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Opinion

Should we consider fossil fuel extraction an unjust enterprise?

Image: Louisiana oil canals causing marsh break-up. Flight courtesy of SouthWings and Healthy Gulf.

This article is part of our Rethinking Corporate Governance blog series

In 2018 we were told that the world had twelve years to cap average global temperature rise to avoid catastrophic climate change. Welcome to year ten. According to the Climate Vulnerability Monitor, government “inaction” on transitioning the global carbon economy is already causing approximately 5 million annual deaths, largely in developing nations.[1]

Yet corporations are constructing and governments are deregulating a rash of new plants, pipelines, and offshore oil ports to feed a fracking boom. This new infrastructure incentivizes emissions that outspend our carbon budget.[2] What the Monitor conservatively calls “inaction” is in fact willful, premeditated action that could rise to the level of crimes against humanity and ecocide.

We must curb this reckless conduct and hold governments and corporations accountable. It is not enough to tweak decision-making rules in corporate governance in an effort to mitigate harm by the extractive industry. Fossil fuel companies ought to be liquidated, and their assets returned to victimized communities as reparations. Since it is unlikely that their governors would agree, the catalyst must come from the legal and civic spheres.

Over one thousand climate lawsuits have been filed in the United States. Mostly seeking damages for tort injury,[3] the suits put a price on incalculable violence. This incalculability is a crucial concept. The mounting losses––cultures and ecologies annihilated, communities dispossessed, futures erased––are irreducible to monetary value.

The most-impacted “developing” nations are former colonies of the industrialized world––the extractive zones from whence wealth, people, and life were stripped and sacrificed to enable “development”. Climatic and environmental instability are directly connected to global wealth inequality.

My work is grounded in the US state of Louisiana––a sacrifice zone in the Global North. Once host to the largest slave market in North America, today Louisiana is home to the nation’s second-highest African American population[4] and is ranked 49th of the 50 states in economy, 50th in opportunity, and 50th in environmental quality.

Fossil fuel companies have dredged 10,000 miles of canals through 15,000 square miles of wetlands to drill over 75,000 wells. These canals kill the vegetation that holds sediment together as land.[5] Since 1930, 1,900 square miles have disintegrated at an average rate of one football field every hour. By 2050, an additional thousand square miles will disappear, leaving coastal communities more vulnerable to the rising seas and destructive hurricanes of the Gulf.

Louisiana’s frontline communities are also victims of the highest levels of air toxicity in the country, a byproduct of the over two hundred petrochemical plants and refineries that occupy the footprints of former slave plantations lining the Mississippi River. This Petrochemical Corridor, known locally as “Cancer Alley”, suffers the highest rates of cancer in the US.

This month, the state approved permits for a 3.7 square-mile plastics facility, which could release 13 million tons of greenhouse gases along with thousands of tons of known carcinogens each year. State support for the project comes on the basis of “job creation and tax revenue”, ignoring the impact on human health, the precipitous downward spiral on emissions targets, and the discovery of burial grounds of enslaved Africans onsite.

The legal doctrine of unjust enrichment, which appears and is hotly debated in both common and civil law, is based on the equitable principle that profits made through activities that impoverish another party are unjust and must be recovered. Eschewing the contradictions of traditional damage claims, unjust enrichment restitutes profit instead of quantifying violence. If fossil fuel production inherently impoverishes communities and ecosystems, might we use this doctrine to classify it as an unjust enterprise?

Let’s consider the conditions:

1. There must be an enrichment

How much wealth have individual companies extracted from Louisiana? Comparing monthly data on oil production with historic oil prices over a twenty-year period, I found that a sample of just 250 wells owned by one company produced oil valued at $27 billion.[6]

2. There must be an impoverishment

Louisiana has been impoverished at each stage of the fossil fuel production cycle, from extraction through climate change. The state’s (highly problematic) Master Plan[7] to “rebuild” ravished wetlands will cost at least[8] $50 billion. No one has aggregated the costs of medical expenses, insurance, flooding, relocation, rebuilding, and adaptation. The impoverishment of Louisiana’s life, culture, and ecology is incalculable.

3. There must be a tie between the enrichment and the impoverishment

A 1989 industry report[9] acknowledged the direct link between oil canal construction and wetland erosion. Corporations have known for decades that fossil fuel production would lead to catastrophic and costly climate change.

Over the next year, I will work with lawyers, community activists, and environmentalists to determine the viability of the final two conditions:

4. There must be no other legal recourse and 5. There must be an absence of justification[10]

This final condition raises the decisive legal and moral determination: Was it worth it?

Condemning oil extraction as “unjust” could return corporate profit to communities, disincentivize extraction, delegitimize the financialization of ecosystems, and fund a just transition. The remedy might be radical in the denotative sense of getting to the root, but it is certainly far less extreme than extraction.

 

 


[1] 400,000 deaths due to climate change-related hunger and disease; 4.5 million deaths due to the carbon economy, including air pollution, hazardous occupations, and cancer. This number will increase to 6 million carbon economy related deaths in 2030, 700,000 of which are due to climate change. See: Fundación DARA and theClimate Vulnerable Forum, Climate Vulnerability Monitor: A Guide to the Cold Calculus of a Hot Planet, 2nd Edition, 2012.

[2] Mazer, Katie et al. “Mapping a Many-Headed Hydra: The Struggle over the Dakota Access Pipeline.” Infrastructure Otherwise.

[3] United Nations Environment Programme, The Status of Climate Litigation: A Global Review, May 2017.

[4] Second to Mississippi.

[5]  See e.g. Davis, Donald Wayne. “Louisiana Canals and Their Influence on Wetland Development.” LSU Historical Dissertations and Theses. 2386. Baton Rouge: Louisiana State University, 1973. http://digitalcommons.lsu.edu/gradschool_disstheses/2386; Houck, Oliver A. “The Reckoning: Oil and Gas Development in the Louisiana Coastal Zone.” Tulane Environmental Law Journal 28, issue 2 (summer 2015); and James G. Gosselink, The Ecology of Delta Marshes of Coastal Louisiana: A Community Profile (US Fish and Wildlife Service, FWS/OBS-84/09, 1984).

[6] By comparing data from the Louisiana Department of Natural Resources’ Strategic Online Natural Resources Information System (SONRIS) on the monthly oil production of one company between 1977 and 1998 (the years when data was available) from a sample of 250 of their wells with an historic chart of monthly oil prices adjusted for inflation, I have estimated the extraction of oil valued at $27,120,955,021.24.

[7] See: “Louisiana’s Comprehensive Master Plan for a Sustainable Coast,” State of Louisiana: Hon. John Bel Edwards, Governor, Draft Plan Release, 2017. ES-18.

[8]  Some estimates are as much as $100-200 billion.

[9] See: Boesch, Donald F. and Rabelais, Nancy. Environmental Impact of Produced Water Discharges in Coastal Louisiana. Report Prepared for the Louisiana Division of the Mid-Continental Oil and Gas Association. July 1989. Scientists estimate that backfilling canals would reverse wetland degradation at a cost of $335 million. But acknowledging backfilling as the solution would mean admitting that canals are the problem, so nothing has been done.

[10] A gift, for example, is a justified enrichment. See: L. Smith, "Unjust Enrichment", in A. Popovici and L. Smith, eds., McGill Companion to Law, online athttps://mcgill.ca/companion/list/unjust-enrichment