To read about more types of environmental litigation, click here.

—

The landmarks of the Bush administration's environmental policy included withdrawing from the Kyoto Protocol, rolling back or weakening numerous environmental rules and simply skirting the issue of climate change. That backdrop provided a setting for some of the most fascinating, important and sometimes action-packed litigation of the past eight years.

The Bush EPA's most prominent battle with environmentalists was the fight over climate change, which culminated with Massachusetts v. EPA. The 2007 Supreme Court case said the EPA could, and in fact must, regulate greenhouse gas emissions.

Despite the ruling, the Bush EPA left the issue to President Obama, who began a reversal in environmental policy almost immediately after taking the oath of office. His administration has announced, for example, that it will take another look at several Bush policies that enraged environmentalists and invited litigation, reconsidering whether the EPA should regulate greenhouse gas emissions from power plants (Bush said no), and whether the agency should grant California and other states a waiver to enforce stricter auto emissions limits (Bush declined).

“What we've seen in the opening weeks of the Obama administration is essentially a wholesale re-evaluation of the Bush-era interpretation, particularly pertaining to air emissions and climate change,” says Adam Kahn, coordinator of the environmental practice group at Foley Hoag.

The about-face, combined with a new bully pulpit in Washington, will no doubt change the nature of future environmental court fights, and experts have many predictions about post-Bush litigation trends.

Rulemaking Challenges

In upcoming years the White House, Congress and the EPA will craft extensive legislation and regulations addressing climate change, and with those changes will come more court challenges.

Michael Gerrard, director of Columbia University's Center for Climate Change Law, predicts a shift from the Bush-era model.

“For the last several years, most of the litigation has been environmental groups suing federal agencies for failing to take action on climate change,” he says. “We now have a federal government that actually is taking action on climate change. So the focus is going to shift to industry groups challenging actions taken by government–and we're already seeing that.”

For example, in January, Indeck Energy filed an action challenging the legality of the Regional Greenhouse Gas Initiative (RGGI), a cap and trade system instituted without legislative approval among 10 northeastern states and to which Indeck's New York plant is subject. Several heat, air conditioning and refrigeration companies and coalitions have filed challenges to a green building ordinance in Albuquerque (a court found that federal law pre-empted it), and a pending action from Ash Grove Cement Co. challenges a Texas ordinance requiring localities to purchase “green” cement.

As other state and regional, and eventually federal, greenhouse gas controls take effect in the coming years, environmental lawyers expect many more challenges.

Activist Litigation

Many predict that the Obama administration's commitment to climate change issues will lead to a decline in activist litigation against the government.

“I like the idea that it may be very difficult to have a lot of lawsuits against an administration where we don't disagree on a lot of the points,” says James Pew, an attorney at Earthjustice, the legal arm of the Sierra Club.

The feeling at the Center for Biological Diversity seems to be one of cautious optimism in the new administration, but mostly of readiness for action following little progress under Bush.

“The question is, 'Will this administration move fast enough?' And we're here to help build the political support for fast action and to convince the administration that … the climate crisis is an absolutely central part of everything going on in this country and in the world right now,” says Kassie Siegel, senior counsel at the Center.

As for the numerous lawsuits still pending against Bush's EPA? “The courts have seen the change in administration, and rather than order the EPA to do something that it may very well be inclined to do on its own right now, they'd probably hold back and give them a little time to get going,” predicts John Sweeney, a member at Womble Carlyle and chair of DRI's Climate Change Litigation Task Force.

Climate Change Torts

Absent statutory guidance on climate change, one type of claim that has seen increased attention–but no success in the courts yet–is the climate change tort, which targets greenhouse gas emitters for causing global warming, often under a common law nuisance theory. Kevin Gaynor, a partner at Vinson & Elkins, calls it a marriage between environmental groups and the toxic tort plaintiffs bar.

One such case, Kivalina v. ExxonMobil, pits the small Alaskan village of Kivalina against power, coal and oil companies for climate change-driven environmental damage the village claims they caused. Another, Comer v. Murphy Oil, uses common law claims to allege that similar defendants exacerbated Hurricane Katrina by contributing to climate change. California v. General Motors and Connecticut v. American Electric Power both use a public nuisance theory against, respectively, auto makers and the electric power industry for contributing to climate change.

With the exception of Kivalina, which awaits a district court ruling, district courts have dismissed all those suits–and all have cited the political question doctrine, indicating their belief that the lawsuits raise questions best addressed by Congress or the executive branch.

