AES v. Steadfast and the Concept of Foreseeability in Climate Change Litigation

Abstract

In the absence of national legislation tackling climate change in the United States, citizens attempt to use the court system as a way of holding large greenhouse gas emitters responsible for their actions. Recent legal opinions concerning the Supreme Court's imprimatur on the EPA's interpretation of Massachusetts v. EPA has allowed many to challenge the idea of whether states and potentially other landholders have standing to sue emitters and hold them liable for damages caused by the effects of global warming. Large emitters often hold liability insurance policies. Liability insurance providers have a general duty to defend those they insure, in addition to their responsibility to indemnify the insured for damages incurred by third parties. The duty to defend and the duty to indemnify the insured is based upon the Commercial General Liability (“CGL”) policy held by the insured.With the influx of climate change lawsuits into the United States court system, the question of whether CGL policies cover liabilities created by property damage resulting from global warming needs resolution. In April 2012, the Virginia Supreme Court held in AES Corp. v. Steadfast Insurance Co. that liability insurance companies do not have a duty to defend the insured in climate change related damage claims resulting from the insured’s intentional release of carbon dioxide and other greenhouse gases. The court reasoned that potential liabilities arising from the insured’s intentional emissions are not covered by CGL policies because intentional emissions do not fall within the policy’s scope of coverage.This paper argues that the court’s decision in AES is correct and that other jurisdictions should follow the holding for the following reasons: (1) the decision is consistent with the Supreme Court’s holding in Massachusetts v. EPA; (2) the decision holds companies responsible for their intentional actions; (3) the decision does not put an unfair burden on liability insurance companies; and (4) the decision does not deter the United States Congress from adopting a comprehensive plan to mitigate global climate change.