City of New York v. Chevron Corp.

The federal district court for the Southern District of New York dismissed New York City’s lawsuit seeking to hold oil and gas companies liable for climate change harms. The court said federal common law governed the City’s claims because the claims were “ultimately based on the ‘transboundary’ emission of greenhouse gas emissions,” and require a uniform standard of decision. The court further concluded that the Clean Air Act displaced any federal common law claims. The court said Congress had “expressly delegated to the EPA the determination as to what constitutes a reasonable amount of greenhouse gas emission under the Clean Air Act.” The court also rejected the City’s argument that if the Clean Air Act displaced their federal common laws claims, state law claims should become available. The court said such a result would be “illogical.” The court noted that the Clean Air Act regulates only domestic emissions but ruled that “to the extent the City seeks to hold Defendants liable for damages stemming from foreign greenhouse gas emissions, the City’s claims are barred by presumption against extraterritoriality and the need for judicial caution in the face of ‘serious foreign policy consequences.’” The court said litigating an action for injuries from foreign greenhouse gas emissions in federal court would “severely infringe” upon matters “within the purview of the political branches.”

On June 1, the Niskanen Center, a think tank “with a strong interest in protecting Americans property rights,” sought to file an amicus brief in support of the City. The brief disputed the defendants’ argument that applying state common law to their actions would violate a federal interest in uniform regulation of their conduct.

Fifteen states filed an amicus brief in support of the motion to dismiss. They argued that the claims raised nonjusticiable political questions, jeopardized the U.S.’s system of cooperative federalism, and threatened extraterritorial regulation. The states also argued that federal statutes had displaced federal common law.

On May 24, 2021, the mandate issued for the Second Circuit’s judgment affirming dismissal of New York City’s tort law-based case against fossil fuel companies.

The Second Circuit Court of Appeals affirmed the dismissal of New York City’s lawsuit seeking climate change damages from oil companies. The Second Circuit’s decision largely followed the reasoning of the district court’s 2018 decision. First, the Second Circuit held that federal common law displaced the City’s state-law public nuisance, private nuisance, and trespass claims because the lawsuit would regulate cross-border greenhouse gas emissions, albeit “in an indirect and roundabout manner,” and because state law claims “would further risk upsetting the careful balance that has been struck between the prevention of global warming, a project that necessarily requires national standards and global participation, on the one hand, and energy production, economic growth, foreign policy, and national security, on the other.” The Second Circuit then held that the Clean Air Act, in turn, displaced federal common law claims related to domestic emissions. The Second Circuit cited American Electric Power Co. v. Connecticut, 564 U.S. 410 (2011), as establishing “beyond cavil” that the Clean Air Act displaced federal common law nuisance suits to abate domestic transboundary greenhouse gas emissions, and found that Native Village of Kivalina v. ExxonMobil Corp., 696 F.3d 849 (9th Cir. 2012), provided “sound reasoning” for determining that the Clean Air Act also displaced federal common law damages claims. The Second Circuit also rejected New York City’s contention that the Clean Air Act’s displacement of federal common law claims resuscitated its state law common law claims. Finally, the Second Circuit held that although the Clean Air Act did not displace New York’s federal common law claims addressing emissions outside the United States, foreign policy concerns foreclosed such claims. The Second Circuit said holding the oil companies liable for “purely foreign activity” would “sow confusion and needlessly complicate the nation’s foreign policy, while clearly infringing on the prerogatives of the political branches.”