Despite the setbacks, the environmental community is committed to making such cases work. “These large tort claims are what changed [the tobacco industry's] behavior,” Siegel says, calling political question dismissals “just legally incorrect.”

The defense bar is unconvinced–yet concerned.

“The plaintiffs bar is making legal arguments to see if they can break down some of these barriers,” says Gaynor, who represented a power company defendant in Kivalina (the court dismissed that company from the suit). “If they do, we will see Kivalina cases in 100 different forms and 1,000 different varieties. A ski slope owner who doesn't get snow; a farmer who doesn't get enough water because the snow pack is not big enough; a landowner whose property is flooded during a hurricane–they'll claim that's because of global warming.”

Sweeney compares the tort claims to lead paint nuisance cases that target wide-ranging defendants for wide-ranging costs. “Those are very worrisome cases,” he says.

Risk Disclosure

Last proxy season's record numbers of shareholder proposals relating to climate change made it clear that investors care about companies' environmental impact and risk. The SEC has so far offered little guidance on this front, but the states have taken the lead.

In August 2008, New York Attorney General Andrew Cuomo came to an unprecedented agreement with Xcel Energy, a Minneapolis-based company that trades on Wall Street. Cuomo had subpoenaed Xcel under state law, challenging its SEC disclosures. Under the agreement, Xcel said it would disclose in its annual 10-K filings the climate change-related financial risks its investors face, such as “present and probable future climate change regulation and legislation.” Dynegy Inc. reached a similar agreement with Cuomo in October.

While shareholder activism on climate change disclosure is at an all-time high, not all companies are jumping to make disclosures. A January 2009 McGuireWoods paper examining the 2008 10-K filings of approximately 350 public companies found that “only 42, or 12.2 percent, made any disclosure whatsoever regarding greenhouse gas emissions or climate change.” Of 21 utility companies that McGuireWoods reviewed, 16 had made some greenhouse gas or climate change disclosure; however, only nine of 21 energy companies and four of 48 industrial companies made any disclosures.

Whether this shareholder activism will rise to the level of shareholder lawsuits is still unclear, Kahn says.

“The effort has been to better disclose as opposed to fighting over the consequences of the failure to disclose,” he says.

To read about more types of environmental litigation, click here.

—

The landmarks of the Bush administration's environmental policy included withdrawing from the Kyoto Protocol, rolling back or weakening numerous environmental rules and simply skirting the issue of climate change. That backdrop provided a setting for some of the most fascinating, important and sometimes action-packed litigation of the past eight years.

The Bush EPA's most prominent battle with environmentalists was the fight over climate change, which culminated with Massachusetts v. EPA. The 2007 Supreme Court case said the EPA could, and in fact must, regulate greenhouse gas emissions.

Despite the ruling, the Bush EPA left the issue to President Obama, who began a reversal in environmental policy almost immediately after taking the oath of office. His administration has announced, for example, that it will take another look at several Bush policies that enraged environmentalists and invited litigation, reconsidering whether the EPA should regulate greenhouse gas emissions from power plants (Bush said no), and whether the agency should grant California and other states a waiver to enforce stricter auto emissions limits (Bush declined).

“What we've seen in the opening weeks of the Obama administration is essentially a wholesale re-evaluation of the Bush-era interpretation, particularly pertaining to air emissions and climate change,” says Adam Kahn, coordinator of the environmental practice group at Foley Hoag.

The about-face, combined with a new bully pulpit in Washington, will no doubt change the nature of future environmental court fights, and experts have many predictions about post-Bush litigation trends.

Rulemaking Challenges

In upcoming years the White House, Congress and the EPA will craft extensive legislation and regulations addressing climate change, and with those changes will come more court challenges.

Michael Gerrard, director of Columbia University's Center for Climate Change Law, predicts a shift from the Bush-era model.

“For the last several years, most of the litigation has been environmental groups suing federal agencies for failing to take action on climate change,” he says. “We now have a federal government that actually is taking action on climate change. So the focus is going to shift to industry groups challenging actions taken by government–and we're already seeing that.”

For example, in January, Indeck Energy filed an action challenging the legality of the Regional Greenhouse Gas Initiative (RGGI), a cap and trade system instituted without legislative approval among 10 northeastern states and to which Indeck's New York plant is subject. Several heat, air conditioning and refrigeration companies and coalitions have filed challenges to a green building ordinance in Albuquerque (a court found that federal law pre-empted it), and a pending action from Ash Grove Cement Co. challenges a Texas ordinance requiring localities to purchase “green” cement.

