entire field, that
action displaces any previously available common law action.”[62]
While this phrase referred specifically to displacement, it applies with equal
force to preemption. By holding that Congress has acted to occupy the entire field,
even in damages claims, the Ninth Circuit has effectively held that such
damages claims meet the legal definition for preemption in addition to
displacement. Thus, the Kivalina
decision has provided the legal justification for expanding the preemption
defense in all environmental common law actions, under both federal and state
law. Indeed, it threatens the continued relevance of environmental common law.
Even more so because preemption, unlike displacement, is not a narrow doctrine
nor is rarely applied. Preemption can be applied to virtually any environmental
federal or state common law claim.

Other Significant Recent Cases

At least two other recent decisions have similarly held that
environmental common law claims are preempted. In Comer v. Murphy Oil USA, Inc. (Comer), a federal district court in
Mississippi held that the CAA preempted the plaintiffs’ claims for damages
related to climate change.[63] The court based its holding on AEP, despite the plaintiffs’ attempt to
argue that AEP was limited to federal
common law nuisance claims for injunctive relief.[64] The court found that the plaintiffs’
claim for damages necessarily called for a determination as to whether
defendants’ emissions were reasonable, that this was a decision that had been
“entrusted by Congress to the EPA,” and that “plaintiffs’ entire lawsuit [was]
displaced by the CAA.”[65]

Again, a federal district court in Pennsylvania reached a
similar conclusion in Bell v. Cheswick Generating Station (Bell).[66] There, the plaintiffs filed a class
action complaint seeking damages on behalf of approximately 1500 individuals
who asserted that emissions from a coal-fired electrical generating facility
damaged their properties.[67] The court relied on TVA, AEP,
and Comer in finding that the
plaintiffs’ claims “impermissibly encroach on and interfere with [the
CAA’s] regulatory scheme.”[68]

Both Comer and Bell demonstrate that the application
of the preemption defense to environmental cases is not confined to Kivalina; rather,
it is a growing trend.

Outlook for the Future

The question of the extent to which environmental common law
tort claims should be permitted in today’s world where there are federal and
state statutes and regulations regarding every conceivable subject matter, has
long been an undercurrent in environmental litigation. With Kivalina, the balance has shifted
decisively in favor of preemption. This change has the potential to rewrite
environmental law in a profound way. Indeed, the effects have already been seen
in the decisions of Comer and Bell, for example. In the future, more
trial courts are likely to be receptive to preemption defenses in environmental
contamination suits for either injunctive relief or damages.

Suits grounded in federal and state environmental statutes
may become the sole mechanism for plaintiffs to seek injunctive relief and perhaps
even money damages. On one hand, this is a positive development for corporate
defendants who prefer the certainty of clearly defined statutes and regulations
to the unpredictable vagaries of common law negligence and nuisance suits.
However on the other hand, environmental plaintiffs will likely be disappointed
by the unavailability of flexible mechanisms of relief that offer paths to more
favorable judgments.

It is impossible to predict what will happen in the future,
but one thing is certain—environmental common law now faces one of its
gravest threats and its very survival is at stake. If courts continue to apply
the preemption defense to environmental claims, environmental common law may go
the way of the fax machine; it may become obsolete.