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Don’t Poke the Bear: The Golden State Says ‘No More’ to Big Oil

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The Golden State’s Bold Move

The gauntlet has been thrown down. On September 16, 2023, CA Attorney General Rob Bonta filed suit against a handful of oil giants operating in California. Shell, Exxon Mobil, ConocoPhillips, Chevron, and BP have all been named defendants for contributing to worsening climate conditions throughout the state. The basis for this lawsuit? A decadeslong deception of the public (according to California) regarding the known harms of fossil fuels and the limited time available to right the wrongs of continued use. The complaint, filed in the Superior Court of California of the County of San Francisco, alleges a nearly seventy-year campaign to mislead consumers and lawmakers. Given how widespread the effects of climate change are throughout the state, AG Bonta has decided to tap into several of his enumerated powers. For this case, chief among those is the law granting the AG authority to file a civil action against private parties for equitable relief in preserving natural resources—Cal. Govt. Code §12607. The bottom line is the government is alleging that the five abovementioned parties each had a hand in misleading Californians, thus delaying action that would have been crucial for minimizing the effects of climate change that we are seeing now. Their argument: it is only fair that those companies compensate the state for the damage they caused to lighten the load taxpayers will have to bear on fighting the climate crisis in the future.

A History of Deceit

The suit rests mainly on the body of knowledge built over decades by oil companies that either remained hidden from the public or downplayed in the public square. Exxon Mobil, for instance, conducted a study over forty years ago in which global warming was predicted as a natural consequence of continued fossil fuel use. Former Exxon scientists revealed another study, published as far back as 1982, in a public hearing under questioning from Rep. Alexandria Ocasio-Cortez (D-NY). Researching the potential consequences of one’s business ventures is one thing; knowingly and publicly espousing information directly contradicting those findings is another. Actions like these have been pervasive throughout the oil industry, with executives parroting soothingly deceptive talking points for years.

On What Grounds?

The leading cause of action asserted by the Attorney General is the “public nuisance” that has stemmed from the defendants’ omission in publicizing their knowledge of the harmful effects of fossil fuels while continuing to refine and sell those fuels for profit. According to California Civil Code Section 3479, a nuisance, which is defined as anything detrimental to health, becomes public when it affects an entire community or neighborhood at the same time. In this case, the nuisance is being felt by the public in the form of sea level rise, coastal flooding and erosion, water supply disruptions, a heightened risk of fires, agricultural damage, and worsened air quality.

It is on this basis that Mr. Bonta seeks to exercise his powers as the state’s chief law enforcement official. Under California Government Code Section 12607, the Attorney General may file and carry out an action to protect natural resources from pollution, destruction, or impairment. The complaint affirms that, as a result of the defendants’ omission of the truth behind continued oil use and their acts in continuing to provide and facilitate its use, the natural resources of California are being harmed in ways that they otherwise would not. Thus, as a result of Big Oil’s alleged deception and facilitation of continued fossil fuel use, legal action aimed at mitigating the harmful effects on the California environment would be warranted.

Legal Trendsetting

The question stemming from these findings is how these energy behemoths can reasonably be expected to compensate the American people (and someday, maybe the world) for the consequences of their actions. The case of The People of the State of California v. Big Oil may provide an important model of how other states can answer this question. The Golden State’s argument for how oil giants can atone for their alleged deceit is simple: break out the checkbook. A lawsuit of this nature is one of those rare instances in which an accountability tool could coincide seamlessly with a broader public policy goal.

California has often led the way on climate action, litigation, and public policy in general these past several decades. If anyone were to conduct some basic, underlying research on the state, they would quickly figure out why: as of now, it is the fifth largest economy in the world. The state also has a long history of leaders actively prioritizing environmental conservation and climate change, regardless of political party affiliation. From Ronald Reagan to Gavin Newsom, chief executives have put their thumb on the scale while influencing unprecedented policy changes. It is primarily because of the heft of the Golden State economy that nationwide change follows any significant decisions made in California. The state has seen a torrent of legislation and executive action these past fifteen years to address worsening climate change issues.

According to some leading experts, the specifics of the suit could have monumental implications for future litigation. According to Richard Wiles, president of the Center for Climate Integrity, it could influence other state attorneys to file suit against Big Oil since California is the first oil-producing state to sue the oil industry for deceiving the public about known and anticipated effects of climate change. The idea of litigation against the fossil fuel industry is still in its infancy, at least in comparison to the number of states that have begun enacting climate public policy. Only about twenty governmental entities (including states, counties, and cities) have initiated litigation aimed at significant fossil fuel producers. That number should be compared to the thirty-six states that have enacted legislation aimed at climate change.

Credit: Bureau of Land Management California

The Underlying Purpose and Relief Sought

Such a small number of litigation claims makes sense when one compares the purpose of public policy to that of the lawsuit filed by the California Attorney General’s Office. Whereas public policies are fundamentally enacted to solve issues deemed necessary by a sovereign government, litigation (at least in this context) comes down to a straightforward purpose: accountability. “I mean, but the main thing [the CA lawsuit] will do is bring some measure of justice to the public . . . for being lied to for all these decades and for having to deal with these damages and pay for it,” says Wiles. In order to hold Big Oil accountable for the alleged deception it engaged in leading up to 2023, the state has to articulate just what form that accountability should take.

California is going for a mixed approach regarding the relief it seeks from the San Francisco County Superior Court. In his announcement of the lawsuit, Governor Gavin Newsom articulated that the relief sought by the state comes down to Big Oil paying their “fair share.” The proposed relief would come in the following forms: 1) a nuisance abatement fund, 2) injunctive relief, 3) financial penalties, and 4) punitive damages. Essentially, the state requests that the Big Oil defendants be ordered to contribute to the cost of dealing with climate change effects in the Golden State. The goal is to punish them for their alleged misconduct while forcing them to help pay the billions upon billions of dollars the state is dishing out to mitigate climate change effects.

Budgetary Constraints and Considerations

If the claims regarding Big Oil’s deception of the public on the disastrous effects of fossil fuel use are to be believed, they have much to contribute. Over the past several decades, the Golden State has seen an astronomical surge in the amount of money it needs to spend annually to deal with natural disasters. As of 2022, California spent $1.2 billion on wildfire suppression alone. Just this past fiscal year, the governor proposed an additional $750 million for drought-related responses on top of the $880 million that had already been allocated through the previous year’s budget. The primary reason this kind of spending on climate-fueled crises has not financially crippled the state: its economy. According to the Bureau of Economic Analysis, the state brought in about $3 trillion in revenue this past fiscal year. The economic vitality of California has allowed it to keep its head above water in terms of spending whatever is necessary to mitigate climate change effects.

Even with the substantial revenue stream that the state sees annually, there are limits to what it can spend. Through several propositions approved by voters over the past several decades, the state finds itself in a bind. Chief among those is Proposition 4, aka the “Gann Limit,” which forces state lawmakers to send half of the excess revenues to taxpayers and half to K-12 education. Essentially, it ties the hands of elected officials in appropriating funds through the budget that could otherwise have gone to existential crises like climate change. Many hands have guided the Office of the California Attorney General in initiating this suit. Only time will tell where it leaves Big Oil, the people of California, and the country.

*The views expressed in this article do not represent the views of Santa Clara University.


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