Earlier this month, I explained why federal circuit courts have been correct to reject energy company attempts to remove various cliamte change cases to federal court, and suggested these suits are not cert worthy. A few days later, the U.S. Court of Appeals for the D.C. Circuit affirmed my view in a clear and concise opinion by Judge Neomi Rao.
In my earlier post, I criticized arguments made by former Attorney General William Barr and AEI's Adam White in support of certiorari in American Petroleum Institute v. Minnesota, a case currently under consideration at One First Street. AG Barr has now responded, and I reproduce his reply below, along with my brief rejoinder.
I am grateful to Professor Jonathan Adler for agreeing to publish my response to his blog post on API v. Minnesota, a case pending before the Supreme Court.
Some background: the case arises from Minnesota's putative state-law claims, filed in its own state courts, against several out-of-state private energy firms and an energy trade association. Minnesota alleges that by selling oil and gas around the world and advocating for their industry, these defendants defrauded the public and changed "the Earth's energy balance," resulting in alleged harm to the state and its citizens. Minnesota claims that the energy firms must disgorge their profits to pay for this alleged damage. The question the defendants have asked the Supreme Court to resolve is whether they may remove the case to federal court. On the merits, the defendants add that state law doesn't reach cases alleging liability for global emissions from the use of oil and gas. That's a federal question. States are not national, much less planetary, cops.
In his blog post, Professor Adler contends that the cases cannot be removed to federal court, and he further takes (or appears to take) the position that state law can govern global greenhouse gas emissions. He has also made these arguments in a law review article.
Professor Adler's blog post takes particular aim at my Wall Street Journal op-ed with Adam White, and amicus brief I and my co-counsel at the Boyden Gray firm submitted on behalf of the American Free Enterprise Chamber of Commerce. Professor Adler agrees that we make "several strong policy arguments" against lawsuits such as Minnesota's, but he disagrees with our legal arguments.
On closer inspection, however, perhaps Professor Adler and I agree on this ultimate point: Minnesota should lose on the merits.
First, some history. As we argue in the amicus brief, the law of transboundary pollution has always been a matter of general law, or, as modern jurists would put it, a matter of "federal common law." A general body of law is essential to the orderly operation of our compound republic. The Constitution, as Chief Justice Marshall put it in McCulloch v. Maryland, doesn't "partake of the prolixity of a legal code." It's a small set of instructions and powers to get the national government up and running. The Constitution, in particular, says precious little about how judges should decide interstate and international disputes that would undoubtedly arise among the states and their citizens and residents.
It didn't have to. As Professor Stephen Sachs has documented, at the time of the Founding and throughout the nineteenth century, judges were understood to find law, not to make it. This was divided into two kinds—local law, such the law of property, which varied from place to place, and general law, which governed everywhere, and thus applied in interstate or international cases. This included cases involving disputes among merchants as well as border disputes, water disputes, or transboundary public nuisances; in these cases, judges would resort to the general law or "the law of nations" to find the principles that governed the dispute before them. Judges wouldn't apply a plaintiff state's version of the law in these disputes, since this would essentially allow the state to be a judge in its own cause.
Congruent with this, before the New Deal, courts also enforced a territorial approach to personal jurisdiction. Even if Minnesota claimed that pollution emitters in North Dakota were harming the state, Minnesota couldn't hale the North Dakota emitters to court. So, most of these cases arose under the Supreme Court's "original jurisdiction" to hear disputes brought by a state.[1] The Supreme Court, of course, wouldn't apply Minnesota law to the emitters in North Dakota. Rather, the Supreme Court would have applied the general law.
As with so many other areas of the law, things changed during the New Deal. Famously, in Erie Railroad, Justice Brandeis abandoned the idea of a "general common law" in diversity of citizenship cases. The Court also expanded the jurisdiction of states in International Shoe, discarding earlier territorial rules for expansive and vague notions of "fair play and substantial justice." These decisions, in spirit, threatened to upend the general law, and to leave no neutral body of law to resolve necessarily interstate legal disputes, including disputes about choice of law, state borders, water rights, and yes, transboundary pollution. What a mess.
Erie's synthesis, however, was not without an antithesis. The same day it decided Erie Railroad, the Supreme Court recognized in Hinderlider v. La Plata River & Cherry Creek Ditch Co. that general law, or what the Court now styled as "federal common law," still applied to some exclusively interstate or national questions. One can think of this as a form of "preemption." But a better way to think about it is this: States are sovereigns with borders, and their law accordingly has limits. Beyond those limits, federal common law or federal statutes, not a self-serving body of state law, must fill the void. The choice of law in these disputes, as Henry Hart would say, is inherently federal.
