Tenth Circuit holds that states retain "Quasi-sovereign ecological rights" as part of federal common law sufficient for federal district court jurisdiction under the Constitution and federal laws: Texas v. Pankey

This month the Tenth Circuit Court of Appeals endorsed the development by the federal courts of a federal common law of the environment which would be applicable in instances of interstate environmental degradation. In an opinion which bears directly on jurisdictional questions raised in the multi-district air pollution suits, now consolidated for trial in the Central District of California, and in Washington v. General Motors, a similar suit in the Supreme Court's original jurisdiction, the circuit court declined either to require Texas to resort to the jurisdiction of the Supreme Court or to have its cause decided under applicable state choice-of-law or substantive law principles.

In Texas v. Pankey, reported in this issue of ELR at 20089, the Tenth Circuit reversed the U.S. District Court's (D.N.M.) dismissal for lack of jurisdiction of a suit for injunction filed by the state of Texas against ranchers in New Mexico who allegedly pollute the Canadian River before it crosses into Texas by spraying their grazing lands with Toxaphene, a toxic chlorinated camphene pesticide used in controlling range caterpillars. The run-off of rainwater from the grazing lands in New Mexico allegedly carries with it quantities of the pesticide which ultimately shows up in Texas's drinking water supply.

The court had two issues before it for resolution. The first was whether the jurisdiction conferred upon federal district courts by 28 U.S.C. § 1331(a) applies to a suit instituted by a state against citizens of another state. Essentially, the court had to decide whether to allow Texas to sue in the federal district court or to limit it to the state courts of New Mexico and the original jurisdiction of the Supreme Court. A state's reasons for not wanting to bring such an action in a sister state's courts were discussed as early as the Constitutional convention and trace to the possible biases of such a forum. See Wisconsin v. Pelican Insurance Co., 127 U.S. 265 (1888). With regard to the original jurisdiction of the Supreme Court, the Tenth Circuit said that Texas's willingness to choose a lower federal court, and not the "more prestigious channel," "ought to be commended as an appropriate regard by it for not unnecessarily increasing present burdens of the Supreme Court." 1 ELR 20090. Hence, the court easily decided this first issue in Texas's favor, citing Ames v. Kansas, 111 U.S. 449 (1884).

The second issue decided by the Tenth Circuit deserves closer attention. The court's resolution of that issue has far-reaching implications for the future development of a district body of environmental legal principles within the common law. The court had to resolve whether the rights which Texas sought to have protected were matters arising "under the Constitution, laws, or treaties of the United States," as this language from 28 U.S.C. § 1331(a) has been construed by the federal courts. The court held that Texas had "a quasi-sovereign ecological right" to protection "from an improper impairment of its natural conditions of environment and resources by acts done outside its boundary and so not subject to local reach or control by it…" 1 ELR 20090.

The basis for the court's decision is its interpretation of Georgia v. Tennessee Copper Co., 206 U.S. 230 (1906). In the Tennessee Copper Co. case Georgia was permitted to maintain suit to prevent the discharge of noxious gases over its territory by an industrial plant in an adjoining state, Tennessee. The Court granted the injunctive relief requested, all justices concurred in the issuance. The Court explained that in doing so it was guided by the same equitable principles as in an action between private parties, although Justice Holmes and Harlan debated the extent of that equitable power.

Georgia v. Tennessee Copper Co. in turn relies on Missouri v. Illinois, 180 U.S. 208 (1901), not discussed in Pankey. In Missouri v. Illinois the Court assumed jurisdiction of a nuisance case in which Missouri alleged that Illinois threatened to discharge harmful sewage into interstate waters. The Court held that where the "health and comfort" of the citizens of one state were endangered by the conduct of a sister state, the state in which the aggrieved persons resided was the proper party to represent them. 180 U.S. 208 241.¹

[1 ELR 10019]

The Tenth Circuit concludes that in the Tennessee Copper case the Supreme Court regarded a state's entry into the union and its commitment to the Constitution "as having inherently insured or guaranteed to it a right of protection by a federal court against improper pollution or impairment by outside sources of its appropriate environmental and resource conditions." 1 ELR 20090. The Tenth Circuit also finds that the right asserted in Pankey arises out of a state's joinder in the general political union. The argument is redolent of social contract theory. The court relies upon language in Mr. Justice Homes's opinion for the Court:

When the states by their union made the forcible abatement of outside nuisances impossible to each, they did not thereby agree to submit to whatever might be done. They did not renounce the possibility of making reasonable demands on the grounds of their still remaining quasi-sovereign interests … 206 U.S. at 237.

