Climate Change Lawsuit Sets Dangerous Precedent

Who is responsible for the costs of building seawalls and other climate change adaptation infrastructure in cities such as Oakland and San Francisco? Is it the taxpayers in those municipalities? The major emitters of greenhouse gases, such as carbon dioxide and methane? Or the companies that have made the emissions possible but have not actually released them?

City officials in California are asking a federal judge to hold only the latter — major oil and gas companies — responsible. By doing so, they risk unleashing a torrent of lawsuits against all manner of companies in the process.

The Bay Area expects to experience increased flooding in the coming decades as global warming causes sea levels to rise. In response, it intends to build infrastructure that will prevent its low-level populated areas from being inundated in the future.

This infrastructure is not cheap, though, and city officials in Oakland and San Francisco want those entities that it holds primarily responsible for global warming (BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell) to pick up the bill under the federal common law tort of nuisance.

Unfortunately for these cities, in 2011 the U.S. Supreme Court ruled that the Environmental Protection Agency, as authorized by Congress — not the courts — has the task of regulating greenhouse emissions.

To get around this roadblock, the cities have opted to sue large producers of fossil fuels, such as oil and gas companies, rather than emitters of greenhouse gases, such as electric utilities or drivers.

In the process, their lawyers have advanced a novel legal theory. It goes like this: By extracting fossil fuels from their underground reservoirs and making them available to be burned, oil and gas companies set the conditions for the greenhouse gas emissions that have contributed to climate change; they are therefore liable to the cities for the costs of building seawalls, because they made the fossil fuels’ combustion and ultimate conversion to greenhouse gases possible.

This argumentative strategy — focusing on the creation of the conditions necessary for fossil fuels to be combusted — is a way for the cities’ lawsuit to conform to legal precedent. It also threatens to ensnare far more than the world’s largest oil and gas producers who are the defendants in the current lawsuit.

Of course, fossil fuels must be extracted before they can be combusted. But that is hardly the only prerequisite. Oil is most commonly refined into distinct fuel (and non-fuel) products prior to being consumed.

The refined fuels are transported to the convenience stores that operate the pumps that move them into the vehicles in which they are combusted. In the case of natural gas, the fuel is distributed to facilities and buildings for use in heat and power systems.

In every case, the fuel is only combusted because numerous other logistics prerequisites have been satisfied in addition to extraction from underground reservoirs.

Pipelines were built to transport the fuel to market. Distribution infrastructure was built to transport the fuel to consumers. Combustion equipment such as vehicle engines, gas turbines, boilers, and furnaces was built to convert the fuel into energy.

In the case of electricity, transmission and distribution lines were built to distribute the energy to consumers.

In the case of refined fuels, road networks and airports were built and maintained so that vehicles could convert the energy into distance traveled.

In other words, modern economies depend on energy systems, without which fossil fuels would not get converted into greenhouse gas emissions.

Does this mean that the cities’ lawyers intend to sue all of these other components of the fossil fuel life cycle for climate change damages? It is unlikely.

Oakland and San Francisco are well aware of their reliance on fossil fuels, so much so that their original legal complaint specifically states that the cities “do not seek to restrain Defendants from engaging in their business operations” (emphasis in original).

Moreover, the cities’ own involvement in the processes of building and maintaining the transportation networks that are required for many fossil fuels to be combusted would quickly make such a maneuver an act of self-harm.

The real concern is with the precedent that this lawsuit would create if successful.

The ability to target the entities that create the prerequisites for a nuisance such as greenhouse gas emissions, rather than the nuisance itself, would create a vast number of potential targets, including manufacturers of products such as gas turbines, furnaces, hot water tanks, road construction equipment, automobiles, and airplanes, to name a few.

Furthermore, given that greenhouse gases are emitted by a variety of activities other than fossil fuel extraction, including agriculture, forestry, and ranching, many other sectors in modern economies could find themselves affected.

The federal judge who is hearing this lawsuit recognized these threats and asked the cities’ lawyers to explain why they do not believe that all entities responsible for greenhouse gas emissions are liable for the costs of Oakland and San Francisco’s seawalls.

Their response was that the lawsuit is only focused on the largest fossil fuel producers. But this ignores the fact that, under federal common law, negligence liability is a question of harm caused — not the size of the entity allegedly contributing to the nuisance.

The cities’ lawsuit is novel because it would potentially hold everyone who creates the prerequisites for greenhouse gas emissions liable.

There is no denying that coastal municipalities will incur substantial climate change adaptation costs in the future, especially as humans continue to abandon rural inland communities for coastal cities.

Politicians have the unenviable task of determining how to allocate these costs across modern economies that continue to be major sources of greenhouse gas emissions.

However, the approach adopted by Oakland and San Francisco — attempting to use the blunt hammer of the courts to fill a perceived vacuum in federal policy — threatens far more than just those companies they prefer to target. More is at stake here than the funding of future seawalls.

Tristan R. Brown is Assistant Professor of Energy Resource Economics at State University of New York in Syracuse, NY.

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