Case 3:06-cv MJJ Document 51 Filed 02/16/2007 Page 1 of 25

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1 Case :0-cv-0-MJJ Document Filed 0//0 Page of GIBSON, DUNN & CRUTCHER LLP THEODORE J. BOUTROUS, JR., SBN, MARJORIE EHRICH LEWIS, SBN, South Grand Avenue Los Angeles, California 00- Telephone: () -000 Facsimile: () - GIBSON, DUNN & CRUTCHER LLP THEODORE B. OLSON, SBN, tolson@gibsondunn.com RAYMOND B. LUDWISZEWSKI (motion for admission pro hac vice pending) rludwiszewski@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 0 Connecticut Avenue N.W. Washington, District of Columbia 0 Telephone: () -00 Facsimile: () -0 Attorneys for Defendants, GENERAL MOTORS CORPORATION, TOYOTA MOTOR NORTH AMERICA, INC., FORD MOTOR COMPANY, AMERICAN HONDA MOTOR CO., INC., DAIMLERCHRYSLER CORPORATION, NISSAN NORTH AMERICA, INC. UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA PEOPLE OF THE STATE OF CALIFORNIA, ex rel. EDMUND G. BROWN, JR., ATTORNEY GENERAL, v. Plaintiff, GENERAL MOTORS CORPORATION, a Delaware Corporation, TOYOTA MOTOR NORTH AMERICA, INC., a California Corporation, FORD MOTOR COMPANY, a Delaware Corporation, HONDA NORTH AMERICA, INC., a California Corporation, CHRYSLER MOTORS CORPORATION, a Delaware Corporation, NISSAN NORTH AMERICA, INC., a California Corporation, Defendants. CASE NO. C0-0 MJJ DEFENDANTS REPLY IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION AND FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED DATE: March, 0 TIME: :0 a.m. JUDGE: Hon. Martin J. Jenkins Reply in Support of Motion to Dismiss C0-0 MJJ

2 Case :0-cv-0-MJJ Document Filed 0//0 Page of TABLE OF CONTENTS REPLY IN SUPPORT OF MOTION TO DISMISS... Page A. THIS CASE MUST BE DISMISSED BECAUSE IT RAISES NONJUSTICIABLE ISSUES PROPERLY RESERVED FOR RESOLUTION BY THE POLITICAL BRANCHES OF THE FEDERAL GOVERNMENT... B. THE COMPLAINT FAILS TO STATE ANY VALID FEDERAL CLAIM.... The Federal Common Law Of Nuisance Does Not Authorize A Damages Action Against Private Companies For Lawful In-State Activity.... The Legislative And Executive Branches Have Displaced Any Federal Common Law Claim In This Area... a. There is a heavy presumption against recognition of federal common law claims.... b. Creating a federal nuisance claim for global warming would impinge on the discretion of the political branches in managing foreign affairs... c. The Clean Air Act displaces any federal common law claim for global warming.... d. The EPCA displaces any federal common law claim for global warming... C. THE COMPLAINT FAILS TO STATE A CLAIM UNDER STATE LAW.... D. FEDERAL LAW WOULD PREEMPT A STATE-LAW NUISANCE CLAIM FOR GLOBAL WARMING EVEN IF CALIFORNIA LAW COULD BE INTERPRETED TO RECOGNIZE SUCH A CLAIM.... CONCLUSION... i Reply in Support of Motion to Dismiss C0-0 MJJ

3 Case :0-cv-0-MJJ Document Filed 0//0 Page of TABLE OF AUTHORITIES CASES ii Reply in Support of Motion to Dismiss C0-0 MJJ Page(s) Alperin v. Vatican Bank, F.d (th Cir. 0)... passim Baker v. Carr, U.S. ()... passim Bates v. Dow Agrosciences, LLC, U.S. (0)..., BMW of N. Am, Inc. v. Gore, U.S. ()..., California Tahoe Regional Planning Agency v. Jennings, F.d (th Cir. )... Carson Harbor Village, Ltd. v. Unocal Corp., 0 F.d (th Cir. 0)... Central Valley Chrysler-Jeep, Inc. v. Witherspoon, 0 U.S. Dist. LEXIS 00 (E.D. Cal. Jan., 0)... Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., U.S. ()... City of Milwaukee v. Illinois, U.S. 0 ()... passim City of Modesto Redevelopment Agency v. Superior Court, Cal. App. th (0)... Comm. for the Consideration of the Jones Falls Sewage System v. Train, F.d 0 (th Cir. )... Compare Geier v. Am. Honda Motor Co., U.S. (00)... Connecticut et al. v. American Elec. Power Co., Inc., 0 F. Supp. d (S.D.N.Y. 0)...,, Control of Emissions From New Highway Vehicles and Engines, Fed. Reg. (Sep., 0)...,, County of Santa Clara v. Atlantic Richfield Co., Cal. App. th (0)..., CSX Transp. v. Easterwood, 0 U.S. ()... Env. Integrity Project v. EPA., F.d (D.C. Cir. 0)...

