WASHINGTON—If the Supreme Court allows a global warming suit that hinges on the federal common law of “nuisance” to go forward, a slew of similar suits—and insurance coverage battles—could follow.

The high court agreed last week to hear an appeal involving American Electric Power Co. Inc. et al. vs. State of Connecticut et al., in which a coalition of states, environmental groups and New York sued several of the nation's largest coal-burning utilities, alleging that their carbon dioxide emissions led to beach erosion, droughts and floods.

A New York federal judge dismissed the case in 2006 on grounds that the regulation of greenhouse gas emissions was a political question best left for the elected branches of government. However, in September 2009, the 2nd U.S. Circuit Court of Appeals reversed, sending shock waves through the energy industry.

Because of its far-reaching implications, AEP vs. Connecticut is being closely watched by parties in two other climate change nuisance cases pending in U.S. courts: Kivalina vs. ExxonMobil Corp., filed by a group of Eskimo villagers who allege that oil, energy and utility companies' greenhouse gas emissions caused Arctic sea ice to diminish and threaten native fisheries; and Ned Comer et al. vs. Murphy Oil USA et al., filed by a group of Gulf Coast property owners who claim that oil and electric power companies' emissions “added to the ferocity of Hurricane Katrina” by contributing to global warming.

In August, the Obama administration intervened in AEP vs. Connecticut, filing a brief asserting that the Environmental Protection Agency, not the courts, should address greenhouse gas emissions.

If the Supreme Court elects to uphold the 2nd Circuit's decision, it could open the floodgates to similar global warming nuisance suits, legal experts say.

On the other hand, a reversal could halt global warming nuisance suits, at least temporarily, until creative plaintiffs lawyers find another cause of action to seek redress, legal experts say.

Legal experts also point to a third potential scenario: The high court could adopt the position it took in its 2007 decision in Massachusetts et al. vs. Environmental Protection Agency et al., which found that greenhouse gases are air pollutants covered by the Clean Air Act, and that it is the EPA's job to regulate them.

Regardless of how the Supreme Court rules, the emergence of climate change nuisance suits is posing insurance coverage questions for defendants and their insurers, though so far only one such suit has spawned actual coverage litigation: Steadfast Insurance Co. vs. AES Corp., which stemmed from the Kivalina case, is slated to be heard by the Virginia Supreme Court in early 2011.

“If the court upholds Connecticut vs. AEP, we're certainly going to see more climate change claims,” said John H. Denton, senior vp and an attorney at Marsh Inc. in New York. “Consequently, we're going to see more claims by policyholders to recover the cost of climate change claims from their liability insurance carriers.”

“On the other hand, if the Supreme Court reverses...it would be a significant setback for climate change litigation in general. Although in other contexts, plaintiffs have been creative and have been able to, at times, avoid legal roadblocks,” Mr. Denton said.

A reversal “will be the death knell for judicial regulation of greenhouse gases,” said William Stewart, partner in the national insurance coverage group of Nelson Levine de Luca & Horst L.L.C. in Blue Bell, Pa.

Conversely, “if they rule the case can go forward...we are going to be swimming in global warming nuisance claims,” Mr. Stewart said.

Trent Taylor, a partner in the environmental and toxic tort practice at McGuireWoods L.L.P. in Richmond, Va., said the most likely outcome is that the court will reverse the 2nd Circuit's ruling on a narrow basis.

“Maybe six justices will agree on one component and decide the case based on that,” he said.

For example, the court may decide such cases shouldn't be decided based on common law tort, but rather based on federal law and federal regulations, Mr. Taylor said.

“This is what the solicitor general's brief argued,” he said.

But even if the court rules this way, “it would not completely end the litigation” over contributions to global warming, according to Collin Hite, a partner and co-leader of the insurance coverage practice group at McGuireWoods.

“There are a couple of different ways to sue over climate change,” such as personal injury, property damage, conspiracy, fraud and failure to disclose, which is the most likely cause of action to be cited in shareholder derivative suits, he said.

And while the pollution exclusion most likely will bar coverage under commercial general liability policies, “I think there's a much better argument for coverage under D&O,” said Mr. Hite, who wrote a white paper analyzing the directors and officers liability coverage in climate change litigation.

Even if the pollution exclusion bars coverage for damages stemming from alleged contributions to climate change, “whether that affects insurers' duty to defend...that remains to be seen,” said John Nevius, a partner and chair of the environmental law group at Anderson Kill & Olick P.C.'s New York office.

“The fact that the Supreme Court took up this case underscores that global climate change is a fact of life in modern society from the standpoint of potential liability and corporate disclosure. How the court holds will inevitably be used by both sides on the insurance divide to argue their position on the impact of any exclusionary language related to pollution in this type of litigation,” Mr. Nevius said.