Climate Lawsuits have Cities Seeing Green

In my last article I discussed atmospheric trust litigation (ATL), the latest crusade among radical environmentalists to impose through the courts what they could not pass through the ballot box. This coordinated campaign includes using child plaintiffs to sue the federal government to adopt their desired climate change regulations and a press strategy including what would become the youth climate strikes. Increasingly prominent components of the ATL campaign are investigations by state attorneys general into ExxonMobil (ongoing in New York, Massachusetts, and being picked up in Washington, DC) and public nuisance lawsuits by cities, counties, and states against Exxon and a few other chosen oil companies (starting or ongoing in Rhode Island and more than a dozen cities and counties across North America). These investigations and climate lawsuits are desperate and misguided attempts to smear providers of conventional fuels and extract rents free of political consequence.

Killing the Goose that Laid the Golden Eggs

For the municipalities investigating and suing oil companies, the main motivation is clear: money. Enough pressure on oil companies could yield settlements of hundreds of millions of dollars, or maybe even a general fund modeled after the Tobacco Master Settlement Agreement worth hundreds of billions of dollars. The best part? They are able to outsource the actual legal work for free, courtesy of Michael Bloomberg and a few foreign-funded organizations. In addition to utilizing this “law enforcement for rent,” former New York State Attorney General Eric Schneiderman also kept in communication about “company specific climate information” with billionaire Tom Steyer and the Rockefeller Family Fund, the latter of which also paid journalists to write stories and op-eds and funded a cherry-picked and error-laden study against ExxonMobil. Though it also already hired a Bloomberg-funded special assistant attorney general, the DC Office of the Attorney General (OAG) announced that to help it investigate Exxon it was hiring extra help on an unusual contingency-fee basis which allows its payout to go instead to a financing institution—say, an interested foundation.

Starting a lawsuit against much-maligned oil companies is also a way to make a costless political statement, providing the perfect cover for rent seeking. For a solidly Democratic municipality, this is a rare political win-win. With attorneys, curated data, media outreach and management provided by wealthy donors and potentially millions of dollars to be gained if they can reach a settlement, how could municipalities (at least those that do not let pesky ethics get in the way like Virginia) not want to join in? As Mike Layton, the Toronto City Councilor who proposed that his city join the burgeoning North American oil lawsuit movement, explained:

I think what you’ll find is as it gains popularity, more and more municipalities are saying, “Wait a second, we have hundreds of millions in infrastructure costs that we see coming. What are we going to do to fund those?” Rather than just assume that we’re going to have to cover it out of the rate base or the tax base or that the federal government will come to the rescue, that we should move ahead and join forces on a similar lawsuit.

As with Juliana, the actual legal claims of the oil investigations and lawsuits seem to be an afterthought for their funders. At a meeting for prominent climate change activists and political operatives organized by the Rockefeller Family Fund, the agenda stated that the goals of the Exxon campaign include “delegitimize them as a political actor” and “drive Exxon & climate into center of 2016 election.” By accepting these resources to engage in sham investigations and lawsuits, OAGs lend the offices’ implicit credibility to the unbridled accusations of environmental activists. I doubt they will be getting that credibility back.

Flawed Reasoning

Most of the arguments brought out against ExxonMobil and other oil companies were built at the workshops of the 2012 La Jolla meeting and are formalized in their summary paper, Establishing Accountability for Climate Change Damages: Lessons from Tobacco Control. The basic strategy is to establish harm caused by climate change, rest the blame squarely on carbon emissions, accuse corporate defendants of having secret knowledge of the harms of climate change and then seek public nuisance damages from those corporations for their contributions to climate change under “joint and several” liability. These lawsuits were designed to accomplish many of the activists’ goals at once. They promise monetary rewards to “combat” climate change—a broad concept that could include funding for renewable energy, climate adaptation, conservation and climate research (perhaps the same research done by the conference-goers). They condemn and punish oil companies, discouraging future energy development. Most importantly, they may secure court approval for the narrative that climate change is an imminent threat, oil producers are to blame for it and opposition to the activists’ plans are part of the oil companies’ misinformation conspiracy.

