Praedicat’s virtual Rendez-Vous session on the climate liability risk noted that the “first wave” of lawsuits from 2004 against oil companies (and in one case, General Motors) had ended in failure in 2012 with the Supreme Court’s dismissal of Connecticut v AEP.
However one, in which Mississippi homeowners sued energy companies for damages to their properties caused by Hurricane Katrina, proved an outlier. Unlike the others, it relied on state common law torts rather than federal law, which the Supreme Court held was now governed by the Clean Air Act and the Environment Protection Agency in this area.
“Although it was ultimately dismissed in a perfect storm of procedural anomalies, the appeals court did hold that the plaintiffs have standing and that the claims should not be dismissed in light of the issues that brought down the other cases in the first wave,” explained Stephen Jones, Praedicat general counsel.
“Comer v Murphy Oil provides something of a roadmap for second wave cases.”
That second wave is proving much bigger, with 18 cases currently active, with the most recent filed earlier in 2021. All make claims under state tort law.
“The strategy appears to be to side-step the federal displacement issue that derailed the cases in the first wave.”
While uncertainties remain as to whether the cases can succeed, if they are heard, they will benefit from advances in “attribution science”, which allows the quantification of the effects of climate change on the likelihood of extreme events and the assignment of responsibility.
“There are two parts to attribution: the first is saying who contributed how much, which leads to the potential for assessing the liability for a particular lawsuit, but also how much more likely was the catastrophic event linked to greenhouse gas emissions,” explained Praedicat co-founder and vice president of modelling Adam Grossman.
“We’re now getting lawsuits against those who failed to protect against or prevent the effects of climate change.”
Adam Grossman, Praedicat
Proxy attacks
Future liabilities may not be limited to fossil fuel energy companies. Jones said the second wave litigation includes actions for secondary effects:
“No longer are we talking only about companies who have allegedly caused climate change; we’re now getting lawsuits against those who failed to protect against or prevent the effects of climate change,” Grossman said.
“This expands the climate litigation into a whole new industrial footprint,” he added.
The second wave has included suits against utilities for powerlines allegedly causing wildfires and landscaping companies responsible for clearing brush around them. In future, it might include food companies, given increased concentrations of naturally occurring arsenic in soil due to drought.
“Predictions are that as much as half the global production of rice may have arsenic levels that may be dangerous to children over the next 40 to 50 years,” he said. The start of this year brought the beginning of the first mass litigation action around high levels of arsenic in baby food.
“You have two tracks of litigation, both of which address climate change, but one directly and one by proxy.”
Related to this, businesses also face what Grossman termed “proxy litigation”: action against companies held to contribute to climate change but on different grounds. One current example is industrial meat production, a significant contributor to greenhouse gas emissions.
On one hand, the industry may face claims directly for its contribution to climate change. Another potential exposure, however, is proxy litigation based on the public health burden from the ill-effects of eating too much red meat.
“The target there is quite ripe for litigation,” said Grossman. “You have two tracks of litigation, both of which address climate change, but one directly and one by proxy.”
Perhaps the strongest example already apparent is cases concerning diesel emissions, with the fuel’s particulates being shown to be linked with cardiovascular disease and autism.
“While in this case oil and gas companies will also be targets of this litigation, you will also get the ports, the train companies, trucking companies and a fairly good swathe of manufacturing industry,” he added.
Praedicat’s modelled scenario combining the general liability and directors and officers exposures for such claims shows US losses of $84.3 billion.
“Diesel could be the new opioid,” said Grossman.
Main image: Shutterstock / Dragon Images
