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New Carbon Bills Won’t Let Oil Companies Off the Hook for Climate Costs

Filed Under: Access to Courts, Featured, Liability Waivers

By Dana Drugmand

Members of Congress recently introduced three new carbon pricing bills aimed at curbing planet-warming emissions. While the bills vary in their policy details, none explicitly absolve the fossil fuel industry of potential tort liability in climate lawsuits brought by municipalities, unlike another recent plan supported by the fossil fuel industry. One of the new proposals even expressly preserves the use of state law nuisance claims like the ones in these suits. 

Last year, the industry declared its support for the Baker-Schultz Carbon Dividends Plan when it was introduced and included the controversial climate liability waiver. That plan also included rolling back Environmental Protection Agency regulations on climate pollution in return for a modest $40 fee per metric ton of carbon emissions.

The new bills propose varying carbon prices, different revenue distribution plans and stances on EPA regulations. The bill that expressly supports state-level action is  the Climate Action Rebate Act of 2019, which strives to cut emissions 55 percent by 2030 with a goal of net zero emissions by 2050. Sponsored by Sens. Chris Coons (D-Del.) and Diane Feinstein (D-Calif.), with a House version brought by Rep. Jimmy Panetta (D-Calif.), the legislation starts the fee at $15 per metric ton of carbon-equivalent emissions, the lowest starting point of the new bills, but it has the steepest fee increase at $15 annually until emissions reach 10 percent of 2017 levels. The bill does not address EPA’s authority to regulate emissions, but it does include a provision stating, “nothing in this legislation preempts any state law or regulation.” 

The two other new carbon pricing bills do not contain a provision clarifying that state law is not preempted, and they do propose to limit the Clean Air Act’s regulatory scope on carbon emissions. Both are bipartisan bills, sponsored by Rep. Francis Rooney (R-Fla.) and Rep. Dan Lipinski (D-Ill.). 

The Raise Wages, Cut Carbon Act of 2019, introduced by Lipinski with Rooney as co-sponsor, would start the carbon fee at $40 per ton and increase it by 2.5 percent a year until emissions reach 20 percent of 2005 levels. Most of the revenue (84 percent) would be used to offset payroll taxes, with the remainder going to Social Security beneficiaries and funding low-income energy assistance and home weatherization programs. The bill prevents the EPA from enforcing regulations limiting emissions from fuels covered by the fee until at least 2030. 

The Stemming Warming and Augmenting Pay (SWAP) Act, introduced by Rooney with Lipinski as cosponsor, starts the fee at $30 per ton and also reduces payroll taxes in addition to helping offset higher energy costs for low-income households and helping Social Security beneficiaries. The fee increases by 5 percent plus inflation each year. The bill also prohibits EPA from regulating greenhouse gas emissions from certain sources under the Clean Air Act, though the 12-year moratorium can be lifted if emission reduction targets are not met. 

“The net effect of the bill is to shift the burden of taxation from working Americans to polluters—where it should be—all while harnessing capitalism, not regulatory bureaucracies, to direct the necessary emission reductions,” Jerry Taylor, president of the Niskanen Center, a libertarian think tank, said in a statement praising the SWAP Act.

The various bills’ restrictions on the EPA’s regulatory authority present an interesting issue for the oil companies being sued for climate damages, said David Bookbinder, Niskanen Center chief counsel who is also providing counsel for three communities in Colorado suing ExxonMobil and SunCor. 

“The defendants are saying hold it, the Clean Air Act completely preempts state tort liability and so we belong in federal court,” Bookbinder told Climate Liability News. “Certainly the bills that don’t affect EPA authority at all would leave that argument intact. The ones that trim back EPA’s authority would greatly affect that argument. Although, the premise of their argument is that Congress is already addressing these things.” He said the fossil fuel company defendants would continue to argue that federal law preempts the tort claims should Congress pass a carbon fee. 

“The defendants no doubt would say it doesn’t matter, if anything this is even a stronger indication that Congress has decided to address the problem,” he said. “On the other hand, some of these bills contain very explicit language saying that nothing in this act affects any state law including state common law remedies.

“That’s also what the Clean Air Act says, which is why no case has ever found the CAA ‘completely preempts.’”

In addition to the new Climate Action Rebate Act specifying no preemption of state law, another bill introduced earlier this year, the Energy Innovation and Carbon Dividend Act, also contains a “no preemption of state law” provision. 

