Ruling in Big Oil case leaves cities, activists reeling

Source: Anne C. Mulkern, E&E News reporter • Posted: Thursday, June 28, 2018

Cities hoping to force oil companies to pay for climate change damages are facing a new reality after a federal judge Monday threw out similar lawsuits against fossil fuel businesses.

Judge William Alsup’s ruling against San Francisco and Oakland, Calif., in the U.S. District Court for the Northern District of California didn’t set a legal precedent that judges in other locales must consider. But it still could affect courts considering 11 other cases from municipalities suing oil companies in California, Colorado, Washington and New York, legal experts said.

“Certainly from a soft-persuasion perspective, I think it could influence what other judges decide,” said Jessica Wentz, staff attorney with the Sabin Center for Climate Change Law at Columbia Law School. “They might look at his reasoning and see some sort of logic to it and apply some of the reasoning to their own decisions.”

San Francisco and Oakland in their cases against Chevron Corp., BP PLC, ConocoPhillips, Exxon Mobil Corp. and Royal Dutch Shell PLC contended that the companies make and sell products that when combusted create a public nuisance. The cities also argued that the companies for decades knew the dangers of warming and hid that information while protecting their assets.

Alsup, a Clinton appointee who in March held a high-profile “tutorial” on climate science, in his ruling accepted climate change as a danger but said that evaluating blame for it is a political issue and not one for the courts.

Advocates for climate action said they hoped it represented just one loss in what’s likely a long process seeking to hold oil companies responsible.

“It’s definitely a setback, there’s no doubt, particularly for communities like San Francisco and Oakland that are experiencing, like so many communities are, the cost of climate change in real time,” said Peter Frumhoff, director of science and policy and chief climate scientist at the Union of Concerned Scientists. “These things do take time.” In lawsuits against the tobacco companies and in other cases, he added, “persistence paid off.”

Appeal expected

Several legal experts said they think the cities would appeal. Oakland City Attorney Barbara Parker on Monday said that her city was “considering all options, including an appeal.” San Francisco said it was evaluating its next step.

If the cities do appeal, it would go to the 9th U.S. Circuit Court of Appeals in California.

That court already is considering whether to take up cases from more than two dozen fossil fuel companies and trade associations sued by Imperial Beach, San Mateo, Marin County, Richmond, Santa Cruz and Santa Cruz County in California. Federal Judge Vince Chhabria — located in the same courthouse as Alsup — earlier this year ruled that those cases belonged in state court, where they started. The oil interests appealed that decision.

Alsup in February ruled that the San Francisco and Oakland cases belonged in federal court. If those cities appealed Alsup’s decision keeping the cases in federal court, the 9th U.S. Circuit Court of Appeals could decide to look at the conflicting decisions of Alsup and Chhabria on where the cases belong, said Michael Burger, executive director of the Sabin Center for Climate Change Law.

“It will be an important decision,” he said.

It’s not clear, however, whether San Francisco and Oakland would be allowed to appeal Alsup’s decision to keep those cases in federal court, as they did not appeal when it first happened, said Ann Carlson, co-director of UCLA’s Emmett Institute on Climate Change and the Environment. If allowed to appeal on those grounds, she said, “I think they will prevail.”

If the California city cases are allowed to stay in state court, they have a better shot, Carlson said, because “state law is much more favorable for the plaintiffs than federal law.”

If only the Imperial Beach, San Mateo, Marin County, Richmond, Santa Cruz and Santa Cruz County cases are allowed to proceed in state court, and end up with a ruling that conflicts with Alsup’s decision, that ultimately could send the cases to the U.S. Supreme Court, experts said.

Pros and cons of fossil fuels

Alsup spent several paragraphs in his ruling detailing the science of climate change and its impacts. He said that all parties agreed fossil fuels “have led to global warming and ocean rise and will continue to do so, and that eventually the navigable waters of the United States will intrude upon Oakland and San Francisco.”

The question of whether producers of fossil fuels should pay for eventual harms from sea-level rise ultimately isn’t one for the courts, Alsup said, but is better addressed by Congress and the White House.

Experts disagreed about whether that was the right call.

Carlson in an email said that Alsup’s arguments on separation of powers and interference with foreign affairs “are incorrect and Judge Alsup’s reasoning, at least, will be overturned on appeal.”

The appeals court, however, could also decide that the cases are pre-empted by federal law, she said. The Supreme Court in deciding the case American Electric Power Co. v. Connecticut ruled that corporations cannot be sued for greenhouse gas emissions because EPA regulates those through the Clean Air Act. In that case, states sought to cap greenhouse gas emissions in the power sector.

Richard Daynard, law professor at Northeastern University and chairman of the Tobacco Products Liability Project that supported litigation against the tobacco companies, said Alsup’s decision was “very thoughtful.”

Alsup in his ruling discussed the benefits of fossil fuels and said those must get weighed against their detriments in terms of deciding whether production of the fuels creates a nuisance. Alsup essentially said that “we can’t call this a public nuisance” because there’s a good side and bad side to fossil fuels, Daynard said.

“To the extent a lawyer can’t come up with a good argument on why he’s wrong,” Daynard said, “this way of dealing with climate change is blocked.”

Blame for what they knew

Alsup in his ruling did not delve deeply into the part of the cities’ suits that accused the companies of hiding what they knew about climate dangers and misleading the public. Experts disagreed about what that meant. Frumhoff said that’s an important part of the cases.

“Companies knew of the harms for more than 30 years,” Frumhoff said. “They could have warned the public and acted to reduce those harms, but they chose not to. They chose to misinform on climate science and to oppose regulations that would have limited emissions.”

Oil companies also successfully lobbied for subsidies that have made fuels available at low cost without accounting for climate damages, he said.

“One has to say that but for their actions we’d be in a very different world today, with respect to the availability of clean energy options and sensible limits on emissions,” Frumhoff said. Alsup “really didn’t wrestle with the question of company responsibility.”

However, Daynard said that’s a difficult argument to make in court. Even if it could be proved that Exxon Mobil and the other companies knew about and hid climate dangers, cities would need to prove that absent the oil companies’ behavior, Congress would have imposed limits on greenhouse gas emissions. But the Constitution in essence prohibits questioning legislators about their decisions.

“Without it, it’s very hard to see how you could ever establish this point,” Daynard said. “It may be totally impossible.”

There’s another angle to the cases, Frumhoff said. The suits possibly are putting pressure on oil companies to consider putting a price on carbon. Americans for Carbon Dividends, a nonprofit, is advocating a carbon tax in a proposal that would give oil companies relief from liability. Exxon Mobil, BP and Shell have signed on to the group.

“It’s an indication, whether you agree with the proposal or not, that the pressure of these kinds of lawsuits might be relevant to driving interests that would not otherwise be realized in federal climate policy,” Frumhoff said. “The potential implications for these lawsuits — if they get past motions to dismiss — to drive and support sensible climate policies is part of the reason why they’re so powerful.”