The question was whether the plaintiffs (few States, the city of New York, and three private land trusts) could maintain federal common law public nuisance claims against carbon-dioxide emitters (four private power companies and the federal Tennessee Valley Authority). As relief, the plaintiffs sought for a decree setting carbon-dioxide emissions for each defendant at an initial cap, to be further reduced annually.
In Massachusetts v. EPA, 549 U. S. 497 (2007), the Supreme Court held that the Clean Air Act, 42 U. S. C. §7401 authorize federal regulation of emissions of carbon dioxide and other greenhouse gases. Massachusetts held that the Environmental Protection Agency (EPA) had misread the Clean Air Act when it denied a rulemaking petition seeking controls on greenhouse gas emissions from new motor vehicles. Greenhouse gases qualify as “air pollutants” within the meaning of the governing Clean Air Act provision; they were therefore within EPA’s regulatory ken. Because EPA had authority to set greenhouse gas emission standards and had offered no “reasoned explanation” for failing to do so, the Supreme Court in that case concluded that the agency had not acted in accordance with law when it denied the requested rulemaking. EPA then undertook greenhouse gas regulation. EPA and the Department of Transportation subsequently issued a joint final rule regulating emissions from light-duty vehicles and initiated a joint rulemaking covering medium- and heavy duty vehicles. EPA commenced a rulemaking under §111 of the Act, 42 U. S. C. §7411, to set limit on greenhouse gas emissions from new, modified, and existing fossil-fuel fired power plants.
The lawsuits in the present case began well before EPA initiated the efforts to regulate greenhouse gases. In July 2004, two groups of plaintiffs filed separate complaints in the Southern District of New York against the same five major electric power companies. The first group of plaintiffs included eight States and New York City, the second joined three nonprofit land trusts; both groups respondents before the Supreme Court. The defendants, petitioners before the Supreme Court, were four private companies and the Tennessee Valley Authority, a federally owned corporation that operated fossil-fuel fired power plants in several States.
By contributing to global warming, the plaintiffs asserted, the defendants’ carbon-dioxide emissions created a “substantial and unreasonable interference with public rights,” in violation of the federal common law of interstate nuisance, or, in the alternative, of state tort law. The States and New York City alleged that public lands, infrastructure, and health were at risk from climate change. The trusts urged that climate change would destroy habitats for animals and rare species of trees and plants on land the trusts owned and conserved. All plaintiffs sought injunctive relief requiring each defendant “to cap its carbon dioxide emissions and then reduce them by a specified percentage each year for at least a decade.”
The District Court dismissed both suits as presenting non-justiciable political questions, citing Baker v. Carr, 369 U. S. 186 (1962), but the Second Circuit reversed, 582 F. 3d 309 (2009). On the threshold questions, the Court of Appeals held that the suits were not barred by the political question doctrine and that the plaintiffs had adequately alleged Article III standing. Turning to the merits, the Second Circuit held that all plaintiffs had stated a claim under the “federal common law of nuisance.” The Court of Appeals further determined that the Clean Air Act did not displace federal common law.
In Milwaukee v. Illinois, 451 U. S. 304, 316–319 (1981) (Milwaukee II), the Supreme Court held that Congress had displaced the federal common law right of action recognized in Milwaukee I by adopting amendments to the Clean Water Act. That legislation installed an all encompassing regulatory program, supervised by an expert administrative agency, to deal comprehensively with interstate water pollution. The legislation itself prohibited the discharge of pollutants into the waters of the United States without a permit from a proper permitting authority. At the time of the Second Circuit’s decision, by contrast, EPA had not yet promulgated any rule regulating greenhouse gases, a fact the court thought dispositive.
The petitioners contended that the federal courts lack authority to adjudicate the present case. Four members of the Court held that at least some plaintiffs have Article III standing under Massachusetts, which permitted a State to challenge EPA’s refusal to regulate greenhouse gas emissions; and, further, that no other threshold obstacle bar review. Four members of the Court, adhering to a dissenting opinion in Massachusetts, 549 U. S., at 535, or regarding that decision as distinguishable, held that none of the plaintiffs had Article III standing. The Supreme Court thus affirmed, by an equally divided Court, the Second Circuit’s exercise of jurisdiction and then proceeded to the merits.
The Supreme Court referred Milwaukee I where in it was held “When we deal with air and water in their ambient or interstate aspects, there is a federal common law.” Decisions of the Supreme Court predating Erie, but compatible with the distinction emerging from that decision between “general common law” and “specialized federal common law,” had approved federal common law suits brought by one State to abate pollution emanating from another State. [Missouri v. Illinois (1901) (permitting suit by Missouri to enjoin Chicago from discharging untreated sewage into interstate waters); New Jersey v. City of New York (1931) (ordering New York City to stop dumping garbage off New Jersey coast); Georgia v. Tennessee Copper Co. (1916) (ordering private copper companies to curtail sulfur dioxide discharges in Tennessee that caused harm in Georgia). The plaintiffs contended that their right to maintain the present suit follow inexorably from that line of decisions.
Recognition that a subject is meet for federal law governance, however, did not necessarily mean that federal courts should create the controlling law. Absent a demonstrated need for a federal rule of decision, the Court had taken the prudent course of adopting the ready made body of state law as the federal rule of decision until Congress strikes a different accommodation. And where, as in the present case, borrowing the law of a particular State would be inappropriate, the Court remain mindful that it did not have creative power akin to that vested in Congress. In the cases on which the plaintiffs heavily relied, States were permitted to sue to challenge activity harmful to their citizens’ health and welfare.
The Supreme Court held that the Clean Air Act and the EPA actions it authorize displaced any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants. Massachusetts made plain that emissions of carbon dioxide qualify as air pollution subject to regulation under the Act. And the Court held that the Act “speaks directly” to emissions of carbon dioxide from the defendants’ plants. If EPA did 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 would be reviewable in federal court. As EPA was currently engaged in a §7411 rulemaking to set standards for greenhouse gas emissions from fossil-fuel fired power plants. To settle litigation brought under §7607(b) by a group that included the majority of the plaintiffs in the present case, the agency agreed to complete that rulemaking by May 2012. The Act itself thus provide a means to seek limits on emissions of carbon dioxide from domestic power plants—the same relief the plaintiffs sought by invoking federal common law.
The Supreme Court disagreed with the plaintiffs argument that federal common law was not displaced until EPA actually exercised its regulatory authority, i.e., until it set standards governing emissions from the defendants’ plants. The critical point was that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation was what displaced federal common law. Indeed, were EPA to decline to regulate carbon-dioxide emissions altogether at the conclusion of its ongoing §7411 rulemaking, the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency’s expert determination. If the plaintiffs in the present case were dissatisfied with the outcome of EPA’s forthcoming rulemaking, their recourse under federal law would be to seek Court of Appeals review, and, ultimately, to petition for certiorari in the Supreme Court. The Second Circuit erred in ruling that federal judges may set limits on green house gas emissions in face of a law empowering EPA to set the same limits, subject to judicial review only to ensure against action arbitrary, capricious, or otherwise not in accordance with law.
The plaintiffs also sought relief under state law, in particular, the law of each State where the defendants operate power plants. In light of the Court’s holding that the Clean Air Act displaced federal common law, the availability vel non of a state lawsuit depend, inter alia, on the preemptive effect of the federal Act. As none of the parties had briefed preemption or otherwise addressed the availability of a claim under state nuisance law, the Court therefore left the matter open for consideration on remand.
The Supreme Court thus reversed the judgment of the Second Circuit and remanded the case for further proceedings consistent with this opinion.