4 Case :0-cv-0-MJJ Document Filed 0//0 Page of Erie Railroad Co. v. Tompkins, 0 U.S. ()... Georgia v. Tennessee Copper Co., U.S. 0 (0)... Harris v. Ford Motor Co., 0 F.d (th Cir. ) (citation omitted)... Ileto v. Glock, F.d (th Cir. 0)..., Illinois v. City of Milwaukee, 0 U.S. ()..., Illinois v. Illinois Outboard Marine, 0 F.d (th Cir. )...,,, Int l Paper Co. v. Ouellette, U.S. ()... Japan Line, Ltd. v. County of Los Angeles, U.S. ()... Kentucky Res. Council, Inc. v. EPA, F.d (th Cir. 0)... Massachusetts v. U.S. Veterans Admin., F.d (st Cir. )..., Mattoon v. City of Pittsfield, 0 F.d (st Cir. )..., Middlesex County Sewerage Auth. v. National Sea Clammers Ass n, U.S. ()..., Mingtai Fire & Marine Ins. Co. v. United Parcel Serv., F.d (th Cir. ) (citation omitted)... Missouri v. Illinois, 0 U.S. (0)...,, MVMA v. N.Y. State Dep t of Envt l Conservation, F.d (d Cir. )..., National Audubon Soc y v. Dept. of Water, F.d (th Cir. )... passim New England Legal Foundation v. Costle, F.d 0 (d. Cir. )... New York v. New Jersey, U.S. ()...,, Ohio v. Wyandotte Chemicals Corp., 0 U.S. ()... Parsell v. Shell Oil Co., F. Supp. (D. Conn. )... iii Reply in Support of Motion to Dismiss C0-0 MJJ

5 Case :0-cv-0-MJJ Document Filed 0//0 Page of Reserve Mining Co. v. EPA, F.d (th Cir. )... San Diego Building Trades Council v. Garmon, U.S. ()... Selma Pressure Treating Co. Inc. v. Osmose Wood Preserving Co., Inc., Cal. App. d 0 (0)... Sosa v. Alvarez-Machain, U.S. (0)... Southwestern Tel. & Tel. Co. v. Danaher, U.S. ()... Spreitsma v. Mercury Marine, U.S (0)..., United States v. Texas, 0 U.S. ()..., Venuto v. Owens-Corning Fiberglass Corp., Cal. App. d ()... Vieth v. Jubelirer, U.S. (0)... STATUTES U.S.C.... U.S.C. (a)... U.S.C. 0(e)... U.S.C. (a)... Cal. Civ. Code... CONSTITUTION U.S. Const. art. I,, cl.... U.S. Const. art. II,, cl.... U.S. Const., art. XIV... passim iv Reply in Support of Motion to Dismiss C0-0 MJJ

6 Case :0-cv-0-MJJ Document Filed 0//0 Page of REPLY IN SUPPORT OF MOTION TO DISMISS The California Attorney General s Opposition ( Opp. ) does nothing to dispel what is clear from the face of his complaint: that this case raises patently non-justiciable questions whose adjudication would interfere with, and frustrate, the ongoing efforts of the political branches to address global warming. These exceedingly complex issues must be confronted at the national and international levels by Congress and the President. They cannot be rationally addressed through piecemeal and unprecedented tort litigation seeking billions of dollars in damages against businesses for making essential, lawful, and comprehensively regulated products that are so crucial to California s culture and economy. As his recent media interviews about this case make clear, the Attorney General himself does not dispute that global warming requires a comprehensive political solution. Rather, he appears to view this lawsuit as a tool for sparking congressional action. But that is neither a proper use of the federal courts nor a proper role for a state attorney general. A. THIS CASE MUST BE DISMISSED BECAUSE IT RAISES NONJUSTICIABLE ISSUES PROPERLY RESERVED FOR RESOLUTION BY THE POLITICAL BRANCHES OF THE FEDERAL GOVERNMENT. The Attorney General s remarkable assertions that his Complaint presents a garden variety interstate nuisance claim and an ordinary tort suit that is committed to the judiciary, see Opp. at -, are wholly baseless. He does not cite a single case in the history of American jurisprudence that authorizes a nuisance suit directed at global climate change and he has almost nothing to say about the one decision to address such a lawsuit, which held that resolution of the issues presented... requires identification and balancing of economic, environmental, foreign policy, and national security interests and thus called for an initial policy determination of a kind clearly for non-judicial discretion. Connecticut et al. v. Am. Elec. Power Co., Inc., 0 F. Supp. d, (S.D.N.Y. 0), appeal pending ( AEP ). The Attorney General s claim for billions of dollars in damages against the automakers in this case is even more ill-suited to judicial resolution than the claim for injunctive relief he and others brought in AEP, yet he does not even attempt to explain by what standards the federal courts would go about determining liability for, calculating, and allocating such damages. He does not because he cannot, as the federal courts do not even recognize common Reply in Support of Motion to Dismiss C0-0 MJJ

7 Case :0-cv-0-MJJ Document Filed 0//0 Page of law claims for damages in the interstate pollution and other nuisance cases upon which he seeks to predicate his new global warming tort. See infra pages -. As shown below, contrary to the Attorney General s assertions, Opp. at -, his global warming lawsuit qualifies as a nonjusticiable political question under each and every one of the six separate tests set forth in Baker v. Carr, U.S. (). And as the Ninth Circuit has recognized, any single [Baker] test can be dispositive. Alperin v. Vatican Bank, F.d, (th Cir. 0); see also Vieth v. Jubelirer, U.S., (0) (plurality opinion) (describing the Baker criteria as six independent tests ).. Textually Demonstrable Commitment to Political Branches. The case easily meets the first Baker test, which looks to whether there is a textually demonstrable constitutional commitment of the issue to a coordinate political department. Baker, U.S. at. As the automakers demonstrated in their motion to dismiss, id. at -, global warming is an issue of public and foreign policy fraught with scientific complexity, as well as political, social, and economic consequences. The U.S. Environmental Protection Agency ( EPA ) has explained that [i]t is hard to imagine any issue in the environmental arena having greater economic and political significance than regulation of activities that might lead to global climate change. See Control of Emissions From New Highway Vehicles and Engines, Fed. Reg., (Sep., 0) (hereinafter Control of Emissions). The text of the Constitution demonstrably reserves such complex issues of foreign and public policy and commerce for the political branches of the federal government. For example, the Constitution s text expressly provides that Congress shall have Power... To regulate Commerce with foreign Nations, and among the several States.... U.S. Const. art. I,, cl.. By seeking to impose damages for the automakers lawful worldwide sale of vehicles, this lawsuit would directly interfere with Congress s power over national and foreign commerce. In fact, such a lawsuit by California would seek to thrust policy decisions made by the federal courts about global warming on all fifty States and other nations by imposing damages against the See, e.g., Second Amended Complaint ( SAC ) 0 (alleging that [e]missions...from defendants products, no matter where such products are operated,... cause an increase in the atmospheric concentration of carbon dioxide and other greenhouse gases worldwide ). Reply in Support of Motion to Dismiss C0-0 MJJ

