In the seemingly endless climate change debate, the regulation of greenhouse gases (GHGs) is a contentious issue among scientists, advocacy groups, lawmakers and businesses. Opinions are strong and varied as to how GHG emissions affect the environment and to what extent they should be controlled.

In 2004, a group comprising eight states, New York City and three non-profits sued six GHG-emitting electric power corporations–American Electric Power Company, American Electric Power Service Corporation, Cinergy Corporation, Southern Company, Tennessee Valley Authority and XCEL Energy–for allegedly contributing to global warming. The plaintiffs in Connecticut v. American Electric Power claimed the utilities' carbon dioxide (CO₂) emissions were a public nuisance causing an array of environmental and personal injuries, including smog-induced respiratory problems; deaths related to prolonged heat waves; property-damaging floods; a decrease in mountain snowpack, a key water source for California; beach erosion from rising sea levels; and loss of biodiversity.

Arguing the utilities' CO₂ emissions constitute 10 percent of the U.S.'s total CO₂ emissions, the plaintiffs sought injunctive relief that would hold the defendants jointly and severally liable for causing a public nuisance, cap the utilities' emissions and require them to reduce emissions by a certain percentage annually for at least 10 years. They reasoned that their pollution-related nuisance claims were simple and similar to ones that courts have adjudicated in the past. As proof, the plaintiffs cited Georgia v. Tennessee Copper Co., a 1907 Supreme Court case in which Georgia sued a company whose noxious gases allegedly threatened the state's forests and crops.

A trial court dismissed Connecticut v. AEP, saying it presented political questions that “are not the proper domain of judges” and that the “scope and magnitude of the relief Plaintiffs seek reveals the transcendently legislative nature of this litigation.”

But on appeal, the 2nd Circuit allowed the plaintiffs' nuisance claims to proceed. When the appeals court denied the defendants' petition for en banc review, the utilities filed a petition for certiorari, which the Supreme Court granted on Dec. 6, 2010.

“This case had to come to the high court,” says Patrick Raher, a partner in Hogan Lovells' environmental group. The Supreme Court must make it clear that the legal system has no business creating CO₂ policies, he says.

“If the plaintiffs can tag utilities for CO₂ liability, the damages are potentially staggering,” says McCarter & English Partner Wylie Donald, co-chair of the firm's Climate Change and Renewable Energy Practice.

Allen Kacenjar, a principal in Squire Sanders' Global Climate Change Practice, says Connecticut v. AEP has serious implications for companies with GHG-emitting facilities. “What's at stake is whether the federal courts will basically become a clearinghouse for climate change tort actions,” he says.

The Supreme Court will hear arguments on April 19, and justices will then attempt to answer the case's crucial question: Can courts regulate GHG emissions in the absence of comprehensive climate change legislation?

Climate Control

Legal experts and politicians have responded to that question with a resounding no. They assert that GHG regulation is up to the government, not the courts.

More than 20 amicus briefs have been filed on behalf of the Connecticut v. AEP defendants, including one from Acting Solicitor General Neal Katyal, who urged the Supreme Court to vacate the 2nd Circuit's decision because the Environmental Protection Agency (EPA) is actively developing GHG emissions rules per the high court's ruling in Massachusetts v. EPA. In that 2007 case, the court decided 5-4 that the Clean Air Act required the EPA to regulate CO₂ and other GHGs if the agency determined they were dangerous pollutants.

The EPA did find GHGs to be dangerous and issued its final endangerment finding in January 2010. On Dec. 23, 2010, the agency announced a rule that requires the largest GHG-emitting utilities–power plants and petroleum refineries–to obtain state-issued air permits for their GHG emissions. The permitting rule, which went into effect Jan. 2, 2011, precedes standards the EPA will announce and finalize for these emitters throughout the next year and a half (see “GHG Governance“).

Power Dispute

Some businesses, states and lawmakers have filed lawsuits challenging the EPA's findings and rules–and ultimately its power grab. And when the new Congress convened in January, Republican members quickly proposed bills that would cut EPA funding and prevent the agency from regulating GHGs.

Ironically, three of the authority-stripping bills' proponents–Sen. James Inhofe, R-Okla.; Rep. Fred Upton, R-Mich.; and Rep. Ed Whitfield, R-Ky.–filed a 19-page amicus brief supporting the Obama administration's position in Connecticut v. AEP. They conceded that the EPA's actions supersede public nuisance claims, though they emphasize that the regulatory efforts of the agency may exceed its authority and “are at a minimum extremely misguided.”

Despite the numerous logistical and economic challenges the EPA's plans may present to businesses, lawyers say it's far easier for companies to comply with federal rules than face Connecticut v. AEP-like litigation that would govern emissions.

“Regulation is much less burdensome than lawsuits because it is predictable and you can plan for it,” Raher says. He notes that if judges were to set emissions rules, the result would be numerous
CO₂ control programs that vary between or even within states. “Business can't live that way,” he says.

If similar GHG emissions-related lawsuits were allowed in the courts, it could mean chaos for all CO₂ emitters, not just the largest ones. “The variety of people that might be able to allege harms is endless,” says Kacenjar. “Anybody that owns shoreline property, farmers, people arguing they've incurred additional health care costs because of excessive heat–it's a scary, slippery slope.”

Improbable Split

Justice Sonia Sotomayor has recused herself from Connecticut v. AEP because she heard arguments for the case when it was in the 2nd Circuit. With eight justices in the courtroom, there's a chance for a split decision, which would leave the 2nd Circuit's decision intact. That result could lead to courts swamped with common law nuisance suits against virtually every industry in the U.S.

Experts say such a phenomenon is unlikely, given the Supreme Court's conservative majority that has repeatedly issued business-friendly decisions.

“I don't believe there will be a split decision,” says Raher, although he adds that plaintiffs attorneys would love a tie vote. “Whether a judge is conservative or liberal, the Supreme Court has as its utmost goal to make sure the federal courts are deciding only appropriate cases.” Raher says it might even be unanimously decided among the justices that GHG governance is not an appropriate area for the courts to explore.

A 4-4 split wouldn't calm the corporate world's worries about future litigation, either. “Businesses want guidance,” says Donald. “They want certainty about what they need to be concerned about in the climate change sphere.”

What's more, if the 2nd Circuit's ruling stands, it will allow a case in the 9th Circuit–Native Village of Kivalina v. ExxonMobil Corp.–to move forward and potentially become the bellwether for future GHG-emissions lawsuits. The Kivalina plaintiffs seek monetary damages for environmental harms caused by GHG emissions, and a split Supreme Court in Connecticut v. AEP would mean the 9th Circuit could decide if the plaintiffs are entitled to those damages.

But Raher believes the Supreme Court's eventual decision–which he expects by June–is apt to eliminate Kivalina on the basic premise that it's not an appropriate case for the court to hear. “The question of damages will never even come up,” he says.