Climate Change Litigation Is Coming — Is Your Company Ready

There can be little doubt that the pendulum of energy regulation has reversed course away from many (or most) of the Obama-era climate change programs. Those who work in the energy sector largely are buoyed by these policy changes. On the other end of the ideological spectrum, however, activists, especially those in the “keep it in the ground” camp, see the deregulation effort as a clear sign that they need to find new ways to effectuate their policy goals.

A likely tactic — one that should frighten any company in the energy sector — is climate change litigation. The United Nations Environmental Programme recently noted that “[l]itigation has emerged as an important feature of ongoing efforts to promote climate change mitigation and adaptation efforts. … In addition to proliferating, climate change litigation also seems to be growing in ambition and effectiveness. …”1

Recent cases across the United States provide ample evidence of the proliferation of climate change litigation as a strategy. At the same time, at least some courts appear to be increasingly receptive to creative theories behind climate change litigation against both governments and private companies.

In the years to come, many companies in the energy sector likely will find themselves named as defendants in climate change lawsuits, and a number of those companies simply will not survive the litigation. Companies that prepare in advance for such actions are more likely to weather the attacks on their business than those companies that merely are reactive.

The La Jolla Conference

Much of the designed legal strategy underlying the climate change litigation in the U.S. was molded into its initial form at the infamous “Workshop on Climate Accountability, Public Opinion and Legal Strategies” held in La Jolla, California in June 2012.2

–  Climate change legal strategies
One key topic of the La Jolla conference was possible legal strategies against energy companies in climate change litigation:

A wide variety of potential legal strategies were discussed at the workshop. Participants agreed that a variety of different approaches could prove successful in spurring action and engaging the public on global warming, with suggestions ranging from lawsuits brought under public nuisance laws (the grounds for almost all current environmental statutes) to libel claims against firms and front groups that malign the reputations of climate scientists.3

The public trust doctrine
Mary Christina Wood, a professor of law at the University of Oregon, presented the La Jolla conference with another theory to support climate change litigation — the public trust doctrine. “Under this doctrine, a state or third-party corporation can be held liable for stealing from or damaging a resource — in this case, the atmosphere — that is held as a public trust.”4 At the La Jolla conference, Professor Wood:

[n]oted that this legal strategy has several promising features: it is being brought by children, can highlight local impacts of climate change because it is being brought in every state and is flexible enough to be brought against states, tribes, the federal government and corporations.5

–  Tobacco litigation and document discovery
Another notable aspect of the La Jolla conference was the application of the lessons learned by plaintiffs in tobacco litigation to climate change litigation. Most significantly, the conferees focused on the use of discovery to obtain industry documents — in the case of the tobacco litigation, more than 80 million pages of documents.6

Conferees noted that documents produced in the tobacco litigation “proved crucial in helping to shift the focus of litigation away from a battle of the experts over the science of disease causation and toward an investigation of the industry’s conduct.”7 Similarly, climate change litigants could use broad discovery to shift the focus to what energy companies knew about environmental impacts of hydrocarbons and use companies’ own documents and words against them in the court of public opinion.

A key element of the true motive behind seeking discovery of industry documents was revealed by one of the participants at the La Jolla conference who “stressed the need to think carefully about which companies and which trade groups might have documents that could be especially useful. And he underscored the point that bringing documents to light must be established as an objective independent of the litigation, or else the most valuable documents are not likely to be made public.”8

One attorney for the Community Environmental Legal Defense Fund, who was recently sanctioned by a Pennsylvania court for bad-faith efforts to impose an injection well ban in a Pennsylvania township, has unabashedly touted the long-term value of costly litigation involving local governments: “If a town goes bankrupt trying to defend on of our ordinances, well, perhaps that’s exactly what is needed to trigger a national movement.”9 This illogical rationale applies equally to driving companies to bankruptcy as it does cities.

Juliana v. United States

One of the more concrete examples of courts expanding the scope of climate change litigation is found in Juliana v. United States, Case No. 6:15-cv-01517-TC (D. Or.), in which a group of youths, a climate scientist and an environmental group sued the U.S. government for violating their constitutional rights to life, liberty and property, and violating a public trust.

