An Updated Look at Civil Liability and Litigation Risks Associated with Climate Change

Climate Change Litigation in the United States

Plaintiffs in the United States have brought climate change actions on various grounds, including common law theories of liability, federal and state environmental statutes, and even constitutional claims. These cases have urged courts to adopt novel interpretations of private liability and governmental duty to address climate change-related risks.

• In recent years, litigants have utilized common law theories to try to hold private companies liable for the effects of climate change. Plaintiffs have pled theories of liability grounded in nuisance, trespass, negligence, failure to warn, and violations of the public trust doctrine. State and local governments have played a particularly consequential role as plaintiffs by bringing climate change-related actions against energy companies. About two dozen lawsuits have been filed by state and local governments, including Rhode Island, Delaware, and Connecticut, and several cities and counties, seeking monetary damages associated with rising sea levels and other effects of climate change. For example, in 2018, the city of New York sued five major oil companies in federal court, seeking damages for alleged injuries caused by climate change and asserting causes of action for public nuisance, private nuisance, and trespass under state common law. In April, the Court of Appeals for the Second Circuit affirmed dismissal of the suit, holding that claims relating to domestic emissions were displaced by federal law and that, concerning foreign emissions, foreign policy concerns and judicial caution warranted dismissing claims under the federal common law.^[ii] Although the appellate court’s judgment may deter future common law claims in the Second Circuit, it remains to be seen whether other federal circuits will follow the Second Circuit’s rationale and, consequently, whether this decision will have a deterrent effect in other jurisdictions.
• Businesses’ public disclosures related to climate change have prompted government investigations and enforcement actions. Federal scrutiny of companies’ climate-change-related disclosures is expected to increase under the Biden administration. In May 2021, President Biden issued Executive Order 14030, which called for a “comprehensive, government-wide strategy” on climate-related financial risk, including actions to enhance climate-related disclosures “to mitigate climate-related financial risk to the financial system or assets and a recommended implementation plan for those actions.”^[iii] Consistent with this directive, in June 2021, the U.S. Attorney’s Office for the Eastern District of New York’s Civil Division launched an Environmental Justice Team, the mandate of which includes, among other things, the initiation of enforcement to address disproportionate climate impacts on disadvantaged communities. Moreover, in July 2021, the Securities and Exchange Commission (SEC) announced that it is developing mandatory disclosure regulations for public companies related to climate risk. The new rule, which is expected later this year, would build on current SEC guidance related to climate change disclosures. The SEC has also recently taken enforcement actions related to climate disclosures. For example, in September 2020, the SEC and Fiat-Chrysler Automobiles agreed to a settlement regarding allegations of misleading disclosures related to an internal audit of the company’s emissions control systems in press releases and annual reports.[iv]

States have also scrutinized public disclosures and other statements by businesses as part of investigations and enforcement actions related to climate change. In 2016, 17 state attorneys general formed a coalition to investigate public statements by energy companies related to climate change.^[v]

More recently, several of these same state attorneys general have sued oil and gas companies for alleged inadequate disclosures of climate-related risks under state consumer protection and unfair trade practices laws. For example, in 2020, Delaware Attorney General Kathleen Jennings brought an action against several energy companies, asserting common law claims and a claim under Delaware’s Consumer Fraud Act, alleging that the companies failed to disclose that their products contribute to climate change.^[vi] Just last month, the state of Vermont filed a suit against oil and gas companies under the Vermont Consumer Protection Act, alleging that the companies misled the public about the impact of fossil fuels on climate change.^[vii] Similar lawsuits have also been filed by the attorneys general of Massachusetts, Connecticut, and Minnesota. Given this increased regulatory scrutiny of public companies’ climate-related disclosures and other public statements, enforcement actions and litigation based on such disclosures is expected to increase.