8 Case :0-cv-0-MJJ Document Filed 0//0 Page of automakers for selling vehicles in those other States and countries. BMW of N. Am, Inc. v. Gore, U.S., - () (discussing Domestic Commerce Clause and due process principles in tort context and declaring that a State may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasors lawful conduct in other States ). Similarly, the conduct of foreign relations is committed by the Constitution to the political departments of the Federal Government; [and]... the propriety of the exercise of that power is not open to judicial review. Mingtai Fire & Marine Ins. Co. v. United Parcel Serv., F.d, (th Cir. ) (citation omitted); Baker, U.S. at n. ( The conduct of the foreign relations of our Government is committed by the Constitution to the Executive and Legislative the political Departments of the Government, and the propriety of what may be done in the exercise of this political power is not subject to judicial inquiry or decision. ) (citation omitted); U.S. Const. art. II,, cl. (granting the President the power to make treaties). The Ninth Circuit has thus declared: [W]e are mindful of the Supreme Court s admonition that it is up to the political branches to come to terms with these delicate [and] complex foreign policy decisions for which the Judiciary has neither aptitude, facilities nor responsibility.... Alperin, F.d at 0. The Attorney General s global warming lawsuit would, unquestionably, directly interfere with these prerogatives. The political branches are engaged in a deliberate and multifaceted course of action on the international stage to address and study global warming. Congress has, among other things, mandated research and other information-gathering activities, while the Executive Branch emphasizes international cooperation and promotes working with other nations to develop an efficient and coordinated response to global climate change. Control of Emissions, Fed. Reg. at. The political branches have to date firmly rejected calls to impose unilateral limitations on carbon dioxide emissions in the United States because that could weaken U.S. efforts to persuade key developing countries to reduce the [greenhouse gas] intensity of their economies. Id. at,. These efforts most recently led to the Intergovernmental Panel on Climate Change s issuance of a summary for policymakers of its report Climate Change 0: The Physical Science Basis (Feb, 0). Reply in Support of Motion to Dismiss C0-0 MJJ

9 Case :0-cv-0-MJJ Document Filed 0//0 Page of But the Attorney General s request that this Court create a new global warming nuisance tort would impose just such unilateral limitations and thereby contradict the foreign policy decisions of the Executive and Legislative Branches. He seeks to impose billions of dollars in damages for past and future emissions against the automakers who sell vehicles in California and around the world. These damages would have an undeniable regulatory effect, as the only way a company could hope to avoid paying them would be to reduce worldwide and California emissions below whatever (thus far undefined) standard the courts determine to be unreasonable. See San Diego Bldg. Trades Council v. Garmon, U.S., () ( [R]egulation can be as effectively exerted through an award of damages as through some form of preventive relief ); Gore, U.S. at n. ( State power may be exercised as much by a jury s application of a state rule of law in a civil lawsuit as by a statute. ). Thus, the Attorney General, by way of this lawsuit, is asking this Court to impose precisely the kind of unilateral limitations on companies doing business in the United States that the political branches have repeatedly and emphatically rejected. AEP, 0 F. Supp. d at (recognizing that Congress and the Executive Branch had specifically refused to impose the limits on carbon dioxide emissions Plaintiffs now seek to impose by judicial fiat ). Accordingly, this lawsuit does not simply touch on domestic and foreign commerce and foreign affairs, see Opp. at, but rather it directly contravenes decisions that have been made by the political branches based on powers expressly vested in them by the Constitution. As such it raises a nonjusticiable political question and should be dismissed.. Lack Of Judicially Discoverable Or Manageable Standards. The Baker test also requires courts to ask whether they have the legal tools to reach a ruling that is principled, rational, and based upon reasoned distinctions. Alperin, F.d at. The Attorney General has not come close to making such a showing. There is simply no legal framework available that would allow the courts to grant relief in a reasoned fashion. Id. The Attorney General hinges his argument on the fact that, in a very narrow band of cases decided decades or even centuries ago, the Supreme Court recognized a simple common law nuisance claim allowing one State to seek an injunction against another State (or residents of another State) to halt transboundary pollution (e.g., to stop a state-owned refinery from spewing pollutants into a river Reply in Support of Motion to Dismiss C0-0 MJJ

