Three Key Errors in First Decision Dismissing Climate Nuisance Lawsuits

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The San Francisco and Oakland climate cases were dismissed by federal judge William Alsup on Monday. Much has already been written – and much more will be – about the merits of this decision. I want to focus briefly on what I think are three key flaws in the decision.

Judge Alsup divided the cities’ suit against five oil majors into two halves – claims for harms from fossil fuel production within the United States, and claims for harms from fossil fuel production outside the United States.

In the first half, he ruled that the Clean Air Act displaces these claims – essentially, that because the CAA regulates emissions of CO2 and other greenhouse gases, cities cannot sue for damages caused by climate change. I think this was wrong, because the CAA does not regulate the oil companies’ activities – under the CAA, the EPA cannot stop or even limit fossil fuel production. (Even if it did, the EPA has never actually regulated CO2 emissions. The Supreme Court only ruled that EPA had that authority in 2007, and EPA did not use the authority until it issued the Clean Power Plan in 2014 – which was immediately tied up in court, has never been implemented, and which current EPA Administrator Scott Pruitt plans to repeal.)

In the second half, Judge Alsup ruled that while conduct outside the U.S. is not regulated by the CAA, the “presumption against extraterritoriality” limits federal claims for such activity. Longtime readers of this blog (you know who you are, both of you) will recognize this phrase – yes, Judge Alsup relied on Kiobel v. Royal Dutch Petroleum and other Alien Tort Statute cases. This was equally erroneous, because – as far as I know – the presumption against extraterritoriality has never been applied when the harm occurs in the United States (and last I checked, California is still in the United States, despite the wishes of the Calexit crowd). The Supreme Court’s discussion in a recent RICO decision, RJR Nabisco, pretty much confirms this.

The third error is perhaps the worst. This decision comes at a stage of the case where no evidence has been submitted; only the allegations of the complaint are at issue. Yet Judge Alsup determined that “judgments in favor of the plaintiffs . . . would make the continuation of defendants’ fossil fuel production ‘not feasible.'” Therefore, he reasoned, only Congress can decide whether to take that step; courts should not.

That may sound reasonable, but it’s not how the law usually works.

First, courts are supposed to decide based on facts. Would paying for the harms of their products really put the oil companies out of business? The companies certainly haven’t argued that, let alone submitted evidence of this. There’s a lot of reasons to believe this isn’t true. The U.S. government has estimated the “social cost of carbon” at about $40 per ton – but let’s say that academic estimates of much higher costs, up to $220 per ton, are more accurate. It takes about 100 gallons of gasoline to make a ton of CO2, meaning that adding $220 per ton would amount to increasing the cost by $2.20 per gallon. Right now, that would put U.S. gas prices over $5 per gallon – that’s a lot, but it’s less than in Germany, the UK, France, and Italy, and far less than the $7.80/gallon pricetag in Norway. Gasoline is, in fact, still sold in all these countries. (A $40/ton pricetag would only increase the price by 40 cents per gallon, which is lower than current gas taxes in most states.)

Second, even if there were a possibility of putting the oil industry out of business, the question of balancing the harm caused by an industry against its “social utility” is typically left to a jury to decide. Justice Neil Gorsuch, while he was still on the 10th Circuit Court of Appeals, approved of jury instructions that stated that in order to find a nuisance, “the plaintiffs had to prove that ‘the gravity of the harm outweigh[ed] the utility of the conduct that caused it.'” Judge Alsup took that decision away from a potential jury, before any evidence had even been submitted.

Ultimately, Judge Alsup’s opinion suggests a reluctance to apply the ordinary legal rules to climate change cases. (That’s the same error committed by a couple of district court judges in prior climate change cases, where they dismissed cases based on the “political question” doctrine; no court of appeals upheld this reasoning.) It’s not the plaintiffs here that are trying to create new legal rules in order to recover from fossil fuel companies; it’s the companies that are trying to create novel defenses to avoid the consequences of long-held legal principles.

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