Understanding the Kivalina Decision Within the Climate Change Governance Framework (Part 1)

Kylie is a second-year student at Harvard Law School. She is currently an Article Editor for the Harvard Environmental Law Review (HELR) and has worked for Professor Wendy B. Jacobs, Director of the Emmett Environmental Law and Policy Clinic at the law school. The views presented in this article are the author’s personal views and not necessarily those of HELR, Professor Jacobs, or the Clinic.

Introduction

The most quoted phrase from the Ninth Circuit’s Kivalina decision last month is: “the solution to Kivalina’s dire circumstance must rest in the hands of the legislative and executive branches of our government, not the federal common law.” This conclusion, viewed in isolation, may give the impression that the court is abdicating responsibility for climate change to the two other branches of government. However, this decision comes in line with a longstanding judicial practice of carefully balancing powers between the judiciary and legislature, especially with regards to air pollution. Kivalina must be understood within the full spectrum of legal remedies for air pollution, encompassing both common and statutory law.

The history of law governing air pollution has shown an evolution from individual nuisance claims to a command-and-control statutory system under the Clean Air Act (CAA), which has been refined through numerous legislative amendments. Climate change, however, is a relatively new issue in the air pollution context, and greenhouse gases (GHGs) have yet to be fully regulated under a statutory system.

Although anthropogenic climate change has been a recognized phenomenon for decades, widespread skepticism as to its effects permeates the political arena. Such skepticism has contributed to delayed action by Congress and the Environmental Protection Agency (EPA) in regulating GHGs, and frustrated environmentalists have gone back to making common law claims through cases such as Kivalina. However, following a well-placed legal attack on the EPA in 2007 for its refusal to regulate GHGs (Massachusetts v. EPA), the statutory wheels have started turning and these common law claims are losing ground.

This article will be presented in two parts. Part 1 will provide a brief overview of the history and limits of common law claims against air polluters, the development of a statutory framework for regulating air pollution, and the framework’s limits in factoring in climate change. Part 2 will discuss environmentalists’ resort to common law in dealing with GHGs, the limits of this approach, and steps that can be taken to tackle the climate change problem in the courts and in Congress.

History of Common Law Claims and Their Limitations

Air pollution litigation began under tort law, which seeks to redress injuries caused by the wrongful act of others. There are two ways of handling air pollution within tort law—through trespass claims or nuisance claims—and of those two, the latter has been preferred. Nuisance claims can be either private or public. A private nuisance claim is one affecting “a definite small number of persons in the enjoyment of private rights,” whereas a public nuisance claim is “one affecting the rights enjoyed by citizens as a part of the public” (definition from Spur Industries, Inc. v. Del E. Webb Development Co.).

Boomer v. Atlantic Cement Co., a 1970 New York Court of Appeals case, provides an example of a private nuisance claim against air pollution. In Boomer, land owners sued a nearby cement plant for dirt, smoke, and vibration. While the court did order the plant to be closed, this injunction was conditioned so that the plant could continue operating if it paid damages to the plaintiff. In doing so, the court missed an opportunity to condition the continued operation of the plant on the development of new, cleaner technology.

The court’s decision to grant such limited relief rested on three rationales. First, the strictly defined role of the court meant that it could only resolve the controversies brought in front of it and not pursue “broad public objectives.” Second, the court viewed as inequitable mandating this one company to make technological advances that can benefit the whole industry. Third, the court found that requiring damages rather than granting a downright injunction was the economically prudent result of balancing the plaintiffs’ total damage with the “value of defendant’s operation” and “the consequences of the injunction which plaintiffs seek” (a traditional tort doctrine requires the courts to balance the “gravity of harm” with the social “utility of the actor’s conduct”). However, in calculating “the consequences of the injunction,” the court did not factor in environmental values not readily transferable into cost. The Boomer case shows that nuisance claims as means of air pollution relief prevents formulating a unified front against entire industries and are likely to undervalue or ignore externalities such as good air quality.

For an example of a public nuisance claim against air pollution, we can look to the Arizona Supreme Court’s 1972 Spur Industries case. In this case, a retirement community was negatively affected by the flies and odor from a nearby cattle feedlot. Although state attorney generals usually bring public nuisance claims, in this case, a private plaintiff—the retirement community developer—was found to have standing due to a “special injury” in both extent and kind, and was granted a permanent injunction. A public nuisance claim does affect a larger group of people than private nuisance claims; however, as with the latter where successful plaintiffs have to actually own the property affected, public nuisance claims limit the pool eligible for compensation since only those whose basic rights were interfered with can bring these claims.