In Milwaukee I, the Supreme Court confirmed that disputes that "deal with air and water in their ambient or interstate aspects" are governed by federal common law. Illinois v. City of Milwaukee, 406 U.S. 91, 103 (1972). The Court also held that interstate nuisance cases arise under the federal "laws" for purposes of federal-question jurisdiction, and so, could be entertained by federal district courts. Id. at 99–101.
Milwaukee I's logic effectively decides the merits in favor of the defendants in API v. Minnesota. As the Supreme Court later explained in Ouellette, a case Professor Adler cites with approval, "the implicit corollary of [Milwaukee I] was that state common law was preempted."
Professor Adler makes several points in response.
First, he stresses the unanimity of federal courts. But according to Professor Adler's article, the only court that has squarely addressed the merits so far is the Second Circuit in City of New York, a case arising under diversity jurisdiction. And the Second Circuit disagreed with Adler on the merits. Several courts have rejected the argument for removal to federal court, but that shouldn't do the plaintiffs much good if state courts must dismiss these suits on the merits upon their return from federal court.
Second, Professor Adler argues that a trio of cases that follow Milwaukee I—Milwaukee II, Ouellette, and AEP—mean that state law over transboundary emissions survives. But these cases don't support the application of Minnesota law against these defendants. Quite the opposite.
Milwaukee II held that nuisance claims seeking to enjoin discharges of sewage into interstate navigable waters were, in the Court's words, "displaced" by the Clean Water Act's extensive permitting and regulatory regime for sources of water pollutants. In footnote 4, however, the Supreme Court made clear that Milwaukee II was not deciding whether "state law is also available."
Ouellette is more interesting, and Professor Adler rightly focuses on it. There, Vermont residents sued a New York company under Vermont law, seeking to enjoin the company from discharging pollutants into Lake Champlain. The Court held that because interstate nuisance law was federal before the Clean Water Act, and the Clean Water Act had displaced that field of federal common law for water pollution, Vermont state law could not apply to a New York source. The only exception was one Congress expressly preserved in a savings clause: an out-of-state source could be sued under that source's state law. To put it more concretely, Vermont residents could sue the New York source only under New York law. This gave Vermont residents no more protection than New York residents enjoyed under local law, and did not allow New York to fashion a body of law for out-of-state sources.
In AEP, the Supreme Court held that the federal common law of nuisance for air pollution had been displaced by the Clean Air Act, at least insofar as it applies to the greenhouse gas emissions of electric utilities operating in the United States. In remanding the case to the court of appeals, the Court said that whether the law of states where the electric utilities operate could provide a claim for relief hadn't been briefed by the parties and could be decided on remand.
Ouellette and AEP stand for the unremarkable proposition that transboundary pollution doesn't become a state-law race to the courthouse just because federal common law has been displaced by a federal statute. This logically follows from the federalism canon, which "requires Congress to enact exceedingly clear language if it wishes to significantly alter the balance between federal and state power." Sackett v. EPA, 598 U.S. 651, 679 (2023) (cleaned up). Therefore, if an issue was beyond the authority of a state before the Clean Air Act—a point Adler doesn't dispute and Milwaukee I supports—it remains out of reach now. The Clean Air Act could not implicitly empower states to regulate interstate or international air pollution. This is not just the view of "energy companies": it is the view of Ouellette taken by the Solicitor General of the United States and the Department of Justice when I was Attorney General (see here, page 26 et seq), before this Administration changed course.
Professor Adler seems to agree, at least at times, with this reading of Ouellette and AEP. Professor Adler argues that Ouellette only allows state law lawsuits that rely "upon the substantive law of the source state." And he further argues "that the exact same principles apply to the Clean Air Act." But if Ouellette's logic applies to this case, then Minnesota's suit should be dismissed forthwith. Minnesota is purporting to sue out-of-state companies for out-of-state emissions under Minnesota law. That is prohibited by Ouellette, which, to quote the case, "precludes a court from applying the law of an affected State against an out-of-state source." If Professor Adler and I agree on this point, then our dispute comes down to a technical question about the well-pleaded complaint rule, not the ultimate merits. But perhaps I misunderstand.
For those interested, our amicus brief, as well as the petition for certiorari, address in detail why the "well-pleaded complaint" rule is not a barrier to hearing this case in federal court, and I won't repeat those arguments again. I will merely respond to some of Professor Adler's critiques.
Professor Adler argues my brief would call on the Court "to disregard over a century of consistent interpretations" of the federal-question jurisdiction statute. Not quite.