In seeking a judicial remedy, the plaintiffs “assert[ed] there is a very short window in which defendants could act to phase out fossil fuel exploitation and avert environmental catastrophe.”10 As a result, plaintiffs sought “(1) a declaration their constitutional and public trust rights have been violated and (2) an order enjoining defendants from violating those rights and directing defendants to develop a plan to reduce CO2 emissions.”11

Following the filing of the complaint, several members of the oil and gas industry intervened and joined the government in moving to dismiss the action for lack of subject matter jurisdiction and failure to state a claim. Affirming Magistrate Judge Coffin’s recommendation that the motions to dismiss be denied, on Nov. 10, 2016, U.S. District Court Judge Ann Aiken (a graduate of the University of Oregon School of Law) issued an opinion and order that expanded the scope of climate change litigation in unprecedented ways.

Judge Aiken was aware that the action was “no ordinary lawsuit” and that the plaintiffs’ action was both unique and of sweeping scope because in their complaint they:

challenge the policies, acts and omissions of the President of the United States, the Council on Environmental Quality, the Office of Management and Budget, the Office of Science and Technology Policy, the Department of Energy, the Department of the Interior, the Department of Transportation (DOT), the Department of Agriculture, the Department of Commerce, the Department of Defense, the Department of State and the Environmental Protection Agency (EPA).12

The lawsuit challenged

decisions defendants have made across a vast set of topics — decisions like whether and to what extent to regulate CO2 emissions from power plants and vehicles, whether to permit fossil fuel extraction and development to take place on federal lands, how much to charge for use of those lands, whether to give tax breaks to the fossil fuel industry, whether to subsidize or directly fund that industry, whether to fund the construction of fossil fuel infrastructure such as natural gas pipelines at home and abroad, whether to permit the export and import of fossil fuels from and to the United States and whether to authorize new marine coal terminal projects.13

One of the most notable elements of Judge Aiken’s opinion was her statement that the “lawsuit is not about proving that climate change is happening or that human activity is driving it. For the purposes of this motion, those facts are undisputed.”14 As framed by the court, the issues to be decided were threefold:

  • “whether defendants are responsible for some of the harm caused by climate change”;
  • “whether plaintiffs may challenge defendants’ climate change policy in court”; and
  • “whether the court could “direct defendants to change their policy without running afoul of the separation of powers doctrine.”15

In addressing the political question issue, Judge Aiken noted that while “[c]limate change, energy policy and environmental regulation are certainly ‘political’ in the sense that they have motivated partisan and sectional debate during important portions of our history,” a “case does not present a political question merely because it raises an issue of great importance to the political branches.”

In fact, she noted, “federal courts regularly adjudicate claims that arise in connection with politically charged issues.”16Judge Aiken therefore concluded that “[t]here is no need to step outside the core role of the judiciary to decide this case. At its heart, this lawsuit asks this Court to determine whether defendants have violated plaintiffs’ constitutional rights. That question is squarely within the purview of the judiciary.”17

Judge Aiken also tilled new ground in holding that the plaintiffs could proceed on claims based upon an alleged violation of the public trust. The court noted that the “public trust doctrine defines inherent aspects of sovereignty.” That is, the court maintained, “the Declaration of Independence and the Constitution did not create the rights to life, liberty or the pursuit of happiness — the documents are, instead, vehicles for protecting and promoting those already-existing rights.”18

Viewed in this light, the court concluded that “plaintiffs’ right of action to enforce the government’s obligations as trustee arises from the Constitution” and thus their “public trust claims are properly categorized as substantive due process claims.”19

Thus, the court invoked the Ninth Amendment to the Constitution to support plaintiffs’ public trust claims: “Because the public trust is not enumerated in the Constitution, substantive due process protection also derives from the Ninth Amendment. But it is the Fifth Amendment (due process right) that provides the right of action.” Because plaintiffs’ claims rest “directly on the Due Process Clause of the Fifth Amendment,” they may “be asserted in federal court.”20

Finally, Judge Aiken addressed what she viewed as the fundamental premise of the opposition put forth by the government:

A deep resistance to change runs through defendants’ and intervenors’ arguments for dismissal: They contend a decision recognizing plaintiffs’ standing to sue, deeming the controversy justiciable and recognizing a federal public trust and a fundamental right to climate system capable of sustaining human life would be unprecedented, as though that alone requires its dismissal.21

In June 2017, Magistrate Judge Coffin issued an order granting the industry intervenors’ motions to withdraw and setting a February 2018 trial date. The government filed a petition for writ of mandamus with the United States Court of Appeals for the Ninth Circuit, which heard oral arguments on Dec. 11, 2017.

