Climate Change LiabilityThe Evolving Legal Framework

October 14, 2008

Munich Re Climate Change and Liability Workshop

Princeton, New Jersey

What We Know

• Intergovernmental Panel on Climate Change (IPCC) 4th Assessment Report (2007):

“ Warming of the climate system is unequivocal ”

Anthropogenic activities (historic and continuing) are significant contributors to climate change

Relative contribution of greenhouse gas (GHG) emissions from different regions of the world is shifting rapidly

What We Don’t Know

Contribution of individual, sector, and jurisdictional sources are diverse and difficult to assess

Impacts are diverse and hard to predict

– Increased incidence and severity of hurricanes, typhoons, thunder and hailstorms

– Potential erosion and flooding of coastal areas from changes in ocean elevation

– Impacts to non-coastal areas from landslides, subsidence, wildfires

Range of Related Legal Liabilities

• Application of existing laws and regulations at the federal and state levels– Federal Clean Air Act– National Environmentahttp://lh4.ggpht.com/_n-

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• Development of new regulatory strategies– Current proposals in Congress for “cap and trade” systems– California’s AB 32

• Litigation– Standing and damages

Climate Change Liability In the United States

U.S. failure to respond at the federal policy level– Reluctance to support international strategies– Failure to pursue domestic strategies

Application of existing laws and regulations– Federal Clean Air Act– National Environmental Policy Act and state

equivalents Development of new regulatory strategies

– Recent federal proposals for “cap and trade”– California’s AB 32

Regulation of GHG Emissions Under the Federal Clean Air Act

Massachusetts v. U.S. Environmental Protection Agency– (U.S.Supreme Court - April 2007)

– CO2 in automobile emissions as an “air pollutant”

– Standing of Massachusetts to sue - imminent jeopardy by rising sea levels that “have already begun to swallow Massachusetts’ coastal lands”

Massachusetts v. EPA II– Filed April 2, 2008

– Seeks order directing EPA to issue endangerment determination and initiate rulemaking process

Federal Environmental Review Cases

Federal Environmental Review Cases

Border Power Plant Working Group v. DOE, 260 F. Supp. 997 (S.D. Cal. 2003)

Mayo Foundation v. Surface Transportation Board, No. 06-031 (8th Cir. 2006)– [Mid-States Coalition for Progress v. Surface

Transportation Board, 345 F.3d 520 (8th Cir. 2003)] Friends of the Earth v. Mosbacher

– Mosbacher I (Friends of the Earth v. Watson, No. 02-4106C, 2005 WL 2035596 (N.D. Cal. Aug. 23, 2005))

– Mosbacher II (Friends of Earth, Inc. v. Mosbacher, No. 02-04106C, 2007 WL 962955 (N.D. Cal. Apr. 30, 2007))

National Environmental Policy Act (NEPA)

California Environmental Review Cases

California Environmental Review Cases

California Environmental Quality Act (CEQA)

Strategy and recent settlements County of San Bernardino (land use) ConocoPhillips

Conduct energy efficiency audit at refinery Conduct GHG audit of all California facilities Pay $7 million to carbon offset fund Pay additional $3 million for other mitigation

measures

Liability under Common Law Litigation TheoriesLiability under

Common Law Litigation Theories

Global warming as a “public nuisance”

• Connecticut v. American Electric Power - GHG emissions from electric power generation facilities– Seeking injunction to abate GHG emissions with cap

and subsequent percentage reductions– Dismissed - lack of subject matter jurisdiction (political

question)• California v. General Motors - GHG emissions from

motor vehicles– Federal and state law claims– Dismissed on September 17, 2007 - failure to state

valid claims

Katrina LitigationHurricane-Related Litigation

Comer v. Murphy Oil USA

Allegation: GHG conduct of defendant oil and coal companies, chemical manufacturers, and insurance companies result in GHG emissions that cause global warming and increase frequency and intensity of hurricanes

Claims for unjust enrichment, civil conspiracy, nuisance and trespass, negligence and fraudulent concealment

Alleged damages: property loss, loss of property use and enjoyment, loss of business and income, cleanup costs, emotional distress

August 30, 2007 - dismissed for lack of subject matter jurisdiction (non-justiciable political question - notice of appeal on September 17, 2007)

Proposed Federal LegislationRecent Federal Proposals

Proposed Federal Legislation• At least ten legislative proposals focused on climate

change introduced in Congress during 2007

Lieberman-Warner-Boxer

• “Climate Stewardship and Innovation Act” (S.280) introduced on October 16, 2007

Senate Environment and Public Works Committee reported bill to full Senate on December 5, 2007, by a vote of 11-8

First bill mandating economy-wide reductions in greenhouse-gas emissions reported out of committee in either house

Bipartisan sponsorship: Lieberman (I-CT), Warner (R-VA), Casey (D-PA), Coleman (R-MN), Collins (R-ME), Dole (R-NC), Harkin (D-IA), Klobushar (D-MN)

Tabled – June 2008

State Legislation

State and Regional Proposals

AB 32 – California’s Global Warming Solutions Act of 2006

First enforceable state-wide program to cap all GHG emission from major industriesRegulatory development underway now– Determination off 1990 baseline and 2020 emissions

limit– January 1, 2009 - CARB to approve scoping plan for

achieving 2020 emissions– January 1, 2010 - Implementation of early action

reduction measures– January 1, 2011 - Adoption of limits and reduction

measures– January 1, 2012 - Regulations go into effect

Other state and regional activities

Proposals for Climate Disclosure Rules

Proposals for Climate Change Disclosure Rules

Currently voluntary program to disclose climate-related risk information

September 18, 2007 petition to SEC by state pension plans and institutional investors

– Asks SEC to assess and disclose “material” financial risks from climate change

– Material risks include financial impacts from emerging carbon-reducing regulations, extreme weather and other physical events, demand for low-carbon technologies and products

Related developments in Congress (hearings and proposed legislation)

Conclusion

CONCLUSIONS

Kevin T. Haroff

Shook Hardy & Bacon LLP

333 Bush Street, Suite 600San Francisco CA 90104-2828

SF Office (415) 544-1961SF Fax (415) 391-0281Mobile (415) 336-6494

Email – kharoff@shb.com