Making Big Oil Pay for Climate Change May Be Impossible
(Bloomberg) -- Exxon Mobil dodged a bullet last month when a judge rejected a novel climate-change lawsuit brought by New York’s attorney general. The case began with a promise from state officials that there would be a historic reckoning for the fossil fuel giant.
It ended ignominiously as a failed accounting fraud claim.
But that was just the beginning. Globally, humans are on the hook for trillions of dollars if they want to sufficiently reduce greenhouse gas emissions, acclimate to the damage already done and prepare for what is yet to come. As more governments and taxpayers find themselves staring down the barrel at rising climate costs, they are increasingly turning to the courts to hold Big Oil accountable.
The New York case was an outlier—it sought to make Exxon Mobil investors whole for an alleged bookkeeping bait-and-switch. The majority of U.S. climate litigation out there takes a more direct approach, seeking damages in so-called public nuisance lawsuits. Fossil fuel use runs counter to the inherent right to exist in a non-warming world, the argument goes, and the energy companies knew that right would be infringed when enough of it was burned.
About a dozen cities, counties and states have sued Exxon, Chevron, BP, Royal Dutch Shell and their peers. The suits seek to reimburse taxpayers for the costs associated with adapting to climate change—from building multibillion-dollar sea walls to repairing damage from powerful storms and, perhaps soon, moving whole communities inland.
Federal appeals courts on both sides of the country are considering whether such cases may proceed. Their rulings—one of which may come any day—will have a powerful effect on the future of climate change litigation.
“Through these cases, we will learn with great detail what the industry knew and when they knew it, and what they did to deceive the public about that knowledge,” said Lee Wasserman, director of the Rockefeller Family Fund, a charity that focuses in part on sustainability issues. “They are now leaving the public with an enormous bill.”
In the U.S., there is precedent for such a massive attempt at legal redress. A few decades back, the tobacco industry was taken to court by a group of states after decades of holding individual litigants at bay. In the end, the companies settled for $246 billion and agreed to changes in the sale and marketing of cigarettes.
But before history can repeat itself, climate litigants have to persuade judges (and the fossil fuel industry) that their lawsuits have a chance of succeeding. So far, their track record hasn’t been that great.
Just last week, a novel case filed by a group of young Americans trying to force the government to address climate change was derailed by a federal appeals court panel. The two-judge majority concluded there is no constitutional right to a livable climate. (The plaintiffs say they will appeal.) Moreover, courts have been quick to note (as have defendants) that the production and use of fossil fuel by energy companies, utilities and manufacturers has been central to building modern civilization as we know it.
Congress, and not the courts, is where the answer lies, industry lobbyists and lawyers say.
Phil Goldberg serves as a special counsel to the National Association of Manufacturers. As such, he’s assumed a leading role in pushing back against climate litigation (an Exxon spokesperson deferred to him when asked about cases filed by Baltimore and Marin County, California). Goldberg argues that federal laws regulating the environment prevent states from foisting their own de facto regulation on the energy industry, and that nuisance suits are just regulation by another name.
“They’re claiming that the mere act of selling oil, gas and other energy products is a liability-causing event because there’s downstream impacts from the use of their products,” he said. “There’s no liability if there are downstream impacts from legally using their products.”
But since those “downstream impacts” are an accelerating global catastrophe, states and municipalities faced with a deadlocked Congress and a White House bent on unraveling existing climate regulations say the courts are their only hope. “Litigation,” said Peter Frumhoff, director of science and policy and chief climate scientist for the Union of Concerned Scientists, “is essential to hold Big Oil accountable.”
Public nuisance claims (what one judge recently called the “unreasonable interference” with a right “common to the general public”) have been made with varying degrees of success when it came to suits and settlements over lead paint, asbestos, opioids and of course tobacco. But making the theory work with fossil fuels is a different matter altogether.
While “the potential liability is far greater,” Wasserman said, “courts have been known to shy away from their responsibility and pass the buck to another branch of government.”
But just getting in the door may be enough, said Matt Pawa, a lawyer representing New York City in its climate litigation. If a city or state can survive a motion to dismiss its lawsuit, it usually means a company will be compelled to open its files and submit to depositions.
“Important information comes out in litigation—the public learns what’s going on,” Pawa said. “The lawsuits, in a way, are shining a bright light on wrongful conduct.”
The evidence climate litigants most want is proof of deception. Energy companies not only sold products they knew would damage the environment, plaintiffs claim, but spent millions of dollars over the decades purposely casting doubt on climate science.
California’s Marin County, at the northern end of the Golden Gate Bridge, was among the first municipalities to file a nuisance claim against the oil industry. Kate Sears, a county supervisor, said the decision in 2017 was based on actual changes to the physical environment rather than projections. A critical roadway in her community floods regularly due to rising waters from the nearby bay.
“For us, sea level rise is real, it’s not an abstraction,” Sears said. “I don’t think it’s appropriate that my taxpayer residents should be on the hook to pay for damages caused by the actions of this industry.”