Regardless of its private or public nature, a nuisance claim poses certain limitations that prevent it from being a sustainable strategy against air pollution. Through the Boomer and Spur Industries cases, we first saw that the courts handling individual law suits can only rule on the issue at hand, even if they are aware of public objectives. Because of this limited reach, nuisance claim plaintiffs cannot go after entire industries by requiring a certain level of technology. Additionally, externalities like good air quality are rarely, if ever, factored into the court’s cost-benefit analyses in granting remedies.

These externalities present a further problem. Under the Coase Theorem, the parties to a dispute will bargain and subsequently settle environmental problems at the most economically prudent tangent. Thus, if the cost of plaintiff’s harm does not exceed the value of the defendant’s operation, the defendant will be able to avoid an injunction by paying off the plaintiff. A final problem that we can gather from these two cases is that common law remedies affect a limited number of people—those who either own affected property or those whose basic rights were interfered with.

This plaintiff pool is further narrowed by the high cost of environmental litigation, which often requires expert witnesses. Also, as environmental nuisance claims may not result in the award of large damages, lawyers may be dissuaded from taking on such claims on a contingency basis in the first place. Thus, only a limited group of people will be able to invoke common law remedies of air pollution, resulting in harsh distributional consequences, particularly since outright injunctions are rarely granted. Adding to this problematic characteristic, the unique property of harm done by air pollution undermines the suitability of common law. Since air pollution harm may be latent and extended over a long period of time, a plaintiff may find it hard to show injury or prove specific causation—the link between the polluter’s actions and the plaintiff’s specific injury. Last but not least, litigation always takes place after the fact. Common law remedies will never be able to preempt pollution.

Development of a Statutory Framework

As these litigations were taking place, in the backdrop were state regulations governing air pollution. In 1955, the federal government passed the Air Pollution Control Act to assist the states in technology research, development, and funding, but the act failed to motivate states to take a more active stance. Finally, in 1970, the federal government passed the Clean Air Act Amendments which laid out the basic framework used in current air pollution regulation. The amendments delicately handled federalism through a division of responsibility between the state and federal governments. The act came to be known as the Clean Air Act.

The act delegates congressional power to the EPA so that the agency can set National Ambient Air Quality Standards (NAAQS) for certain “criteria pollutants.” Next, the states create tailored State Implementation Plans (SIPs) by set deadlines and enforce these plans in order to attain NAAQS. Non-criteria pollutants are governed under the National Emissions Standards for Hazardous Air Pollutants (NESHAPs) program which is enforced by both EPA and the states. The act also provides a plan to manage new pollution sources called the New Source Performance Standards (NSPS), a set of uniform technology-based requirements concerning itself with even individual pieces of equipment.

The first NAAQS deadline was 1975. Due to wide-spread non-compliance, Congress amended CAA in 1977 to extend the general deadline to 1982. Non-attainment zones (NAZs)—areas furthest from achieving compliance—were afforded a lengthier deadline (1987). Those places already in compliance were designated Prevention of Significant Deterioration (PSDs). PSDs and areas in non-attainment were all subject to New Source Review (NSR), a permit-based system for new sources focusing on the overall emissions from a facility and not on individual pieces of equipment. This signified the co-existence of both technology- (NSPS) and permit- (NSR) based systems for new sources within the CAA.

Further non-compliance resulted in the 1990 amendment in which Congress established new graduated requirements for NAZs, which provided lengthier deadlines in exchange for more stringent regulations. This amendment also invigorated the NESHAPs program, increasing the number of regulated pollutants from seven to 189 (currently 188 listed).

Since 1990, there have been no across-the-board CAA amendments by Congress; the EPA does periodically tweak enforcement rules, such as when it tightened NAAQS for ozone and particulate matter in 1997. However, this basic framework is now being shaken up as the CAA is being required to account for GHGs.

Regulating GHGs Within the Statutory Framework

The CAA was not passed with GHGs in mind. GHGs have unique features that separate them from other pollutants regulated under the CAA. Notably, they do not remain at the locality of the source. Since GHGs easily permeate throughout the atmosphere, there is an almost impossibility of establishing causation between a source’s contribution to the pollution and the specific harm done. Additionally, GHGs are prevalent; the GHG emission quantity measured in tons per year (tpy) greatly exceeds that of other pollutants.

The first characteristic does not present a problem in the sense that the CAA concerns itself with technology and the quantity of emissions rather than with linking the emissions to a specific harm. Thus, there is no causation issue. However, the second characteristic poses a problem in CAA enforcement since the statute provides specific quantities of pollutants that trigger sources into being regulated, numbers that were set before Congress knew that GHGs might be regulated under the CAA.

