May 14, 2018

Why Tort Action Against Fossil Fuel Producers is a Good Idea



Much robust debate has ensued from the recent spate of climate nuisance lawsuits filed by local governments against the fossil fuel industry seeking compensation to help pay for the costs of dealing with local climate impacts. Among the most frequently heard objections to these suits are that 1) municipalities filed these cases because the federal government has refused to act, but that tort cases are no substitute for federal policy action, and 2) that liability for climate damages—if any exist—properly rests with fossil fuel consumers, not fossil fuel producers. The fact that many smart, serious people who recognize the importance of climate risks marshal these arguments should give us pause. But we should not pause for long: Neither argument is as compelling as it appears at first glance.

A recent op-ed in The Hill from our friends Josiah Neeley and William Murray (both of whom are smart, serious, and worthy of our attention) neatly frame the issues at play. Reflecting the sentiment that judicial action to address climate risk is the wrong way to go, Neeley and Murray argue that “these cases seem to be rooted more out of desperation rather than a strategy to achieve ideal policy.” According to them, “there is a simpler and more effective way to deal with this problem”, i.e., a carbon tax.

The first problem with that argument, however, is that the plaintiffs are not trying to “achieve ideal policy.” They are instead trying to pay the vastly increased costs for critical local services such as wildfire prevention and response, road maintenance, flood control, etc., that climate change has forced upon them. That is the difference between adaptation (dealing with the impacts of climate change), and mitigation (reducing greenhouse gas emissions). A federal carbon tax (and we strongly agree with R Street on the need for one) results in reduced emissions and a significant chunk of change for the Treasury. But neither reduced emissions nor increased federal revenue will necessarily deal with the immediate and pressing problems facing these governments.

Reduced emissions means no more than the costs of dealing with climate impacts will continue to increase, but at a slower rate than they would if emissions were unchecked. That would be great, but that doesn’t help local governments find the money to pay for responding to the climate impacts being visited in the here-and-now.

The second problem with their argument is that while carbon tax revenues could, in theory, be used to pay for present and future adaptation costs, few on the right are at all interested in so using that revenue, including Neeley and Murray. Instead, they argue that carbon tax revenues “be used to offset more burdensome existing taxes, boost economic growth and invest in jobs.” Unless Congress decides to spend most – and possibly all – carbon tax revenues on adaptation, a federal carbon tax does not even begin to solve the problems that are the subject of these lawsuits (nor, obviously, would EPA regulation). In short, not even the most robust federal climate mitigation policy is likely to pay for local climate adaptation.  

Neeley and Murray, like many others, likewise argue that these lawsuits are inappropriate because “climate change is the result of actions of millions of emitters.” But why is that relevant? Every one of those emitters obtained the fossil fuel they burned from one of a small number of producers, and every one of those producers knew that 1) the purchaser would burn their products, and 2) burning their products would cause precisely the injuries that the plaintiffs are suffering. The minute that gallon of gasoline left the refinery, the producer knew what harms it would inflict—and either said nothing or, even worse, affirmatively denied that global warming was occurring or was caused by burning that gasoline. The American legal system has long recognized that people who make and sell products knowing that they will cause harm should be held responsible for those injuries.   

Moreover, if tort liability compels fossil fuel producers to internalize the cost of climate injuries, these companies (as rational economic actors) would presumably incorporate those costs into the price of their products. Because all customers/emitters would each pay their proportionate share, to hold fossil fuel producers liable is to the hold emitters liable.

Finally, Neeley and Murray raise a new argument, that “It is also not clear if those most in need of help would benefit from such a system, give [sic] that it’s very likely that poorer areas will be hit hardest by global warming and may also lack the resources to bring a large-scale legal action like that brought by the city of Boulder.” Fortunately, local governments can pursue these claims with few or no resources. For instance, the Niskanen Center, along with our co-counsel at Earthrights International, are representing the Colorado plaintiffs (including San Miguel County, population less than 8,000) pro bono, so it is not costing those governments a penny to pursue legal recourse. And Richmond, California (as in City of Richmond v. Chevron) is not exactly swank. According to the U.S. Census Bureau, Richmond’s 2016 median household income was below the national figure, and 16 percent of the city lived below the poverty line. Yet Richmond had no problem finding lawyers to represent it on a contingency basis.

The debate over the climate nuisance cases will—and should—continue. And for that debate to be an informed one, it is important to understand why these cities have sued and why it makes economic sense that the defendants should be held responsible for the climate injuries caused by their products.