Judge lets cities probe oil giants for documents

Source: Debra Kahn, E&E News reporter • Posted: Tuesday, May 29, 2018

SAN FRANCISCO — A federal judge last week  ordered oil companies to submit to discovery on the question of the court’s jurisdiction to hold them liable for climate-related damages to California cities.

Judge William Alsup of the U.S. District Court for the Northern District of California gave attorneys representing San Francisco and Oakland nine weeks to request documents from BP PLC, Royal Dutch Shell PLC and ConocoPhillips. The oil companies argue that they do not exercise enough control over their U.S. operations to be held liable for their actions, and the court’s decision yesterday allows the cities to seek documentation related to those claims.

“You want all these trenches, you’re going to get all these trenches,” Alsup said, comparing the case to warfare. “Strategically, you should ask yourself on both sides whether you are pursuing the right course for teeing these issues up for an ultimate decision.”

Alsup bristled at the argument by Shell’s attorneys, in particular. The Dutch company claims it isn’t subject to the suit because it doesn’t manage the “continuous flow of business from the foreign corporation to the state of California.”

“That is so unconstitutional,” Alsup said. “Your declaration I have to accept as gospel, and they don’t even get to probe it?”

The opportunity for discovery will be limited to jurisdictional issues rather than the broader question of whether the claims are displaced by federal authority to address greenhouse gases under the Clean Air Act. The companies assert that the case should be dismissed because Congress and the Trump administration hold the authority to regulate carbon emissions.

Alsup’s order applies only to Shell, BP and ConocoPhillips — not Chevron Corp., a California-based company that did not challenge the court’s jurisdiction. It was unclear whether it also applied to Exxon Mobil Corp., which did not make the same arguments about the company’s location.

“You might be the smart one in this group,” Alsup said. “Exxon at least admits you can be sued somewhere in the United States.”

In March, Alsup demonstrated an appetite to delve into the details of climate science during an unusual “tutorial” that he made a required event for the cities and the oil companies (Climatewire, March 22).

Legal experts described the court’s order on discovery as an incremental win for the cities. But Alsop also spoke of the societal contribution from fossil fuels.

“This will be inconvenient for the defendants and could drag things out, and could also make clear that the court does in fact have jurisdiction over the defendants, but it isn’t blowing the case wide open as an order to conduct discovery more broadly would be,” Ann Carlson, faculty director of the UCLA Emmett Institute on Climate Change and the Environment, said in an email. “It shows that he is not going to take assertions from the defendants lightly. So if they are claiming that the court doesn’t have personal jurisdiction he’s not just going to believe them, but he’s going to want evidence that that is true.”

‘New set of facts’

Alsup expressed curiosity about the companies’ arguments that the court is not the proper venue to address damages from greenhouse gases. He ordered each side to deliver a 10-page brief within a week on the balance between fossil fuels’ damages and benefits.

The balancing test stems from the question of whether the production of fossil fuels should be considered a public nuisance, as the cities have alleged. The companies are arguing that the courts should not take on the question of public nuisance as it applies to greenhouse gases.

“If the test is a balancing test of what is reasonable or not, I look at the broad sweep of history and see that we needed oil and fossil fuels, coal would be another one, to get from the 1850s or 1859, when they struck oil in Pennsylvania, to the present,” Alsup said. “And yes, that’s causing global warming, that’s a negative, but against that negative we need to weigh in the large benefits that have flowed from the use of fossil fuels.”

U.S. Justice Department attorney Eric Grant backed up the oil companies by citing American Electric Power Co. v. Connecticut, the Supreme Court decision that found corporations can’t be sued for greenhouse gases because EPA regulates them under the Clean Air Act.

“This issue involves complex trade-offs,” Grant said. “Individual federal district courts really lack competence to undertake that task. … This court, and certainly other courts as well, should not recognize the type of remedies sought by the plaintiffs.”

Alsup wondered whether he would be extending public nuisance law to a new area. “There’s no court in the history of the universe that has ever extended this to global warming,” he said.

“We’d be extending it to a new set of facts,” said the cities’ attorney, Steve Berman. He argued that the court wouldn’t need to weigh complex policy trade-offs because plaintiffs are only seeking damages, not an injunction to stop fossil fuel production.

“You’re asking for billions of dollars for something that hasn’t happened yet in Oakland, for example, that may never happen to the same extent that you’re predicting in the complaint,” Alsup said. “Why don’t we just wait and see if it happens? … If the city of Oakland has to pay millions of dollars for a sea wall, then OK, but it hasn’t even occurred yet, and it may not occur until you and I are long gone.”

Berman also argued that the companies’ efforts to “muddy” up the scientific consensus on climate change should play into the “constellation of conduct” that would lead to a finding that producing fossil fuels constitutes a public nuisance. “We’re not doing something that is as novel as defendants claim,” he said.

Alsup seemed unconvinced that they should pay damages. “We’ve been using fossil fuels for the entire Industrial Revolution; we won the Second World War with fossil fuels,” Alsup said. “If we didn’t have fossil fuels, we would’ve lost that war and every other war and airplanes couldn’t fly. … Trains couldn’t run and we would be back in the Stone Age. We’ve derived a huge benefit from fossil fuels, right?”

Alsup also questioned whether the outcome would have been different without the oil companies’ actions.

“You understand how very much dependent our nation has been on oil,” he said. “Isn’t it logical that if these defendants hadn’t ramped up, somebody else would’ve ramped up?”

Berman said that if the oil companies had disclosed their research into global warming in the early 1980s, “we would have changed our energy policy. … I can’t just accept your proposition that someone else would have stepped in and taken over production.”

Chevron’s attorney, Ted Boutrous, pushed back. “There’s no evidence that consumer demand would have changed,” he said. “No one’s changed their behavior now after five [Intergovernmental Panel on Climate Change] reports. It’s completely speculative, it’s incoherent.”

A legal observer said it was surprising that Alsup asked for more analysis on the question of public nuisance.

“It’s premature in the case for the judge to be making any sort of decisions about the benefits and harms of fossil fuel,” said Sean Hecht, co-executive director of UCLA’s Emmett Institute. “Instead, the judge’s job is to figure out whether it’s possible for the plaintiffs to bring an action like this. It seemed a little bit of an odd choice to me on the judge’s part to ask for briefing on something that should come later in the case.”

Reporter Anne C. Mulkern contributed.