Russia’s invasion of Ukraine is a reminder that energy security is both a national security issue and a household financial security issue. When oil and gas prices go up for any reason, including due to supply side constraints from this war, the nation struggles to find affordable alternative supplies and ends up buying energy from disagreeable and undemocratic foreign regimes, undoubtedly helping to prop them up.
Everything energy related – from the price at the pump to the energy we consume to run air conditioners or, before you know it, heat for the winter – has been skyrocketing. When that happens, we should find ways to bring energy prices down, especially from domestic sources, instead of supporting frivolous litigious escapades that drive up prices.
Yet, the latter is exactly what we see happening with dozens of pending lawsuits in state and federal courts across the country brought in recent years by states, counties and municipalities against fossil fuel companies. The cases seek to hold these companies liable for climate change damages under novel theories of “public nuisance” and consumer fraud.
The cases are not only legally deficient but also effectively impose a tax on producing energy. Even if the energy companies eventually win, the costs of the litigation alone drive up prices. Further, even though the legal theories are flawed, the settlement pressures are huge, again threatening additional increases in the cost of doing business that will be passed on to consumers in the form of higher energy prices to cover the bounty.
The looseness of our standards for tort lawsuits is directly proportional to increased prices for consumer goods. This is the reason to see tort lawsuits as effectively taxes on goods.
Indeed, some of the activist plaintiffs in these climate lawsuits have expressly stated that one purpose of these lawsuits is to drive energy prices up to cut into profitability and reduce demand to hobble the fossil fuel industry.
In fact, some activists have acknowledged that they purposefully hope to directly harm not just companies but also consumers by making it hard for the average household to afford fossil fuel-based energy under a paternalistic desire to force these consumers to choose alternative sources.
This is the havoc wreaked when plaintiffs’ attorneys and other crusaders abuse the legal system for personal profit or political causes. The legal system is sometimes unabashedly manipulated by activists to try to effect social change. Too often lost in the conversation is the tax the activists’ advocacy have on society as a whole, and how their efforts, if successful, impose costs on all of us in terms of increased prices caused by the liability and litigation costs they impose on producers of consumer goods.
These climate-change lawsuits are just the latest example of this effect. Notably, these dozens of climate change lawsuits target almost exclusively U.S. and European energy companies (already the most regulated in the world) rather than the less environmentally sensitive operators such as Venezuela’s PDVSA, Russia’s Gazprom or Rosneft, or Saudi Arabia’s Aramco, which are much harder to get jurisdiction over in U.S. state and federal courts, in part because they are often foreign state-owned.
The consequence of this selectivity is that the privately held U.S. and European companies see their cost of doing business increase. That’s what litigation liability is — an added cost on production.
Of course, the companies not sued operating in dangerous and less environmentally sensitive countries do not face such costs. The natural consequence is that the U.S. companies must increase prices and suffer a competitive disadvantage in the global energy market. The resulting global competitive advantage these lawsuits offer to Venezuelan, Russian, Saudi Arabian and other similar foreign companies increases their market power and helps prop up the often oppressive and aggressive regimes in which they operate. This is destabilizing for the world and a real national security threat to the United States.
These lawsuits are dangerous and ungrounded, and we should hope the courts continue to recognize that. But because plaintiffs keep filing away and are clearly not getting the message that their cases are weak, more should be done.
Voters should ask their local municipal officials and state attorneys general to make their position on these lawsuits known in the coming midterm elections. Beyond the specific issue, it will tell voters a lot about whether these politicians see their role as prudent agents of the voters focused on local problems and about how they see separation of powers. And voters should reject local and state candidates this fall who are willing to waste their taxes and government resources pursuing frivolous litigation that only increases the voters’ costs for filling their tanks and cooling or heating their homes.
Further, Congress should consider very clearly and expressly preempting these lawsuits in any future or existing climate legislation packages, sending a clear signal to courts and litigants that solving our climate problems is not the province of the judiciary.
Such an action would also signal the commitment of the elected branches to addressing climate change and leave them better situated to succeed without interference from the courts.
Any temptation to expand the law to accept these kinds of lawsuits should at the very least be tempered by an understanding of the unintended consequences that adventurous tort litigation can bring. At a time when America’s energy security is already tenuous, these lawsuits are not only unwise and ungrounded but also a real threat to national security.
Donald J. Kochan is professor of law and deputy executive director of the Law & Economics Center at George Mason University Antonin Scalia Law School.
Source: TEST FEED1
