Exxon win doesn’t end Big Oil climate fight

Company’s court victory in New York over duty to investors won’t stem emission suits

WASHINGTON — When a New York judge ruled Tuesday that Exxon Mobil had done nothing to deceive investors of the risks climate change posed to its business, the nation’s largest oil company scored a headline-grabbing victory.

But it was only the first hurdle in what is likely to be a years-long — if not multi-decade-long — fight for the oil and gas industry in its legal battle over climate change

In federal courts around the country, cities and states are moving ahead on claims that Exxon and other oil companies should pay for public costs associated with climate change, such as fighting wildfires and the construction of sea walls to prevent flooding.

“This is the first real (climate change) trial we’ve had,” Thomas McGarity, a University of Texas law professor, said of the New York attorney general’s case against Exxon. “But it’s a securities law case. It doesn’t get to the essence of the problem, which is the emissions of greenhouse gases, not deception.”

The U.S. Supreme Court has ruled that it is the role of Congress to regulate greenhouse gas emissions, not the federal courts. But environmental attorneys maintain the court left the door open on whether state courts could assess damages to companies that produce and burn fossil fuels.

Oil companies, including Exxon, Chevron, BP and Royal Dutch Shell, are facing litigation in state courts in California, Colorado, New York, Rhode Island, Washington and elsewhere from state and local governments argu

ing their greenhouse gas emissions present a public nuisance.

The companies are fighting to get the cases into federal court, where they would likely be dismissed.

“It’s an international issue, not something a judge can do,” said Boyden Gray, a Washington attorney and former White House counsel to President George H.W. Bush. “I don’t think the courts are going to be the root. It’s going to be through the government.”

The verdict Tuesday marked the end of a rare public examination of the inner workings of the oil industry, as the New York Attorney General’s Office presented its case that Exxon defrauded investors about the risks climate change regulation posed to oil and gas production.

Rex Tillerson, former Exxon CEO and former secretary of state, was called to the stand to explain the company’s policies on estimating future carbon prices for oil and gas projects, while the company accused the attorney general’s office of being on a political witch hunt.

An Exxon spokesman on Tuesday called the suit “baseless,” commenting, “lawsuits that waste millions of dollars of taxpayer money do nothing to advance meaningful actions that reduce the risks of climate change.”

New York Attorney General Letitia James replied that “the oil giant never took seriously the severe economic impact that climate change regulations would have on the company, contrary to what they were telling the public.”

And while New York Supreme Court Judge Barry Ostrager might have ruled in Exxon’s favor, he did not address the larger issue of climate change liability.

“Nothing in this opinion is intended to absolve Exxon Mobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products,” he wrote. “Exxon Mobil is in the business of producing energy, and this is a securities fraud case, not a climate change case.”

Environmental attorneys will now be asking state courts to decide whether oil and gas companies can be held liable for producing a product that virtually every American uses in their everyday lives.

In October, the state of Rhode Island scored a victory when a federal district court ruled against oil companies’ claims that litigation claiming greenhouse gas emissions are a public nuisance and should be heard in federal court, not state — a ruling they have appealed to the 1st U.S. Circuit Court of Appeals.

The oil industry should prepare for a lengthy legal fight, said David Bookbinder, an attorney with the think tank Niskanen Center, who is representing municipalities in Colorado in a case against Exxon and other companies.

“It’s a long and fraught legal path,“he said. “I tell clients, we can lose these cases in four to five years or win them in 10 to 15 years.”

james.osborne@chron.com twitter.com/osborneja