Federal Common Law and Statutory Preemption Bar Municipal Climate Tort Claims: NYC v. Major Oil Corporations

Federal Common Law and Statutory Preemption Bar Municipal Climate Tort Claims: NYC v. Major Oil Corporations

Introduction

Case: City of New York, Plaintiff-Appellant, v. Chevron Corporation, ConocoPhillips, Exxon Mobil Corporation, Royal Dutch Shell plc, BP p.l.c., Defendants-Appellees. (993 F.3d 81)
Court: United States Court of Appeals for the Second Circuit
Date: April 1, 2021

This landmark case addresses whether municipalities like New York City can utilize state tort law to hold multinational oil companies accountable for damages resulting from global greenhouse gas emissions. The City of New York sought to recover costs associated with climate resiliency measures by suing major fossil fuel producers. The key issues revolve around the applicability of federal common law, statutory preemption under the Clean Air Act, and the extraterritorial reach of environmental regulations.

Summary of the Judgment

The Second Circuit affirmed the dismissal of the City of New York's complaint against Chevron, ConocoPhillips, Exxon Mobil, Royal Dutch Shell, and BP. The court held that federal common law preempts state tort claims in this context and that the Clean Air Act further displaces any federal common law claims related to domestic greenhouse gas emissions. Additionally, the court determined that the Clean Air Act does not authorize state-law claims concerning foreign emissions, and thus, such claims are barred. Consequently, the City's lawsuit was dismissed for lack of a viable legal basis under state law.

Analysis

Precedents Cited

The Judgment extensively references pivotal cases that establish the hierarchy and boundaries between federal and state laws concerning environmental issues:

  • Erie Railroad Co. v. Tompkins (304 U.S. 64, 1938): Established that there is no general federal common law, emphasizing federal courts' adherence to state law in the absence of federal statutes.
  • Massachusetts v. EPA (549 U.S. 497, 2007): Recognized the EPA's authority to regulate greenhouse gases under the Clean Air Act.
  • American Electric Power Co. v. Connecticut (564 U.S. 410, 2011): Held that the Clean Air Act displaces federal common law nuisance claims seeking abatement of greenhouse gas emissions.
  • Kivalina v. ExxonMobil Corp. (696 F.3d 849, 2012): Concluded that the Clean Air Act also displaces federal common law claims seeking damages for past emissions.
  • Kiobel v. Royal Dutch Petroleum Co. (569 U.S. 108, 2013) and Jesner v. Arab Bank, PLC (138 S. Ct. 1386, 2018): Emphasized the limitations on federal common law claims with extraterritorial implications, underscoring foreign policy concerns.

These cases collectively underpin the court’s reasoning that federal statutes like the Clean Air Act occupy the field of environmental regulation, thereby precluding state tort claims and limiting the scope of federal common law, especially concerning extraterritorial actions.

Legal Reasoning

The court applied a multi-faceted legal analysis:

  • Federal Common Law Preemption: The court determined that the City’s claims fell within the narrow enclave where federal common law applies, primarily dealing with issues of national and international concern like global greenhouse gas emissions. Since federal common law aims to provide uniformity in such matters, state tort claims were preempted.
  • Displacement by the Clean Air Act: Building on AEP and Kivalina, the court concluded that the Clean Air Act not only occupies the field but also displaces any federal common law claims related to domestic emissions, whether seeking abatement or damages.
  • Extraterritorial Limitations: Regarding foreign emissions, the court emphasized the presumption against extraterritoriality, reinforced by Kiobel and Jesner, asserting that judicial expansion of federal common law into foreign territories would infringe upon foreign policy prerogatives and the separation of powers.
  • Statutory Interpretation of Savings Clauses: The court interpreted the Clean Air Act’s citizen-suit and states’ rights savings clauses narrowly, allowing state actions only within their territorial boundaries and not endorsing broad state tort claims on a global scale.

The court meticulously dissected the intersection of state and federal law, emphasizing that environmental regulation, especially on a global scale, is best governed by federal frameworks to ensure coherence and effectiveness.

Impact

This judgment reinforces the primacy of federal statutes in environmental regulation, particularly the Clean Air Act, thereby limiting municipal and state-level litigation against major polluters. It establishes a clear barrier against using state tort law to address complex, global issues like climate change, ensuring that such matters remain within the purview of federal and international frameworks.

Future cases attempting to hold multinational corporations accountable for environmental damages through state courts will likely encounter significant hurdles due to this precedent. The decision underscores the necessity for legislative action at the federal level to address climate-related liabilities comprehensively.

Complex Concepts Simplified

Federal Common Law

Definition: A body of law developed by federal courts in the absence of specific federal statutes. It applies primarily to issues of national significance where uniformity is essential.

Key Point: Federal common law is limited and exists only in specific areas where federal interest is paramount and absent of clear statutory guidance.

Statutory Preemption

Definition: A doctrine where federal law overrides or takes precedence over state laws in cases of conflict.

Key Point: When a federal statute like the Clean Air Act comprehensively addresses an issue, it preempts any state laws seeking to regulate the same matter.

Extraterritoriality

Definition: The application of a country’s laws beyond its national boundaries.

Key Point: U.S. laws, including common law, typically do not apply outside the territorial jurisdiction of the United States unless explicitly stated.

Savings Clauses

Definition: Provisions within a statute that preserve rights or responsibilities outside the statute’s scope.

Key Point: In the Clean Air Act, savings clauses allow states to enforce their own emission standards, provided they are not less stringent than federal standards and are applied within their own jurisdictions.

