In 2020, Honolulu and Maui brought suits in the respective circuit courts of their counties against petroleum companies that have operated in Hawaiʻi for decades. The lawsuits allege that the companies knew for a very long time that the use of their products would bring about catastrophic climate changes.
The oil companies sought to remove the cases to federal court. When that effort failed, they moved for dismissal. When that failed, they sought relief from the state Supreme Court, which, on October 31, 2023, denied their appeal, allowing the cases to move forward.
Two of the defendants – Sunoco (parent of Aloha Petroleum) and Shell – have filed petitions for writs of certiorari with the U.S. Supreme Court, asking the court to overturn the Hawaiʻi Supreme Court’s decision. Shell’s petition presents two questions: “1. Whether claims seeking damages for the effects of interstate and international emissions on the global climate are beyond the limits of state law and thus preempted under the federal Constitution,” and “2. Whether the Clean Air Act preempts state-law claims predicated on damaging interstate emissions.” Sunoco’s petition asks just one question: “Whether federal law precludes state-law claims seeking redress for injuries allegedly caused by the effects of interstate and international greenhouse-gas emissions on the global climate.” (Emphasis added.) Those petitions are still pending.
As the lawsuits moved through state courts, Aloha Petroleum brought a suit in federal court against the companies that had insured it. The parent company of the insurers, AIG, had denied Aloha’s demand that it defend Aloha against the claims of Maui and Honolulu, citing exclusions for release of pollutants in two policies, issued in the 1980s. Aloha argued that the pollution exclusions applied only to pollutants on premises, not product liability – which is the theory underlying the county lawsuits.
Most of the federal case hinges on just how to define “accident” and “pollutant.” To clarify this, the federal court asked the state Supreme Court to rule on two “certified questions.” First, does an ‘“accident” include the reckless conduct of the insured? Second, are greenhouse gases “pollutants,” as defined in the pollution exclusions contained in the policies.
Last month, the Supreme Court issued its ruling. As to the first question, the court found in Aloha’s favor, determining that “accident” included reckless conduct. “AIG’s policies cover an ‘occurrence.’ The policies define an ‘occurrence’ as an ‘accident.’ ‘Accident’ is undefined. The counties’ lawsuits allege Aloha acted recklessly – it knew of climate risk but emitted – and misled the public about the dangers of emitting – greenhouse gases anyway.”
As to the second question, the justices found in favor of AIG. “AIG argued that Aloha’s conduct was intentional,” they wrote, “therefore the counties’ lawsuits do not raise an ‘occurrence’ under the policies. Aloha understood climate science, so climate-caused damage was expected, not fortuitous, AIG said. Plus, the policies’ pollution exclusions bar coverage for the lawsuits’ claims.”
After a lengthy discussion of whether greenhouse gases should be considered pollutants in the traditional sense of the word, the justices agreed that they should be. “Traditional environmental pollution has three main features: (1) the release of a damaging substance, (2) into the environment, (3) that causes harm because of its presence in the environment. These attributes align with what insurance industry drafters intended, what ‘contaminant’ means, and what a policyholder expects. Also, these features match the plain meaning of pollution,” the justices opined, citing Black’s Law Dictionary.
“Greenhouse gases, including carbon dioxide, produce ‘traditional’ environmental pollution. Aloha’s gasoline produces GHGs. These gases accumulate in the atmosphere and trap heat. Because they are released into the atmosphere and cause harm due to their presence in the atmosphere, GHGs are pollutants.”
Following the release of the Supreme Court’s decision on the two questions, Aloha and AIG were instructed to submit to the court a status report, setting forth their respective positions in light of the Supreme Court’s ruling.
Aloha attorneys locked onto a statement in that ruling purporting to describe the issue before the federal court: “Whether Aloha is ultimately entitled to a defense under the [1980] policies is a question for the [federal] District Court. To award coverage under those policies, the District Court must find that the counties’ complaint alleges property damage during the policies’ coverage period.”
Aloha’s attorneys go on to cite language in the counties’ complaints referring to property damage. “As such,” they conclude, “given the Hawaiʻi Supreme Court’s ruling that greenhouse gases cause damage to the environment upon being released into the atmosphere, there are sufficient allegations of property damage taking place during the two AIG policy periods (1986-1988) to trigger a duty to defend under those policies. Accordingly, Aloha requests that the District Court set a supplemental briefing schedule on cross motions for summary judgment regarding Defendants’ duty to defend Aloha under the two AIG policies at issue.”
AIG attorneys, on the other hand, honed in on the Supreme Court’s answer to the second certified question, finding that greenhouse gases are indeed pollutants. This, they say, means that “the next steps in this matter are straightforward – the Court should grant the AIG Insurers’ motion for partial summary judgment and deny Aloha’s motion for partial summary judgment.”
If Aloha disagrees with the court’s finding, they write, “it can appeal that determination to the Ninth Circuit when final judgment is entered in favor of the AIG Insurers.”
Meanwhile, in state courts, litigation in both the Maui and Honolulu cases has been on hold as the appeals run their courses.
— Patricia Tummons
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