Climate Change Related D&O Liability - The Coming Flood?

American Bar Association

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PUBLISHED ON: December 14, 2010

An increasing number of climate change related lawsuits have been filed in the last three years. Climate change related lawsuits implicating corporate conduct have generally fallen into one of two categories: (1) lawsuits against governmental entities seeking to compel those entities to promulgate and enforce regulations requiring companies to reduce emissions; and (2) lawsuits against companies alleging that their emissions caused or contributed to climate change.

The landmark case against a governmental entity is Massachusetts, et al. v. Environmental Protection Agency, et al., 549 U.S. 497 (2007). In the Massachusetts case, several states and private organizations challenged the EPA’s denial of the plaintiffs’ petition for the EPA to regulate emissions from new cars pursuant to the EPA’s alleged duty to promulgate emission standards for “any air pollutant” under the Clean Air Act. The EPA had denied the plaintiffs’ petition based on the conclusion that the Clean Air Act did not confer the EPA with the power to issue mandatory regulations to address climate change and that in any event it would have chosen not to do so. In rejecting the EPA’s position, the Supreme Court made its first ruling on climate change issues and held that greenhouse gas emissions from cars (including carbon dioxide) constituted an air pollutant under the terms of the Clean Air Act, and that the EPA had failed to support its refusal to decide whether the emissions contributed to climate change and endangered public health and welfare. In addition, the Court found that state entity plaintiffs had standing to bring the lawsuit in so far as they were able to demonstrate injury, causation, and the existence of a remedy. In December 2009, in response to the Supreme Court’s ruling, the EPA issued a finding that greenhouse gas emissions “in the atmosphere threaten the public health and welfare of current and future generations.”