• While much of the climate change litigation to date has focused on allegations that companies have or are contributing to GHG emissions, businesses have also been targeted based on a theory of failing to prepare for the effects of climate change. For example, citizens have filed suits against coastal bulk storage and fuel terminals for impacts to those facilities from weather events, on the theory that operators failed to prepare for the predictable effects of climate change.^[viii] In the wake of Hurricane Harvey, a county in Texas filed civil and criminal complaints against a chemical manufacturer relating to damage caused by floodwaters at one of its facilities. While the company successfully defended itself in the case, the action could presage future enforcement actions following natural disasters associated with climate change. After a wildfire, a group of California residents sued a utility company whose maintenance practices allegedly contributed to the fire by failing to properly account for the increased risks of wildfires due to climate change.^[ix]
• Plaintiffs have filed suits against the federal government on various legal grounds to compel climate-related initiatives. For example, in Juliana v. United States, an environmental organization sued the federal government on behalf of a group of children, alleging that the government had violated fundamental rights to equal protection under the Fifth Amendment to the U.S. Constitution,^[x] the Ninth Amendment,^[xi] and the public trust doctrine by contributing to greenhouse gas (GHG) emissions, and sought an injunction requiring the federal government to phase out emissions and implement measures to reduce atmospheric levels of CO₂. After the district court denied the government’s motion to dismiss, in January 2020 the Ninth Circuit held on appeal that the plaintiffs lacked standing to bring the claims based on the onerous burden that would be placed on the court to redress a problem requiring coordinated governmental action to tackle.^[xii] The litigation remains ongoing, however, as the plaintiffs have since moved to amend their complaint and the district court ordered the parties into mediation to reach a potential settlement. Although the Ninth Circuit’s immediate ruling in Juliana will pose an obstacle to future climate change litigation, the court’s findings that the plaintiffs suffered “concrete and particularized injuries” associated with climate change—such as drought and flooding—and that plaintiffs’ alleged injuries were caused by carbon emissions from fossil fuel production could encourage future litigants to invoke constitutional rights in an effort to compel federal action.
• Litigants have sued under the National Environmental Policy Act (NEPA) and similar state environmental review laws to challenge approvals for energy projects. Such lawsuits have challenged permits and/or environmental reports for oil and natural gas pipelines,^[xiii] coal projects,^[xiv] liquid natural gas terminals,^[xv] and approvals or lease sales for oil and gas drilling.^[xvi] Plaintiffs have achieved successes in these actions. For example, in 2020, a federal court in Montana vacated 287 oil and gas leases issued by the U.S. Bureau of Land Management (BLM), finding that the agency’s environmental assessments prepared for the lease sales under NEPA failed to account for the cumulative effects of GHG emissions.^[xvii] Such suits challenging governmental approvals for major projects may be expected to increase after the Biden administration’s proposed amendments to the Council on Environmental Quality’s implementing regulations for NEPA,^[xviii] which would restore some of the procedural hurdles that the Trump administration eliminated in its own regulatory overhaul.

International Climate Change Litigation

Climate change litigation in Europe and elsewhere outside the U.S. has also increased in recent years, as demonstrated by the following recent examples:

• In December 2019, in a case brought by an environmental group on behalf of hundreds of Dutch citizens, the Supreme Court of the Netherlands upheld a district court decision, which ordered the Dutch government to lower its domestic GHG emissions by at least 25 percent by the end of 2020 compared with 1990 levels.^[xix] Notably, the district court based its decision on a finding that the government had a duty of care to protect its citizens from climate change.^[xx]
• In February 2021, a court in France held in favor of environmental groups claiming that the French government had failed to meet its obligations to decrease GHG emissions under the 2015 Paris climate agreement and ordered the government to disclose the steps it would take to reach its climate targets.
• In March 2021, the Ontario Superior Court of Justice rejected a motion to dismiss filed by the province of Ontario, Canada in a suit filed by environmental groups on behalf of seven youth plaintiffs who alleged that the provincial government violated the Canadian Charter of Rights and Freedom by failing to address climate change. Specifically, the plaintiffs claimed that Ontario’s 2030 GHG reduction target was inadequate to meet the goals of the Paris Climate Agreement.
• In May 2021, a district court in the Netherlands ruled that Royal Dutch Shell’s parent company had to reduce its CO₂ emissions by 45 percent within 10 years relative to its 2019 emissions. The court found that Shell’s obligation to reduce emissions related not only to the company’s own emissions, but also to end-users’ emissions. The case, brought by environmental and human rights groups, is believed to be the first successful case requiring a multinational company (rather than a government entity) to reduce emissions.
• A court in New South Wales, Australia held in May 2021 that the environment minister had a duty of care to children concerning CO₂ emissions and should take reasonable care to avoid harming the children when deciding whether to approve a coal mine expansion project that would contribute to GHG emissions.
• On September 20, 2021, a German environmental organization filed two actions against the automobile manufacturers, BMW and Mercedes-Benz, for refusing to reduce their carbon emissions target and stop production of fossil carbon-emitting cars by 2030 (Deutsche Umwelthilfe v. BMW and Deutsche Umwelthilfe v. Mercedes-Benz). The cases represent the first climate lawsuits against the auto industry outside the United States.

Looking Forward

Although plaintiffs continue to face substantial hurdles to mounting successful cases under existing law and evidentiary burdens, particularly in the U.S., the liability risks to industry also are increasing, as the science around causation and attribution continues to evolve alongside an increasingly prominent and pervasive public discourse. That is, as public attention and policy discussions continue to grow louder about climate change and concerns about its effects, litigation and government enforcement actions related to climate change can be expected to increase. Similarly, the expanding scope of potential defendants in such actions includes a wide range of entities, from businesses that emit GHGs, to those that develop technologies that rely on fossil fuels, to those that are responsible for maintaining critical infrastructure vulnerable to the effects of weather events than can be associated with climate change.