That leaves the door open to state common law nuisance claims against fossil fuel producers. “The language would not preempt state nuisance claims,” said Ann Carlson, co-director of the Emmett Institute on Climate Change and the Environment at UCLA School of Law. 

“It’s very important to allow such suits to go forward because the damages communities have sustained and will continue to sustain from climate change are huge,” added Carlson, who has provided pro bono consulting for some of the California municipal plaintiffs in these lawsuits. “Preemption for liability would leave those communities, and their taxpayers, on the hook for all the costs.” 

While many climate activists support a carbon fee as part of the strategy to combat climate change, studies suggest the current proposals come nowhere near matching the true cost of carbon emissions. A recent study by researchers at the University of Massachusetts concluded that a carbon tax would have to reach $200 a ton to change consumer behavior and to keep low-income consumers from disproportionately absorbing the costs.

Carlson said that a carbon tax may not be enough on its own and that preserving the federal government’s authority to enact other climate policies is important. 

“The federal government could supplement a carbon tax with additional measures if a tax fails to deliver the necessary emissions reductions—for example, to control methane on public lands, or to reduce greenhouse gases from the transportation sector,” she said. “Sometimes, a carbon price is insufficient to achieve deep emissions reductions either because the price isn’t high enough or because the price signal doesn’t get through to the end user.” 

Bookbinder added that a federal carbon tax would not eliminate the need for climate liability litigation so long as the tax revenue fails to compensate state and local governments for the costs of climate damage.  

“A carbon tax does not address the adaptation needs in terms of how do state and local governments pay for these things,” he said. “The lawsuits are not premised on reducing emissions. They are about telling the industry that if you’re going to sell these products, then you have to pay for the damage.” 

Mayors Group Votes to Support Cities’ Right to Sue Oil Industry for Climate Damages

Filed Under: Access to Courts, Featured, Liability Litigation

By Karen Savage

The country’s largest organization of mayors passed a resolution on Monday opposing any federal or state legislation that would grant fossil fuel companies immunity from climate liability lawsuits. The resolution had been championed by the mayors of several cities who have filed those lawsuits against the industry, hoping to hold those companies accountable for climate damages their cities have already suffered.

Those mayors won the support of the U.S. Conference of Mayors, which passed the resolution at their meeting in Hawaii. The resolution was co-sponsored by the mayors of Oakland, Richmond and Santa Cruz, Calif., as well as Baltimore and Boulder, Colo., which have already filed suits against the oil industry. The mayors of San Leandro and Torrance Calif., Austin, Honolulu, Salt Lake City and St. Petersburg, Fla., were also co-sponsors. 

“Fossil fuel lobbyists tried to kill the resolution in the Environment Committee, but they failed as it passed 9-1,” said Richmond Mayor Tom Butt. “It was then adopted unanimously in the general session.”

The resolution is aimed at preventing legislation like the industry-backed Baker-Schultz Carbon Dividends Plan, which proposes taxing carbon emitters and returning the proceeds to the American public. Buried in the plan’s fine print is the waiver of the right to sue fossil fuel companies for climate change impacts. 

Congressional leaders at a hearing on the economic and health consequences of climate change last month weren’t told that the Baker-Schultz plan would also immunize companies from climate liability lawsuits. 

Ted Halstead,  chief executive of the Climate Leadership Council, a policy group, and Americans For Carbon Dividends, an industry-backed organization founded to promote the plan, testified at the Congressional hearing.

The Baker-Schultz plan also calls for rolling back most greenhouse gas and other emissions regulations.

While no legislation has been introduced to implement the Baker-Schultz plan, the mayors’ group hopes to pre-emptively shoot it down. The resolution vows to oppose “any legislation, whether in Congress or state legislatures, that attempts to limit or eliminate cities’ access to the courts by overriding existing laws or in any way giving fossil fuel companies immunity from lawsuits over climate change-related costs and damages.”

The mayors said taxpayers should be protected from solely shouldering the costs of climate change impacts. They also demand that Congress ensure that cities have the resources to protect their residents—particularly low-income and disadvantaged communities—as well as vulnerable infrastructure.

Butt said cities across the U.S. are now facing hundreds of billions of dollars in climate change-related adaptation costs.

