At issue in the Supreme Court case, American Electric Power Co. (AEP), et al. v. Connecticut, is whether states can use public nuisance laws to force coal-burning power plants to reduce their carbon dioxide emissions.
Connecticut, California, New York, Rhode Island, Vermont, Iowa, New York City and three conservation groups argued that AEP, three other private companies, and the Tennessee Valley Authority (TVA), are significantly contributing to global warming through emissions from their fossil-fuel burning power plants.
The power companies—the nation's five largest emitters of carbon dioxide—are "contributing to and exacerbating these harms by emitting 650 million tons of carbon dioxide each year – ten percent of the entire country's annual emissions," the states wrote in their Supreme Court brief. The power companies argued that no single source of carbon dioxide emissions can be traceable to global climate change. The states' lawsuit is unprecedented, they argued, and would unleash a torrent of other legal claims against small and big energy producers alike.
Connecticut and the other states are seeking a three percent cut in carbon emissions from the power companies for the next ten years. In an initial ruling, a lower court sided with the power companies, determining that the states' suit involved complex political questions that should be handled by the legislative and executive branches. But the Court of Appeals for the 2nd Circuit overturned that ruling, holding 1) public nuisance claims against greenhouse gas emitters do not present non justiciable political questions, and 2) private organizations have standing, upon a showing of injury different in kind from the public at large, to pursue litigation.
The Supreme Court appeared deeply skeptical of the states' claims on Tuesday. Both conservative and liberal justices questioned whether a federal judge could deal with the complex issue of global warming, a topic they suggested is better left to Congress and the Environmental Protection Agency (EPA).
The Obama administration, representing the TVA, joined with the power companies in asking the high court to dismiss the lawsuit. The administration stated that the EPA is considering setting emission standards that would accomplish what the states are seeking.
Peter Keisler, arguing on behalf of the power companies, summarized his clients' position as follows:
This is a case in which the courts are being asked to perform a legislative and regulatory function in a matter in which the necessary balancing of contending policy interests is among the most complex, multifaceted, and consequential of any policy issue now before the country.
The states ask that the courts assess liability and design a new common law remedy for contributing to climate change, and to do so by applying a general standard of reasonableness to determine for each defendant, in this case and in future cases, what, if any, its share of global reductions in greenhouse gas emissions ought to be. That would require the courts not to interpret and enforce the policy choices placed into law by the other branches, but to make those policy choices themselves. And all of our arguments here – that plaintiffs lack standing, that the Federal common law shouldn't be expanded to include this new cause of action, and that the case presents nonjusticiable political questions – while all of them represent distinct points, all of them flow from the same basic separation of powers principles that establish, we believe, that the case ought to be dismissed.
Neal Katyal, arguing on behalf of the Administration, joined in the argument by the power companies:
In the 222 years that this Court has been sitting, it has never heard a case with so many potential perpetrators and so many potential victims, and that quantitative difference with the past is eclipsed only by the qualitative differences presented today. Accordingly, the Court should apply the prudential standing doctrine and hold these lawsuits not fit for judicial resolution. The very name of the alleged nuisance, "global warming," itself tells you much of what you need to know. There are billions of emitters of greenhouse gasses on the planet and billions of potential victims as well.
Barbara Underwood, arguing on behalf of the states, opened by arguing:
This case rests on the longstanding fundamental authority of the states to protect their land, their natural resources, and their citizens from air pollution emitted in other states. It rests on three propositions: One, the interests of the states are harmed by global warming; two, these defendants, as the five largest U.S. emitters of carbon dioxide, are significant contributors to it; and, three, these defendants could take reasonable, cost-effective measures to reduce their emissions in a way that would slow the effects of global warming.
The Justices seemed skeptical of the arguments presented by the states' counsel. Justice Ginsburg:
General Underwood, the – the relief that you're seeking, asking a court to set standards for emissions, sounds like the kind of thing that EPA does. I mean, Congress set up the EPA to promulgate standards for emissions, and now what – the relief you're seeking seems to me to set up a district judge, who does not have the resources, the expertise, as a kind of super EPA.
Chief Justice Roberts:
...the whole problem of dealing with global warming is that there are costs and benefits on both sides, and you have to determine how much you want to readjust the world economy to address global warming, and I think that's a pretty big burden to post – to impose on a district court judge.
No statute or rule "currently regulates the emissions of existing power plants," said Barbara Underwood, the New York solicitor general. Underwood said the plants operated by the companies and the TVA account for 10 percent of all carbon dioxide emitted annually in the U.S.
The case is the second climate change dispute at the court in four years. In 2007, in Massachusetts v. EPA, the court held that carbon dioxide and other greenhouse gases are pollutants under the Clean Air Act. By a 5-4 vote, the justices held that the EPA has the authority to regulate such greenhouse gas emissions.
Justice Ginsburg was among the justices in the majority in the Massachusetts v. EPA case. Two others in that majority, Justices Stephen Breyer and Anthony Kennedy, also expressed doubts about the states' case Tuesday. Breyer questioned whether a judge would have the authority to issue the kind of order the states want.
Justice Sonia Sotomayor, who was on the federal appeals court panel that heard the case, recused herself from the Supreme Court's consideration of the issue.
A decision is expected by late June.
On the same day, the Virginia Supreme Court heard arguments in The AES Corp. v. Steadfast Insurance Co. That case tests whether there will be insurance coverage under general liability policies for carbon dioxide liability. Steadfast filed a declaratory judgment action disclaiming coverage for one of the utilities sued in Native Village of Kivalina v. ExxonMobil Corp. In the Kivalina case, a native village in Alaska brought a nuisance suit against 24 major oil companies seeking relocation costs and damages regarding fisheries. In 2009, a federal district judge dismissed the case against the power companies based upon the attenuated nature of the causal link between the claimed injuries and any particular defendants' conduct, and on the basis that the regulation of greenhouse gas emissions was an issue best left to the political branches of government. The plaintiffs have appealed the ruling to the 9th Circuit Court of Appeals.
In the AES v. Steadfast case, the trial court held that, based on the allegations in the Kivalina Complaint that AES knowingly and intentionally engaged in conduct known to pollute the atmosphere and to cause global warming, which foreseeably resulted in such severe erosion damage to the Arctic coastline that the native people of Kivalina must abandon their island home, Steadfast had no duty to defend AES in the Kivalina suit.
The trial court reasoned that based on the allegations in the Kivalina Complaint, Steadfast had no duty to defend AES because the allegations did not constitute an "occurrence" (i.e., an accident), as defined in the Steadfast policy.
AES appealed the trial court's decision to the Virginia Supreme Court.
On appeal, Steadfast requested that the Virginia Supreme Court affirm the trial court's grant of summary judgment. Alternatively, Steadfast argued that it has no duty to defend AES based on the pollution exclusion that bars coverage for damages "arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of 'pollutants,'" as defined in the policy. The trial court held that there was no "occurrence," without reaching the "pollution exclusion" issue.
Steadfast argued that the Kivalina Complaint is "quintessentially" a claim alleging environmental pollution. The Kivalina Complaint alleged that AES released such huge amounts of gaseous waste products as to harmfully alter the constitution of the global environment, the atmosphere itself, and expressly characterized this environmental damage as "pollution."
As a consequence of the Kivalina allegations, Steadfast argued that "as a matter of black-letter Virginia law, the insurance question turns only on whether the allegations [against AES], taken as true, allege pollution, and they do."
The AES Corporation v. Steadfast Insurance Company case is the first liability climate change insurance coverage case filed in the U.S. As a consequence, insurers and policyholders are closely monitoring this case
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