17 Mar 2008

A nuisance or a nonsense? Liability for products with greenhouse emissions

by Peter Briggs, Callan O'Neill

It is unlikely an action in Australia alleging that products which emit greenhouse gases are a public nuisance or defective would be successful at present. Companies should be aware of the risk of litigation for publicity reasons or to promote law reform.

Media attention, a growing public awareness and a change in the political climate have pushed climate change to the forefront of public debate. As a result, environmental groups and other litigants around the world are exploring ways to seek redress for the harm caused by greenhouse gas emissions.

Should Australian manufacturers and suppliers of such goods be concerned?

Possible risks

In response to increasing scientific knowledge, Australian courts are willing to consider the environmental effects of global warming as a valid concern (see for example Gray v Minister for Planning [2006] NSWLEC 720 and Walker v Minister for Planning [2007] NSWLEC 741).

What claims might be brought against manufacturers and suppliers of goods alleged to cause climate change? The two possible causes of actions are the tort of nuisance and a product liability action alleging that the goods were defective or not of merchantantable quality/fit for purpose. At present, it is unlikely that any claim would be successful. If the motivation behind the proceedings were to attract media attention and to bring about law reform, however, such a claim might nevertheless be litigated.

A nuisance?

The tort of nuisance has been used successfully, both in Australia and internationally, in the context of environmental harm. In the UK for instance, in AB v South West Water Services [1993] QB 507 the English Court of Appeal awarded exemplary damages against a water authority that supplied consumers with water contaminated with aluminium sulphate on the basis that the contamination was a public nuisance.

The argument would be that as greenhouse gases contaminate the atmosphere, which in turn causes climate change, the emission of carbon dioxide has the potential to be viewed as a public nuisance. An action in public nuisance requires four elements:

  • a standing to sue;
  • an interference with a public right;
  • that any such interference be both substantial and unreasonable; and
  • that the nuisance have caused the loss or damage.

Not everyone can sue. The standing requirement means that a claimant (or claimants) must have a "special interest" in the litigation. Traditionally, courts are prepared to apply a more liberal test of standing for applicants for these types of actions, which has resulted in certain environmental organisations as being recognised as having a "special interest". Arguably, certain classes of claimant, such as those who reside on islands or coastal regions affected by rising sea levels, those affected by rising salinity, or those who can not develop land they own which close to sea level, could potentially demonstrate a "special interest" along with relevant action groups.

The requirement of causation presents a greater hurdle for plaintiffs. Climate change is as a result of multiple different causes which have differing impacts. How then is a loss to be attributed to any particular defendant or a class of defendants and by what amount? There is no mechanism under Australian law which would allow such an allocation.

In the United States, a market share theory of causation has been mooted as a possible solution but is yet to be successfully argued in an environmental action in the US. "Market share liability" holds that "a defendant's contribution to the aggregate risk of harm should approximate to the defendant's output". Consequently, damages are to be allocated proportionately based upon a defendant's market share.

For example, in Connecticut et al v American Power Company 406 F Supp 2d 265 (SDNY 2005), the defendants represented 25% of the carbon dioxide emissions from the power sector in the US and 10% of the carbon dioxide emissions of the world. The plaintiffs alleged that the defendants were contributing to the public nuisance of global warming, and applied for injunctive relief requiring abatement by capping carbon emission by a specific percent over 10 years. The District Court for the Southern District of New York dismissed the case for lack of jurisdiction, holding that it was not willing to make a pronouncement on issues that involved legislative discretion.

Public nuisance was also raised in Korinsky v Environmental Protection Agency 2005 WL 2414744 (SDNY 2005), where a New York resident sued, amongst others, the Environmental Protection Agency for contributing to global warming by failing to adequately regulate emissions. The plaintiff attempted to argue he had chronic sinus problems and had developed a mental illness through fear of global warming. On that occasion, the plaintiff failed to prove both that he had standing and that the Court had jurisdiction.

An action in nuisance also requires that any interference be unreasonable. This may also be a hurdle for plaintiffs for the same reasons that a product emitting gases damaging to the environment may not be defective.

Is a product which emits greenhouse gases defective?

In Australia, product liability claims may be brought against a manufacturer of products which are defective and which are not of merchantability quality and fit for purpose and if a defective product causes loss under Parts V Division 2A and VA of the Trade Practices Act 1974 (Cth) and in negligence.

In a greenhouse context, this would mean demonstrating that products which emit or cause to emit greenhouse gases or contribute to climate change, are sub-standard or defective.

The current law however does not regard a product as being defective simply because it has the capacity to cause harm. For instance pharmaceutical products may cause significant side effects in certain patients and items such as guns and knives may cause injury and even death when used in a certain manner, yet products with these characteristics would not necessarily be defective for the purposes of product liability law. By analogy, a car's greenhouse gas emissions, should not be viewed as defective, given that cars have inherently (at least until now) consumed fossil fuels.

Likelihood of success - insights from the case law

The Federal Court decision of Cook v Pasminco [2000] FCA 677 illustrates some of the challenges a climate change plaintiff would face. It concerned an action for damages for the harm caused by "noxious emissions" from a plant owned by the defendant. The plaintiffs submitted that the "noxious" emissions, which included lead and sulfur dioxide, had damaged their health, that the emissions were "goods" manufactured by Pasminco and because of their harmful nature were a defective. The Federal Court rejected the claim.

The recent California District Court case, People of the State of California v General Motors et al N0. 06-05755 (ND Cal 2006), also considered the issue of climate change harm. In this case, California brought an action against the six major car producers in the State (including General Motors) which it asserted was responsible for 20 percent of the anthropogenic greenhouse gas emissions in the United States and 30 percent of those in California. California claimed that these emissions were a public nuisance and sought billions of dollars in damages for the harm caused to the State as a result of climate change.

Again, the claim was dismissed. Judge Jenkins of the Northern District Court of California held that "the adjudication of the plaintiff's claim would require the Court to balance the competing interests of reducing global warming emissions and the interests of advancing and preserving economic and industrial development" and that the Court's entry "into the global warming ticket would require initial policy determination of the type reserved for the political branches of government".

The future

Given the problems above, it seems unlikely that a successful claim could be brought at present in respect of products emitting greenhouse gases. This position could change in the future, however, if a manufacturer chooses to keep using a high emission fuel source when a zero emission fuel source exists.

It should also be remembered that litigation is sometimes used as a political tool to effect change. Accordingly, the potential remains for such claims to be brought.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.