10 Case :0-cv-0-MJJ Document Filed 0//0 Page of that flows across the border into a neighboring state). See Opp. at -. But as discussed in more detail below, the Attorney General s claim for billions of dollars in money damages in this lawsuit differs radically from those simple nuisance claims seeking injunctive relief, and raises a whole different set of issues for which no standards or rules of law exist. For example, the Supreme Court has indicated that even simple injunctive relief may be inappropriate in cases where the plaintiff has participated in the challenged behavior. Missouri v. Illinois, 0 U.S., (0) (denying injunction request where the plaintiff has sovereign powers and deliberately permits discharges similar to those of which it complains ); New York v. New Jersey, U.S., - () (denying request for injunction barring New Jersey from discharging sewage into harbor when it is considered that for many years all of the sewage from the great population of New York City and its environs... has been discharged into the harbor ). Here, California has long welcomed, encouraged, and participated in the use of defendants products, yet now claims that the combined effect of emissions legally produced within its borders, in other States, and in other countries has caused it to suffer unreasonable harm. Under these circumstances, how would this Court possibly go about determining whether the interference suffered by California is unreasonable? Opp. at. This would require a retroactive political judgment... [and] [s]uch judgment calls are, by nature, political questions. Alperin, F.d at. The Attorney General s quest for past and future money damages makes this case more impossible to adjudicate still, as the very cases cited by the Attorney General make clear. See, e.g., Georgia v. Tennessee Copper Co., U.S. 0, (0) (while a federal common law nuisance claim seeks relief from injuries analogous to torts, [s]ome peculiarities necessarily mark a suit of The Supreme Court has expressed reservations about the difficulty of adjudicating even the simple transboundary injunction cases of the sort discussed by the Attorney General, noting that the Court s prior efforts to settle disputes regarding interstate air and water pollution ha[ve] been anything but smooth and the sense of futility that has accompanied this Court s attempts to [deal] with the complex technical and political matters that inhere in all disputes of the kind at hand. Ohio v. Wyandotte Chemicals Corp., 0 U.S., 0-0 (). Moreover, holding the automakers liable for billions of dollars in damages based on such an amorphous and subjective reasonableness test would violate due process. See, e.g., Southwestern Tel. & Tel. Co. v. Danaher, U.S., 0- (). Reply in Support of Motion to Dismiss C0-0 MJJ

11 Case :0-cv-0-MJJ Document Filed 0//0 Page of this kind including the difficulty of valuing such rights in money ). If the Court accepts the Attorney General s argument holding the automakers jointly and severally liable for global warming then the six targeted automakers will be forced to join as defendants all other automobile manufacturers, plus the companies who provide the fossil fuels used in vehicles; those companies will be forced to join the homebuilders who produce large homes that must be heated and cooled; those companies will be forced to join utility companies and appliance makers; and so on and so on until every company, municipality, and individual who either creates products that use energy, utilizes those products, or simply breathes air and respirates, see SAC ( Carbon dioxide is... emitted by human activity ), is joined as a co-defendant. And after every man, woman, and child on the globe is so joined, the Court will then be asked to decide who is entitled to damages, who must pay them, and how to allocate the payments and receipts. This, apparently, is the Attorney General s idea of a garden variety tort claim.. Impossibility Of Deciding Without Making Initial Policy Decision. Since much of the above analysis concerning the first and second Baker factors is applicable to the remaining factors as well, the automakers will address those factors only briefly. As to the third Baker factor, the Attorney General contends that adjudication of his multi-billion dollar damage claim against the automakers for lawful conduct will [s]imply involve applying facts to established law and will not require the court to make a policy choice. Opp. at -. These assertions are simply incorrect. They stem both from the Attorney General s conflation of this case with the few simple transboundary injunction cases that the Supreme Court decided in the late 00s and early 00s and from his failure to come to grips with the need for discoverable and manageable standards for adjudicating the mind-numbingly complex array of issues his claims raise. The questions that the Attorney General asks the Court to adjudicate are quintessentially political questions: what is an unreasonable contribution to the sum total of carbon dioxide in the earth s atmosphere, what level of global warming is acceptable, as opposed to unreasonable, and who should bear the cost for global climate change? They require policy decisions that must be made by other branches.. Impossibility Of Deciding Without Lack of Respect For the Political Branches. As to the fourth Baker factor, the Attorney General argues that judicial action on [his] nuisance claims Reply in Support of Motion to Dismiss C0-0 MJJ

12 Case :0-cv-0-MJJ Document Filed 0//0 Page of will not call into question a decision by the legislative or executive branches. See Opp. at -. This is incorrect, as the Attorney General seeks by this action to impose precisely the kind of unilateral limitations on companies doing business in the United States that the political branches have rejected. AEP, 0 F. Supp. d at. Doing so would not merely express a lack of respect for the choices of the political branches, but would affirmatively undermine the political branches strategy and choices at a sensitive time by weaken[ing] U.S. efforts to persuade key developing countries to reduce the [greenhouse gas] intensity of their economies. Control of Emissions, Fed. Reg. at,.. Adherence To Political Decisions Already Made. As to the fifth Baker factor, the Attorney General contends that [t]here simply is no existing global warming policy because the federal government has not imposed unilateral limitations on domestic greenhouse gas emissions. See Opp. at -. But the United States policy with respect to global warming is clear. As discussed in extensive detail in the motion to dismiss, it is to emphasize international cooperation and promote[] working with other nations to develop an efficient and coordinated response to global climate change. Control of Emissions, Fed. Reg. at. The choice of federal policymakers not to pursue the specific method of addressing global warming that the Attorney General apparently prefers that is, enacting unilateral caps on domestic emissions is hardly proof that there is no policy. Compare Geier v. Am. Honda Motor Co., U.S. (00) (federal agency s decision not to mandate airbags was policy choice preempting state tort suit for damages). The political question doctrine squarely forbids such second-guessing of the choices made by Congress and the President.. Potential For Conflicting Pronouncements. Finally, as to the sixth Baker factor, the Attorney General claims that this case presents no risk of multifarious pronouncements because two administration officials have voiced approval of a bottom-up approach to addressing global warming involving initiatives by state and city governments. See Opp. at -. But these statements hardly support the Attorney General s position, as he seeks to control and regulate the activities of the automakers on a worldwide level and impose billions of dollars in damages based on their conduct in other States and in other countries. This is anything but a bottom-up approach and it flatly contradicts the political branches rejection of unilateral action by the United States in an area Reply in Support of Motion to Dismiss C0-0 MJJ

