Climate Change Report : Climate Change Lawyer & Attorney : K&L Gates Law Firm : Global Climate Law, Carbon Emissions

By Vanessa Edwards (London), Philip Torbøl (Brussels), Christopher Tung (Hong Kong), and Sara Aparicio Hill (Brussels)

The Court of Justice of the European Union (CJEU) has delivered its Judgment on a Preliminary Ruling on the European Union’s Emissions Trading Scheme (EU’s ETS) extension to aviation. The Judgment substantially follows the Advocate General’s Opinion of 6 October 2011.

Background to the Dispute
The EU’s ETS Directive 2008/101 ("the Directive") requires all greenhouse gas emissions from aircraft landing or taking off within the EU to be included within the ETS, which aims to cut greenhouse emissions by creating a market for emission allowances. Accordingly, from that date all airlines – including those of non-EU countries – will have to acquire and surrender emission allowances for their flights which depart from and arrive at European airports.

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By: John M. Sylvester (Pittsburgh) and Jonathan D. Christman (Pittsburgh)

In the nation’s first appellate decision of its kind, the Virginia Supreme Court has held that an insurer does not have a duty to defend an energy company policyholder for third-party liability claims alleging global warming-related damage.  Specifically, in AES Corp. v. Steadfast Insurance Co., the Virginia Supreme Court upheld a lower court decision and determined that an insurer had no duty to defend AES Corporation with respect to a global warming claim lawsuit brought by a native Alaskan village against several energy and utility companies on grounds that the complaint did not contain allegations of an “occurrence” necessary to trigger the insurer’s relevant policies.  This decision, however, is certainly not a conclusive statement on the issue of insurance coverage for global warming claims because the legal principles on which the decision is based are a minority view. 

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By Vanessa Edwards (London/Brussels), Philip Torbøl (Brussels), Christopher Tung (Hong Kong), and Jonathan Blank (Washington, D.C.)

In an important case pending before the European Court of Justice (ECJ), the Advocate General Juliane Kokott (AG) delivered her Opinion on Thursday 6 October. The AG considers that the inclusion of international aviation in the European Union (EU) Emissions Trading Scheme (ETS) is compatible with international law.

The AG's Opinion is not binding on the judges of the ECJ but in the majority of cases the judgment of the ECJ comes to the same conclusion. The judgments in this case should be delivered in the course of next year.

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By John Krill (Harrisburg)

The United States Supreme Court has held that the Clean Air Act[1] “displaces” any federal common-law cause of action that might exist for the alleged public nuisance of contributing to global warming by emitting carbon dioxide, but left open the possibility of state law claims.

The Court decided 8-0 in American Electric Power Co. et al. v. Connecticut et al. that the Second Circuit erred when it allowed such a federal common-law nuisance suit by eight states and three land trusts to go forward against five major electric power companies.[2]

The Opinion of the Court, reviewing the history of the federal common law of public nuisance, focuses on the litigation several decades ago over sewage pollution of Lake Michigan.  In Illinois v. City of Milwaukee, the Court found that there was a common-law cause of action maintainable by the State of Illinois to abate pollution of the lake from Milwaukee’s discharges.[3]  Nine years later the Court held that the Clean Water Act amendments to the Federal Water Pollution Control Act[4] had “displaced” the federal common law claims brought by Illinois.[5]

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by Jack Krill (Harrisburg), Christopher Kratovil (Dallas) and Stephen Matzura (Harrisburg)

Briefs on the merits are now being filed in the U.S. Supreme Court in American Electric Power et al. v. Connecticut et al., in which eight states and three land trusts are suing six electric utilities to abate emissions alleged to be contributing to global warming.

The utilities are appealing the decision of the Second Circuit Court of Appeals, which held that the complaint stated a cause of action in the nature of a federal common-law tort of public nuisance. The utilities are arguing essentially three points. First, the plaintiffs do not meet the requirements of Article III of the U.S. Constitution for standing to sue, because their alleged injuries are neither fairly traceable to the defendants nor redressable by the courts. Second, the federal common law tort of nuisance does not include global warming and has been "displaced" by the remedies in the Clean Air Act. Third, the case is nonjusticiable (relying on the precedent set in Vieth v. Jubelirer, a case that K&L Gates won in 2004) .

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by Cliff L. Rothenstein (D.C), Michael W. Evans (D.C), Cindy L. O'Malley (D.C)

The 112th Congress, which kicked off on January 5th, has a vastly different makeup and profile than the just completed 111th Congress.  A new, more conservative Republican House majority, with a new Speaker, new committee chairmen anxious to make their mark, new Tea Party members, coupled with a more liberal House minority due to the defeat of 20 plus so-called Blue Dogs and longtime fixtures of the likes of Ike Skelton, John Spratt and Jim Oberstar, may make for a rather polarizing couple of years.  

In the Senate, the leadership and committee chairmen and composition will look very similar to the last Congress.  But with the Democrats holding only a razor thin majority, overcoming real or threatened filibusters will continue to be a challenge.  

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An article by Pittsburgh partner John Sylvester and associate Jim Malloy examines some of the insurance coverage issues arising from global warming claims asserted against industrial companies that have allegedly emitted greenhouse gases in the course of their business operations.

The article "Insurance Coverage for Global Warming Liability Claims," appears in a recent issue of the Tort Trial & Insurance Practice Journal and observes that the global warming debate recently has entered the courtroom with potentially costly consequences to corporate defendants.

John and Jim’s article discusses the coverage issues that policyholders face in seeking general liability insurance for defense costs and potential liabilities that may result from global warming claims. These issues include those relating to the duty to defend, timely notice to insurers, the trigger of coverage, the nature of the relief sought by the claimants, the so-called "expected-intended" defense asserted by insurers and the applicability of the pollution exclusion, among others. The article recommends that corporate defendants review their current and historical liability policies to analyze the prospects for insurance coverage for these claims.

To read the full article, click here.

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Authored by John C. Bjorkman (Seattle)

In the last three months, two federal court decisions in the United States have resurrected previously dismissed lawsuits for greenhouse gas (GHG) emission and climate change liability. In one, plaintiffs sued for injunctive relief asking the court first to cap defendants’ emission levels and then to reduce them. In the other, plaintiffs asked for money damages potentially totaling billions of dollars. Although the trial courts in both cases dismissed the complaints, the respective courts of appeal reinstated the plaintiffs’ claims and have allowed them to proceed for now.

The courts’ final word on the business community’s exposure to injunctive relief and damage claims may be a long way off, but companies may now want to start asking questions about insurance coverage for litigation defense and indemnity for traditional third-party property damage claims as well as director and officer exposures.

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