The basis for this in law is precarious at best. Far-reaching public nuisance claims have an extensive record of being thrown out in courts. For a lawsuit to be justiciable—resolvable by a court—it must revolve around legal and not political questions. In order ensure that courts adhere to the judicial function of resolving discrete and tractable disputes rather than wider social ills, all tort law must establish proximate cause; there must be a close connection between the defendant and the harm done to the plaintiff. But climate change is global in scope and caused by billions of actors, including the plaintiffs themselves. The irony of a city calling the burning of conventional fuels a public nuisance when that city uses (and owes much of its current existence to) those fuels was not lost on U.S. District Judge John Keenan, who dismissed the New York City lawsuit:

As an initial matter, it is not clear that Defendants’ fossil fuel production and the emissions created therefrom have been an “unlawful invasion” in New York City, as the City benefits from and participates in the use of fossil fuels as a source of power, and has done so for many decades.

When the plaintiffs are relying on a theory of joint and several liability, whereby a few oil companies can be held liable for a global phenomenon of which they are minor actors, it is hard to ignore the plaintiffs’ own contributions to emissions. It certainly makes the climate lawsuits look less like discrete and tractable legal disputes and more like either political stunts or attempts to use the courts to reach political outcomes that the plaintiffs cannot reach through their legislatures. Outside of the courtroom, supporters of the plaintiffs justify the lawsuit on political grounds, arguing that the judiciary is justified in doing the jobs of the legislative and executive branches because those branches have not offered the right solutions.

Even if one were to successfully convince a judge that this is a legal question, other fatal issues persist. In American Electric Power Co. v. Connecticut (2011) the court held that the Clean Air Act and EPA actions displaced the federal common law of nuisance. Since these companies comply with federal regulations, they are immune to additional nuisance challenges. The grand ambitions of these state and local governments also brush up against the federal government’s authority under the Commerce Clause of the U.S. Constitution. To the extent that such a suit would attempt to impose fines for actions done outside of the plaintiff’s state, they violate the plaintiffs’ constitutional restrictions on out-of-state commerce. Indiana and 14 other states argued in their Amici Curiae on behalf of the oil industry defendants against New York City’s lawsuit that using public nuisance to regulate global climate change “attempts to extend New York law across not only the United States, but the entire world.”

False Premises

The judges who have dismissed these lawsuits aimed at their legal defects, but the lawsuits’ unsound structures are due equally to the groundless claims at their foundations. The first claim is that the municipalities have suffered and will suffer demonstrable harms from anthropogenic global warming. It is not sufficient to show damages from sea level rise or extreme weather events; it must be shown to what extent a global climatic shift contributed to these phenomena. The enormity of this challenge cannot be overstated. Why should we accept a plaintiff’s prediction of extra damages from local weather due to global climate change in the far future when professional meteorologists can hardly predict damages from weather or even the weather itself in the near future? The effect of global warming would also presumably be dependent on the exact amount of future emissions and warming, yet another uncertainty.

The cost of climate change for a given municipality depends heavily on the effect of future extreme weather events on its region. These are nearly impossible to predict and the relationship of a warming earth and local extreme events is poorly understood. For example, the most recent report by the U.N. Intergovernmental Panel on Climate Change (IPCC AR5) stated that the future influence of climate change on tropical cyclones is likely to vary by region, and identified low confidence for region-specific projections of frequency and intensity. Municipalities that predict great costs from climate change are necessarily making shaky assumptions. As the judge who threw out San Francisco and Oakland’s lawsuit against oil companies incredulously stated, “You’re asking for billions of dollars for something that hasn’t happened yet and may never happen to the extent you’re predicting it will happen.”

Even if a municipality does suffer losses from weather, the impact of anthropogenic global warming is hard to determine. Local factors and chance are the predominant variables, and in countless cases the municipalities themselves have been contributing to the cost: destruction of protective wetlands, poor forest maintenance, increased building in risk-prone areas and various actions including urbanization itself that affect land water storage and thus land subsistence/relative sea level rise. Until the plaintiffs stop making their own costs worse, it is hard to see why they should be given more money. The funds that the plaintiffs are demanding would ostensibly be used for things like sea walls and other climate resiliency projects, but the track record of such arrangements are dismal. States secured billions of dollars in perpetuity from the Tobacco Master Settlement Agreement, but just 2.4 percent of the annual revenues have made their way into the intended use of tobacco prevention and cessation programs. If the plaintiffs suing the oil companies truly believed that these climate adaptations are vital investments, they would have already started building them.