The Pankey court, however, is troubled that in both Tennessee Copper and in Pankey the mischief at issue appears to be a simple nuisance. The court appears to be bothered that quasi-sovereign ecological rights based on federal common law are necessary to dispose fairly of a simple nuisance action, even though the nuisance is interstate and widespread enough to prompt the states to sue parens patriae. Although Mr. Justice Holmes did base his Tennessee Copper opinion on residual state quasi-sovereign interests, he was clearly thinking of common law nuisance while he wrote. He refer to state "relief from injuries analogous to torts" and to a state's "abatement of outside nuisances." His reliance upon constitutional theory may in fact have been prompted by his desire to complete the analogy to classical nuisance doctrine: in cases like Tennessee Copper (and Pankey) a state may be in the position of a landowner whose property interests are damaged by an adjoining landowner's tortious conduct. Subject to limitations, it is still the law today that an individual damaged by his neighbor's nuisance has the remedy of self-help. By analogy, a state retains its remedy of self-help until it waives its remedy by joining the union." … The alternative to force is a suit in this Court." 206 U.S. 230, 237, per Holmes, J.

Thus, the more like a simple nuisance the cause in Pankey becomes, the less it appears to be of sufficient gravity to require the application of the Constitution and laws of the United States and an ecological right in order to dispose of it. In these circumstances the circuit court appears to offer two justifications for its finding: (1) even if the Supreme Court in Tennessee Copper cannot be said to have recognized the quasi-sovereign ecological right here asserted, the Court nevertheless estaolished a status "… of direct protectability and justiciability in relation to the Constitution" sufficient for jurisdiction. That status would be sufficient in this case to allow Texas to sue to abate the nuisance (leaving aside for the moment the problem of what substantive las governs.) (2) If the existence at the time of the Tennessee Copper decision of such a status was sufficient for jurisdiction under 28 U.S.C. § 1331(a), but insufficient to justify concluding from the Court's opinion that a quasi-sovereign ecological right existed, nevertheless, developments since Tennessee Copper would justify finding that such a right existed today as part of federal common law.

The second of these grounds deserves closer examination. Unfortunately, the court does not identify with great specificity the developments in the law since Tennessee Copper which justify concluding today that the federal common law guarantees to the states quasi-sovereign ecological rights. The court first points out that at the time of Tennessee Copper the need for an existence of federal common law had not yet been recognized. Hence, the Tenth Circuit concludes the Supreme Court understandably dealt with the question before it upon an "indefinite basis." 1 ELR 20090 "As the field of federal common law has been given necessary expansion into matters of federal concern and relationships (where no applicable federal statute exists, as there does not here, the ecological rights of a State in the improper impairment of them from sources outside the State's own territory now would and should, we think, be held to be a matter having basis and standard in federal common law…" 1 ELR 20090. "Historical, judicial and other conceptual factors…" have helped to supply the evolving substance of matters which "arise under" the Constitution and laws of the United States. Mr. Justice Frankfurter in Romero v. International Terminal Operating Co., 358 U.S. 354, and the Court in Ames v. Kansas, supra, are quoted on the evolutionary character of federal jurisdiction.

What justifies the inclusion in the federal common law of the right asserted by the court to exist here?

Federal common law and not the varying common law of the individual States is, we think, entitled and necessary to be recognized as a basis for dealing in uniform standard with the environmental rights of a State against improper impairment by sources outside its domain. The more would this seem to be imperative in the present era of growing concern on the part of a State about its ecological conditions and impairments of them. In the outside sources of such impairment, more conflicting disputes, increasing assertions and proliferating contentions would seem to be inevitable. Until the field has been made the subject of comprehensive legislation or authorized administrative standards, only a federal common law basis can provide an adequate means for dealing with such claims as alleged federal rights. 1 ELR 20090.