13 Case :0-cv-0-MJJ Document Filed 0//0 Page of where speaking with one voice is especially important. See Japan Line, Ltd. v. County of Los Angeles, U.S., () (negative Foreign Commerce Clause protects the National Government s ability to speak with one voice in regulating commerce with foreign countries). B. THE COMPLAINT FAILS TO STATE ANY VALID FEDERAL CLAIM.. The Federal Common Law Of Nuisance Does Not Authorize A Damages Action Against Private Companies For Lawful In-State Activity. The Attorney General seizes on a handful of pre-erie decisions to argue that the Supreme Court has long recognized a federal cause of action for the type of interstate, environmental public nuisance California alleges. See Opp. at -. This is wrong for several reasons. In Erie Railroad Co. v. Tompkins, 0 U.S. (), the Supreme Court sharply curtailed the federal courts ability to create common law, and in City of Milwaukee v. Illinois, U.S. 0, () ( Milwaukee II ), the Court further pruned back the reach of federal common law in the nuisance context, declaring that a federal court could not generally apply a federal rule of decision... in the absence of an applicable Act of Congress. Id. at. Thus, it is entirely unclear that the Supreme Court would reach the same result it reached in Tennessee Copper if the issue were presented again today particularly in light of the multiple comprehensive federal regulatory schemes that now exist. But more fundamentally, even the cases on which the Attorney General relies assuming they remain good law at most permit one State to seek equitable relief enjoining pollution originating in a neighboring State. By contrast, here the Attorney General seeks money damages against private companies for engaging in lawful conduct within California that the State has long approved and encouraged. None of the cases cited by the Attorney General remotely supports such a vast and literally unprecedented expansion of the federal common law of nuisance. First, this case unlike all of the cases cited by the Attorney General does not involve an attempt by a State to enjoin conduct committed by non-residents occurring outside its borders. This is a critical distinction. [T]he federal common law... was originally recognized to fill a void in the law applicable to suits seeking abatement of pollution originating within the domain of one state sovereign and exerting adverse effects in the domain of another. Massachusetts v. U.S. Veterans Admin., F.d, (st Cir. ). The cases upon which the Attorney General relies are Reply in Support of Motion to Dismiss C0-0 MJJ

14 Case :0-cv-0-MJJ Document Filed 0//0 Page of consistent with this limitation. For example, in Tennessee Copper, a factory located in Tennessee produced noxious gas that wafted over the Tennessee border and into Georgia. The Supreme Court held that Georgia could rely on the federal common law of nuisance to enjoin this extraterritorial behavior because a sovereign... should not be... destroyed or threatened by the act of persons beyond its control. U.S. at. Similarly, in Illinois v. City of Milwaukee, 0 U.S. () ( Milwaukee I ), a city in Wisconsin discharged sewage into Lake Michigan. The sewage later drifted into Illinois territory and the Supreme Court held that injunctive relief might be proper to protect Illinois from improper impairment by sources outside its domain. Id. at n. (citation omitted). Here, in contrast, the Attorney General purports to rely on federal law to sue the automakers three of whom are incorporated in California for conduct occurring in part within California s own borders. Multiple courts have emphasized that a federal common law nuisance claim cannot lie under such circumstances. For example, in Comm. for the Consideration of the Jones Falls Sewage System v. Train, F.d 0 (th Cir. ), the Fourth Circuit explained: We may thus take it as established that there is a body of federal common law by which a public nuisance in one state which infringes upon the environmental and ecological rights of another state may be abated. As thus applied, there is an acceptable accommodation of state and national interests.... [But] the doctrine... has not been extended beyond the abatement of public nuisances in interstate controversies where the complainant is a state and the offenders are creating extra-territorial harm. In controversies such as this one, there is present neither the reason nor the necessity for the invocation of a body of federal common law.... Id. at 0-0 (emphasis added). See also Reserve Mining Co. v. EPA, F.d, - (th Cir. ) ( reject[ing] the federal common law of nuisance as a basis for relief where Minnesota sought to enjoin conduct of mining company operating within Minnesota). The Ninth Circuit s decision in National Audubon Soc y v. Dept. of Water, F.d (th Cir. ), which reiterated the limited context in which the [Supreme] Court has been willing to recognize a federal common law nuisance claim based on air pollution due to an interstate dispute, id. at 0, is in accord. In National Audubon, a conservationist group asserted a federal common law nuisance claim based on air pollution, seeking to enjoin a water diversion project that produced dust storms which allegedly polluted the air in both California and Nevada. Id. at 0. Reply in Support of Motion to Dismiss C0-0 MJJ

