Oil Producers Succeed in California Climate Change Action

Written By Thomas W. McInerney, Michael P. Theroux, Laura M. Gill and Parker Mckibbon

On June 25, 2018, the United States District Court for the Northern District of California dismissed a claim against several oil and gas producers for impacts relating to climate change in The City of Oakland v. BP, Chevron and Others, No. 17-CV-0611 (N.D. Cal. June 25, 2018) [Oakland]. The plaintiffs, the Cities of Oakland and San Francisco, sought billions of dollars against defendants Chevron Corporation, Exxon Mobil Corporation, BP p.l.c., Royal Dutch Shell plc and ConocoPhillips on the grounds that the defendants have been large contributors to greenhouse gas emissions, which cause rising sea levels resulting in coastal flooding in these cities. The plaintiffs are proceeding under a federal public nuisance action to obtain an abatement fund to combat the flooding.

This action is one of several such claims in the United States and will not be the end of litigation between U.S. energy producers and cities or municipalities facing the effects climate change.

Summary of Decision

The Court granted the defendants' motion to dismiss the claim on the basis that issues relating to climate change should be regulated by the legislature rather than the judiciary. The Court stated that its ruling "accepts the science behind global warming" yet "[t]he problem deserves a solution on a more vast scale than can be supplied by a district judge or jury in a public nuisance case." The Court also noted that the judiciary must exercise great caution in adjudicating the claim, as the relief sought would affect the conduct of energy producers and energy policies worldwide, including substantially undermining the feasibility of fossil fuel production.

One of the obstacles that the plaintiffs faced was the United States Supreme Court decision in Am. Elec. Power Co. v. Connecticut, 564 U.S. 410 (2011) [AEP]. AEP held that the authority of the Clean Air Act and the Environmental Protection Agency (EPA) displaced federal common law in the area of public nuisance to enjoin a defendant's emission of greenhouse gasses. Because the Clean Air Act and the EPA govern only domestic emissions, the plaintiffs argued that the conduct of the defendants occurred outside of the United States and the effects of greenhouse gasses occur within the United States. In the result, the Court disallowed the claim because it was "foreclosed by the need for federal courts to defer to the legislative and executive branches when it comes to such international problems."

Takeaways

The decision is an initial victory for oil and gas producers in climate change litigation. However, the plaintiffs are considering whether to appeal the decision and there are a number of outstanding similar suits by states, cities and municipalities throughout the United States. It can be anticipated that courts in the United States, such as the Ninth Circuit Court of Appeals, will continue to be asked to address complex issues relating to climate change and that oil and gas producers will be required to defend suits relating to their alleged liability for impacts relating to climate change.

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