It just took a while for this message to be heard. When Massachusetts was decided in April 2007, the AEP case had been pending in the U.S. Court of Appeals for the Second Circuit for some time, and there it would sit for over two more years. When the Second Circuit finally issued its decision, it held, among other things, that the CAA did not displace or otherwise disturb lawsuits alleging that GHG emissions contributed to a public nuisance under federal common law.

This conclusion was easily the weakest and least convincing portion of the panel’s lengthy opinion, largely because it failed to apply the very formula for displacement it cited from the relevant precedents. The Supreme Court had long held that whether federal environmental regulations displace federal common law actions for interstate pollution turns on legislative action. As the Second Circuit explained, citing the Supreme Court’s decision in Milwaukee v. Illinois (Milwaukee II), “[b]ecause ‘federal common law is subject to the paramount authority of Congress,’ federal courts may resort to it only ‘in absence of an applicable Act of Congress.’” Therefore, if the CAA’s expansive statutory scheme was to apply to GHGs, it would follow that federal common law nuisance claims would be displaced.

Despite the clear language of Milwaukee II, the Second Circuit rejected the displacement claim. It focused not on the CAA, but on its implementation by the EPA, and concluded that since the EPA had not yet begun to exercise its authority to regulate GHGs, the states’ nuisance claims had yet to be displaced. This approach shifted the locus of displacement authority from Congress to the EPA, making displacement hinge upon particular policy choices that could change from one administration to the next.

The Second Circuit’s failure to follow the very precedents upon which it purported to rely made it easy for the Court to coalesce in what could otherwise have been a divisive case. The participating Justices may have split 4-4 over standing, but they were in complete agreement that Milwaukee II required displacement here. As Justice Ginsburg explained for a unanimous Court, whether a federal regulatory program displaces preexisting federal common law claims is dependent upon what legislation Congress has enacted. Congress’s adoption of a statute governing GHG emissions displaces federal common law actions concerning GHG emissions without regard to the nature of the resulting regulatory regime. “As Milwaukee II made clear . . . 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 “critical point,” Justice Ginsburg explained, was that “Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants,” not whether the resulting regulations were effective or desirable. Indeed, Justice Ginsburg noted, were the EPA to adopt inadequate regulations, or even to “decline to regulate carbon-dioxide emissions altogether,” it would be immaterial to displacement. In enacting the CAA, as interpreted in Massachusetts, Congress made the scope and stringency of federal GHG emissions something for the EPA to determine in the first instance.

That the CAA displaces public nuisance suits under federal common law does not mean the states and conservation groups are left without legal remedy. The Court did not consider whether public nuisance lawsuits under state law would be similarly precluded. This subject was not briefed and implicates a different legal standard. Federal common law is disfavored, but so too is preemption of state-law-based claims. Whereas enactment of a relevant statute is sufficient to displace federal common law actions, much more is required to preempt state law.

AEP could chill state-law-based nuisance actions nonetheless. While not addressing preemption, Justice Ginsburg’s opinion explained why courts are particularly ill-suited to addressing climate change claims. Identifying and setting appropriate GHG emission targets requires the consideration of numerous economic, environmental, and other tradeoffs. Deciding how to balance such competing considerations is the sort of legislative policy judgment Congress either delegates to an administrative agency or reserves for itself. As Justice Ginsburg explained, the EPA “is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions.” There is no reason to think that state judges, or even federal judges applying state law, would fare any better. If anything, the application of variable state standards to matters of a global, interjurisdictional concern could further frustrate the development of a coherent climate change policy.

Whether or not state-law-based tort claims proceed, controls on GHG emissions will proliferate. Massachusetts made sure of that. The state and conservation group plaintiffs may have lost in AEP, but they do not have a lost cause. The die for this case was cast in Massachusetts. The reason the states lost this particular climate battle was because they had already won the war.

Jonathan H. Adler is a Professor of Law and the Director of the Center for Business Law and Regulation at Case Western Reserve University School of Law and a Lone Mountain Fellow at the Property and Environment Research Center. Portions of this essay are adapted from an article forthcoming in the Cato Supreme Court Review.

Preferred Citation: Jonathan H. Adler, A Tale of Two Climate Cases, 121 Yale L.J. Online 109 (2011), http://yalelawjournal.org/forum/a-tale-of-two-climate-cases.