Sometimes, when the Supreme Court decides a case, it’s hard to know how the decision will play out. After all, few would have predicted that when the Court decided Chevron USA v. NRDC, a recondite case about power-plant emissions, it was in fact changing administrative law for a generation. Only after lower courts applied the decision in hundreds of other cases did its real impact become clear. It was a legal revolution in slow motion.

But other times, a case’s impact is clear well in advance. So it will be this coming Term, when the Supreme Court considers Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County. Like Chevron before it, Suncor is superficially about air pollution, a big enough topic in its own right. But beneath its surface, it is also about the legitimacy—and even existence—of federal common law. States and scholars are pushing the Court to narrow federal common law as a concept, or maybe even discard it entirely. And if the Court does that, the result will ripple through many other areas of law, some of which have nothing to do with climate change. The blast radius could be wide, and the implications profound. One hopes the justices are looking ahead as well as behind.

Federal Law by Federal Courts

The debate over federal common law is almost two centuries in the making. It started with Swift v. Tyson, an 1842 decision where the Supreme Court recognized something called “general law.” General law was basically the law at large—a way of finding legal rules by resorting to widely accepted tradition. This tradition was something like custom, something like logic, something like natural law. Since it didn’t depend on any single legislature or court, its sources were hard to pin down. At times, it seemed to be plucked from little more than thinly glossed air. But even so, according to Swift, it could be applied by federal courts to govern areas of general concern. Even when state law might otherwise apply to a dispute, federal courts were still free to search the tradition and find a different, “general” rule.

If that concept sounds strange to us now, it’s because the Supreme Court has long since abandoned it. In Erie Railroad Co. v. Tompkins, the Court held that there is no such thing as “federal general common law.” It reasoned that federal courts have no power to create law on their own. Instead, federal law must come from one of three sources: a treaty, a statute, or the Constitution. If none of those sources applies, a federal court can’t just fish around for a general rule. Instead, it must apply the only other law available—state law. There is no third option.

Erie’s legal rule is clear on its face. But like most legal rules, it comes with caveats. From the beginning, the Supreme Court has continued to recognize that there are some cases where Erie’s binary logic doesn’t hold. For example, states sometimes get into disputes over their mutual boundaries. Neither state can claim that its own law governs the issue, and there may not be a federal statute on point. In that kind of case, the only possible way to resolve the dispute is to create federal common law.

This kind of common law, though, isn’t just the old general law in disguise. It is grounded in the Constitution’s logic and structure, which assign responsibility for national issues to the national government. It is genuine federal law. And as federal law, it can preempt inconsistent or incompatible state law. It might even occupy the field, leaving no room for state law at all. That is different from the general law, which had no preemptive effect: state and federal courts were free to disagree about what the general law was. So ironically, by sweeping away general law, Erie gave us a more uniform system. Where federal common law applies, there is only one rule. 

Suncor and the General Law Revival

But like Swift before it, Erie has started to show its age. A new generation of scholars have started to question not only its reasoning, but also its results. They have asked, if federal courts really have no power to make law, then what are they doing deciding cases where no federal law applies? True, there may be some cases where state law can’t apply, like border disputes. But that doesn’t mean they should just make the law up. Instead, they should look for general trends and customs across the legal community. That is, they should do what they did under Swift.

That debate will loom over the Court’s deliberations in Suncor. There, Colorado local governments are suing energy companies for allegedly contributing to climate change. Their claims are all based on state law. In response, the companies say the claims are preempted by federal common law, which has long been thought to govern disputes about interstate pollution. And while Congress has since entered the field by passing, among other things, the Clean Air Act, the field remains inherently federal. State authority doesn’t snap back just because Congress has displaced federal common law by statute.

But if the new critics are right, and federal common law has lost its moorings, that argument could collapse. While federal common law preempts state law, “general” law does not. So if we’re moving back toward a general-law regime, the companies could face even more litigation in the states.

Suncor’s Blast Radius

So could a lot of other people. As important as Suncor may be for climate regulation, it could also have a wide blast radius. Today, federal common law governs dozens of legal fields. These fields have relied on federal uniformity for two generations. A sudden change could shift the ground beneath a lot of feet.

To take one example, consider the law of labor contracts. For about seven decades, labor contracts have been governed by federal common law. This common law ostensibly grows out of section 301 of the Labor–Management Relations Act, which facially just gives federal courts jurisdiction to hear suits about labor-contract violations. But in the 1950s, the Supreme Court held that it also allows federal courts to create federal common law. The Court reasoned that Congress was concerned with making sure that labor contracts were enforced uniformly. So it would have been odd for Congress to import state contract law through section 301. Instead, the Court concluded, Congress meant to give federal courts the power to fashion their own brand of contract law. And that contract law would displace all state regulation.

To be sure, that conclusion was never uncontested or obvious. Justice Frankfurter, for one, argued vigorously in dissent that one could not read substantive common-law authority into a statute that, at least on its face, merely gave federal courts jurisdiction. In effect, he accused the Court of exercising lawmaking authority where no such authority had been given by Congress. So even though modern caselaw under section 301 grows out of a statute, it has always been open to the same critiques made by the modern critics of federal common law.

And yet, this approach to labor contracts has worked. It has both invited reliance and promoted stability. Unions and employers wrote thousands of contracts with section 301 in mind. These parties understood that their agreements would be interpreted and enforced according to a uniform body of contract law. They knew exactly what they were agreeing to. But if Suncor takes a bite out of federal common law, that certainty could slide into a morass of state-by-state regulation. Labor contracts could suddenly mean one thing in Sacramento, but a different thing in Syracuse.

Labor contracts are hardly the only example. The same instability could sweep into other areas as well. But labor contracts offer a clear picture of what Erie has produced: consistency, certainty, and a legal environment that promotes stable investment. That is what federal common law protects, and it is what we could lose if Suncor goes the wrong way. Some decisions have unpredictable results, but that one would not: it would upset expectations and sow a new crop of legal chaos.