Climate Lawsuits Against Big Oil Are Likely a Useless Distraction

Funny: These cities didn't disclose any concerns about climate change in their bond issues.


Tim Bingham/Dreamstime

New York City has joined seven California jurisdictions in filing public nuisance lawsuits against five major oil companies. The suit says BP, Chevron, Conoco-Phillips, ExxonMobil, and Royal Dutch Shell are responsible for 11 percent of the greenhouse gases that have accumulated in the atmosphere. The plaintiffs want to "shift the costs of protecting the City from climate change impacts back onto the companies that have done nearly all they could to create this existential threat."

New York specifically cites the costs of protecting its citizens against future sea level rise that will result chiefly from melting glaciers draining into the oceans and storms worsened by rising temperatures. "To deal with what the future will inevitably bring, the City must build sea walls, levees, dunes, and other coastal armament, and elevate and harden a vast array of City-owned structures, properties, and parks along its coastline," the suit says. "The costs of these largely unfunded projects run to many billions of dollars and far exceed the City's resources."

Turning the tables on its municipal antagonists, ExxonMobil has filed a countersuit in a Texas court that aims to call out the hypocrisy of the California jurisdictions for issuing bonds without themselves mentioning any risks from climate change or sea level rise. "Notwithstanding their claims of imminent, allegedly near-certain harm," the lawsuit argues,

none of the municipalities disclosed to investors such risks in their respective bond offerings, which collectively netted over $8 billion for these local governments over the last 27 years.

To the contrary, some of the disclosures affirmatively denied any ability to measure those risks; the others virtually ignored them. At least two municipal governments reassured investors that they were "unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur, when they may occur, and if any such events occur, whether they will have a material adverse effect…."

The stark and irreconcilable conflict between what these municipal governments alleged in their respective complaints and what they disclosed to investors in their bond offerings indicates that the allegations in the complaints are not honestly held and were not made in good faith. It is reasonable to infer that the municipalities brought these lawsuits not because of a bona fide belief in any tortious conduct by the defendants or actual damage to their jurisdictions, but instead to coerce ExxonMobil and others operating in the Texas energy sector to adopt policies aligned with those favored by local politicians in California.

ExxonMobil seeks to depose various officials from the California cities and counties suing the company, to "investigate potential claims of abuse of process, civil conspiracy, and constitutional violations." Naturally, the cities are outraged that the honesty and integrity of their civil servants are being questioned. The San Francisco Chronicle reports:

"It is repugnant that oil companies might sue public servants personally in an attempt to intimidate them from protecting their communities and environment," said John Beiers, county counsel for San Mateo County. "We will not be intimidated."

Assuming that the emissions from the products sold by the oil companies are contributing significantly to the costs of adapting to climate change, are public nuisance lawsuits an effective remedy to the problem?

Not really, suggests Case Western University law professor Jonathan Adler in his 2011 analysis of American Electric Power vs. Connecticut. In that case, several states and environmental groups sued five major power companies for the damages allegedly caused by their emissions of greenhouse gases from the generation of electricity. The dispute reached the U.S. Supreme Court, which narrowly decided that the fact that the Environmental Protection Agency was promulgating carbon dioxide regulations precluded the lawsuit.

Adler observes:

Libertarians and others have argued that using the common law to address environmental pollution concerns is better than resorting to decision-making by centralized administrative agencies. While global climate change is anything but a typical environmental pollution concern, even a modest warming could produce the sorts of harms common-law nuisance actions have addressed. The common law has long recognized actions that cause the flooding of a neighbor's land as a trespass or nuisance, and even so-called skeptics recognize global warming could produce a measurable increase in sea level.

Yet opening the door to climate-based nuisance suits could unleash a torrent of litigation. Given the ubiquity of GHG [greenhouse gas] emissions, allowing suits against one set of firms inevitably opens the door to suits against others—without any prospect of addressing the underlying concern. Given the global nature of the problem, climate change can only be mitigated or averted on a global scale. Reducing emissions from the 5, 50, or 500 largest GHG emitters within the United States will have no appreciable effect on the accumulation of GHGs in the broader atmosphere.

Adler consequently concludes that "such questions lie far beyond the capability of common-law courts. For better or worse, then, we have to leave climate change in the hands of the political process, to be addressed—if at all—by legislative and (duly authorized) administrative action."

Disclosure: I have not yet divested my minor stock holdings in oil company stocks (which I purchased with my own funds).