James Osborne / The Houston Chronicle – 2016-06-14 18:48:05
The Case Against Big Oil
Industry dismisses comparisons to tobacco litigation
James Osborne / The Houston Chronicle
WASHINGTON (June 11, 2016) — In April, the email inboxes of energy executives filled with alerts from the nation’s top corporate law firms. Subject: The multi-state investigation into whether Exxon Mobil committed fraud by discounting the impact of fossil fuels on climate change.
For years, efforts to hold energy companies and governments liable for the warming of the planet had moved through the court system with little fanfare or success. But with state governments probing Exxon Mobil’s public and internal statements on climate change, lawyers warned their clients to get ready.
“There is escalating effort to bring pressure to bear on companies with respect to their public securities statements on the effects of climate change,” the New York law firm Pillsbury Winthrop Shaw Pitman said in a letter.
For oil executives in Texas and across the country, the investigations into whether their industry suppressed findings and misled investors, policy-makers, and the public about global warming not only raise the prospects of criminal charges, but add momentum to a legal campaign that many analysts compare to the decades-long battle against Big Tobacco.
As in the early days of tobacco litigation, environmental advocates say, they have had few victories, but each case has opened new areas of inquiry, tested legal strategies, and revealed more about what energy firms and regulators knew about climate change — and when they knew it.
In recent months, environmentalists have enjoyed some small wins. In April, a federal judge in Oregon ruled that a case against the US government for inaction on climate change could proceed, explaining that “the alleged valuing of short term economic interest despite the cost to human life” required examination by the courts.
In the Netherlands, a court ruled that the government, in the interest of protecting the low-lying country, must reduce carbon emissions 25 percent by 2020 — a ruling the Dutch government is appealing.
In Ohio, a federal appeals court opened the door to more climate change lawsuits when it said a power utility could be held liable for emissions even if it didn’t violate federal pollution laws.
“If you look at the history of tobacco litigation through the first several decades, the result was always the same. The plaintiff always lost,” said Carroll Muffett, president of the Center for International Environmental Law. “With each new case, more information came to public light. And that’s what we’re seeing here.”
Energy industry lawyers, however, dismiss comparisons to tobacco litigation, seeing a futile attempt by environmentalists to upend decades of case law. Courts have traditionally ruled that to hold defendants liable, their actions or products must be directly linked to damages caused to plaintiffs, said Kevin Ewing, an attorney with the Houston law firm Bracewell.
“Tobacco was shown to cause specific harm to specific individuals,” he said. “Not so with climate change, where we cannot yet discern the factual connection between a company’s conduct and individual harm, even though we can observe the global effects of climate change at large.”
Environmental lawyers have argued for years that governments and companies are obligated to reduce greenhouse gas emissions in the interests of protecting mankind from rising oceans, severe storms and the other effects of climate change.
They had little success. The US Supreme Court ruling in 2011 that the federal government alone has the power to control carbon emissions, which are legal are under air pollution laws all over the world.
But the recent entry of state prosecutors into the fray opens a new line of inquiry: Did fossil fuel companies mislead investors and the public on climate change and the risk it posed to their businesses?
The involvement of 17 state attorneys general, led by New York’s Eric Schneiderman, who in November disclosed his investigation of Exxon Mobil, has only increased comparisons with the tobacco case. In 1998, attorneys general from 46 states won a landmark, $200 billion settlement from the tobacco industry.
Many of the lawyers involved in the tobacco lawsuits, are reprising roles in climate change cases. Ted Wells, the attorney for Exxon Mobil in the climate change inquiry, also represented Phillip Morris.
Former Justice Department lawyer Sharon Eubanks, who ran the government’s tobacco litigation team and now works as a plaintiff’s attorney, has called on federal prosecutors to pursue a possible racketeering case against oil companies, on the theory they conspired to deceive the public just as a federal judge ruled in 2006 that tobacco companies had done.
The rush to court follows revelations last year by Inside Climate News and the Los Angeles Times that Exxon undertook climate change research in the 1970s and ’80s, and was warned by its scientists of the threat.
But some legal scholars are skeptical that the case against the oil industry is as cut and dried as that against tobacco, which was found to have hidden research proving nicotine is addictive and smoking causes cancer.
As yet, there is no evidence of oil companies hiding research on climate change. In addition, the causes and implications of climate change remained unsettled among scientists for so long that holding a company liable for espousing a dissenting view could prove difficult, said David Adelman, an environmental law professor at the University of Texas.
“The legal standard of fraud is a clear misrepresentation of fact,” he said. “With climate change, it’s a hard argument. You have to think about how knowledge and understanding changed over time. The further you go back in time, the harder it’s going to be to make a case of fraud.”
In the late 1990s, as the climate change debate reached fever pitch, former Exxon CEO Lee Raymond travelled to Beijing to speak to the World Petroleum Council.
Seven years earlier, a United Nations panel of scientists connected global warming to modern society’s dependence on oil and coal, which produce carbon dioxide, a greenhouse gas that traps heat in the earth’s atmosphere.
But Raymond, who held a doctorate in chemical engineering from the University of Minnesota, questioned the scientific basis for reducing emissions as a way to combat warming.
“Leaping to radically cut this tiny sliver of the greenhouse gas pie [that comes from human activity] on the premise that it will affect climate defies common sense and lacks foundation in our current understanding of the climate system,” Raymond said.
The following year, a leaked memo from the American Petroleum Institute, working with Exxon, Chevron, and the Alabama power firm Southern Co., laid out a public relations strategy to recruit scientists and lobby media outlets to cast doubt on science that blamed global warming on fossil fuels.
As climate science has eliminated uncertainties about the cause and effects of climate change, the 1990s public relations campaign has cast a shadow from which many energy companies are unable to emerge — no matter what they do to reduce carbon emissions.
Southern, for instance, touts that it cut carbon dioxide from its power plants 25 percent by shifting from coal to natural gas. Exxon protests that it’s unfair to suggest the company fully understood the effects of climate change decades before the world’s leading scientists.
That’s “not a credible thesis,” said spokesman Alan Jeffers said. “Our understanding of the science evolved as everyone else’s did.”
Chevron and the American Petroleum Institute declined to comment.
Environmental advocates, meanwhile, are adopting novel legal strategies to press their cases. In Oregon, for example, the group Our Children’s Trust convinced the judge to allow its lawsuit to proceed by arguing that the constitutional rights of future generations to “life, liberty and property” are violated as long as the United States allows the burning of fossil fuels.
In Germany, lawyers argue that the German utility RWE should foot the bill to protect a Peruvian mountain town from a melting glacier because RWE’s power plants contribute to greenhouse gases that put the community in peril.
In Massachusetts, environmental attorneys say Exxon should have considered the effects of climate change in devising protections for an oil storage terminal, which they allege releases pollutants into Boston Harbor as a result of increased storm surges and heavier rains.
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