Introduction
Right now, cases involving climate change are being heavily litigated in courts across the United States. Hundreds of climate change-related cases have been filed in both federal and state courts, where parties are challenging governments’ and industry’s knowledge of and contribution to climate change. In the abstract, one would think that litigation involving emissions of greenhouse gases (“GHG”) linked to climate change would largely focus on the federal Clean Air Act. Yet, climate change-related cases now involve ever-expanding causes of action, including not only claims under the federal Clean Air Act and other federal statutes, but claims under the U.S. Constitution, state law claims, and common law claims.
There are several active cases that may have major implications on the government’s role in determining the direction of climate change policy, and on private companies’ past and future liability for alleged contributions to climate change, as well as knowledge of climate change impacts on business decision-making. This article discusses notable current cases involving climate change.
Children’s Rights and the Public Trust
First, and possibly the most novel and notorious, is a case filed in the U.S. District Court for the District of Oregon.[1] In 2015, a group of 21 minor children, along with an individual acting as guardian for future generations, filed a complaint against the United States, individual U.S. officials, and various government agencies. The plaintiffs argued that the United States government enables the exploitation and combustion of fossil fuels, which releases GHGs into the atmosphere. The plaintiffs further argue that enabling GHG emissions—which cause climate change—will significantly endanger the plaintiffs’ substantive due process rights of life, liberty, and property protected by the Fifth Amendment to the U.S. Constitution and violates the public-trust doctrine, or the obligation of the government to hold certain natural resources in trust for people and for future generations. The plaintiffs asked the district court to order the executive branch to prepare a consumption-based inventory of GHG emissions in the United States, and implement an enforceable national remedial plan to phase out fossil fuel emissions and draw down excess atmospheric GHG.
The government attempted several times to dismiss the complaint, arguing the plaintiffs lacked standing and that the claims lacked justiciability, stating its view that the claims represent political questions reserved for the other branches of government. Each attempt was initially stymied by the district court or the Ninth Circuit. The parties were barreling towards trial, originally set for October 29, 2018, when the government applied to the U.S. Supreme Court on October 18, 2018, for a stay of the trial and filed a petition for writ of mandamus. Chief Justice Roberts temporarily paused the trial on October 19, 2018, by issuing an administrative stay, but ultimately on November 2, 2018, the U.S. Supreme Court denied the government’s application for stay; thus removing what would seem to be the final hurdle for the district court to proceed with the trial. However, less than a week later, on November 8, 2018, the Ninth Circuit stayed the trial pending consideration of the government’s petition for writ of mandamus filed with the Ninth Circuit, the next battle in this case.
Should the Ninth Circuit deny the petition for writ of mandamus, what would loom ahead for the parties is an anticipated 50-day trial on the merits. Ultimately, the results of this case could take years to proceed from trial to another appearance before the Ninth Circuit, to—almost certainly—being argued again before the U.S. Supreme Court. Many of the minor plaintiffs may be well into young adulthood by the time this litigation has run its course, but the outcome of this case could have far-reaching and longstanding precedent in the legal battle over government’s role in addressing climate change.
Keystone XL Pipeline
Next is a case that involves the Keystone XL Pipeline, the proposed pipeline that has been in national headlines for nearly a decade. The pipeline is proposed to transport petroleum products from Alberta, Canada, through Montana, South Dakota, and Nebraska and then connect with an existing pipeline system. As a brief background, in 2015 the Obama Administration denied the Keystone XL Pipeline a Presidential Permit. This permit is necessary to allow the pipeline to make a trans-border crossing from Canada into the United States. In a 2015 Record of Decision (“ROD”), the U.S. Department of State determined that the United States’ leadership in addressing climate change provided a significant basis for denying the permit. Further, the 2015 ROD stated that there was science supporting the need to keep global temperature less than two degrees Celsius above pre-industrial levels, and human activity represented a dominate cause of climate change.
In 2017, the Trump Administration issued a revised ROD and the U.S. Department of State approved the Presidential Permit. With regards to climate change, the 2017 ROD simply stated that there have been numerous developments related to global action to address climate change and a decision to approve the pipeline would support U.S. priorities related to energy security. In March 2017, environmentalists filed a complaint for declaratory and injunctive relief in the U.S. District for the District of Montana challenging the Trump Administration’s reversal from the Obama Administration’s 2015 permit denial. The environmentalists and the government filed motions for summary judgment, and on November 8, 2018, the district court granted in part and denied in part both parties’ motions, but ultimately vacated the 2017 ROD and remanded the matter to the U.S. Department of State for further consideration.[2] The district court concluded that the Department of State failed to comply with the National Environmental Policy Act and the Administrative Procedure Act “when it disregarded prior factual findings related to climate change and reversed course.” This decision blocks Keystone XL Pipeline construction until a successful appeal overturning this decision or the Trump Administration reissues a new ROD with a more reasoned analysis for why it decided to overturn the 2015 ROD.
The next cases discussed are not claims against government action or inaction on climate change or their evaluation of climate change impacts, but involve claims against industry members for their contributions to GHG emissions and their management and disclosure of climate change risks.
