Environmental Law ReSource : Environmental Lawyer & Attorney : Reed Smith Law Firm : Climate Change, Sustainability

This post was written by Larry Demase.

In AES Corp. v. Steadfast Insurance Co. (AES), 2011 WL 4139736 (September 16, 2011), the Virginia Supreme court unanimously held that the Steadfast Insurance Company (Steadfast) is not obligated to cover court costs for the Virginia-based energy group AES Corporation under its liability policy in another lawsuit, Native Village of Kivalina v. ExxonMobil Corp. (Kivilina).

AES is one of 24 companies that were sued by Kivilina, an Alaskan coastal village, for damage to its community from global warming (The underlying case, Kivilina, No. 09-17490, is still pending before the Ninth Circuit Court of Appeals). After being sued by Kivalina, AES tendered the claim to its insurer, Steadfast. Steadfast denied the claim, and subsequently filed an action for declaratory judgment in Virginia. The trial court ruled in favor of the insurer, concluding that the underlying climate change claims in the Kivalina lawsuit did not constitute an "occurrence" under AES' commercial general liability policies. Because the court decided the case on the occurrence issue, the court did not reach the issue of whether the pollution exclusion might apply. AES appealed to the Virginia Supreme Court. The Virginia Supreme Court held that an insurer’s duty to defend is not triggered by allegations of damages flowing from intentional actions that the plaintiffs claim resulted in climate change. The court held that the insurance policies at issue “only require [the insurer] to defend … against claims for damages of bodily injury or property damage caused by an occurrence or accident” and that the allegations in the underlying complaint do not constitute such an occurrence or accident: Further, the state supreme court held, “Whether or not [the insured’s] intentional act constitutes negligence, the natural and probable consequence of that intentional act is not an accident under Virginia law.” This decision is being hailed as a major victory for insurers.

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This post was written by Steve Regan and Jennifer Smokelin.

As reported in last week's Wall Street Journal, challengers to natural gas drilling in Peters Township, Pennsylvania are taking a new approach: township residents will vote this fall on an initiative seeking to ban drilling in the Marcellus Shale basin that amends the township's home rule charter on the ballot. This is believed to be the nation's first voter initiative seeking to ban fracking activity. The amendment to the Peters Township home rule charter was drafted by the Community Environmental Legal Defense Fund, the same organization that drafted the City of Pittsburgh's ordinance banning natural gas drilling. The Peters Township charter amendment contains some of the same subject-to-challenge provisions as the City of Pittsburgh ordinance, including provisions that purport to deny corporations their rights under the commerce and contracts clauses of the United States and Pennsylvania constitutions and the right to challenge the Peters Township charter amendment in court. Moreover, a drilling ban ordinance substantially similar to the Peters Township charter amendment, and drafted and advocated by the same advocacy group, was struck down by the U.S. District Court for the Western District of Pennsylvania in a case involving another Washington County municipality, Blaine Township.

More than 100 towns in the state have already passed ordinances related to drilling. But the drilling industry argues that complete bans are pre-empted by state mineral extraction laws. Moreover, Peters Twp is attempting to ban drilling through an amendment to its home rule charter. Under the Pennsylvania Home Rule Charter and Optional Plans Law (Home Rule Law), a municipality that has adopted a home rule charter may exercise any powers and perform any function not denied by the Constitution of Pennsylvania, statute or by its home rule charter. Here, Peters Township's attempt to ban the exploration and production of natural gas through an amendment of its home rule charter is subject to challenge because such a ban is a violation of the Home Rule Law. Under the Home Rule Law, a municipality may not exercise powers that are contrary to, or in limitation or enlargement of, powers granted by statutes applicable in every part of the state. For instance, the Pennsylvania Oil and Gas Act is applicable in every part of Pennsylvania, and Peters Township's charter amendment banning the extraction of natural gas would be contrary to the Oil and Gas Act - including the Oil and Gas Act's stated purpose to permit the optimal development of oil and gas resources in Pennsylvania.

Peters Township's proposed charter amendments also rest on shaky legal ground because home rule municipalities may not determine the duties, responsibilities or requirements placed on businesses, occupations and employers. The Peters Township charter amendment, which bans the extraction of natural gas in Peters Township and deprives corporations engaged in the extraction of natural gas rights and protections afforded under the United States and Pennsylvania constitutions, arguably impermissibly regulates businesses and employers by prohibiting an activity that is expressly permitted and regulated by Pennsylvania law.
 

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This post was written by David Wagner.

We expanded the scope of our quarterly teleseminar to include hot topics in environmental and energy law and invite you to join us. It’s on Wednesday, October 5, 2011 from 12 to 1 pm ET. There’s no cost but we do ask you to R.S.V.P. At the teleseminar, we’ll provide a regulatory update on five major legal developments in the environmental and energy law world:

• Legislation/Rules — The hottest issue in new rules is the New Source Performance Standards for the oil and gas industry as well as for utilities and refineries. Our team will review the high points and effective dates, what industry should look out for, and likely challenges.
• Litigation — A current issue in litigation, especially in the oil and gas industry, is aggregation of air emissions from diverse sources. We will discuss recent challenges to air permits involving this issue. Also, our team is challenging a CERCLA 107/113 appeal for cert to the United States Supreme Court – tune in to hear the latest in that area.
• Policy and Technology — The policy framework behind fracking is in its infancy and studies to determine or influence policy framework abound. Our team will discuss recent DOE and USGS papers, as well as industry studies, concerning emissions. In addition, we will touch on the significance of the U.S. Supreme Court in Sackett v. EPA. We will also tackle the policy implications of interplay between the U.S. Environmental Protection Agency and Federal Energy Regulatory Commission.
• International Issues — In the international arena, all eyes are on the upcoming COP in South Africa and the fate of the Kyoto Protocol. Our team will discuss these issues, as well as their implications for EU business and EU greenhouse gas regulations.
• State Issues — We will focus on California with a summary of recent developments regarding the implementation of the California Global Warming Solutions Act (aka AB32) and California's “Green Chemistry” Initiative.

To sign up, please email Sandy Petrakis.

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