Though the Juliana litigation, as well as similar cases pending in several states including Colorado22, were brought against public entities, the wide scope of legal theories put forth by the litigants and accepted, at least in part, by some courts, should send waves of concern to private energy companies. What theories are litigants preparing against private companies? Will courts be receptive to those claims?

Municipalities Sue Energy Companies
A number of California municipalities have filed tort claims against 18 energy companies alleging that imminent sea level rise presented a substantial threat and that the sea level rise will be a direct result of global warming, for which the defendant energy companies are to blame. The plaintiff municipalities allege that the defendants collectively are responsible for around 20 percent of the world’s carbon dioxide emissions between 1965 and 2015, and that the industry knew or should have known for years about the threats posed by climate change caused or enhanced by the production and use of hydrocarbons.23

The hyperbole in the municipalities’ filings is staggering, as represented by the City of Oakland’s assertion that “by 2050 a ‘100-year flood’ in the Oakland vicinity is expected to occur … once every 2.3 years … by 2100 … almost once per week.”24

The plaintiffs in these cases rest their claims primarily on state law nuisance claims, and turn away from federal nuisance claims. Federal law-based nuisance claims have been successfully opposed in several matters, primarily because actions by the EPA related to climate change essentially displaced the nuisance claims. While it may be difficult for the plaintiffs to prove causation against individual plaintiffs and thus prevail on their nuisance claims, as noted above, many would consider the litigation successful even if it proceeds no further than the discover stage.

In early January 2018, New York City brought an action against five large energy companies alleging that they “produced, marketed and sold ‘massive quantities’ of fossil fuels, despite knowing ‘for decades’ the impact their use would have on the environment.”25

The last couple of years have seen epic swings in weather, 100-year hurricanes, droughts, fires and floods in California, bitter cold in the east and the worst fire season on record in much of the western U.S. In light of the attention to paid these events, it seems likely that more people are going to view climate change as a root cause and seek compensation from those they blame for climate change.26

Energy Companies Need to Be Proactive in the Face of Climate Change Litigation

What does this mean for your oil and gas or energy company? Initially, if you think your company is immune to climate change litigation, you are wrong. More importantly, if you are not proactively thinking about how you would respond to such litigation, you are proceeding down a risky path.

1United Nations Environmental Programme, “The Status of Climate Change Litigation – A Global Review,” May 2017.
2“Establishing Accountability for Climate Change Damages: Lessons from Tobacco Control,” Summary of the Workshop on Climate Accountability, Public Opinion and Legal Strategies, Martin Johnson House, Scripps Institution of Oceanography, La Jolla, CA June 14–15, 2012.
3Id. at 11.
4Id. at 14.
6Id. at 7–8.
8Id. at 8–9.
10Juliana v. United States, 217 F. Supp. 3d 1224, 1233 (D. Or. 2016).
12Id. at 1234.
14Id. at 1234 (footnote omitted).
16Id. at 1236 (internal quotations and citations omitted).
17Id. at 1241.
18Id. at 1260–1261 (footnote omitted).
19Id. at 1261.
21Id. at 1262.
22See, e.g., Martinez v. Colorado Oil and Gas Conservation Commission, Case No. 16CA0564, 2017COA37 (March 23, 2017) (cert granted).
24https://cei.org/sites/default/files/Final SEC Tip Clean.pdf.
26https://www.marketwatch.com/story/how-much-is-climate-change-behind-the-hurricane-harvey-flooding-in-houston-2017-08-28; https://www.eenews.net/stories/1060066829.

Jack R. Luellen is a principal of Dickie, McCamey & Chilcote, P.C. and the location chair of the Denver office. He concentrates his practice in energy law, with a particular emphasis in oil and gas. He represents interests in the E&P and midstream sectors.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Originally appeared at:  Law360.com, 3/26/2018click here to view.

Jack R. Luellen

Reprinted with permission from Law360. All rights reserved. Further duplication without permission is prohibited.