Perhaps the Court's reluctance to spell out in detail the content of the federal common law rights asserted traces to its view of the proper scope of appellate review. To have decided that the district court could take jurisdiction of this case and that the applicable [1 ELR 10020] substantive law was federal common law, not New Mexico's choice-of-law rules (and probably its nuisance law)² in the court's view may have exhausted its responsibilities on appeal. The district court now knows that it may look beyond state law if necessary to decide the case equitably, given its unique interstate and environmental character.

In applying the Tenth Circuit's admonition that federal common law should be applied "until the field has been made the subject of comprehensive legislation or authorized administrative standards…," the district court may find that the Federal Insecticide, Fungicide and Rodenticide Act of 1964 (FIFRA), 7 U.S.C. § 135 et seq., and regulations and decisions under that act either help supply the content of applicable federal common law or pre-empt to some extent the application of federal common law. Pre-emption is unlikely, however, since many states have stringent pesticide laws which apparently do not conflict with federal law, and since existing federal or state pesticide laws do not cover the effects of pesticides in interstate situations. However, the Federal Water Pollution Control Act, 33 U.S.C. § 1151 et seq., and regulations thereunder, may apply in the Pankey situation. Perhaps it was the uncertain effect of present water quality standards in controlling water-borne pesticides under the act's cooperative state-federal system that led the circuit court to state that federal common law should apply until comprehensive legislation or authorized administrative standards have been promulgated. 1 ELR 20090.

The effect on the development of an interstate federal environmental common law of the stringent standards set in some state pesticide legislation (e.g. Wisconsin's) will probably be tested early, if such common law principles actually do develop. States which have achieved high environmental standards through state legislation will probably be the first to attempt to protect their internal environmental quality from pollutants which easily cross state lines. The weight given their standards and viewpoints in the court's equitable determination of what the federal common law should be will probably supply the first indications of how well a federal common law of the environment will function to protect an individual state's environmental quality. See New York v. New Jersey, 256 U.S. 296 (1921); New Jersey v. New York City 283 U.S. 473 (1931).

Jurisdictional Considerations which are raised by the decision in Pankey

The Tenth Circuit, had it decided Pankey differently, might have chosen one of the two alternatives discussed below. Like the actual holding, both raise interesting questions of state and federal jurisdiction. Also, they possibly shed some further light on the rationale for the court's decision.

The court could have denied jurisdiction (forcing Texas to file in the Supreme Court or — much less likely — in the state courts of New Mexico) by refusing to find that the cause of action arose under the Constitution or federal laws. Besides adding to the caseload of the Supreme Court the predicted increase in environmental cases between states and citizens of other states, this alternative would require the Supreme Court to decide what law governs — federal or state common law — in a suit in its original jurisdiction between a state and citizens of another state.

The Supreme Court applies federal interstate common law in suits between states. See Note, The Original Jurisdiction of the Supreme Court, 11 Stan. L.Rev. 665 (1959). Interestingly enough, the Court has not yet stated clearly its rationale for applying federal common law in suits between states, rather than following Erie R.R. v. Tompkins, 304 U.S. 64 (1938), and applying state law. More importantly for Pankey, the Supreme Court has never expressly held that it will depart from Erie and develop federal common law when a state sues citizens of another state. There are good reasons to expect, however, that it would develop its own rules of decision based on interstate federal common law, and perhaps these reasons influenced the Tenth Circuit as it decided Pankey. The Supreme Court could not apply Erie to its own rulings, as it requires district courts to do under Erie, since the Court does not sit in a state. It could apply the law of one state party or the other, but which one? The rule applicable in the district courts is that the choice-of-law rules of the state in which the forum sits apply. Again, since the Supreme Court does not sit in a state, were Erie followed it would either put itself in the position of a district court in which proper jurisdiction and venue lies (or of state courts having the same) or adopt its own choice-of-law rules to find the applicable state law. In these circumstances the Court would be more likely to fall back on the rule adopted for state-against-state conflicts to achieve consistency in cases involving a state as a party. This would ease the Court's burden in deciding interstate conflicts on an equitable basis, so that it could achieve the Erie goal of uniformity of decision in similar cases and avoid inconsistent decisions arising from extremely varied state law (both choice-of-law and substantive). This would also greatly simplify the task of the Court [1 ELR 10021] if and when several states bring suit together.³

