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Why Connecticut v American Electric Power is a boon to US business

By Todd Cort

The debate over whether increases in atmospheric greenhouse gases were resulting in climate change ended years ago. They are.  More recently, the debate over whether humans are the primary cause of climate change also ended. We are.

The debate in the US has recently raged over who has the authority to curtail industrial greenhouse gas emissions – particularly from power generation, the largest source of emissions. Is it the job of the Environmental Protection Agency (EPA – the federal regulation agency) or of  individual states? Or is it up to companies to voluntarily curtail emissions?

The Bush administration began the debate by stating that carbon dioxide was not covered by the Clean Air Act (the federal regulation governing air pollutants). The result of this opinion was that the EPA was not afforded the authority to regulate carbon dioxide emissions. The resulting Supreme Court decision in 2007 (Massachusetts v EPA) disagreed with this interpretation and placed carbon dioxide within the remit of the Clean Air Act – freeing the EPA to take steps to regulate emissions.

At the same time, several states joined with Land Trust organizations to sue power companies directly for damages incurred due to greenhouse gas emissions and climate change impacts (Connecticut v American Electric Power). This suit was brought under an area called Tort Law – akin to personal injury lawsuits – which sues for ‘breach of civic duty’. The argument from the coalition was that states have the right to seek damages in federal court when the impacts of defendant (in this case the power companies) cross state boundaries. The Supreme Court, on June 20th 2011, threw out the lawsuit by reaffirming that it is the EPA’s responsibility to regulate carbon emissions by power companies – and so punitive measures through the federal government would be through fees, fines and penalties set by the EPA, not through damages awarded by federal courts.

The decision should make almost everyone happy. If the Tort-based lawsuit had been upheld, it would have created precedent for states and others to sue carbon emitters individually for damages resulting from carbon emissions – a potential nightmare for large emitters like power companies. The Supreme Court also reinforced the authority of the EPA to regulate and curtail carbon emissions, specifically on the power generation sector, which has many environmental groups cheering to see resolution on the debate of ‘who is responsible’.

The only group of stakeholders displeased with the decision are the remaining ‘hold-out’ politicians and companies that seek to prevent any regulation of carbon emissions. This increasingly small group will need to come to terms quickly with the reality that the EPA is moving forward to curb emissions.

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