Conclusion

The Second Circuit's decision in City of New York v. Chevron et al. underscores the formidable barriers municipalities face when attempting to leverage state tort law to address global environmental challenges. By reaffirming the principles of federal common law preemption and statutory displacement under the Clean Air Act, the court ensures that environmental regulation remains within a unified and federally coordinated framework. This judgment not only limits the avenues for local governments to seek redress against major polluters but also emphasizes the critical role of federal legislation in navigating complex, transboundary issues like climate change. As climate litigation evolves, this precedent serves as a pivotal reference point for the balance of power between state initiatives and federal authority in environmental governance.

Case Details

Year: 2021
Court: United States Court of Appeals For the Second Circuit

Judge(s)

Richard J. Sullivan, Circuit Judge

Attorney(S)

John Moore (Richard Dearing, Claude S. Platton, Nwamaka Ejebe, on the brief), for James E. Johnson, Corporation Counsel of the City of New York, New York, NY; Steve W. Berman, on the brief, Hagens Berman Sobol Shapiro LLP, Seattle, WA; Matthew F. Pawa, on the brief, Hagens Berman Sobol Shapiro LLP, Newton Centre, MA, for Appellant City of New York. Theodore J. Boutrous, Jr. (Joshua S. Lipshutz, on the brief), Gibson, Dunn & Crutcher LLP, Los Angeles, CA; Andrea E. Neuman, Anne Champion, on the brief, Gibson, Dunn & Crutcher LLP, New York, NY; Herbert J. Stern, Joel M. Silverstein, on the brief, Stern & Kilcullen, LLC, Florham Park, NJ, for Appellee Chevron Corporation. John F. Savarese, Ben M. Germana, Wachtell, Lipton, Rosen & Katz, New York, NY; Sean C. Grimsley, James R. Jones, Bartlit Beck LLP, Denver, CO, for Appellee ConocoPhillips. Theodore V. Wells, Jr., Daniel J. Toal, Jaren Janghorbani, Paul, Weiss, Rifkind, Wharton & Garrison, LLP, New York, NY; Dawn Sestito, O'Melveny & Myers LLP, Los Angeles, CA; Patrick J. Conlon, Exxon Mobil Corporation, Houston, TX, for Appellee Exxon Mobil Corporation. David C. Frederick, Brendan J. Crimmins, Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, DC, for Appellee Royal Dutch Shell. Nancy G. Milburn, Arnold & Porter Kaye Scholer LLP, New York, NY, Matthew T. Heartney, Arnold & Porter Kaye Scholer LLP, Los Angeles, CA, for Appellee BP p.l.c. Catherine M. Sharkey, Crystal Eastman Professor of Law, New York University School of Law, New York, NY, for Amicus Curiae Catherine M. Sharkey, Crystal Eastman Professor of Law. David S. Frankel, Assistant Solicitor General, Steven C. Wu, Deputy Solicitor General, for Letitia James, Attorney General, State of New York, New York, NY, for Amici Curiae States of New York, California, Maryland, New Jersey, Oregon, Rhode Island, Vermont, and Washington, and the District of Columbia. Harold Hongju Koh, Michael J. Wishnie, Conor Dwyer Reynolds, Yale Law School, Rule of Law Clinic, for Amici Curiae Professors Sarah H. Cleveland, Zachary D. Clopton, William S. Dodge, Harold Hongju Koh, Kermit Roosevelt III, and Christopher A. Whytock. Kimberly Ong, Natural Resources Defense Council, New York, NY, for Amici Curiae New York City Environmental Justice Alliance, THE POINT Community Development Corporation, and UPROSE. Michael Burger, Jennifer Danis, Morningside Heights Legal Services, Inc., Columbia Environmental Law Clinic, New York, NY, for Amici Curiae National League of Cities, U.S. Conference of Mayors, and International Municipal Lawyers Association. Corbin K. Barthold, Richard A. Samp, Washington Legal Foundation, Washington, DC, for Amicus Curiae Washington Legal Foundation. Eric Grant, Deputy Assistant Attorney General, R. Justin Smith, Christine W. Ennis, United States Department of Justice, Environment and Natural Resources Division, Washington, DC, for Amicus Curiae United States of America. Peter D. Keisler, C. Frederick Beckner III, Ryan C. Morris, Tobias S. Loss-Eaton, Sidley Austin LLP, Washington, DC; Steven P. Lehotsky, Michael B. Schon, Jonathan D. Urick, U.S. Chamber Litigation Center, Washington, DC, for Amicus Curiae Chamber of Commerce of the United States of America. Philip S. Goldberg, Christopher E. Appel, Shook Hardy & Bacon L.L.P., Washington, DC; Linda E. Kelly, Peter C. Tolsdorf, Manufacturers’ Center for Legal Action, Washington, DC, for Amicus Curiae National Association of Manufacturers. Thomas M. Fisher, Solicitor General, Kian J. Hudson, Deputy Solicitor General, for Todd Rokita, Attorney General of Indiana, Office of the Attorney General, Indianapolis, IN, for Amici Curiae States of Indiana, Alabama, Alaska, Arkansas, Georgia, Kansas, Louisiana, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah, and West Virginia. Yaakov M. Roth, Jones Day, Washington, DC; Robert A. Mittelstaedt, Jones Day, San Francisco, CA; Robert E. Johnson, Jones Day, Cleveland, OH, Kelly Holt, Jones Day, Boston, MA, for Amicus Curiae Professor Richard A. Epstein.

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