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Coal and Tobacco Companies Could Have More in Common Than We Think

By Sara Murphy - Mar 9, 2014 at 10:00AM

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What the history of tobacco and asbestos litigation might reveal about coal’s prospects.

Chevron's ( CVX 0.45% ) legal victory this week over its gross misconduct in Ecuador may have undermined attempts to hold fossil-fuel companies accountable for the damage they do, but coal is still likely following in the familiar footsteps of tobacco and asbestos. Indeed, the lawsuit the Sierra Club filed this week against Ameren ( AEE 0.30% ) stands a good chance of holding up in court. As scientific evidence amasses of the harm people suffer from pollution and greenhouse gas emissions, successful litigation will surely follow.

Just a matter of time ...
So far, legal challenges based on the harmful effects of dirty coal specifically and carbon emissions more broadly have not enjoyed much success. In Kivalina v. ExxonMobil ( XOM 0.29% ), an Alaskan village tried unsuccessfully to hold coal companies (including Chevron) to account for the profound damage the village had suffered as a result of climate change.

The plaintiffs also contended that the companies had deliberately suppressed scientific evidence of the negative effects of their products and practices. Sounds like a page from the Big Tobacco playbook, no? Nevertheless, the courts dismissed the case for reasons that didn't address whether it was legitimate to link that harm back to ExxonMobil and Chevron.

In Chevron's ongoing Ecuadorian saga, all parties basically accepted the fact that the company had trashed the Amazon and ruined life for tons of villagers there. The judge found in Chevron's favor based on legal factors that were completely independent.

Be that as it may, we have to remember that Big Tobacco was successful at fighting off lawsuits at first too, even as the tide was turning against cigarettes. When consumers started backing off of cigarettes as their deadliness became plain, and as legislation finally appeared in the face of overwhelming scientific evidence, Big Tobacco bolted for unregulated overseas markets. Big Carbon is doing the same thing now.

The thing is, when you peddle a product that's hurting people, you can't run away forever. The lawsuit against Ameren is the Sierra Club's response to the company's persistent pollution beyond Clean Air Act limits. The type of pollution from Ameren's coal plants, known as particulate matter, can lead to cancer and premature death. No matter how the case goes, it's sure to be just one of many more to come.

Watch the following video below to hear more about coal's uncomfortable similarity to tobacco, and what it could mean.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$62.45 (0.29%) $0.18
Chevron Corporation Stock Quote
Chevron Corporation
CVX
$118.45 (0.45%) $0.53
Ameren Corporation Stock Quote
Ameren Corporation
AEE
$86.79 (0.30%) $0.26

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