Global Warming Claims Against AEP, Utilities to Get U.S. High Court Review

The U.S. Supreme Court said it will hear an appeal by four power companies including American Electric Power Co., agreeing to decide whether they must face a suit by states seeking a reduction in carbon dioxide emissions.

The eight states, including New York and California, say plants operated by AEP, Xcel Energy Inc., Duke Energy Corp., Southern Co. and the Tennessee Valley Authority contribute to global warming by pumping 650 million tons of carbon dioxide into the atmosphere each year. The suit seeks to force cuts in emissions from the plants.

A ruling barring the suit would be a victory for businesses beyond the utilities involved in the case. Trade groups representing automakers, oil companies, farmers, mining companies, chemical companies and manufacturers all filed briefs urging Supreme Court intervention, in some cases saying their members might face similar lawsuits.

The lower court ruling “has staggering economic implications,” the U.S. Chamber of Commerce said in a court filing supporting the utilities.

The states contend that the carbon dioxide emissions are a “public nuisance,” invoking a legal theory more typically used in cases of localized pollution. In letting the suit go forward, along with a similar one filed by three land trusts, the New York-based 2nd U.S. Circuit Court of Appeals overturned a trial judge who had concluded that the dispute belonged in the political arena, rather than the courts.

Source: AEP

American Electric Power's General James M. Gavin power plant in Cheshire, Ohio. Close

American Electric Power's General James M. Gavin power plant in Cheshire, Ohio.

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Source: AEP

American Electric Power's General James M. Gavin power plant in Cheshire, Ohio.

Avenue Threatened

Supreme Court review threatens to strip environmentalists of one avenue that might have led to new limits on greenhouse- gas emissions. The case doesn’t affect the Environmental Protection Agency’s efforts to regulate emissions, which include tougher fuel-economy standards for vehicles and a requirement that new and modified industrial polluters, such as power plants, use the “best available” technology to limit greenhouse gases.

“Public nuisance law would be an unwelcome, unpredictable and unwieldy addition to the utility regulatory landscape,” Christine Tezak, a senior analyst for Robert W. Baird & Co. Inc., a Milwaukee-based asset management fund, said in a note to clients. “It is better for the industry if the EPA or Congress manages this issue, instead of the courts.”

Efforts to restrict carbon emissions took a blow in last month’s congressional elections. Republicans won control of the House of Representatives and gained seats in the Senate, likely dooming prospects for enactment of so-called cap-and-trade legislation.

Important Courts

“With some in Congress attacking EPA and the Clean Air Act, the federal courts are more important than ever to protect the health and welfare of millions of Americans put in danger by these power companies’ enormous carbon pollution,” David Doniger, policy director for the climate center at the Natural Resources Defense Council, a New York-based environmental group, said in a blog post.

Justice Sonia Sotomayor didn’t take part in today’s decision to hear the case, signaling that eight justices will rule on it and raising the possibility of a 4-4 deadlock. Sotomayor heard arguments in the case as a judge on the 2nd Circuit, though she didn’t take part in the appeals court’s ruling.

The case will put the Obama administration in the position of arguing alongside the power industry. In a brief filed on behalf of the TVA, acting U.S. Solicitor General Neal Katyal said the courts should defer to Congress and the executive branch on what steps to take against climate change.

Carbon Dioxide

Katyal had urged the court to set aside the lower court ruling and order reconsideration, rather than granting a hearing.

Carbon dioxide from the utilities represents about 25 percent of emissions from U.S. power plants and 10 percent of emissions from all U.S. sources, the states said in their 2004 lawsuit. Vermont, Rhode Island, Iowa, Wisconsin, Connecticut and New York City are also plaintiffs in the case.

In their appeal, the companies argue that the states lacked the legal right, or standing, to sue because they can’t show that they were harmed by anything the utilities did or that they would benefit from a ruling against the power companies.

“A court is not a regulator and may not enter relief against a particular defendant where the plaintiff’s injury is not traceable to that defendant and where relief against the defendant would not redress that injury,” the companies argued.

Reduced Emissions

State officials led by New York Attorney General Andrew Cuomo argue that they have done enough by alleging that a reduction in carbon dioxide emissions from the plants would ease climate change. They point to a 2007 Supreme Court decision backing a state suit that sought to make the EPA take steps against auto emissions.

“While it may be true that regulating motor-vehicle emissions will not by itself reverse global warming, it by no means follows that we lack jurisdiction to decide whether EPA has a duty to take steps to slow or reduce it,” the five- justice majority said in that case.

The case, which the court will consider and decide in the first half of 2011, is American Electric Power v. Connecticut, 10-174.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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