State and Local Government Actions Against Industry Groups
There have been several cases initiated around the country by state or local government entities against industry companies seeking compensation for damages caused by climate change. The governments argue under various common law legal theories that the companies’ emissions caused climate change, which damages coastlines and other government infrastructure. Many of these suits were initially filed in state court and were subsequently removed to federal courts. Local governments have been largely unsuccessful in these cases, but have appealed and are now presenting arguments before circuit courts.
In California, the City of Oakland and the City and County of San Francisco had cases dismissed by the District Court for the Northern District of California for failing to state a claim.[3] Appeals were filed to the Ninth Circuit and briefing is due January 31, 2019.[4] Similarly, New York City filed suit against industry members to obtain compensation to redress the effects of climate change under theories of state law nuisance and trespass. This case was dismissed, but NYC appealed the dismissal on July 26, 2018, to the Second Circuit.[5] Forthcoming decisions by the circuit courts in favor of the municipalities will send these cases back to the district courts to be further litigated. However, decisions against the municipalities would all but foreclose these types of state-law claims in the Second and Ninth Circuits and would be extremely persuasive for industry organizations in similar suits in other circuits.
New York Attorney General Lawsuit
On October 24, 2018, the New York Attorney General, Barbara Underwood, filed a summons and complaint against Exxon Mobil Corporation (“Exxon”) in New York County Supreme Court.[6] The New York Attorney General claimed that Exxon employed internal practices that were inconsistent with its representations disclosed to investors and inadequately addressed climate change regulatory risk in business decisions. Specifically, the Attorney General claims that Exxon publicly stated that, when evaluating business decisions, the company uses certain “proxy costs” to account for potential costs due to government regulation of GHG emissions, but in practice either used lower amounts than those publicly disclosed or did not include proxy costs in decision making at all. The New York Attorney General argued that these practices fraudulently underreported climate change risks to investors, which constitutes fraud under the New York Martin Act[7] and New York common law.
This litigation is still developing, but if the New York Attorney General is successful in this case, the practical implication is that large GHG-emitting companies will need to assess the information provided to investors in securities-related documents and presentations, and used in business decisions involving GHG-regulatory risk. While the case is currently specific to New York law, this case could have an impact on companies across the country as other State Attorney Generals, and investors, may be emboldened to pursue litigation similar to this New York case and to the case discussed below.
Investors Lawsuit
Finally, in 2016, a group of Exxon investors filed a class action securities fraud lawsuit in the U.S. District Court for the Northern District of Texas alleging facts similar to the above suit filed by the New York Attorney General.[8] In the Texas case, the investors claim that Exxon understood climate change impacts on business assets, but failed to disclose recognized risks caused by climate change that could result in hydrocarbon reserves of the company being “stranded” or unable to be fully utilized. The plaintiffs argue that intentionally not disclosing this information fraudulently inflated the stock price and bond rating of the company.
Exxon filed a motion to dismiss the case, arguing that its statements were not materially misleading and that the plaintiffs did not sufficiently plead scienter, or mental state with an intent to deceive, required in securities fraud cases. On August 14, 2018, the district court concluded that the plaintiffs sufficiently alleged that Exxon made material misstatements regarding the company’s use of proxy costs in formulating business and investment plans and that the plaintiffs’ allegations support finding strong inferences of scienter. Exxon attempted a reconsideration of the court’s August 14, 2018, decision, but on November 5, 2018, the district court rejected the reconsideration request and denied the company’s request to immediately appeal the decision, thus allowing the case to proceed.
Conclusion
The past few months have seen a flurry of activity across the country for cases involving climate change issues. The cases discussed above are only a few examples of the climate change litigation that has been developing the past few years, but these cases all share a significance and novelty that practitioners should monitor closely. Broadly, we are seeing ever-expanding legal theories being used by plaintiffs to draw the debate of climate change into the court system. We are also seeing unsuccessful attempts by the government and industry to dismiss these cases at early stages of litigation. Over the course of the next year to several years, we may see precedential holdings involving these cases that could stall the use of certain legal theories to challenge climate change, or greenlight these theories for plaintiffs to pursue additional litigation.
[1] Juliana v. United States, No. 6:15-cv-1517, (D. Or. filed Aug. 12, 2015).
[2] Northern Plains Resource Council et al v. Shannon et al, 17-cv-00031-BMM, (D. Mont., Nov. 08, 2018) (Order vacating 2017 ROD).
[3] See City of Oakland v. BP P.L.C., 325 F. Supp. 3d 1017 (N.D. Cal. 2018).
[4] See Id., appeal docketed, No. 18-16663 (9th Cir., Aug. 24, 2018).
[5] The City of New York v. BP P.L.C., No. 1:18-cv-00182 (S.D.N.Y. 2018), appeal filed No. 18-2188 (2nd Cir., July 26, 2018).
[6] People of the State of N.Y. v. Exxon Mobil Corp., No. 452044/2018 (N.Y. Sup. Ct., filed Oct. 24, 2018).
[7] N.Y. Gen. Bus. Law § 352 et. seq.
[8] Ramirez v. Exxon Mobil Corp., 3:16-cv-3111 (N.D. Tex. Nov. 7, 2016).
