Energy and Environment Monitor
Federal Courts on both Coasts Reject Cities' Efforts to Hold Oil Industry Responsible for Damages Caused by Climate Change
July 26, 2018
By: Kevin M. McGuire
"The problem deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case." Judge William Alsup
Last week, on July 19, 2018, the U.S. District Court for the Southern District of New York (Judge John F. Keenan) dismissed the City of New York’s action against BP, Chevron, Conoco-Phillips, Exxon Mobile and Royal Dutch Shell seeking to recover damages caused by global warming, including the cost of infrastructure needed to protect against rising sea levels. City of New York v. BP, P.L.C., No. 18 Civ. 182, slip op. (S.D.N.Y. July 19, 2018).
Judge Keenan’s decision closely mirrors last month’s opinion of Judge William H. Alsup of the U.S. District Court for the Northern District of California with respect to the same claims brought by the cities of Oakland and San Francisco against the same five defendants. City of Oakland v. BP P.L.C., Nos. 17-civ-06011 and 17-civ-06012, slip op. (N.D. Cali. June 25, 2018).
In both actions, the plaintiff cities claim that the defendants make and sell products that when combusted create a public nuisance. The cities also claim that the defendants knew of the global damages for decades and hid that information while protecting their assets.
In their respective decisions, neither Judge disputed that fossil fuel consumption caused climate change. As noted by Judge Keenan, despite the defendants’ alleged “attempts to deny or downplay” the harmful effects of fossil fuel use on climate change, they do not dispute the “scientific consensus that greenhouse gas emissions from fossil fuel use have contributed to global warming.” City of New York, slip op. at 5. Similarly, Judge Alsup found that “[a]ll parties agree that fossil fuels have led to global warming and oceans rise and will continue to do so, and that eventually the navigable waters of the United States will intrude upon Oakland and San Francisco.” City of Oakland, slip op. at 6.
The issue for the courts was whether the producers of fossil fuels should pay for anticipated harm that will eventually flow from a rise in sea level under public and private nuisance theories. The gravity of the cities’ claims was not lost upon Judge Alsup:
The scope of plaintiffs’ theory is breathtaking. It could reach the sale of fossil fuels anywhere in the world, including all past and otherwise lawful sales, where the seller knew that the combustion of fossil fuels contributed to the phenomenon of global warming…. 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, constitutes a public nuisance.
Addressing the merits of the city’s nuisance claims, and following the lead of Judge Alsup, Judge Keenan focused on the interstate and international reach of the subject emissions to conclude that the city’s claims are governed by federal common law. “Widespread global dispersal is exactly the type of ‘transboundary pollution suit’ to which federal common law should apply.” City of New York, slip op. at 11, citing Native Village of Kivalina v. Exxon Mobile Corp., 696 F.3d 849, 855 (9th Cir. 2012). In reaching this result, Judge Keenan rejected the City’s contention that its claims are based on “defendants’ production and sale of fossil fuels” – not on the defendants’ direct emissions of greenhouse gases. Judge Keenan explained “regardless of the manner in which the City frames its claims in its opposition brief, the amended complaint makes it clear that the City is seeking damages for global-warming related injuries resulting from greenhouse gas emissions….” City of New York, slip op. at 12.
The district courts then addressed the federal common law issues. In the earlier opinion, Judge Alsup foreshadowed the complexity of the analysis required under federal public nuisance law:
With respect to balancing the social utility against the gravity of the anticipated harm, it is true that carbon dioxide released from fossil fuels has caused (and will continue to cause) global warming. But against that negative, we must weigh this positive: our industrial revolution and the development of our modern world has literally been fueled by oil and coal….Having reaped the benefit of that historic progress, would it really be fair to now ignore our own responsibility in the use of fossil fuels and place the blame for global warming on those who supplied what we are demanded?
City of Oakland, slip op. at 8.
Judge Alsup concluded, however, that the Clean Air Act and EPA’s authority to set emission standards thereunder has displaced federal common law nuisance claims related to emissions of greenhouse gases. City of Oakland, slip op. at 9 citing American Electric Power Co. v. Connecticut, 564 U.S. 410 (2011) (“AEP”).
Judge Keenan reached the same result emphasizing that “Congress has expressly delegated to the EPA the determination as to what constitutes a reasonable amount of greenhouse gas emission under the Clean Air Act. City of New York, slip op. at 17 citing AEP, 564 U.S. at 428-29 (requiring federal judges in public nuisance suits to determine what amount of carbon dioxide emission is reasonable “cannot be reconciled with the decision-making scheme Congress enacted” under the Clean Air Act). Because the Clean Air Act has spoken “directly to the question” of domestic greenhouse gas emissions, the City’s claims are displaced. Id. at 18. Judge Keenan concluded that under AEP and Kivalina, “the Clean Air Act displaces the City’s claims seeking damages for past and future domestic greenhouse gas emissions brought under federal common law.” City of New York, slip op. at 17.
Recognizing that the Clean Air Act regulates only domestic emissions, both Judge Keenan and Judge Alsup addressed the cities’ claims in the context of the two foreign oil companies and the global activities of the U.S. - based companies. Judge Keenan held that “to the extent that the City seeks to hold Defendants liable for damages stemming from foreign greenhouse gas emissions, the City’s claims are barred by the presumption against extraterritoriality and the need for judicial caution in the face of serious foreign policy consequences.” City of New York, slip op. at 21, citing Jenser v. Arab Bank, PLC, 138 S. Ct. at 1402. Judge Keenan reasoned that such claims implicate “countless foreign governments and their laws and policies” and are the subject of “international agreements.” City of New York, slip op at 22. As Judge Keenan concluded:
[T]he immense and complicated problem of global warming requires a comprehensive solution that weighs the global benefits of fossil fuel use with the gravity of the impending harms. To litigate such an action for injuries from foreign greenhouse gas emissions in federal court would severely infringe upon the foreign policy decisions that are squarely within the preview of the political branches of the U.S. Government. Accordingly, the Court will exercise appropriate caution and decline to recognize such a cause of action.
City of New York, slip op. at 22.
Judge Alsup applied similar reasoning. “[Q]uestions of how to appropriately balance these worldwide negatives against the worldwide positives of the energy itself, and of how to allocate the pluses and minuses among the nations of the world, demand the expertise of our environmental agencies, our diplomats, our Executive, and at least the Senate. Nuisance suits in various United States judicial districts regarding conduct worldwide are far less likely to solve the problem and, indeed, could interfere with reaching a worldwide consensus.” City of Oakland, slip op. at 12.
The cities in both cases are considering appeals. In addition, nuisance actions brought by other cities and municipalities under state law are proceeding in California, Colorado, Washington, Maryland, and Rhode Island. It remains to be seen whether judges in those actions will find persuasive the reasoning of Judges Keenan and Alsup.