Under the NSR system, a  new source or a modification of a source in PSDs would need to acquire a permit if it is “major”—in other words, if it may cause emissions up to 100 tpy for one pollutant or 250 tpy for a combination of pollutants (criteria pollutants plus alpha). Although this may be a feasible requirement for other pollutants, requiring permits for such quantities in GHGs would ‘trigger in’ numerous facilities such as office buildings and malls as point sources. Furthermore, since GHGs have no NAAQS set, areas technically cannot be in non-attainment, and thus all areas are PSDs for the purposes of GHGs. This would require more permits than the EPA currently has the capacity to handle. The EPA has estimated that if GHGs are regulated under the current definition of “major,” the number of permit applications each year would increase almost 300-fold to more than 81,000.

This is one of the reasons why the EPA held off on regulating GHGs under CAA. In 2007’s Mass. v. EPA, however, the Supreme Court found that the EPA does have the authority to regulate GHGs in tailpipe emissions (EPA had also been arguing that it lacked the regulating authority) and that it should reconsider its decision to not regulate the pollutants. Although the GHGs at issue in Mass v. EPA were limited to Title II of the CAA—which covers transportation rather than stationary sources—once GHGs become a regulated pollutant under the CAA, NSR would go into effect and the EPA would have to set performance standards and issue permits for stationary sources also. After conducting an “endangerment finding” and a “cause or contribute finding,” the EPA, in 2009, decided to regulate and set standards for GHGs. Emissions standards were set in May 2010 for 2012-2016 model vehicles. Since 2012 model vehicles could be sold starting January 2, 2011, GHGs have technically been regulated under the NSR scheme starting from this date.

Since the possibility of regulating GHGs within CAA was first raised, the EPA has desperately sought ways to harmonize GHG regulation with the preexisting provisions of CAA. In May 2010, it issued the Tailoring Rule, which creates a “carbon dioxide equivalent” of threshold emission levels. Instead of the 100/250 tpy threshold, PSD state permitting authorities will only require permits if a new source emits at least 100,000 tpy of GHGs and if a modification increases GHG emissions by at least 75,000 tpy.

Although this new rule seems administratively prudent, legally speaking, it is on shaky grounds. Two groups of judicial doctrines are at clash here. The first group against the Tailoring Rule utilizes the Chevron analysis (a two-step guide for judicial review of an agency action) and finds that since the statute addresses directly the “precise question at issue,” the court does not have to go on to the second step to determine whether the agency action was a “permissible construction of the statute,” since this second step applies only if Congress did not clearly indicate its intention. In other words, since the CAA clearly indicates the NSR “major” threshold to be 100/250 tpy, EPA does not have the authority to arbitrarily change this standard to 100,000/75,000 tpy.

On the other hand, there is a second group of judicial doctrines working in favor of the Tailoring Rule. First, when applying the Chevron doctrine, the agency does not have to follow a literal interpretation if doing so will produce “absurd results.” The agency is excused also from a literal interpretation of a statutory provision if it would be impossible to administer, a doctrine known as “administrative necessity.” Finally, the “one-step-at-a-time” doctrine recognizes that agencies generally do not “resolve massive problems in one fell regulatory swoop,” and that agencies may implement statutory mandates in steps. Since the EPA predicted that regulating GHGs under the current definition of “major” would result in 81,000 permit applications per year, requiring the EPA and states to administer this can be viewed as an absurd result, or an administrative impossibility. Even assuming the first two doctrines fail, the EPA can still invoke the final doctrine by implementing the Tailoring Rule in steps, which is what it has been doing. The most recent third step was finalized this July.

Although the D.C. Circuit almost dealt with the validity of the Tailoring Rule in Coalition for Responsible Regulation v. EPA this past June, the court chose to exercise judicial economy by declining to rule on the merits after it established that it lacked jurisdiction on the issue. By finding that the plaintiffs had no standing, the court did narrow the platform on which parties can challenge the Tailoring Rule. However, the courts have yet to directly address the rule’s legitimacy and the question remains whether the CAA can really handle GHG regulation.

Concluding Part 1

Although CAA has mostly replaced nuisance claims for the purposes of air pollution, GHGs have become regulated under the CAA only recently and even now, are not adequately accounted for.

In Part 2, this article will illustrate how this inadequacy of CAA has prompted environmentalists to move back to the common law approach in dealing with climate change. American Electric Power Co.  v. Connecticut, the 2011 Supreme Court case and Kivalina, the 2012 Ninth Circuit case are examples of this regression. However, the courts have largely put an end to common law remedies for climate change by ruling that CAA (or more specifically, agency action under the CAA) has displaced these remedies.

With the option of common law eliminated, environmentalists should tackle the climate change problem in a two-fold manner. First, they should force the agency’s hand within the current statutory framework via petitions and suits. Then, this statutory framework can serve as an interim measure as environmentalists push for a GHG-specific statute in Congress. These two approaches will be discussed in more detail in Part 2.

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