15 Case :0-cv-0-MJJ Document Filed 0//0 Page of The Ninth Circuit held that these allegations failed to state a claim because the federal common law of nuisance encompasses only those interstate controversies which involve a state suing sources outside of its own territory because they are causing pollution within the state to be inappropriate for state law to control. Id. at 0. So, too, here. Because the Attorney General complains of conduct that occurred at least in part within California, and further because many of the defendants are California corporations, he cannot assert a federal common law nuisance claim. See U.S. Veterans Admin., F.d at ( Whether the common law [of nuisance] so recognized extends to suits involving pollution originating within the territorial jurisdiction of the plaintiff sovereign is doubtful. ). This is particularly true since California has long approved, encouraged, and promoted the very conduct the sale and use of defendants products that it now challenges. See Missouri, 0 U.S. at (denying request for abatement where the plaintiff has sovereign powers and deliberately permits discharges similar to those of which it complains ); New York, U.S. at - (same). Second, the remedy sought in this case, money damages, is conspicuously different from the injunctive relief sought in every case cited by the Attorney General. See, e.g., Parsell v. Shell Oil Co., F. Supp., - (D. Conn. ) ( [t]here is some justification for limiting any right of action under [Milwaukee I] to private parties seeking injunctive relief rather than damages ). The U.S. Supreme Court has recognized that this, too, is a crucial distinction. In Middlesex County Sewerage Auth. v. National Sea Clammers Ass n, U.S., (), the Court granted certiorari on the issue whether a private citizen has standing to sue for damages under the federal common law of nuisance. The Court remarked that such monetary relief would go considerably beyond [Milwaukee I], which involved purely prospective relief sought by a state plaintiff. Id. at (emphasis added). The Court ultimately declined to reach this issue, resolving the case on narrower grounds, and held that [w]e therefore need not discuss whether the federal common law of nuisance could ever be the basis of a suit for damages by a private party. Id. at n. (emphasis added). As Middlesex County makes clear, the Attorney General s suggestion that this case presents a garden variety federal common law nuisance claim of the type that the Supreme Court has long recognized, see Opp. at, -, is utterly wrong. Granting the relief sought in this case would Reply in Support of Motion to Dismiss C0-0 MJJ

16 Case :0-cv-0-MJJ Document Filed 0//0 Page of extend the federal common law of nuisance considerably beyond Tennessee Copper and the other cases cited by the Attorney General, which involved claims for abatement and other injunctive relief rooted in equity. See California Tahoe Regional Planning Agency v. Jennings, F.d, (th Cir. ) ( federal common law nuisance actions [are] instituted by one state to enjoin damaging activities carried on in another pursuant to the equitable powers of the federal courts ).. The Legislative And Executive Branches Have Displaced Any Federal Common Law Claim In This Area. The Attorney General devotes nearly a quarter of his Opposition to the argument that Congress has not displaced federal common law with respect to global warming. Opp. at -. The Court, however, need not even reach the issue of displacement. Since there is no such thing as a federal nuisance claim for money damages against private companies based on lawful, in-state conduct, there is no law to displace. Milwaukee II, U.S. at (displacement concerns whether a previously available federal common-law action has been displaced ) (emphasis added). The Attorney General s displacement claims fail on the merits in any event. As established below, both the Clean Air Act ( CAA ) and the Energy Policy and Conservation Act ( EPCA ) create precisely the sort of comprehensive regulatory framework sufficient to displace any federal common law claim for global warming. Although the Attorney General apparently believes that CO emissions should be regulated in a different or more stringent manner than Congress has chosen, this is not the test for whether Congress has displaced federal common law. Mattoon v. City of Pittsfield, 0 F.d (st Cir. ); Illinois v. Illinois Outboard Marine, 0 F.d, (th Cir. ). a. There is a heavy presumption against recognition of federal common law claims. As a threshold matter, the Attorney General suggests that United States v. Texas, 0 U.S., (), enacts a presumption in favor of retaining federal common law when it conflicts with subsequently-enacted legislation. Opp. at. This is misleading. The language quoted in the Attorney General s brief is actually the test for analyzing the effect of federal legislation on state law, which is a different standard than the test for displacement of federal common law. Texas, 0 U.S. at. Indeed, in Milwaukee II, the Supreme Court explained that the very concerns about displacing state law which counsel against finding pre-emption of state law in the absence of clear Reply in Support of Motion to Dismiss C0-0 MJJ

17 Case :0-cv-0-MJJ Document Filed 0//0 Page of [congressional] intent actually suggest a willingness to find congressional displacement of federal common law. U.S. at n.. Thus, [w]e start with the assumption that it is for Congress, not federal courts, to articulate appropriate standards to be applied as a matter of federal law. National Audubon, F.d at 0 (citation omitted). Congress need not affirmatively proscribe the common-law doctrine at issue for displacement to occur. Texas, 0 U.S. at. b. Creating a federal nuisance claim for global warming would impinge on the discretion of the political branches in managing foreign affairs. In their motion to dismiss, the automakers established that federal courts should be particularly wary of creating common law causes of action if doing so would pose risks of adverse foreign policy consequences or otherwise imping[e] on the discretion of the Legislative and Executive Branches in managing foreign affairs. Id. at - (citing Sosa v. Alvarez-Machain, U.S. (0)). The Attorney General fails even to acknowledge this line of authority in his Opposition or attempt to explain how his theory of climate control that the automakers should be held liable for billions of dollars in damages because their products produce more CO than he believes they should produce could possibly be deemed not to interfere with the political branches discretion in negotiating multilateral greenhouse gas agreements with other nations. c. The Clean Air Act displaces any federal common law claim for global warming. Relying on Justice Douglas s dissent in Milwaukee II, the Attorney General asserts that the test for displacement of federal common law is whether Congress has passed a comprehensive statute that includes an all-encompassing permitting scheme, speak[s] directly to the particular question otherwise being answered by federal common law, and provide[s] some recourse for the problem at issue. See Opp. at -. Based on this test, the Attorney General argues that the CAA is not sufficiently comprehensive to displace his federal global warming claim because the statute does not directly restrict[]... emissions of carbon dioxide or other greenhouse gases and does not contain a comprehensive permitting system. See Opp. at -. These claims are baseless. The CAA is widely considered to be the most comprehensive environmental statute ever enacted. In MVMA v. N.Y. State Dep t of Envt l Conservation, F.d, - (d Cir. ), the Second Circuit described the CAA as one of the most Reply in Support of Motion to Dismiss C0-0 MJJ