“Eight cities, six counties, and one state, collectively representing approximately 15,374,000 million people or 4.7% of the total population, have filed lawsuits over the past two years to protect their residents and taxpayers by holding fossil fuel companies accountable for costs of climate damages and adaptation measures,” the resolution said, adding that cities must have access to the courts in order to resolve disputes over climate change-related damages and adaptation costs.

The U.S. Conference of Mayors, the National League of Cities and the International Municipal Lawyers Association, have filed amicus briefs in support of many cities that have filed climate liability suits.  They say those suits “raise textbook claims under state law, seeking to allocate fairly a portion of the significant costs required to protect city and county residents from harms inflicted by Defendants’ products.”

“Fossil fuel companies and related trade groups spent billions of dollars on public relations and lobbying campaigns to obscure the truth from the public and elected officials about the potentially catastrophic consequences of burning fossil fuels, even while some of those companies were protecting their own assets from rising seas and other impacts of climate change,” the mayors’ resolution said.

The American Petroleum Institute did not immediately respond to a request for comment.

“The science is clear and overwhelming that those costs are being incurred solely because of the actions of the fossil fuel companies,” Butt said. 

“As mayors we need to continue our leadership advocating at the state and federal levels to protect our rights and defend our residents from the catastrophic damages of climate change which is impacting our cities at alarming rates.”

Marin County Resolution: Big Oil Should Not Be Immune From Climate Liability

Filed Under: Access to Courts, California Climate Lawsuits

By Dana Drugmand

Marin County, Calif., is working to rally opposition to a carbon tax proposal that would also grant legal immunity to fossil fuel companies facing climate liability lawsuits—just like the one Marin and more than a dozen other communities have filed to hold those companies accountable for the costs of climate damages.

The Marin County Board of Supervisors passed a resolution on Tuesday opposing immunity for oil, coal and gas companies. The resolution also affirms that the Environmental Protection Agency should continue to regulate greenhouse gas emissions under the Clean Air Act. The resolution is a response to the Climate Leadership Council’s carbon tax proposal—which is supported by fossil fuel companies—that would roll back EPA regulations on climate pollution and prohibit lawsuits seeking to hold the fossil fuel industry liable for the costs of climate impacts.

“Giving these companies immunity from legal liability would block our access to the courts,” Marin County Board of Supervisors President Kate Sears wrote in a letter to colleagues. “This resolution is an opportunity to raise awareness of the dangers lurking within apparently forward-thinking proposals for a price on carbon and dividend to taxpayers.

“It is also a chance to ask our federal and state legislative and executive leaders to strongly oppose any efforts to deprive local governments and the public of access to the courts, and any attempts to weaken EPA’s ability to protect the environment and the public’s health.”

Marin County leaders also signed on to a letter last year from several communities to California Sens. Diane Feinstein and Kamala Harris raising an alarm about the liability waiver proposal.

Marin County filed its  lawsuit against 37 fossil fuel producers in July 2017. It, along with simultaneous lawsuits filed by San Mateo County and the city of Imperial Beach, is awaiting hearings by the Ninth Circuit Court of Appeals on whether the suits should be heard in state or federal courts.

Other California communities are awaiting similar appeals, including San Francisco and Oakland whose suit against five large oil companies was dismissed by a federal judge last year, the city and county of Santa Cruz and the city of Richmond.

Recently, a federal judge ruled that a similar lawsuit filed by Baltimore should be heard in Maryland courts.

The lawsuits allege that fossil fuel producers funded campaigns to mislead the public about climate science while knowingly promoting a product that drives global warming. Communities are already experiencing the impacts, including sea level rise, increased extreme weather, heat, drought and wildfires. They face steep costs to protect residents, property and infrastructure. The communities bringing liability suits say the fossil fuel companies should be forced to help pay for those damages.

The companies are fighting the suits in court, but are also lobbying on Capitol Hill to support the carbon fee and dividend proposal that includes the immunity provision. The House Ways and Means Committee held a hearing on the plan and that provision was not mentioned. But the increased attention on the CLC’s plan prompted some of the communities that had already sued the fossil fuel industry to take a stand. Richmond Mayor Tom Butt is bringing a bringing a resolution  to the upcoming meeting of the U.S. Conference of Mayors that opposes stripping communities of their right to pursue climate liability through the courts. That resolution already has the support of several other cities—Baltimore, Boulder, Colo., and Santa Cruz—that are also suing fossil fuel companies.