Editor's note: This story was updated on Oct. 23, adding additional quotes.
OGJ Senior Staff Writer
HOUSTON, Oct. 22 -- A climate change litigation threat appears to be looming for the oil and gas industry in the wake of a US Supreme Court decision allowing the regulation of greenhouse gases as air pollutants.
Federal courts recently issued conflicting decisions in climate change litigation. One case involved Murphy Oil USA, and another case involved ExxonMobil Corp. and others. Power companies face the same issues.
The recent litigation all stems from an Apr. 2, 2007, decision in which the Supreme Court ruled that the Environmental Protection Agency has authority under the Clean Air Act to regulate greenhouse gases. That ruling came in a lawsuit filed by Massachusetts and several other states, US cities, and environmental groups.
On Sept. 21, the US Circuit Court of Appeals for the 2nd Circuit in New York City allowed a coalition of eight states, New York City, and environmental groups to sue coal-burning utilities over climate change. That ruling later was cited in the Murphy Oil ruling.
Anthony Cavender of the Pillsbury Winthrop Shaw Pittman LLP law firm in Houston said, “Given that the Obama administration has already advocated for tighter regulations related to the environment as a whole, and in particular for tougher policies governing carbon emissions, many plaintiffs may now feel that the time is right to file such suits.”
Murphy Oil suit
On Oct. 16, a three-judge panel of the US Court of Appeals for the 5th Circuit in New Orleans said residents and land owners along the Gulf Coast in Mississippi could seek relief for Hurricane Katrina damages presumed to be related to global warming.
The appeals court ruling in the case of Ned Comer vs. Murphy Oil USA reversed a decision from the US District court for the Southern District of Mississippi, which had dismissed the case.
The appeals court ruled that Comer could assert claims that Murphy Oil operations caused greenhouse gas emissions and contributed to global warming and a rise in sea levels that consequently strengthened Hurricane Katrina.
Comer and others, seeking compensatory and punitive damages, argued they had the legal standing to litigate these claims based on the 2007 Supreme Court decision.
Judge James Dennis in New Orleans wrote that the court arrived at its decision independently but that the “Second Circuit’s reasoning [in Connecticut vs. AEP] is fully consistent with ours, particularly in its careful analysis of whether the case requires the court to address any specific issue that is constitutionally committed to another branch of government.”
Separately, the US District Court for the Northern District of California in late September dismissed a climate change lawsuit that Inupiat Eskimos living in Kivalina, Alas., near the Arctic Circle filed against ExxonMobil.
The plaintiffs alleged that 24 oil, energy, and utility companies emitted greenhouse gases that contribute to global warming and consequently diminish sea ice that protects their village from winter storms and erosion.
The California court dismissed the lawsuit for lack of subject matter jurisdiction and because the Inupiat Eskimos could not prove the companies caused any injury. An attorney for the town of Kivalina has said he plans to appeal.
Sheila Harvey, a partner with Pillsbury’s climate change and sustainability team in Washington, DC, said that while each case must be individually evaluated on the merits of evidence, she noted that “The decision in Kivalina is more in keeping with how courts have traditionally ruled—often dismissing these types of cases as ‘nuisance suits’ filed by plaintiffs for no other purpose than to cause headaches for companies they politically or personally disagree with.”
Suggestions for industry
John R. Eldridge, an attorney with Haynes and Boone LLP in Houston, notes the lesson for the oil and gas industry is that it cannot expect immediate dismissal of claims associated with damages allegedly caused by GHG emissions.
“This is not saying that a state or tribe or city or individual pursuing one of these clams to abate the nuisance will get an order enjoining an oil company or refinery from emitting carbon dioxide,” Eldridge said. “We still don’t know how these cases will ultimately turn out.”
Meanwhile, he advises oil companies to be prepared in case they get targeted in a tort claim involving climate change.
“Companies need to figure out what their position should be about legislation based on the fact that they may be defending these kinds of cases if there is not a fix or a resolution by the US Supreme Court or by Congress,” Eldridge said.
“I think this is going to be a wake up call for the industry,” he said, referring specifically to the Kivalina case. “I think most people had some sense that these claims were so far out that they would be dismissed upfront as political or for lack of standing.”
Peter S. Glaser, a partner with Troutman Sanders LLP in Washington, said, “We are having a cataclysm going on in federal and state tort law as it apples to climate change. This is really extraordinary, and I can’t overstate to you the importance of this.”
Speaking during a webcast briefing arranged by the Western Business Roundtable, Glaser said the implication stemming from the recent court decisions is that any GHG emitter, including fossil fuel producers, can be sued.
“The amount of emissions didn’t seem to matter…basically any emitter of greenhouse gases and any producer of fossil fuels…can also be sued,” Glaser said.
For instance, plaintiffs can sue an oil company and seek an injunction where, if successful, a judge could say stop emitting, use some other type of fuel, or reduce emissions, he said.
“But even worse, you can be sued in damages,” Glaser said. “The really worrisome part of the case in Mississippi was that the plaintiffs were property owners in the Hurricane Katrina area represented by old-time, well-known plaintiff trial lawyers. These people don’t care about global warming, and they don’t care about proper public policy. They want money…. It’s even more worrisome because in effect we will have global warming policy now because that is what is really at stake here,” if judges and juries can tell oil companies to change their behavior.
Contact Paula Dittrick at email@example.com.