18 Case :0-cv-0-MJJ Document Filed 0//0 Page of comprehensive pieces of legislation in our nation s history and an extremely complex law and noted that the 0 amendments beggar[] description. Congress... took what was widely perceived as an unapproachable piece of legislation and tripled the Act s length and geometrically increased its complexity. In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., U.S., (), the Supreme Court observed that [t]he [CAA] Amendments of are a lengthy, detailed, technical, complex, and comprehensive response to a major social issue. And in National Audubon, the Ninth Circuit declared that [i]n the [CAA], Congress established a comprehensive state and federal scheme to control air pollution in the United States. F.d at 0. See also Kentucky Res. Council, Inc. v. EPA, F.d, (th Cir. 0) (explaining that the CAA establishes a comprehensive program for controlling and improving the nation s air quality through a combination of state and federal regulation ). These authorities conclusively demonstrate that the CAA is more than sufficiently comprehensive to displace the federal nuisance claim asserted in this case. Indeed, while the Attorney General acknowledges that multiple federal courts have found that the Clean Air Act displaces federal common law claims for nuisance, see Opp. at n., he conspicuously fails to identify a single decision ever reaching the opposite conclusion. At bottom, the Attorney General s complaint is not that the CAA is insufficiently comprehensive as a whole, but that it fails to regulate one specific type of emission greenhouse gases in the manner or with the stringency that he would prefer. This, however, is not the test for comprehensiveness. See, e.g., Illinois v. Outboard Marine Corp., Inc., 0 F.d, n. (th Cir. ) ( We would render meaningless the Supreme Court s emphasis on the comprehensiveness Instead, the Attorney General resorts to citing Judge Reinhardt s dissent in National Audubon which was penned two years before the 0 amendments to the CAA. The Attorney General also implies that New England Legal Foundation v. Costle, F.d 0 (d. Cir. ), somehow supports his position. See Opp. at. This is disingenuous. In Costle, the Second Circuit expressly declined to reach the issue of displacement. F.d at n. ( [W]e leave for a more appropriate case the question of whether all federal common law nuisance actions involving the emission of chemical pollutants into the air are precluded by the statutory scheme set forth in the [CAA]. ). Moreover, Costle involved an evaluation of the CAA in its pre-0 form. Reply in Support of Motion to Dismiss C0-0 MJJ

19 Case :0-cv-0-MJJ Document Filed 0//0 Page of of the Amendments, if we took it as a mandate to dissect the [statute] section-by-section, with a view to finding that parts of it are not comprehensive. ). Moreover, in 0, Congress specifically considered (but ultimately rejected) a proposal to amend the CAA to include a CO standard for new motor vehicles, instead choosing to address the issue through a variety of non-regulatory approaches. See Motion to Dismiss at n.. The Attorney General s disagreement with the direction forged by Congress is not proof that the CAA is insufficiently comprehensive to displace federal common law. See, e.g., Milwaukee II, U.S. at ( Demanding specific regulations of general applicability before concluding that Congress has addressed the problem to the exclusion of federal common law asks the wrong question. The question is whether the field has been occupied, not whether it has been occupied in a particular manner. ); Outboard Marine, 0 F.d at ( Illinois... urge[s] us... to find that Congress has not addressed the question because it has not enacted a remedy against polluters. Adopting this distinction, however, would be no different from holding that the solution Congress chose is not adequate. This we cannot do. The lesson of Milwaukee II is that once Congress has addressed a national concern, our fundamental commitment to the separation of powers precludes the courts from scrutinizing the sufficiency of the congressional solution. ). Finally, the Attorney General also suggests that the CAA is not sufficiently comprehensive because it does not contain a comprehensive permitting program. See Opp. at. This is factually wrong. The authority upon which the Attorney General relies (a dissent in National Audubon) predates the extensive 0 amendments to the CAA. Among other things, the 0 amendments added a permitting program for stationary sources. See Env. Integrity Project v. EPA., F.d, - (D.C. Cir. 0) ( Title V of the 0 Amendments... requires that certain air pollution sources, including every major stationary source of air pollution, each obtain a single, comprehensive operating permit to assure compliance with all emission limitations and other substantive CAA requirements that apply to the source. ). The CAA also requires that every new motor vehicle be certified as meeting applicable emissions standards. See U.S.C. ; MVMA, F.d at -. In short, a key premise underlying the Attorney General s challenge to the comprehensiveness of Reply in Support of Motion to Dismiss C0-0 MJJ