The second alternative for the Tenth Circuit would have been to preserve the federal forum in the district court, but to distinguish Tennessee Copper and find that in Pankey Texas had to rely upon applicable state law. This result the Tenth Circuit could accomplish by developing its already stated theory that Tennessee Copper at least esablished a status, if not a federal common law right, under § 1331(a), and that this status allowed Texas the use of the federal district court, which under Erie would have to apply state law of choice-of-law and of substan-ce (probably principles of nuisance law). The interpretation of the phrase "arising under" the Constitution and federal laws necessary to achieve this result has a shaky basis in precedent, but is not unlikely, given the case load of the Supreme Court and the rule which will not allow states to be considered as persons for purposes of establishing diversity.

This result, however, does mean that if the Supreme Court ever applies interstate federal common law, as it does in the closely analogous instance of its state-against-state jurisdiction, the district courts would not be applying the same rules of decision. This inconsistency would probably be overruled, especially since states could forum shop by going to the Supreme Court where federal common law would be available.

The Tenth Circuit's opinion therefore appears to rest on two pillars: (1) the broad equitable and historical principles which buttress the development at this time of states' quasi-sovereign ecological rights, which the circuit court discusses; and (2) the rational allocation of cases and choice of applicable law in the state and federal systems, which the court does not discuss. Admittedly with respect to the second, the federal courts may take a decidedly different tack. They may fashion principles under which state law is applied from the Supreme Court on down. However, for the reasons stated above, such a result appears to be unlikely.

Other current litigation involves the jurisdictional questions raised by Pankey: Washington v. General Motors and multidistrict private civil treble damage antitrust litigation involving motor vehicle air pollution control equipment

The problem of which federal or state courts should have jurisdiction of suits by a state against residents of another state is presented in at least two other recent environmental cases still in their preliminary phases.

In Washington v. General Motors, No. 45 Original (U.S. 1970), 17 states are seeking injunctive relief against the four major automobile manufacturers on three courts. (1) Plaintiffs maintain that defendants conspired, combined and agreed in restraint of trade to delay and prevent the research, development and installation of effective air pollution control devices for automobiles, all in violation of the Clayton Act, 15 U.S.C. § 26, and the Sherman Act 15 U.S.C. § 1. (2) They also allege that defendants have entered into a common law conspiracy in restraint of trade, and plaintiff states seek general equity relief as parens patriae to protect the health, safety and welfare of their citizens. (3) Lastly, plaintiffs maintain that defendants have caused a public nuisance which injures the health, safety and property of the plaintiff states and their citizens. The states sue parens patriae for appropriate injunctive relief against the manufacturers of autos which discharge harmful levels of pollutants. The parties have filed briefs on plaintiffs' motion for leave to file a complaint. Oral arguments have been heard, and the case awaits a decision on whether in the interests of convenience, efficiency and justice the Supreme Court should exercise its discretion and accept jurisdiction of the case.

A similar suit, Multidistrict Private Civil Treble Damage Anti-trust Litigation Involving Motor Vehicle Air Pollution Control Equipment, Docket No. 31 (Judicial Panel on Multidistrict Litigation 1970), is a consolidation of 17 different federal district court suits by states' attorneys general all seeking essentially the same relief based on essentially the same causes of action as sought in Washington v. General Motors, supra. The seven justices of the Judicial Panel, acting pursuant to 28 U.S.C. § 1407, assigned the case to Judge Manuel Real of the United States District Court (C.D. Calif.).

The two suits — one in the original jurisdiction of the Supreme Court and the other in a federal district court — raise squarely the issue of the most appropriate forum for the resolution of multi-state environmental problems where the states' concern has not or cannot be reached by federal or state law. In Pankey and Tenth Circuit decided that if one state has a cause of action against citizens of another, and if proper jurisdiction under 28 U.S.C. § 1331(a) is obtained, the state is entitled to bring its action in the district court, on the grounds that the state is relieving the burden of an overworked Supreme Court. In Pankey, however, in order to establish the necessary district court jurisdiction under 28 U.S.C. § 1331(a), the Tenth Circuit also spoke to the question of what substantive law should apply. The multi-district and original jurisdiction suits raise this question only with respect to the district court action, since in the original jurisdiction of the Supreme Court neither diversity nor a federal [1 ELR 10022] question is necessary — the grant of jurisdiction is by statute and is direct. 28 U.S.C. § 1251(b)(3).

