On April 1, 2021, the 2nd U.S. Circuit Court of Appeals in Manhattan rejected New York City’s attempt to criminalize the legal production and sale of fossil fuels by major oil companies. NYC was attempting to hold them liable to help pay what they asserted were the costs of addressing harm caused by global warming.
In 2018, federal judge John Keenan acknowledged that climate change required attention by Congress and the executive branch, and not the courts. Calling climate change “a fact of life,” Judge Kennan stated that “Global Warming… must be addressed by the other two branches of government” and not via generalized litigation.
The Court upheld Judge Keenan’s original decision barring the City’s claims, holding that municipalities cannot “utilize state tort law to hold multinational oil companies liable for the damages caused by global greenhouse gas emissions.” Ruling in favor of the five oil companies, BP Plc, Chevron Corp, ConocoPhillips, Exxon Mobil Corp and Royal Dutch Shell Plc, the Court said the regulation of greenhouse gas emissions is better addressed under federal law and international treaties:
“To permit this suit to proceed under state law would further risk upsetting the careful balance that has been struck between the prevention of global warming, a project that necessarily requires national standards and global participation, on the one hand, and energy production, economic growth, foreign policy, and national security, on the other” said the Court.
NYC was trying to sue under NY nuisance law for damages caused by the companies’ “admittedly legal” production and sale of fossil fuels and noted that “every single person who uses gas and electricity contributes to global warming.” The Court rejected the City’s attempt to “sidestep” the “numerous federal statutory regimes and international treaties” that “provide interlocking frameworks for regulating greenhouse gas emissions, as well as enforcement mechanisms to ensure that those regulations are followed.”
“Global warming presents a uniquely international problem of national concern,” Circuit Judge Richard Sullivan wrote for a three-judge panel. “It is therefore not well-suited to the application of state law.” The Court also said the City’s federal common law claims were displaced by the federal Clean Air Act.
Sullivan added that while the Clean Air Act did not address emissions from outside the country, foreign policy concerns and the risk of courts “stepping on the toes of the political branches” barred the city’s lawsuit.
Climate action champions hoping for court-initiated regulation of greenhouse gases are certainly feeling the setback. Nick Paolucci, a spokesman for New York’s law department, said the city was disappointed it could not hold the oil companies “accountable for the environmental damage they knew their products would cause.” No word if the City intends to appeal. Chevron and the other defendants were obviously very happy.
Attention now shifts to Congress and the Biden Administration’s infrastructure and climate proposals. Avisen Legal’s Impact Counsel will continue providing our perspective on investment and entrepreneurial opportunities made possible by the Biden plan. Feel free to reach out to Todd Taylor or Jeremy Kalin for additional perspective or to discuss how we can help you take advantage of these opportunities.