Driving On Empty: The Fate of Fossil Fuel Companies in Climate Nuisance Litigation

HRLR Online November 14, 2019
Download the PDF

Reeva Dua is a 2020 J.D. Candidate, Columbia Law School.

States and municipalities are increasingly attempting to use climate nuisance litigation to hold fossil fuel companies such as BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell, accountable for climate change. Climate plaintiffs across the country are requesting a total of approximately two hundred billion dollars in damages. If these plaintiffs manage to win their lawsuits, defendants simply do not have the cash flow to pay such large damage awards. Defendants’ principal assets are associated with fossil fuel reserves, so extracting oil and gas resources as a method of paying damages would exacerbate climate change. As a result, the oil and gas companies could be compelled to file for bankruptcy. In either the sale of the companies or their assets, defendants would be transferring their oil and gas resources to other fossil fuel companies, whose actions would further cause detrimental effects to the environment. Additionally, in the bankruptcy context, climate plaintiffs would be considered unsecured creditors and would be paid out only after the secured creditors receive their full payments, so they may not even be paid sufficiently. Therefore, if plaintiffs overcome their obstacles in litigation and reach the discovery stage, the best outcome is for the parties to form a Master Settlement Agreement. Plaintiffs would agree to drop their lawsuits, and defendant oil and gas companies would agree to increase their use of renewables, transition away from fossil fuels, and leave a certain portion of unburnable carbon in the ground.