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Climate Cases Put Big Oil’s Behemoth Trade Group in Bull’s-Eye

Sept. 14, 2020, 10:00 AM

State and local governments taking Big Oil to court over climate change have a new target: the American Petroleum Institute—an approach that could pay off for plaintiffs and create headaches for the industry’s biggest trade group, lawyers say.

Recent lawsuits from Delaware, Minnesota, and Hoboken, N.J., name API as a defendant, saying the group should be on the hook alongside oil companies for allegedly misleading the public about fossil fuels’ climate impacts.

“API has participated in and led several coalitions and front groups, often in collaboration with the Fossil Fuel Company Defendants, that have organized deceptive advertising and communications campaigns that promote climate disinformation and denialism,” Hoboken lawyers said in the city’s Sept. 2 complaint.

Minnesota and Delaware made similar allegations in recent cases. API offered the same response to the lawsuits, defending the industry’s history of reducing greenhouse gas emissions.

“The record of the past two decades demonstrates that the industry has achieved its goal of providing affordable, reliable American energy to U.S. consumers while substantially reducing emissions and our environmental footprint,” senior vice president and chief legal officer Paul Afonso said in a statement. “Any suggestion to the contrary is false.”

But outside legal experts say the cases pose a serious legal problem for the group by targeting internal documents going back decades and requiring expensive courtroom defense—no matter if the plaintiffs are successful in the end.

“Litigation risk alone is still leverage on the part of plaintiffs,” said Donald J. Kochan, a professor at George Mason University specializing in environmental law and torts. “There are colorable claims against trade associations that make the risk of them being litigated high, even if there’s a low probability of plaintiffs’ success.”

Parallel to Tobacco Cases

API is a behemoth in the oil and gas world, currently representing nearly 600 producers, refiners, and others across the industry. Formed in 1919, the institute aims to influence public policy, conduct research, and set industry standards.

The trade group’s prominence makes it an obvious target for some of the climate cases cropping up across the country in recent years, Selendy & Gay PLLC attorney Lena Konanova said.

She drew comparisons to associations entangled in litigation over tobacco and various products liability cases, noting the claims focus on “hiding known dangers by those associations, or downplaying the dangers to the public.”

Kochan said API has plenty of legal defenses to try to sink the new lawsuits—including the argument that it can’t be liable when it doesn’t directly sell anything to consumers. But the plaintiffs will likely benefit either way, he said.

“Trade association litigation budgets are often designed to challenge government regulations, so if now they have to spend most of their litigation budget defending against plaintiffs’ claims of liability—there’s less funding to litigate against the regulations,” he said.

API is represented by McGuireWoods LLP and Winthrop & Weinstine P.A. in the Minnesota case. The group hasn’t yet shared its legal teams for the Hoboken and Delaware cases.

‘New Avenue for Discovery’

Targeting API also gives plaintiffs an opportunity to recover useful records from the group’s archives that could contribute to more liability claims, Center for Climate Integrity executive director Richard Wiles said.

“The documents that they might turn over could lead you many places that the individual companies’ documents might not,” he said.

Karen Sokol, a law professor at Loyola University in New Orleans, said to expect a “more powerful trial” if the plaintiffs advance to that stage in litigation against API.

“What comes out in it is going to provide a lot of information to the public,” she said.

Other Groups Next?

The claims against API center on allegations that the group funded “climate misinformation” research, publicly downplayed the impacts of climate change, and led “greenwashing campaigns” to tout natural gas as a clean energy source.

Though API is an industry leader, smaller trade associations could also be implicated in future cases, Sokol said, noting that regional oil and gas groups have likely issued similar public communications that could be targeted as misleading.

Other trade groups should give “serious consideration” to their potential liability, depending on what types of work such organizations have done to direct, fund, or disseminate questionable research or advocacy materials, Konanova said.

“You should be concerned,” she said, “if you think there’s some risk that the way you put out your message is false or misleading in some way.”

—With assistance from Dean Scott.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergindustry.com

To contact the editor responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com

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