A federal judge wants the litigants in two high-profile climate change lawsuits against the five largest oil companies to make the case for whether he should consider the benefits of fossil fuels. He also wants the oil companies to start ponying up documents about their internal operations — documents that could reveal contradictions in one of their key arguments in the case while also opening them up to new lines of attack.
The suits, filed by the cities of Oakland and San Francisco, are seeking damages from BP, Chevron, Exxon Mobil, Shell, and ConocoPhillips to pay for seawalls and other infrastructure to deal with the impacts of climate change. They’re significant in part because they involve uncharted legal territory: Never before have plaintiffs tried to hold industry liable for a global problem that affects everyone. They’re also the first big test for the growing wave of cities and counties that want to try the same tactic in courts around the United States.
Judge William Alsup of the United States District Court for the Northern District of California, who is presiding over the San Francisco and Oakland lawsuits, on Thursday asked both sides to put together a 10-page supplemental brief on whether the court is required to weigh the benefits of fossil fuels against the harm they cause through climate change.
The judge also punted on several motions from the defendants to dismiss the case, instead opening a nine-week discovery period so the court can figure out how much control oil companies wield over their California subsidiaries. This discovery period will be a critical factor in determining whether the court has jurisdiction over these corporations.
These documents could refute the argument from some oil companies that they don’t exert enough control over their California subsidiaries to be liable for climate change damage in California, and they may reveal new targets for future litigation.
Wading into the weeds is nothing new for Alsup, who has established a reputation for his technical acumen and desire to learn about the latest research and technology. In an unprecedented move in March, he asked both sides of the suit to provide him a five-hour climate change tutorial, delving into the physics of how carbon dioxide absorbs infrared energy and the mechanism behind ice ages.
The latest developments in the lawsuits show that the judge isn’t convinced one way or the other about the merits of the cases, which could set a major precedent and yield billions in damages, just yet. But he is starting to get frustrated with the pace.
Let’s consider the new developments one at a time.
Do courts have to compare the benefits of fossil fuels to the harms from climate change?
For the brief, Alsup noted that the source of Oakland and San Francisco’s complaint is that rising sea levels due to greenhouse gases from burning fossil fuels constitutes a public nuisance. “There’s no court in the history of the universe that has ever extended this to global warming,” he said. But he wanted to know if he’s considering them to be a nuisance whether he has to weigh the benefits of coal, oil, and natural gas against their harms.
“If the test is a balancing test of what is reasonable or not, I look at the broad sweep of history and see that we needed oil and fossil fuels, coal would be another one, to get from the 1850s or 1859, when they struck oil in Pennsylvania, to the present,” Alsup said. “And yes, that’s causing global warming, that’s a negative, but against that negative we need to weigh in the large benefits that have flowed from the use of fossil fuels.”
Accounting for the industrial growth and economic development driven by fossil fuels against the harm of more intense storms and coastal flooding is a difficult task, and having to include such an analysis could undermine the case for the cities that are suing.
“That’s a very tough job for a court to do and the plaintiffs wish to avoid having that balancing test for a lot of obvious reasons, and would prefer to say, ‘You’ve chosen to make these products; you simply have to pay for the damage they cause,’” David Bookbinder, chief counsel at the Niskanen Center, told Vox.
Oil companies will now have to reveal more about their inner workings, which could provide the plaintiffs more ammunition
As for ordering a discovery phase, that’s a consequence of some of the oil companies arguing that the court doesn’t have jurisdiction over such a lawsuit. Some of these companies say they are national or multinational corporations and don’t exercise enough control over their operations in California to be held liable.
Essentially, the defendants are saying cities can’t sue the parent companies of oil majors because their home offices don’t have direct control over their subsidiaries that operate in California.
So now Alsup wants them to prove it with documentation of just how much control these companies wield. The judge also bristled at the kitchen sink approach the oil companies are using to try to get the case dismissed before it goes to trial.
“You want all these trenches, you’re going to get all these trenches,” Alsup said, comparing the case to warfare. “Strategically, you should ask yourself on both sides whether you are pursuing the right course for teeing these issues up for an ultimate decision.”
As Bookbinder pointed out, oil drilling and refining operations in California belong to wholly owned subsidiaries of the big oil companies, so they’re more connected to the top office than, say, a typical McDonald’s franchise, where an independent operator effectively rents the brand name from the parent company.
Chevron, which is headquartered in California, is not contesting jurisdiction on these grounds. Chevron was also the only company that presented at Alsup’s climate tutorial, where its attorney acknowledged humanity’s role in driving climate change.
This new discovery phase in the lawsuit isn’t the big pretrial discovery where the companies would have to start coughing up incriminating internal documents, but it will force them to reveal more about how they operate than they want to, and that still has them worried.
“This is scary to them at a smaller scale,” Bookbinder said. “This is, ‘Shit, we hate it when people get into understanding our internal corporate business.’”
Outside of these lawsuits, oil companies are facing increasing scrutiny on climate change from shareholders, who are pushing oil companies to reveal more about the risks they face as average temperatures rise around the world.
The last big vote for the shareholder season is at Chevron on May 30. That resolution goes a step further than others by asking for a plan to decarbonize its operations. Chevron opposes it. https://t.co/eRJ4AMoaL3 pic.twitter.com/uaEKlV9Wjn— Amy Harder (@AmyAHarder) May 25, 2018
The main avenue for this is shareholder resolutions, which aren’t legally binding but can force companies to respond.
What it all means is that the prospect of holding major energy companies liable for their impacts on the climate is closer than ever, but years of legal wrangling still stand in the way.