Interestingly enough, both plaintiffs and defendants in Washington v. General Motors assumed in arguing whether plaintiffs should be allowed to file in the Supreme Court that the third count — the public nuisance count — did not arise under the Constitution and federal laws. This being the case, the parties assumed, jurisdiction to hear the public nuisance count did not exist of right in the federal multi-district suit; jurisdiction could only be obtained if the district judge in his discretion allowed pendent jurisdiction, since 28 U.S.C. § 1331(a) had not been satisfied. Pankey bears directly upon this assumption. It can be regarded as a public nuisance suit asserted by a state parens patriae or in its quasi-sovereign capacity. (All three suits discussed here rely upon the same line of cases, and especially upon Tennessee Copper, for the proposition that states retain quasi-sovereign interests entitling them to bring actions parens patriae.) Thus Pankey gives plaintiffs a theory on which to bring the third count as a matter of right in the multi-district action. Pankey allows jurisdiction under 28 U.S.C. § 1331(a) and supplies a theory of substantive law under which one common law principle would apply, not the choice-of-law and nuisance principles of 17 different states, in deciding the public nuisance count.

It is interesting to note that Pankey cuts against the plaintiffs' case in the Supreme Court. There they are arguing that the Supreme Court should exercise its discretion to allow the suit, because a trial in the multidistrict action on the public nuisance count might not be possible. Pankey is authority for the proposition that the count can be heard under federal common law in the district court.

Removed from the context of the two air pollution suits, Pankey opens the way for a variety of environmental actions between states and citizens of other states in the federal district courts. No attempt need be made to convince the Supreme Court to allow the suit to be filed in its original jurisdiction. On the other hand, in meritous cases where convenience, efficiency and justice require it, the Court's original jurisdiction remains available. Attorneys-general of states with environmental interests to protect from interstate sources of harm will therefore find Pankey of great interest. Their latitude in choosing alternative judicial strategies is increased by that decision, as are the available theories of substantive law under which they might proceed.

1. Several other SupremeCourt cases, not discussed by the Court, bear directly upon the issues presented in Pankey. These include two state-against-state nuisance cases within the original jurisdiction of the Supreme Court [New York v. New Jersey, 256 U.S. 296 (1921); New Jersey v. New York City, 283 U.S. 473 (1931)] and especially Georgia v. Pennsylvania R. Co., 324 U.S. 439 (1945), in which the state of Georgia brought an original action under the Clayton Act for injunctive relief and damages against 20 railroads alleged to have conspired in fixing freight rates that discriminated against Georgia. The Supreme Court held in the Pennsylvania R. Co. case that its original jurisdiction could be invoked by a state suing citizens of another state in either its parens patriae or "quasisovereign" capacity. (This case did not reach trial on the merits.)

2. In state courts nuisance actions are generally treated as local actions which must be brought in the district where the nuisance is to be abated. See, e.g., Ladew v. Tennessee Copper Co., 179 Fed. 245 (C.C.D. Tenn), aff'd 218 U.S. 357 (1910); Engle v. Scott, 57 Ariz. 383, 114 P.2d 236 (1941); Mississippi and M.R. Co. v. Ward, 67 U.S. (2 Black) 485 (1862); State v. Reynolds, 113 Ohio App. 469, 178 N.E.2d 842 (1960); People v. City of St. Louis, 10 Ill. 351 (1848); People ex rel Cunningham v. Lewis, 43 Ill. App. 2d 295, 193 N.E.2d 473 (1963). Annotation, Venue of Suit to Enjoin Nuisance, 7 A.L.R.2d 473 (1949). A number of states have statutes to the same effect. See, e.g., Kansas Statutes Ann. 1964, § 60-908; West Virginia Code, § 20-5A-17; Baldwin's Ohio Revised Code Ann., Ch. 3707.01, 3707.51; T.18 Vermont Statutes Ann., § 610.

3. See discussion of air pollution suit brought by 17 states in the original jurisdiction of the Supreme Court against corporations resident in other states, infra.