^{[i] Global Climate Litigation Report: 2020 Status Review, United Nations Environment Program.}

^{[ii] City of N.Y. v. Chevron Corp., et al., 993 F.3d 81 (2d Cir. 2021).}

^{[iii] Available at: Federal Register :: Climate-Related Financial Risk}

^{[iv] See SEC, “Fiat Chrysler Agrees to Pay $9.5 Million Penalty for Disclosure Violations” (September 28, 2020), available at: SEC.gov | Fiat Chrysler Agrees to Pay $9.5 Million Penalty for Disclosure Violations.}

^{[v] “When Attorneys General Attack: AGs’ Aggressive Investigation of Climate Change Disclosures, and Getting Your Insurer to Provide Coverage,” available at: https://www.pillsburylaw.com/en/news-and-insights/when-attorneys-general-attack-ags-aggressive-investigation-of.html.}

^{[vi] State of Delaware v. BP Am. Inc. et al., No. N20C-09-097 (Del. Super. Ct. Sept. 10, 2020).}

^{[vii] Office of the Vermont Attorney General, “Attorney General Donovan Files Consumer Protection Suit Against Fossil Fuel Companies” (September 14, 2021), available at: https://ago.vermont.gov/blog/2021/09/14/attorney-general-donovan-files-consumer-protection-suit-against-fossil-fuel-companies/.}

^{[viii] Conservation Law Found. Inc. v. Gulf Oil Ltd. P’ship, No. 3:21-cv-00932 (D. Conn. July 7, 2021); Conservation Law Found. Inc. v. Shell Oil Co., et al., No. 3:21-cv-00933 (D. Conn. July 7, 2021); Conservation Law Found. Inc. v. Shell Oil Products US, et al., No. 1:17-cv-00396 (D. Conn. Aug. 28, 2017).}

^{[ix] Van Oeyen v. Southern California Edison, No. 19STCV04409 (Cal. Super. Ct. Feb. 8, 2019).}

^{[x] The Due Process clause requires the federal government to provide equal protection of law. U.S. Const., amend. V.}

^{[xi] “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” U.S. Const., amend. IX.}

^{[xii] Juliana v. U.S., 947 F.3d 1159 (9th Cir. 2020)}

^{[xiii] Ctr. for Biological Diversity v. Scott, No. 4:21-cv-00047 (D. Mont. May 3, 2021) (challenging the Army Corps of Engineers’ reissuance of Nationwide Permit No. 12, a general permit covering oil and gas pipeline projects under the Clean Water Act, on the grounds that the agency had failed to adequately assess the covered pipeline projects’ contribution to climate change under NEPA); Friends of the Headwaters v. U.S. Army Corps of Engineers, No. 1:21-cv-00189 (D.D.C. Jan. 21, 2021) (challenging U.S. Army Corps of Engineers’ issuance of permits for a crude oil pipeline for failing to consider potential lifecycle GHG emissions); Rosebud Sioux Tribe v. U.S. Dep’t. of the Interior, No. 4:20-cv-00109 (D. Mont. Nov. 17, 2020) (challenging a right-of-way granted for the Keystone XL pipeline for, among other things, failing to adequately analyze climate change).}

^{[xiv] Citizens for Clean Energy v. U.S. Dep’t of Interior, No. 4:17-cv-00030 (D. Mont. Mar. 29 2017) (challenging the repeal of a moratorium on federal coal leasing).}

^{[xv] Vecinos para el Bienestar de la Comunidad Costera v. Fed. Energy Regul. Comm’n, No. 20-1045 (D.C. Cir. Aug. 3, 2021) (finding deficiencies in Commission’s NEPA analysis of liquefied natural gas export terminal project’s GHG emissions and remanding without vacatur); Ctr. for Biological Diversity v. Fed. Energy Regul. Comm’n, No. 20-1379 (D.C. Cir. Sept. 21, 2020) (petitioning for review of the Commission’s approval of a liquid natural gas terminal, gas pipeline, gas treatment plant, and transmission lines in Alaska).}

^{[xvi] Sovereign Iñupiat for a Living Arctic v. Bureau of Land Management, No. 3:20-cv-00290-SLG (D. Alaska Aug. 18, 2021) (vacating approvals to drill for oil in the National Petroleum Reserve).}

^{[xvii] WildEarth Guardians v. U.S. Bureau of Land Management, 457 F.Supp.3d 880 (D. Mont. 2020).}

^{[xviii] National Environmental Policy Act Implementing Regulations Revisions, 86 Fed. Reg. 55757 (proposed Oct. 7, 2021) (to be codified at 40 C.F.R. pts. 1502, 1507, and 1508).}

^{[xix] According to a report by the PBL Netherlands Environmental Assessment Agency, the Netherlands’ total GHG emissions as of 2019 were approximately 18 percent lower than the 1990 emission level. See: Greenhouse gas emissions in the Netherlands 1990-2019 | PBL Netherlands Environmental Assessment Agency.}

^{[xx] Urgenda Foundation v. State of the Netherlands, C/09/456689 / HA ZA 13-1396.}