1. Latham & Watkins operates as a limited liability partnership worldwide with an affiliated limited liability partnership conducting the practice in the United Kingdom, France and Italy. © Copyright 2008 Latham & Watkins. All Rights Reserved. Global Climate Change Update: Recent Developments Los Angeles / San Diego / Washington, D.C. October 27, 2009 Robert Wyman (LA)

2. 2 What We Will Cover 2. Climate Change Litigation Under the Federal National Environmental Policy Act (“NEPA”) and State “Little NEPAs” 1. American Electric Power & the EPA: federal executive & judicial branch developments regarding climate change 3. Congressional Response Forthcoming? A look at the Kerry-Boxer and Waxman-Markey federal Bills

3. 3 GHG Emissions Reduction Pressure Being Applied At Multiple Points Federal Executive: EPA regulatory actions Judiciary: public/private nuisance suits; NEPA litigation Congress: Kerry-Boxer and Waxman-Markey bills Regions Western Climate Initiative Regional Greenhouse Gas Initiative Midwestern Greenhouse Gas Accord States Governors: GHG emissions reductions by Executive Order Judiciary: multiple states with “Little NEPA” litigation State legislatures: GHG emissions reduction legislation

4. 4 1. American Electric Power & the EPA 2. Climate Change Litigation Under NEPA and State “Little NEPAs” 1. American Electric Power & the EPA: federal executive & judicial branch developments regarding climate change 3. Congressional Response Forthcoming? A look at the Kerry-Boxer and Waxman-Markey federal Bills

5. 5 Connecticut v. American Electric Power (2d Cir. 2009) Claim: Federal common law of nuisance Remedy sought: Injunctive - caps and mitigation schedule 2 nd Circuit reverses lower court No political question present Plaintiffs have standing Cognizable federal common law nuisance claims The court recognized: the court’s unique role in plugging gaps in remedies available for environmental injury courts will be displaced (and federal nuisance not available) once Congress or EPA acts

6. 6 Comer v. Murphy Oil Co. (5th Cir. 10/16/09) Claims: state (Mississippi) common law claims of public and private nuisance, trespass, negligence, unjust enrichment, fraudulent misrepresentation and civil conspiracy Subject matter jurisdiction: diversity Remedy sought: compensatory and punitive damages (no injunctive relief) Reverses lower court dismissal based on lack of standing, non-justiciable political question Fifth Circuit: Plaintiffs have standing to assert public and private nuisance, trespass and negligence and those claims are justiciable State claims: sufficient to allege damage to interests due to defendants’ GHG emissions Federal claims ( Lujan 3-prong test ) – Article III Standing: Injury in fact – concrete injury to particular lands and property alleged Injury fairly traceable to D’s actions indirect causation sufficient as long as there is a fairly traceable connection between injury and conduct (not equivalent to tort causation); Cites Mass v. EPA for recognizing causal connection and for recognizing mere “contribution” to harm as sufficient for traceability purposes; Distinguishes Ctr for Biological Diversity (DC Cir 2009) on traceability grounds D’s attenuation argument subject to proof upon remand Injury likely to be redressed by a favorable decision – damages sufficient

7. 7 Comer v. Murphy Oil Co. (continued) Other claims dismissed on prudential standing basis – claims are mere general grievances more properly addressed by representative branches of government Claims are justiciable and not political questions because they have not been wholly and indivisibly committed exclusively to Congress or the Executive Branch The adjudication of plaintiffs’ claims will not require the district court to “fix and impose future emission standards upon defendants and all other emitters.” Concurring Opinion – would affirm district court on alternative ground that plaintiffs fail to state a claim under common law because alleged facts cannot establish proximate cause of plaintiffs’ injuries.

8. 8 Native Village of Kivalina (N.D. Cal. 9/30/09) Claims: federal common law of nuisance; state private and public nuisance, civil conspiracy, concert of action Remedy Sought: monetary damages (no injunctive relief sought) Decision: action dismissed for lack of subject matter jurisdiction for federal common law of nuisance; state claims dismissed Political question analysis: Foreign policy component not disabling, however... Court rejects and distinguishes AEP and other pollution cases: Not a discrete set of defendants; instead the alleged harm is attributable to “innumerable sources located throughout the world and affecting the entire planet and its atmosphere.” The alleged harm is distinguishable from the discharge itself Absence of judicial tools to address key issues Nuisance balancing - court cannot balance the social utility of the activity (energy affordability, safety, reliability) against its harm; this is a policy question Remedy - court cannot make a policy decision regarding who should bear the cost of global warming

9. 9 Native Village of Kivalina (continued) Article III Standing (evaluating the contribution component of causation): Absence of federal GHG standards removes presumption (present in other discharge cases) of a substantial likelihood that any defendant’s conduct harmed plaintiffs. Contribution becomes irrelevant because a discharge, standing alone, is insufficient to establish injury. Plaintiffs failed to allege that D’s discharge is the “seed” of their injury. Proximity is irrelevant because the zone of discharge is effectively the globe. Citing Ctr for Biological Diversity (DC Cir 2009) – causal link is “too tenuous” to establish standing. No Special Solicitude In contrast to the position of Massachusetts ( Mass v EPA ) Village is not a “state” Not a procedural posture; just a damages claim

10. 10 EPA Activities Supreme Court Decision in Mass v. EPA – if EPA finds that GHG emissions endanger public health or welfare, then it must regulate Pending Endangerment Finding Mandatory GHG Reporting Rule Finalized Proposed Motor Vehicle Regulation to be Finalized on March 31, 2010 Proposed Tailoring Rule anticipates 3/31/10 regulation of GHGs under CAA Prevention of Significant Deterioration (PSD) Regulation – Best Available Control Technology 25,000 annual ton trigger proposed