20 Case :0-cv-0-MJJ Document Filed 0//0 Page of the CAA that the statute does not include a comprehensive permitting system is entirely false. d. The EPCA displaces any federal common law claim for global warming. The Attorney General concedes that the fuel economy standards established under the EPCA may have indirect benefits in the fight against global warming and further concedes that the EPCA provides an enforcement provision... imposing civil penalties for failure to meet CAFE standards. See Opp. at -. Nevertheless, the Attorney General contends that the EPCA is not sufficiently comprehensive to displace his purported federal common law claim because regulating fuel economy is not the only way to address global warming and because the remedy that California seeks is not within the precise scope of remedies prescribed by Congress in EPCA. Id. Once again, the Attorney General misapprehend[s] the nature of the comprehensiveness inquiry required under [Milwaukee II], which turns on whether the field has been occupied, not whether it has been occupied in a particular manner. Mattoon v. City of Pittsfield, 0 F.d, (st Cir. ) (applying this rule to reject claim that federal statute was not sufficiently comprehensive to meet the test in [Milwaukee II]... because the EPA did not regulate giardia lamblia contamination at the time of the events which prompted the present litigation ). Whether or not Congress could require the use of alternative fuels or the reduction of emissions upstream in the manufacturing process, the point is that Congress has established federal fuel economy standards that, as even the Attorney General concedes, effectively place a cap on vehicular CO emissions and produce some benefits in the fight against global warming. Opp. at -. Any claim that Congress should have done even more thus has no bearing on the issue of displacement. For similar reasons, the Attorney General s criticism of the remedies available under the EPCA is unavailing. The Attorney General s complaint is that he believes Congress should have provided a tort cause of action under the EPCA in addition to providing an enforcement provision backed by the threat of civil penalties. Yet [i]n the absence of strong indicia of a contrary congressional intent, we are compelled to conclude that Congress provided precisely the remedies it EPA issues Certificates of Conformity for all vehicles sold in the United States and the California Air Resources Board issues the equivalent, Executive Orders, for California sales. Reply in Support of Motion to Dismiss C0-0 MJJ

21 Case :0-cv-0-MJJ Document Filed 0//0 Page of considered appropriate. Middlesex County, U.S. at. The Attorney General s dissatisfaction with the palette of remedies offered by Congress does not entitle the Attorney General to assert a multi-billion dollar federal tort claim that Congress has never approved. Outboard Marine, 0 F.d at ( Illinois... urge[s] us... to find that Congress has not addressed the question because it has not enacted a remedy against polluters. Adopting this distinction, however, would be no different from holding that the solution Congress chose is not adequate. This we cannot do. ). C. THE COMPLAINT FAILS TO STATE A CLAIM UNDER STATE LAW. The Attorney General devotes nearly as much of his brief to a discussion of how the Court should dismiss his state-law nuisance claim, see Opp. at, as he does to attempting to defend the claim on the merits. See Opp. at -. This speaks volumes about the strength of this claim.. California Affirmatively Sanctioned And Authorized Defendants Conduct. In their Motion to Dismiss, the automakers established that any state-law nuisance claim would be barred by section of the California Civil Code because the challenged conduct in this case the sale, distribution, and use of automobiles was expressly authorized by both state and federal law. In response, the Attorney General asserts that [a] defendant cannot obtain the protection of section simply because the defendant s conduct is in compliance with the law. See Opp. at. This is a red herring. The automakers claim is not that they merely complied with the law, but that California affirmatively and expressly sanctioned their conduct through, among other things, the CARB certification process, by which California placed its imprimatur on every one of defendants vehicles sold within the State. This case thus closely resembles Carson Harbor Village, Ltd. v. Unocal Corp., 0 F.d (th Cir. 0), where the defendant did not just argue that its conduct was legal, but also showed it was operating under an affirmative grant of permission from the State.. California s Consent Precludes Any State-Law Nuisance Claim. The Attorney General makes a half-hearted effort to contest what is obvious: that California has plainly consented to the Ileto v. Glock, F.d (th Cir. 0) is distinguishable, as the nuisance claim in that case was premised on alleged violations of state law after the initial, legal sale of firearms. Meanwhile, in Venuto v. Owens-Corning Fiberglass Corp., Cal. App. d (), there was no affirmative grant of permission to the defendant, and Venuto s discussion of section is dicta in any event because the court decided the case on other grounds. Id. at -. Reply in Support of Motion to Dismiss C0-0 MJJ

22 Case :0-cv-0-MJJ Document Filed 0//0 Page of complained-of conduct in this case. See Opp. at 0. Indeed, it is not the case that California has merely support[ed] the purchase and use of automobiles by third parties through infrastructure and other actions. Id. Rather, California itself has purchased tens of thousands of automobiles for its own use, affirmatively promoted recreational automobile tourism, and reaped billions of dollars of revenues each year from automobile-related taxes and fees. If this is not consent, it is difficult to imagine what might be. Cf. Missouri, 0 U.S. at ; New York, U.S. at -.. No Affirmative Conduct Is Alleged. The Attorney General mischaracterizes the automakers position as a claim that public nuisance can[not] apply to products, and then proceeds to attack this straw man by citing cases involving nuisance claims against product manufacturers. See Opp. at 0-. But this misses the point. The crucial distinction established in the motion to dismiss is that a nuisance claim will not lie against a product manufacturer absent allegations that the manufacturer engaged in some form of affirmative conduct beyond the mere manufacture and distribution of a product. County of Santa Clara v. Atlantic Richfield Co., Cal. App. th, 0- (0). For example, in City of Modesto Redevelopment Agency v. Superior Court, Cal. App. th, (0), such affirmative conduct was present because it was alleged that the defendant went beyond selling its product by also specifically instruct[ing]... user[s] to dispose of wastes in [an improper] manner. Similarly, in Ileto v. Glock, F.d, (th Cir. 0), [t]he alleged nuisance [was] not premised on the legal manufacture and design of the guns or the sale of guns to individuals who are legally entitled to purchase them. On the contrary, the nuisance claim rests on the defendants actions in creating an illegal secondary market... by purposefully over-saturating the legal gun market in order to take advantage of re-sales to distributors that they know or should know will in turn sell to illegal buyers. Here, the Attorney General has failed to allege anything remotely resembling the affirmative conduct present in Modesto and Glock. The Attorney General s complaint is that the automakers products contribute to global warming when operated as designed, see SAC -, which is tantamount to the mere manufacture and distribution of a product formulation deemed insufficient to state a nuisance claim against a product manufacturer in Santa Clara. Reply in Support of Motion to Dismiss C0-0 MJJ