No Suit for You

Federal Court Dismisses California Climate Change Cases Against Oil Companies

Cities across the country have brought novel lawsuits seeking to hold oil companies responsible for climate change—in particular, the city’s cost to adapt to rising seas and other climate change impacts. Although property owners can generally sue those who damage their property, these cases are unusually complicated because of the number of contributors to climate change and uncertainty about where it’s impacts will be felt, when, and how costly they will be.

On June 26th, a federal court dismissed the first of these lawsuits, brought by two California cities. This is a significant setback for the cities pursuing this approach and signals similar results in the other cases.

The cases have been controversial, to put it mildly. Earlier this year, the Niskanen Center’s David Bookbinder (who represents Boulder, Colorado in one of these suits) and R Street Institute’s Josiah Neeley and William Murray had a thoughtful debate about using the courts to settle climate change disputes.

For the pro-litigation camp, these lawsuits are necessary because the political process is failing to address the problem and could be an effective means to hold the producers of oil (although not emitters themselves) responsible for the injuries caused to others. Courts routinely hold polluters to account for the damage they do to nearby properties—and rightly so.

But, as the anti-litigation camp responds, climate change is no routine tort issue. Such cases would be as complex as any case could be, forcing individual judges to weigh the global costs and benefits of emissions and craft remedies on individual sources (essentially everything). These problems are even more difficult to overcome when the defendant is the producer of an energy source rather than the end-user releasing emissions.

If carbon capture, for instance, is deemed the most efficient means of reducing emissions, how’s a court supposed to order an oil producer to implement these measures when the emissions are being caused by someone else? Or suppose the answer is that more energy should come from nuclear, not natural gas. How’s a judicial decree against Exxon supposed to have any impact on that balance?

In rejecting the California lawsuit, the federal court emphasized the unimaginably complex problem a judge would have to solve if one of these cases proceeds.

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. Without those fuels, virtually all of our monumental progress would have been impossible. All of us have benefited. 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 demanded? Is it really fair, in light of those benefits, to say that the sale of fossil fuels was unreasonable?

Taken to their logical conclusion, everyone on earth would be both a plaintiff and defendant in these case.

The scope of plaintiffs’ theory is breathtaking. It would reach the sale of fossil fuels anywhere in the world, including all past and otherwise lawful sales . . . [JW—not to mention everyone who burned them.]

Although I’m generally in favor of the tort system resolving pollution concerns, it’s clear that this is no ordinary case. This problem calls out for an effective, market-oriented response. As Neeley and Murray conclude their article:

There is a simpler and more effective way to deal with this problem. For a long time, economists have advocated for pollution pricing as a mechanism to make polluters pay for the costs they impose on third parties. A fee ensures that polluters only do so to the extent that the benefits of emissions . . . exceed the harm caused to others . . . Applied to climate change, this would mean a fee on carbon emissions.

Courts can play an important role in ensuring that no person is forced by the government to bear a disproportionate share of the impacts of climate change. But they’re not equipped to design a global system for regulating emissions. Only markets—and the price signals they create—can solve such a complex problem.

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