Scott S. Allen

October 15, 2009

On September 21, 2009 the Second Circuit Court of Appeals announced their landmark decision in Connecticut v. American Elec. Power Co., Inc. In this case eight states, a city, and three land trusts separately sued five of the nations' largest utilities seeking abatement of the defendants' ongoing contributions to the public nuisance of global warming.

In holding that the suit could continue, the Second Circuit reversed the lower district court's ruling that the case presented non judiciable political questions outside of the scope of court's jurisdiction. Crucial to their ruling the Second Circuit held that:

1. the plaintiffs' actions did not constitute non-justiciable political questions;
2. the plaintiffs had standing;
3. municipal and private plaintiffs were not precluded from bringing claims based on the federal common law of nuisance;
4. the plaintiffs stated a claim under the federal common law of public nuisance; and
5. federal legislation did not displace the federal common law nuisance claims.

This decision, especially if adopted by the other federal circuit courts, could open a floodgate of litigation against those deemed to be contributing to the public nuisance of global warming. Furthermore, this decision comes at a time when the EPA is looking to step up regulation of green house gases. Given the intensity of the public and political debate surrounding global warming, this decision has the potential of drawing a significant amount of scrutiny.

While the decision appears to affect only the utilities industry, it puts at risk virtually any company that generates green house gases. Since most businesses produce at least some greenhouse gases, there are very few companies that could not be potentially affected. Furthermore, if large scale businesses can be held liable for contributing to global warming, it may only be a matter of time before smaller businesses or individuals could be included as well.

The insurance industry is paying particularly close attention to the issue. Not only are they concerned with the direct property damage that could be linked to global warming, but the insurance industry is also worried about the potential liability of the insured. If industries that produce large amounts of greenhouse gases can be held liable for contributing to global warming, their insurance premiums are bound to increase significantly.

This decision is unlikely to be the final say on what types of claims can be filed against those who produce greenhouse gases. But as regulations become stricter, and science improves to the point where the emission of greenhouse gas can be linked to specific harms, the potential for further claims to be brought is tremendous.

Sources:

Connecticut v. Am. Elec. Power Co., Inc., No. 05-5104-CV, 2009 WL 2996729, (2nd Cir. Sept. 21, 2009).

Connecticut v. Am. Elec. Power Co., Inc., 406 F.Supp.2d 265 (S.D.N.Y. 2005).

Heather Demirjian & Margaret A. Hill, United States: Legal Developments Affecting the Regulation and Litigation of Greenhouse Gas Emissions, Mondaq, Oct. 12, 2009, http://www.mondaq.com/article.asp?articleid=87492.

Richard O. Faulk, Business: Global Climate Change Ruling Presents Widespread Risks for Business, Reuters, Oct. 5, 2009, http://www.reuters.com/article/pressRelease/idUS168944+05-Oct-2009+PRN20091005.

Saulius Mikalonis, Global Climate Change Debate Ventures into the Courtroom, MLive.com, Oct. 5, 2009, http://blog.mlive.com/green-blawg/2009/10/post.html.