Common Sense Kiss of Death for Climate Change Lawsuits

The decision by the United States Court of Appeals for the Ninth Circuit in Native Village of Kivalina v. ExxonMobil Corp., No. 09-17490, 2012 U.S. App. LEXIS 19870 (9th Cir. Sept. 21, 2012) if left standing has the practical effect of ending the way environmental law claims are decided.  In a unanimous decision, the Appeals Court dismissed the case against XOM and other oil, energy and utilities companies alleging that their greenhouse gas emissions threaten the defendants’ property and other rights.  Had the court upheld the lawsuit it would have forced the energy companies to own the burden of proving that their business operations do not cause global warming—an impossible burden that would have subjected them to endless nuisance lawsuits.

The original lawsuit was dismissed by the Federal District court in 2009 as essentially a political lawsuit.  The plaintiffs appealed and the Ninth Circuit took the case. Meanwhile, the U.S. Supreme Court decision in AEP v. Connecticut, 131 S. Ct. 2527, 2535, 180 L. Ed. 2d 435 (2011) , where the legal issue was the same question as in Kivalina of is there a federal common law of public nuisance. Apparently the answer is that there is no federal general common law, but the courts over time have asserted the power to assume there is under a legal principle called “statutory interstices” and have used it to fashion remedies to fit the facts.  The problem with this judicial activism is there is a federal statute that says that the federal common law has been displaced — a concept similar to preemption.

Judge Sidney Thomas, writing for the Ninth Circuit panel in Kivalina, said that the Supreme Court had decided the matter in the AEP case. “We need not engage in complex issue and fact-specific analysis in this case, because we have direct Supreme Court guidance that 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.  Further Judge Thomas said that the 1981 decision by the U.S. Supreme Court in Middlesex County Sewerage Authority v. National Sea Clammers Ass’n, 453 U.S. 1, 4 (1981) found  that “under current Supreme Court jurisprudence, if a cause of action is displaced, displacement is extended to all remedies.”  The practical result is that there is no displacement when there is no federal statutory remedy for monetary damages as a result of climate change.

The trial bar is left gasping for air, but the marketplace is spared from endless litigation over climate change. The principal legal theory behind climate change litigation and the endless quest for monetary damages has been debunked by the most arguably liberal Appellate Court in the land and worse, the Kivalina decision appears to further strengthen the preemption defense for defendants in all environmental common law actions, under both federal and state law. This is a victory for common sense worth savoring.

Gary L Hunt

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Gary Hunt is a global business executive with 20+ years experience as a “C’ level trusted adviser on corporate strategy, M&A, and recurring revenue business model strategies.

His focus is information technology and energy vertical “sweet spots” where IT and OT converge to offer scalable growth opportunities to leverage data and analytics into advanced predictive analytics solutions using recurring revenue business models.

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