Oil and gas in the Capitals
Climate litigation in the U.S. and globally is a entering an ominous phase for the oil industry. In the U.S. (home to more climate lawsuits any other nation), numerous lawsuits are advancing after a Supreme Court decision. That particular decision cleared the way for these cases to proceed and denied oil companies’ efforts to move the venue of such lawsuits from state courts to federal courts. For example:
- In the first ruling of its kind nationwide, a Montana state court ruled in favor of young people, who alleged the state violated their right to a “clean and healthful environment” by promoting the use of fossil fuels. The sweeping win, one of the strongest decisions on climate change ever issued by a court, will likely usher in numerous similar cases.
- A federal judge ruled that a federal constitutional climate lawsuit, also brought by youth, can go to trial.
- More than two dozen U.S. cities and states are suing oil companies, alleging they knew for decades about the dangers of burning oil and gas and concealed that information. At least 20 of these cases are likely to go to trial.
- Hoboken, New Jersey, has added racketeering charges against oil majors to its 2020 climate lawsuit—the first to employ the approach in a state court.
Globally, things are also menacing. For example:
- The number of climate-related cases internationally has doubled since 2015, and now total over 2,300—200 of which which were filed in the last12 months.
- About 25% of all climate cases ever brought were filed between 2020 and 2022, and this trend is accelerating.
- New climate change litigation has recently been identified in numerous nations, including Bulgaria, China, Finland, Romania, Russia, Thailand and Turkey.
- In 2021, judges for the first time ordered a company to emit less CO2 in a landmark ruling by Dutch courts against Shell.
Karen Sokol, professor at Loyola University College of Law, stated, “I don’t know of another time in history where so many courts in so many different levels all over the globe have been tasked with dealing with a similar overarching issue.” Climate-related cases in the U.S. previously focused on the regulation of specific infrastructure projects. However, recent climate litigation differs because it focuses not on a particular projects’ emissions, but on responsibility for the climate itself. Sokol has labeled these new suits “climate accountability litigation.”
Lawsuits in the U.S. now allege that the oil industry has long known the dangers of burning fossil fuels and hid that information. Since 2017, seven states and 35 municipalities have sued oil companies and lobbying groups on these grounds. Unlike the youth plaintiffs’ constitutional cases, the disinformation lawsuits seek large monetary damages.
The oil industry has requested to have these cases heard in federal courts, which are seen as more favorable to the industry, instead of the state courts where they were filed. In April, the Supreme Court denied five such requests by oil majors. It later issued a similar decision on appeal requests in lawsuits filed by Hoboken and Delaware.
Delta Merner, of the Union of Concerned Scientists, stated that these rulings could be “game changing.” There could still be procedural challenges and delay, but now, courts will debate their legal merit.
Todd Spitler, an ExxonMobil spokesperson, stated his company will “continue to fight these suits, which are a waste of time.” A spokesperson for the American Petroleum Institute stated that the industry has substantially reduced emissions over the past two decades.
Each of the disinformation cases is based on some combination of four different legal theories: Tort law, product liability, consumer protection and—most recently— racketeering. In April, lawyers for the city of Hoboken amended a 2020 complaint to allege that the defendants violated New Jersey’s racketeering laws by conspiring to sow doubt about climate change. It marked the first-ever state lawsuit of its kind, following one last year in which 16 Puerto Rico cities brought federal charges under the Racketeer Influenced and Corrupt Organizations Act (RICO) claims—RICO was enacted in 1970 to target the mafia.
Missy Sims, a lawyer with Milberg, one of the world’s largest class-action firms, is “on a mission from God,” and has filed lawsuits against ExxonMobil, Chevron, Royal Dutch Shell, BP, and others. She argues that those companies have produced 40% of global GHGs, while colluding to deceive the public.
Her case is part of a new wave of litigation targeting oil companies over climate change, but differs in two significant ways. It was the first to allege that, by downplaying the effects of global warming, the companies violated RICO. Keep in mind, RICO charges expose defendants to potentially huge financial damages and open a new front in oil companies’ legal challenges. The case was also the first to request damages from a specific weather event, 2017’s Hurricane Maria, which killed thousands and caused more than $100 billion in damages in Puerto Rico.
All of the larger rulings helped galvanize other, smaller cases and create a snowball effect. The more individual climate cases succeed in the courts, the more they set new legal precedents that allow other climate cases to succeed, which most do—54% of non-US cases had outcomes unfavorable to oil companies.
Two things are certain. First, studies found that the filing of a new case or a court decision against oil majors negatively affected their finances. Thus, oil companies will be harmed, no matter the outcomes of the cases. Second, as always, many lawyers will be making lots of money from this litigation.
- The last barrel (February 2024)
- Oil and gas in the Capitals (February 2024)
- What's new in production (February 2024)
- First oil (February 2024)
- E&P outside the U.S. maintains a disciplined pace (February 2024)
- Prices and governmental policies combine to stymie Canadian upstream growth (February 2024)
