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RISKVUE ARCHIVE | FEATURE STORIES
Global Warming Litigation--Already Here, But Are You Ready?
By Christina LaRosa and Noel Paul
A regular glance at headlines of major newspapers reveals a somewhat startling trend: global warming litigation is increasingly appearing commonplace. Just last month, The New York Times, among other papers, reported on two major global warming decisions by federal courts. The Times also highlighted New York Attorney General Andrew Cuomo's demand that certain energy companies report risks to shareholders of their greenhouse gas emissions ("GHGs"). Given this rise in legal activity, the most pressing question for companies concerned with global warming litigation is not whether suits will come, but how to respond to them. To that end, the issue of insurance coverage should be foremost in their planning.
There are primarily four major areas of global warming litigation: (1) Clean Air Act ("CAA") litigation; (2) compliance suits under the National Environmental Protection Act ("NEPA"); (3) suits seeking damages or claiming nuisance; and (4) suits attempting to regulate emissions at the state level. In the absence of regulation by the federal government, advocates of emissions' regulation appear to be advancing their cause through a variety of legal theories, in a variety of courts.
Clean Air Act Litigation
In what some experts have called the most significant environmental law decision of the past decade, the Supreme Court held in Massachusetts v. EPA that: (1) the EPA had authority to regulate GHGs; and (2) Massachusetts and other states had standing to bring suit for injuries resulting from global warming. There is no doubt that the first holding will significantly affect the future of global warming regulation, particularly in determining to what degree state governments can address the issue themselves. The holding on standing--in particular, that states had "special solitude" to bring suit, and that they could redress their injuries resulting from climate change--arguably is far more significant. By holding that states--and possibly large landholders--could bring suit for global warming, Massachusetts opened federal courts to a host of suits that otherwise likely would have foundered.
Compliance Suits Under NEPA/State Statutes
Another federal court held that environmental groups had standing to sue two government defendants for failing to factor their contributions to global warming into their Environmental Impact Statements. In Friends of the Earth v. Mosbacher, the court further denied defendants' summary judgment motion, stating that it was reasonably probable that emissions from the groups' projects would adversely affect plaintiffs' concrete interests.
Significantly, states are beginning to require consideration of climate change under state legislation similar to NEPA. California Attorney General Jerry Brown recently sued San Bernardino County, the nation's largest in terms of land area, for failing to account for greenhouse gases when updating its 25-year plan for growth. The lawsuit alleged that the California Environmental Quality Act requires regulation of GHGs like any other pollutant, and that counties must account for such emissions for any major development project. (The two parties recently reached settlement.) Massachusetts Gov. Deval Patrick, meanwhile, has ordered state regulators to require developers to calculate GHG emissions before initiating major projects.
Suits Claiming Nuisance Or Seeking Damages
Plaintiffs have initiated several ambitious suits against some of the largest emitters of GHGs in the US, essentially in an effort to "regulate through litigation." In Connecticut v. American Electric Power, eight states, the City of New York, and several land trusts brought nuisance suits against the nation's five largest utility companies. The suits argued that these companies' CO2 emissions constituted a public nuisance, and asked a federal judge in the Southern District of New York to enjoin each defendant to abate its emissions. The judge demurred, however, finding that regulation of global warming constituted a "political question" that the courts were not suited to address.
Recently, a judge in the Northern District of California used similar reasoning to throw out perhaps the most aggressive litigation brought against corporate emitters of GHGs. California's suit against six major motor vehicle manufacturers sought billions of dollars in damages to compensate the state for its losses resulting from global warming. The state cited several injuries --including loss of snow pack and coastline, and increased flooding and wild fires--resulting from climate change, as well as costs to prevent further harm.
Like his counterpart in New York's Southern District, however, Judge Martin J. Jenkins dismissed the suit as a "non-justiciable political question." Upholding the plaintiff's theory that the automakers unreasonably "interfered with a right common to the general public," according to Judge Jenkins, would require a policy determination of the costs to society of CO2 emission compared to the economic benefit of industrial development. The courts, Judge Jenkins stated, are not suited to make such a determination. Moreover, while Massachusetts granted states standing to pursue "procedural" remedies to global warming, Judge Jenkins said the Court's holding did not necessarily provide standing for suits seeking damages.
Other suits for damages have involved some more unconventional claims. In Comer v. Nationwide Mutual Insurance, 14 individuals who lost their homes in Hurricane Katrina filed a class action against eight named oil companies, 100 unnamed oil and refining companies, and 31 coal companies for their historic emissions of GHGs. These emissions constituted a nuisance, plaintiffs argued, because they contributed to the formation of the hurricane.
State Regulation Of Emissions
Shortly before the decision in favor of the automakers, a Vermont district court judge provided a major victory for those seeking increased CO2 regulation. Along with 11 other states, Vermont had adopted GHG emission limits for cars and light trucks. The regulations, originally conceived and adopted by California, would require automakers to cut GHG emissions by up to 37 percent by 2016. Thus, the automakers argued that the regulations were technologically impossible to meet, and that the federal government preempted state efforts to regulate emissions.
Judge William K. Sessions III ruled, however, that the industry surely would be able to adapt to this regulation, as it has to those imposed previously. Moreover, because the EPA had the power to grant California and other states a waiver on federal governance of this issue, the states were not technically preempted from devising their own emissions regulations. In late 2005, California filed a waiver with the EPA regarding the emissions standards. The EPA has promised to rule on the request by the end of the year, though California has promised to bring suit if the agency fails to act promptly.
Conclusion
Impatience with the federal government's decision not to regulate GHGs, along with a handful of highly influential court decisions, appears to have fueled a steady increase in global warming litigation. As plaintiffs bring a variety of legal theories in front of a diverse number of judges and juries, it is probable that several plaintiffs eventually will receive favorable judgments in the form of damages, court injunctions, or policy decisions. Fortunately, corporate policyholders held liable in these proceedings should receive indemnification from various lines of coverage. 
ABOUT THE AUTHORS
Christina LaRosa is an attorney in the Chicago office of Anderson Kill. Ms. LaRosa is experienced in handling insurance recovery litigation on behalf of policyholders in matters involving commercial general liability, first party property, professional liability, environmental, and labor and employment litigation. She can be reached at 312-577-7582 or clarosa@andersonkill.com.
Noel Paul is a law clerk in the Chicago office of Anderson Kill.
Reprinted with permission from the Autumn 2007 issue of Energy & Chemical Insurance Advisor, published by Anderson Kill & Olick, P.C.
riskVue | The webzine for risk management professionals
November 2007
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