April 17, 2018

Oil Companies Should be Held Accountable for Climate Change



Boulder County and San Miguel County, along with the city of Boulder, have filed a common law suit in Colorado state court today against ExxonMobil and Suncor. Their claim? Those two companies manufactured fossil fuels that have contributed to global warming and thereby increased the number and severity of wildfires, droughts, and flash flooding, while also worsening air quality, harming forest health, and increasing mortality from heat waves. These local governments ask that ExxonMobil and Suncor compensate them for the increased expenditures these governments will have to make to deal with these impacts—costs that would otherwise fall on local taxpayers. Along with co-counsel, the Niskanen Center will represent the plaintiffs pro-bono in this case.

Why would a think tank chock-full of libertarian expats join with environmentalists and represent local governments in a lawsuit against oil companies? Because we take property rights and the rule of law seriously.

There is little factual dispute about the fundamentals. Despite the omnipresent drumbeat of climate denialism from some corners of the right, the oil industry concedes that climate change is real, that it is largely if not entirely driven by the industrial emissions of greenhouse gases, and that the products they manufacture are the source of much of those emissions. Significant damages are consequently being imposed on people around the globe every single year, and those damages will only get larger and more severe over time.

The oil industry argues, however, that these matters are best dealt with by the federal government, not by state courts. Maybe so, but for three decades and counting, that has not happened, in no small part because the fossil fuels industry has used every political weapon in its vast corporate arsenals to stop any meaningful federal climate response. Even the most limited, half-hearted policy measures are now being rolled back by the Trump administration. Sorry Boulder and San Miguel, say ExxonMobil and Suncor, but the politicians have decided that we get to destroy property and impose costs on taxpayers without consequence or complaint.

Fortunately, politicians don’t necessarily get to have the last word. America has two parallel legal authorities—statutory law (that which is enacted by the legislature) and common law (judge-made law that protects fundamental individual rights, liberties, and social practices that have evolved over time). Common law primarily concerns itself with compensating parties for wrongful acts.

Common law has long been championed by conservatives and libertarians such as F. A. Hayek because it is a legal manifestation of “spontaneous order.” Precedents established by non-political judicial decision-making enable the law to evolve slowly and organically from within society. The alternative is to have it imposed upon all corners of society all at once by raw political, majoritarian will. When conservatives rail against “the administrative state,” this is often what they have in mind.

In a paean to the virtues of common law relative to statutory law, an essay published in 2016 by the Cato Institute observes that the “imperative to please constituencies means that the information legislatures codify often comes from well-organized interests with substantial resources. Special-interest pleading is a hallmark of legislation and regulation. Judges in common law courts have fewer of the perverse incentives than [sic] legislators and regulators do.” In short, “the interests of legislators and regulators are likely to diverge from justice more often than the interests of judges.”

For these and other reasons, conservative and libertarian intellectuals who embrace what is known as “free market environmentalism” have long argued that pollution is a trespass on private property that is best dealt with whenever possible by common law action—not by legislators acting to referee such trespasses via sweeping environmental laws with (heavily politicized) utilitarian calculations in mind. By representing the interests of their constituents in this case, that’s exactly what these municipalities are trying to do.

The oil industry argues, however, that there is little precedent for using common law to address a complex global problem like climate change. Maybe so, but that’s hardly the end of the conversation. “Part of the genius of the common law is its mix of adaptability and consistency,” notes Cato. “When new circumstances arise, common-law courts, urged on and educated by the parties to disputes, adapt existing rules in ways that they believe produce the most just and fair outcomes. They look for comparable cases in their own and other jurisdictions to learn what adaptation of existing law will produce the best results.”

But aren’t oil consumers, rather than oil producers, really the responsible parties here? No. Courts have repeatedly ruled that manufacturers are liable for the damages their products cause, especially when they know in advance that their products, if used as intended, will cause that harm. And that’s exactly the case here. The oil industry has known since a least 1957 that burning fossil fuels will eventually warm the planet to dangerous levels, and that the cost of that warming would prove monumental. Rather than alert the public and engage in good-faith conversation about how society should respond, the oil industry sought to mislead and deny what they knew about the risks of fossil fuel consumption until very recently.

Even if you remain convinced that oil consumers, rather than oil manufacturers, are the parties that should be held liable for greenhouse gas emissions, that gets us nowhere. That because ascertaining individual contributions to greenhouse gas emissions (past and present) is an impossible analytic task. Given that companies are agents of consumers, however, holding oil companies responsible is to hold oil consumers responsible. And our ability to isolate individual corporate contributions to greenhouse gas emissions—and thus, to warming—allows us to parcel out responsibility in a fair manner.

In an ideal world, we’d put an economy-wide market price on carbon energy to create funding  to pay for the necessary costs of adapting to climate change. But until that day comes, holding manufacturers responsible for the damages they impose on others is the next best thing. To do otherwise is to green-light violence to property rights and individual liberty in the name of corporate profit, and that is something that conservatives and libertarians should never do.