Rhode Island sued oil and gas producers the following year, accusing them of putting its 400 miles of economically crucial coastline at risk. “They profited from what they did, and they knew the effects of what was coming, and they tried to cloud the science,” Rhode Island Attorney General Peter Neronha said in an interview.
In the Marin County case, defendant energy companies said the lawsuit “wrongfully calls into question” federal policies. In the Rhode Island litigation, the industry claimed the state is blaming oil companies for “global greenhouse gas emissions of countless actors, including Rhode Island and its residents.”
These climate lawsuits, said Chevron spokesman Sean Comey, are “designed to punish a few companies in one industry who lawfully deliver” products to consumers. Exxon, Shell and BP either declined to comment or didn’t respond to requests seeking comment.
Comey’s assertion does illustrate a problem with ascribing specific liability for global warming. Though the starring role of oil, gas and coal producers in the global climate crisis is irrefutable, figuring out how much of global warming is their fault as a whole—not to mention individual companies—may be impossible.
For now, most climate cases are bogged down in fights over whether they belong in state or federal court. In October, the U.S. Supreme Court allowed three state court lawsuits to proceed while the jurisdiction fight proceeds. But lower-court federal judges have largely sided with defendants, rejecting nuisance suits by New York City, San Francisco and Oakland. All have been appealed. Other pending nuisance cases have been filed by King County, Washington; Boulder, Colorado; and the cities of Imperial Beach, Santa Cruz and Richmond, California.
“Their theory rests on the sweeping proposition that otherwise lawful and everyday sales of fossil fuels, combined with an awareness that greenhouse gas emissions lead to increased global temperatures, constitute a public nuisance,” wrote U.S. District Judge William Alsup in San Francisco in a 2018 decision tossing out a climate lawsuit. That same year, U.S. District Judge John Keenan said, in dismissing New York City’s case against Exxon, Chevron, BP, ConocoPhillips and Shell, that the “immense and complicated problem of global warming” is for Congress and the administration to fix.
A federal appeals court could decide on New York City’s challenge to Keenan’s ruling in the coming weeks, while oral arguments of appeals by San Francisco and Oakland are slated for Feb. 5 before another appellate panel. Decisions in those cases are likely to inform climate litigation choices by other states and cities.
Chris Chrisman, a corporate defense lawyer with Holland & Hart in Denver, predicts the courts will ultimately side with the energy industry.
“It’s a recognition of the limitations of what state nuisance laws were designed to accomplish,” said Chrisman, who represents energy companies but isn’t involved in the nuisance cases. “They might be able to address the adverse effects of a smokestack going up right next door to your house, but they’re not designed to address a global problem like climate change.”
Unsurprisingly, lawyers for the plaintiffs don’t see it that way. They argue their nuisance claims are bolstered by evidence that fossil fuel companies knew the damage their products did, and actively sought to steer public debate elsewhere. Many of the suits also allege negligence for “failure to warn,” negligence for design defects, strict liability and trespass.
In a lawsuit filed by the City of Baltimore, lawyers said energy companies were on notice about their impact on the Earth’s atmosphere in 1965, when President Lyndon Johnson’s scientific advisory committee on environmental pollution warned that by 2000, humanity’s greenhouse gas emissions would “modify the heat balance of the atmosphere to such an extent that marked changes in climate … could occur.”
Instead of taking action to prevent global warming, Baltimore said the defendants “embarked on a decades-long campaign designed to maximize dependence on their products and undermine national and international efforts to rein in greenhouse gas emissions.”
Marin County pointed to a now-defunct industry group whose members included “affiliates, predecessors and/or subsidiaries” of some of the defendants. In 1991, the county alleged in its complaint, the group launched a national climate denial campaign that targeted “less-educated males” in order to “reposition global warming as theory (not fact).” One of the group’s ads stated “Who told you the Earth was warming ... Chicken Little?”
Goldberg, special counsel to the National Association of Manufacturers, said such allegations of corporate deception are “all window dressing to try to drive the public opinion and judicial reaction to it.”
The legal effort by climate litigants is evolving, however. In October, a state court case filed by Massachusetts included claims under consumer protection laws, arguing that Exxon misled residents and investors about the environmental impact of the gasoline they buy.
“It’s a different kind of case,” Massachusetts Attorney General Maura Healey said in an interview. “Exxon made misrepresentations and failed to disclose material facts about systemic climate change risks.”
Exxon, having moved the case to federal court for now, claimed in a November filing that Healey is trying to stop the company “from producing and selling fossil fuels.” In a response filed this month, Healey rejected the company’s argument. She instead compared her claims to tobacco litigation, saying it’s “deceptive advertising and marketing that the Commonwealth is seeking to stop.”
Hana Vizcarra, a staff attorney at Harvard Law School’s Environmental and Energy Law Program, said the increasing need to find someone other than taxpayers to pay the costs of climate change will continue to drive state and local governments toward litigation. Nevertheless, she’s skeptical about their chances for victory.
“Plaintiffs in the remaining cases may yet see some success at the state level as they refine their claims,” she said. “But the federal court decisions indicate this remains a difficult path.”
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