Climate Change Suit Against Big Oil Nixed as Too Ambitious

Finding that New York City had trod on the federal government’s turf, the Second Circuit dismissed a lawsuit seeking to hold Big Oil financially responsible for rising sea levels.

This 2012 file photo shows destroyed homes left in the wake of Superstorm Sandy in Ortley Beach, N.J. (AP Photo/Mike Groll, File)

MANHATTAN (CN) — The Second Circuit affirmed the dismissal Thursday of a lawsuit against five of the largest oil companies, writing that New York City tried to bite off more than it could chew with an overly ambitious environmental suit.

The ruling undercuts similar complaints by nearly two dozen other municipalities to hold Big Oil liable for the economic effects of climate change.

“We’re disappointed that the Second Circuit has denied the city its day in court to hold these companies accountable for the environmental damage they knew their products would cause,” said Nick Paolucci, a spokesman for the city’s law department.

New York City had sued BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell in 2018, saying that the oil giants should pay the lion’s share of a $20 billion resiliency program to build levees, elevate streets, update wastewater infrastructure and otherwise prepare the city for rising sea levels.

Twenty-three other states filed amicus briefs on both sides of the issue. So, too, did the Trump administration, which wrote that the lawsuit would “undermine the exclusive grants of authority to the representative branches of the federal government to conduct the Nation’s foreign policy.”

Mayor Bill DeBlasio said in a statement at the time that, “as climate change continues to worsen, it’s up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient.”

Months later, a federal judge dismissed the suit, noting the sought-after changes were beyond the city’s purview and that climate change is an international problem. “Climate change is a fact of life,” wrote U.S. District Judge John Keenan, saying that fixing the problem would require action from legislators and not the judiciary.

Affirming that outcome Thursday, the Second Circuit agreed that trying to curb greenhouse gas emissions was much too mammoth of a goal for the city. At its core, according to the 51-page opinion, the lawsuit is an overly ambitious nuisance suit against the energy companies.

“Artful pleading cannot transform the City’s complaint into anything other than a suit over global greenhouse gas emissions,” U.S. Circuit Judge Richard Sullivan wrote for a three-judge panel. “Put differently, the city’s complaint whipsaws between disavowing any intent to address emissions and identifying such emissions as the singular source of the city’s harm. But the city cannot have it both ways.”

The ruling chides New York City for seeking to hold the companies responsible not merely for emissions released in New York, but around the globe.

“Such a sprawling case is simply beyond the limits of state law,” Sullivan wrote. “Any actions the producers take to mitigate their liability, then, must undoubtedly take effect across every state (and country). And all without asking what the laws of those other states (or countries) require.” (Parentheses in original.)

The court said James failed to get around that issue by merely asking for damages. “If the Producers want to avoid all liability, then their only solution would be to cease global production altogether,” Sullivan wrote.

Both the oil producers and their attorneys applauded the court’s ruling.

“The unanimous opinion exposes — and correctly rejects — the sleight-of-hand that the plaintiffs have presented to the courts, in which they seek a money judgment based on worldwide emissions that they attribute to the defendants’ lawful energy-producing activities at the same time that they pretend they are not trying to regulate the energy industry,” Chevron’s lead attorney Theodore Boutrous Jr., of Gibson, Dunn & Crutcher, said in a statement.

Judge Sullivan also warned Thursday that allowing municipalities to pursue such cases could upset the precarious applecart on current efforts to curb global warming, which must be balanced with energy production and economic growth, among other factors.

Giving New York City the ability to sue for one set of standards could open the floodgates and subject the companies “to a welter of different states’ laws” that could undermine U.S. policy on climate change, Sullivan wrote.

Exxon Mobile spokesperson Casey Norton echoed this argument in a response to the ruling Thursday.

“As we’ve said from the beginning, lawsuits like New York City’s do not belong in the courts and do nothing to advance meaningful efforts that address climate change,” Norton said in an email. “We support global efforts from policymakers, companies, and individuals to develop real solutions.”

Sullivan emphasized that the Clean Air Act exists to address emissions, and that “state law does not suddenly become presumptively competent to address issues that demand a unified federal standard simply because Congress saw fit to displace a federal court-made standard with a legislative one.”

While Congress does have the ability to allow cities or states to sue on environmental issues of national importance, it can do so only over using the law of the pollution’s source state, Sullivan noted.

Other municipalities, such as San Mateo, California, have sued energy companies, claiming they knew the damage fossil fuels would wreak on the environment. The lawsuits were modeled on the successful multibillion dollar suits that had targeted Big Tobacco years earlier.

A case currently before the U.S. Supreme Court originated out of Baltimore, which seeks to hold Big Oil responsible for the cost of climate change. No ruling has yet been issued on that case, which was heard in January.

New York City has since taken other measures against the companies. Earlier this year, two public pension funds divested more than $4 billion in investments in fossil fuel producing companies. Paolucci said the city’s efforts “to protect New Yorkers from the devastating impacts of climate change and hold bad actors accountable is not over.”

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