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Greenhouse gas change fuel for lawsuits?

Greenhouse gas change  fuel for lawsuits?

WASHINGTON—The Environmental Protection Agency's finding last week that greenhouse gases threaten public health and welfare could bolster global warming-related litigation against emitters of such gases, legal experts say.

At the same time, the government's endangerment finding also could bolster the argument that carbon dioxide and other greenhouse gases are pollutants and that pollution exclusions contained in various commercial insurance policies should apply in coverage disputes, some say.

The EPA finding, which was widely expected after it issued preliminary findings in April, stems from the 2007 Supreme Court decision in Massachusetts et al. vs. Environmental Protection Agency et al. In that ruling, the high court ruled that greenhouse gases fall within the definition of pollutants under the Clean Air Act. It then ordered the EPA to determine whether greenhouse gases emitted by new motor vehicles cause or contribute to air pollution and endanger public health. Such a determination is a prerequisite for regulating those emissions under the Clean Air Act.

The EPA endangerment finding came on the eve of the U.N. Climate Change Conference in Copenhagen, where delegates from 192 countries, including the United States, are gathered to try to reach a consensus on how to prepare for an international treaty to limit global warming. The conference continues this week.

Many said they believe the Obama administration will use the EPA move to spur Congress to enact climate change legislation, which could create federal pre-emption complications for common law global warming suits.

The American Clean Energy and Security Act of 2009, which would cap greenhouse gas emissions, among other things, passed the House in June, but the Senate has not taken up the measure.

Although legal experts noted that the EPA's finding, in and of itself, may not give rise to climate change litigation, experts said it is likely that plaintiffs attorneys will use it to bolster existing suits against greenhouse gas emitters accused of creating a public nuisance.

Recent decisions by federal appeals courts in the 2nd and 5th Circuits giving “the green light” for two such suits to proceed provide the main impetus for plaintiffs to continue pursuing climate change litigation, said Deborah L. Stein, an associate with Simpson Thacher & Bartlett L.L.C. in Los Angeles.

In State of Connecticut et al. vs. American Electric Power Co. Inc. and Ned Comer et al. vs. Murphy Oil USA et al., the 2nd and 5th Circuits, respectively, overturned lower court rulings that the global warming suits brought under nuisance law raised political questions that were inappropriate for judicial review (BI, Nov. 22).

Last week's EPA endangerment finding, however, “certainly will be viewed by plaintiff lawyers as additional fodder for those lawsuits,” Ms. Stein said.

Coupled with the recent appeals court developments, “you now have the federal government talking about the level of endangerment. It just provides support for the causation arm of those allegations,” said John G. Nevius, a shareholder at policyholder firm Anderson Kill & Olick P.C. in New York.

“My view is common law nuisance (litigation) was strengthened by the statutory enactment of Superfund, so I would speculate that when the EPA comes out with regulations...that would strengthen a nuisance case—that your emissions of an air pollutant is remediable under common law tort,” said J. Wylie Donald, a policyholder attorney in the Wilmington, Del., office of McCarter & English L.L.P. and co-chair of the firm's climate change and renewable energy practice.

While the EPA endangerment finding “may add to the plaintiffs attorneys' perception that these types of cases can succeed...there still remain very serious causation and damages issues, including the need to show a nexus between a targeted defendant's conduct and the harm alleged by a particular plaintiff or group of plaintiffs,” said Laura A. Foggan, a partner at Wiley Rein L.L.P. in Washington. The EPA's finding “does nothing to alleviate the difficulty of plaintiffs' proof on the causation and damages issues, which are very high hurdles.”

A more direct effect of the EPA finding, Ms. Foggan said, has to do with pollution exclusions. The finding reinforces “that claims made in climate change litigation are pollution-related claims and, thus, helping make clear that these are matters to which pollution exclusions are applicable.”

While Mr. Nevius acknowledged that the endangerment finding could indeed “bring some of these pollution exclusion-related issues to the fore,” he said that viewing a pollution exclusion as an “across-the-board bar” in insurance coverage is “inappropriate.”

“You have to look at the allegations of the complaint and the language of the insurance policy” on a case-by-case basis, he said.

Legal experts noted, however, that such coverage disputes and climate change litigation in general ultimately could become moot should Congress pass a federal greenhouse gas emission regulatory regime that expressly pre-empts all state and local rules as well as common law lawsuits.

“We may see an effort by Congress to provide for a more express pre-emption to head off global warming private lawsuits so global warming doesn't turn into the next asbestos,” Mr. Nevius said.

The scope of that pre-emption is an issue Congress “has to be wrestling with,” noted Mike Bloomquist, of counsel with Wiley Rein. Some argue that those alleging harm from greenhouse gas emissions should be allowed to sue for damages, while others say the issue needs to be settled now because “we can't have all these lawsuits going on,” he said.

Overall, “nobody wants EPA or the courts to unilaterally act under current law. In fact, a rallying cry from those that support congressional action has been, "We can't let the courts and EPA regulate this,' “ Mr. Bloomquist said.