As other state and regional, and eventually federal, greenhouse gas controls take effect in the coming years, environmental lawyers expect many more challenges.

Activist Litigation

Many predict that the Obama administration's commitment to climate change issues will lead to a decline in activist litigation against the government.

“I like the idea that it may be very difficult to have a lot of lawsuits against an administration where we don't disagree on a lot of the points,” says James Pew, an attorney at Earthjustice, the legal arm of the Sierra Club.

The feeling at the Center for Biological Diversity seems to be one of cautious optimism in the new administration, but mostly of readiness for action following little progress under Bush.

“The question is, 'Will this administration move fast enough?' And we're here to help build the political support for fast action and to convince the administration that … the climate crisis is an absolutely central part of everything going on in this country and in the world right now,” says Kassie Siegel, senior counsel at the Center.

As for the numerous lawsuits still pending against Bush's EPA? “The courts have seen the change in administration, and rather than order the EPA to do something that it may very well be inclined to do on its own right now, they'd probably hold back and give them a little time to get going,” predicts John Sweeney, a member at Womble Carlyle and chair of DRI's Climate Change Litigation Task Force.

Climate Change Torts

Absent statutory guidance on climate change, one type of claim that has seen increased attention–but no success in the courts yet–is the climate change tort, which targets greenhouse gas emitters for causing global warming, often under a common law nuisance theory. Kevin Gaynor, a partner at Vinson & Elkins, calls it a marriage between environmental groups and the toxic tort plaintiffs bar.

One such case, Kivalina v. ExxonMobil, pits the small Alaskan village of Kivalina against power, coal and oil companies for climate change-driven environmental damage the village claims they caused. Another, Comer v. Murphy Oil, uses common law claims to allege that similar defendants exacerbated Hurricane Katrina by contributing to climate change. California v. General Motors and Connecticut v. American Electric Power both use a public nuisance theory against, respectively, auto makers and the electric power industry for contributing to climate change.

With the exception of Kivalina, which awaits a district court ruling, district courts have dismissed all those suits–and all have cited the political question doctrine, indicating their belief that the lawsuits raise questions best addressed by Congress or the executive branch.

Despite the setbacks, the environmental community is committed to making such cases work. “These large tort claims are what changed [the tobacco industry's] behavior,” Siegel says, calling political question dismissals “just legally incorrect.”

The defense bar is unconvinced–yet concerned.

“The plaintiffs bar is making legal arguments to see if they can break down some of these barriers,” says Gaynor, who represented a power company defendant in Kivalina (the court dismissed that company from the suit). “If they do, we will see Kivalina cases in 100 different forms and 1,000 different varieties. A ski slope owner who doesn't get snow; a farmer who doesn't get enough water because the snow pack is not big enough; a landowner whose property is flooded during a hurricane–they'll claim that's because of global warming.”

Sweeney compares the tort claims to lead paint nuisance cases that target wide-ranging defendants for wide-ranging costs. “Those are very worrisome cases,” he says.

Risk Disclosure

Last proxy season's record numbers of shareholder proposals relating to climate change made it clear that investors care about companies' environmental impact and risk. The SEC has so far offered little guidance on this front, but the states have taken the lead.

In August 2008, New York Attorney General Andrew Cuomo came to an unprecedented agreement with Xcel Energy, a Minneapolis-based company that trades on Wall Street. Cuomo had subpoenaed Xcel under state law, challenging its SEC disclosures. Under the agreement, Xcel said it would disclose in its annual 10-K filings the climate change-related financial risks its investors face, such as “present and probable future climate change regulation and legislation.” Dynegy Inc. reached a similar agreement with Cuomo in October.

While shareholder activism on climate change disclosure is at an all-time high, not all companies are jumping to make disclosures. A January 2009 McGuireWoods paper examining the 2008 10-K filings of approximately 350 public companies found that “only 42, or 12.2 percent, made any disclosure whatsoever regarding greenhouse gas emissions or climate change.” Of 21 utility companies that McGuireWoods reviewed, 16 had made some greenhouse gas or climate change disclosure; however, only nine of 21 energy companies and four of 48 industrial companies made any disclosures.

Whether this shareholder activism will rise to the level of shareholder lawsuits is still unclear, Kahn says.

“The effort has been to better disclose as opposed to fighting over the consequences of the failure to disclose,” he says.