The centerpiece of the investigations and the public nuisance lawsuits is the allegation that for decades ExxonMobil had unique, definite knowledge that burning oil would warm the planet (#Exxonknew), yet publicly sowed doubts in order to maximize its profit. There is a significant problem here for the environmental activists; this narrative is false. The research that Exxon did is publicly available, as it has been for decades in peer-reviewed publications, and it was not just Exxon doing global warming research. You can see scientific reports on the subject well before Exxon’s research, in Time Magazine in 1956, a Bell Labs production from 1958 (with Frank Capra!) and even a report to Congress sent by President Lyndon Johnson in 1965. Activists discovering all of the studies and warnings available decades ago have expanded the conspiracy to include other oil companies and even electric utilities rather than admit that global warming was not so secret after all.

So maybe everybody in government and anyone else that cared to know could have found out about global warming since at least the 1960s—but what about the misinformation that Exxon was spewing, sowing doubt about the certainty of the science? Inside Climate News published a series on Exxon that claimed to show just that. But what is misleadingly omitted from their out-of-context quotes of Exxon’s research is that the scientists frequently discussed the uncertainty of causal mechanisms and future warming predictions. President Johnson’s Science Advisory Committee was certainly up-to-date on the climate science, but their concerns about carbon dioxide emissions were couched with “at present it is impossible to predict these effects quantitatively,” a problem they hoped to be resolved in a few years by better computers. It must have taken longer than that, because in the mid 1970s, when the concept of global warming had been around for decades, journalists as well as the majority of scientific papers flipped over to alarms about global cooling. Of course, in both cases the clear solution one could find in the media was to curb our use of oil and gas, a case that was also frequently made by alarmists for the enduring 20^th century “peak oil” theories.

The activists’ key evidence that Exxon muddied the scientific waters comes from a study produced by researchers involved with the investigations, one of whom was featured in the New York Times as one of the original architects from the 2012 La Jolla meeting. The study, funded in part by the Rockefeller Family Fund, concludes that while ExxonMobil’s internal documents and research found anthropogenic warming, their New York Times advertorials from 1989-2004 sowed doubt.

One critical problem with this representation is that Exxon and Mobil were separate companies until 1999, and the climate research came from Exxon while the advertorials came from Mobil. More importantly, the study was cherry-picked and error-laden, relying on the Greenpeace-run website PolluterWatch to find just 36 global warming-related advertorials from a weekly advertorial series that lasted 15 years. Energy In Depth found 69 global warming-related advertorials, of which “the overwhelming trend in ExxonMobil’s advertorials was to acknowledge that climate change is happening, that humans are contributing to it and that the company was and is taking steps to mitigate it.”

Perhaps recognizing the flaws in the #Exxonknew narrative, the NY OAG ended up suing ExxonMobil on claims entirely contrary to their initial accusations—although you would not know it from the misleading New York Times headline, “New York Sues Exxon Mobil, Saying It Deceived Shareholders on Climate Change.” One would be forgiven for reading that and believing that the NY OAG is accusing the oil corporation of downplaying the risks of climate change to its shareholders, but in fact, it is arguing exactly the opposite: that the oil corporation has been telling shareholders that the risk from climate is greater than their internal estimates. If this strange argument does not give you the impression that the NY OAG is truly concerned about ExxonMobil shareholders, well, you might be right—any money that the State of New York manages to pressure Exxon into coughing up in a settlement will go straight into the government’s coffers.

Ironically, the only parties that any courts have found to be giving conflicting positions on climate change are the California counties and cities that sued Exxon; though in their lawsuits they were certain that climate change will cause damaging sea level rise and floods in the near future, in their recent bond offerings they stated that they are unable to predict whether sea level rise or other climate change impacts will occur or whether they will have material adverse effects to city finances or the local economy. The Texas District Court in which Exxon asked for finding of fact concluded that these contradictions “raise the question of whether the California municipalities brought these lawsuits for an improper purpose,” boding well for Exxon in a potential countersuit. The Californian municipalities will be forced to either admit that the claims of damages from climate change that they alleged in their litigation are false or face fraud charges for underreporting climate risks to their bondholders.

Conclusion

We as a society have depended on the reliable electricity and transportation made possible by oil, gas and coal. There has been no deception necessary for this relationship to occur; these fuels make up the vast majority of U.S. energy consumption as they have for more than a century, a fact that decades of generous subsidies for nuclear, biofuel, wind and solar energy has done little to change. Our current public nuisance is not the conventional fuels that keep the lights on at schools and hospitals but rather the sham lawsuits created by municipalities looking for their next meal ticket.

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