At the outset, the law on federal-question jurisdiction has not been "consistent." Far from it. The law is so muddled Chief Justice Roberts has likened it to a Jackson-Pollock canvas. The mess can be traced back to an 1894 decision where an anti-reconstruction Court, over Justice Harlan's dissent, badly misconstrued federal law to prevent removal based on federal defenses, defeating the core purpose of federal removal, as I explain in the amicus brief.
But the Supreme Court doesn't need to revisit that precedent here, because this case involves an inherently federal claim masquerading as a claim under state law, not a federal defense. What the Court should do is avoid extending its original mistake by denying removal here. This is not, as Adler suggests, a "heavy lift."
The Supreme Court, to be sure, has done a poor job of providing guidance on the limits of the well-pleaded complaint rule. Many federal courts have read that guidance narrowly and essentially taken the position that they will greenlight artful pleading until the Supreme Court speaks more clearly. That doesn't mean the result they reach is the right one, however. Judge Stras, on the panel below, urged the Supreme Court to clear up the muddled doctrine and recognize these cases belong in federal court. That'd be more consistent with the original meaning of the law, as I explain in my brief, and—contra Adler—this case is eminently "cert. worthy." At least Justice Kavanaugh has suggested that he agrees; and the recent relisting of this case suggests that others on the Court may be coming around to that view. I certainly hope that is the case.
[1] International air pollution disputes would sometimes be decided by establishing international tribunals to arbitrate the dispute under the law of nations. A classic example is the Trail Smelter case between the U.S. and Canada.
I appreciate AG Barr taking the time to respond to my blog post. I will offer only a few brief thoughts in reply.
Barr is correct that we agree on some points. We agree that under Milwaukee I, common law claims alleging harms from interstate pollution were goverened by federal common law, and that this made a good deal of sense. Indeed, there is even an argument that downstream and downwind jurisdictions were better protected by such a regime than they would be for decades under federal pollution control statutes. We further agree that under the logic of Milwaukee I, any claim filed by a state or locality alleging harms from interstate pollution would have raised federal common law claims and would have been governed by the federal common law, whether or not the plaintiffs sought to advance putatively state law claims.
That was arguably the law in 1972. It is not the law now. For good or ill, the Supreme Court abandoned this regime. First, in Milwaukee II, the Court held that the mere enactment of federal law addressing interstate pollution displaces the preexisting federal common law, such as it is no longer there. While Milwaukee II concerned the effect of the federal Clean Water Act on water pollution-related claims, the Court's subsequent AEP decision adopted the exact same approach for air pollution, inclding greenhouse gases. Whatever the type of pollution, Milwaukee II and AEP make clear that there is no federal common law to govern the claims.
So what happens when a plaintiff files suit alleging harms from pollution that crosses state lines? State law governs such claims. How do we know? Because that is what the Supreme Court expressly held in Ouellette. While noting that such claims had, at one time, been governed by federal common law, the Court recognized that federal common law had been completely ousted by federal environmental statutes, but that state common law had not been. Rather, the Court explained, state common law claims were only preempted to the extent Congress had expressly chosen to preempt them (which, given the broad savings clauses such laws contain, is not much at all.) As Judge Rao explained in her opinion in DC v. ExxonMobil: "In the Clean Air Act, Congress displaced federal common law through comprehensive regulation, but it did not completely preempt state law, nor did it provide an independent basis for removal, as it has done in many other statutes." Thus, in Ouelette, the plaintiffs were allowed to proceed with their claims under state law, and were ultimately able to obtain a substatial settlement.
Barr cites the Supreme Court's admonition in Sackett that Congress must "enact exceedingly clear language if it wishes to significantly alter the balance between federal and state power," but completely misses the point. The pre-existing balance was one that left states free to adopt pollution control policies without federal interference. Thus if federal law is to preclude states from pursuing state-law claims against polluters, the burden is on those calling for such preclusion to find "exceedigly clear language" from Congress to that effect.
Does this mean anythign goes? Of course not. Minnesota and other climate plaintiffs will ultimately have to substantiate their claims under applicable state law, and do so within applicable constitutional constraints (such as the Due Process Clause) which may limit the nature of their claims or the relief they may obtain. The question now is merely whether the mere fact of filing such claims, and seeking judicial redress for interstate pollution, necessarily implicates federal law and justifie removal into federal court. Here the law is clear: There is nothing inherently federal about such common law claims, and there is no reason such claims should be heard in federal court. The circuit courts have been unanimous on this point and, so long as they follow current law, the justices should be as well.
The post William Barr Responds on American Petroleum Institute v. Minnesota appeared first on Reason.com.
