Can Big Oil Be Sued for Causing Global Warming?

Richard A. Epstein

This article first appeared on the Hoover Institution site.

New York City and a number of California municipalities, including San Francisco and Oakland, have filed lawsuits against five major oil companies—BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell—for contributing to the increased risk of global warming.

These complaints cite recent scientific reports that project that sea levels will rise from 0.2 meters to 2.0 meters (or 0.66 to 6.6 feet) by 2100, with a major loss of land surface area and serious climate disruptions.

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They further allege that the “Defendants had full knowledge that the fossil fuels would cause catastrophic harm.”

The complaints rely chiefly upon public nuisance law, which prohibits unreasonably interfering with public rights in air and water through discharges of dangerous substances—in this instance, carbon dioxide and other greenhouse gases.

These cities are demanding that each oil company named in the complaint contribute to an abatement fund to counteract the perceived future threats to the environment from global warming.  

In this essay, I confine my attention to the soundness of the public nuisance theory offered by San Francisco and New York in order to explain why private lawsuits are the wrong instrument for dealing with the global warming threat.  

In full disclosure, in this essay, I provide my own independent legal analysis of these complaints, which I prepared for the Manufacturer’s Accountability Project, an organization that focuses on the impact of litigation on the manufacturing industry.

The basic law of nuisance is divided into two parts, public and private, which complement each other.

Private nuisances require at a minimum “an invasion of another’s interest in the private use and enjoyment of land.” The defendant must release, emit, or discharge the offensive materials—such as filth, odors, or noise—onto the plaintiff’s property.

The relevant causal connection has to be so tight that there are no intervening forces between the discharge and the ensuing physical invasion of the plaintiff’s property. So, for example, the supplier of various materials and chemicals is not responsible for the waste that a manufacturer emits from their use.

GettyImages-642471602

A firefighter carries a woman from her car after it was caught in street flooding as a powerful storm moves across Southern California on February 17, 2017 in Sun Valley, California. After years of severe drought, heavy winter rains have come to the state, and with them, the issuance of flash flood watches in Santa Barbara, Ventura and Los Angeles counties, and the evacuation of hundreds of residents from Duarte, California for fear of flash flooding from areas denuded by a wildfire last year. David McNew/Getty

The typical private nuisance dispute usually involves one party (or a very few) who either makes the discharges or suffers consequences from them. The basic intuition behind this limitation on private suits is that administrative costs balloon out of control when the number of parties who suffer some degree of harm increases, as happens when pollution is discharged into a public waterway used by hundreds of different people.

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Yet it is a mistake to ignore large pollution discharges simply because private lawsuits are an ineffective instrument to secure damages, an injunction, or both.

As early as 1536, the English judges filled this gap by developing the law of public nuisances that rested, both then and now, on the key distinction between general and special damages. Thus, if the defendant erected an obstruction along a public road, none of the parties delayed by the blockage had a private right of action. But any individual who ran into the obstacle and suffered physical injuries or property damage could recover in tort.

Now, the shortfall in deterrence attributable from not compensating the delayed travelers was offset by a fine against the wrongdoer, the money from which could be used to remove the obstacle or placed in the public treasury.

It is important to understand the enormous stretch in moving from traditional public nuisances to the modern global warming cases. The first point of difference is that only five companies—but no other carbon-dioxide-emitting polluter in the world—are joined as defendants.

That is to say, the cities are apparently seeking to recover virtually all of their alleged abatement costs from the five named oil companies, instead of holding each only for its pro rata share of total emissions from all sources.

But just what fraction of total carbon dioxide emissions can be traced to the named defendants? Note first that any release of carbon dioxide into the atmosphere has the same impact on global warming regardless of its source.

These five oil companies are responsible at most for a tiny fraction of the global total of carbon dioxide emissions.

First, just looking at the American scene, some good chunk of the carbon dioxide releases are from other oil companies not named in the complaint. Another, probably larger, chunk comes from burning coal, making cement, and human and animal respiration.

Carbon dioxide is also released in large quantities by forest fires, including those that recently overwhelmed Northern and Southern California. And that's just in America; vast amounts of carbon dioxide are released from a similar range of human activities all across the globe.

Here are some numbers: As of 2015, all carbon dioxide emissions from the United States comprised 14.34 percent of the global total, while China’s emissions stood at 29.51 percent. Even if the five oil companies were somehow responsible for, say, 10 percent of the United States’ carbon dioxide emissions, that would be less than one percent of the total human releases.

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Under standard tort rules, the liability of each defendant must be limited to its own pro rata share of the total harm given that under Section 433A of the Restatement of Torts, there is a “reasonable basis for determining the contribution of each cause to a single harm,” in this instance measured by market shares.

Indeed, these public nuisance lawsuits are especially dubious, given that the oil companies did not by their sales emit any carbon dioxide into the atmosphere. The dangerous releases came from many different parties, both private and public, including the municipalities bringing these lawsuits.

These numerous parties used these products in countless different ways, with as much knowledge of their asserted effects on global warming as these five defendants. How could the oil companies have known about the anticipated course of global warming forty years ago when key government studies done today are uncertain about the magnitude of the effects of emissions on sea levels and the economic consequences?

The first paragraph of the New York City complaint ducks these factual complexities by insisting, falsely, that crude oil was “a product causing severe harm when used exactly as intended.” But the end uses of crude oil are so varied (including, for example, the creation of various plastics in common use today) that the effective control of emissions is best done through the regulation of these end users and not the oil companies.

Indeed, even for gasoline, the level of carbon dioxide emissions critically depends on the operation and maintenance of the many different types of facilities, equipment, and vehicles, all of which are beyond the direct control of the oil companies.

Yet all these end users are already subject to extensive emissions controls under the Clean Air Act and countless other environmental directives, both at the state and federal level.

This sensible distribution of regulatory authority rests on the superior ability of government agencies (at least compared to the courts), often in cooperation with each other, to formulate and maintain coherent policies to regulate the emissions of carbon dioxide, as well as methane, nitrous oxide, and fluorinated gases, which the EPA calculates account for 18 percent of greenhouse gas emissions.

The issues here are especially complex for many technical and logistical reasons. One critical task is to decide the optimal level of emissions. The implicit assumption of the New York and San Francisco lawsuits is that the world would become a better place if all emissions of carbon dioxide were stopped.

But that position ignores the enormous benefits that come from the use of fossil fuels, which continue to supply over 80 percent of the nation’s energy needs. No other fuel source could keep manufacturing, transportation, and commerce alive.

And it is just exaggeration to claim, as the city plaintiffs do, that these oil companies “have done nearly all they could to create [the] existential threat” of global warming when in fact energy efficiency in the United States has consistently improved, particularly in generating electrical power.

No public nuisance suits for global warming can solve a problem that must be addressed by a coherent regulatory program. Instead, chaos will follow if hundreds of different states, counties, and cities are allowed to bring separate actions under state law.

It bears emphasis that in 2011, a unanimous Supreme Court decision in American Electric Power Co. v. Connecticut held that the combination of the Clean Air Act and actions by the Environmental Protection Agency “against carbon-dioxide emitters . . . displace the claims that the plaintiffs seek to pursue” under a public nuisance theory brought under federal law.

The Court left open the question of whether the federal regulation at the time preempted any state law cause of action for public nuisance.

But, as I argued at the time, the only viable solution was for the federal government and the EPA to “orchestrate” the effort to control emissions. The point is doubly true against these remote, upstream defendants who have not emitted anything themselves.

The standard analysis of federal preemption has long held that states may not engage in their own remedial efforts, even by actions in tort, when extensive federal regulation occupies the field, or when state activity either frustrates federal action or is in conflict with it.

If anything, the scope of federal oversight, actual and prospective, is far more comprehensive than it was when American Electric Power was decided. And so federal preemption alone should block a set of dubious public nuisance claims that should never have been brought in the first place.

Richard A. Epstein, the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution, is the Laurence A. Tisch Professor of Law, New York University Law School, and a senior lecturer at the University of Chicago.

This article was first written by Newsweek

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