Supreme Court unlocks climate cases by rejecting oil industry bid

April 25, 2023

Originally published by E&E News. Written by Lesley Clark.

The Supreme Court’s decision to reject a batch of climate liability petitions from oil companies paves the way for a flood of lawsuits against the industry to be heard in state courts from Maryland to Hawaii.

The high court on Monday turned down five requests from the oil industry to intervene in cases brought by a dozen municipalities. The decision involves a narrow slice of law — whether climate lawsuits against the fossil fuel industry should be heard by state or federal judges — but the outcome could be sweeping.

The move stands to accelerate nearly two dozen climate lawsuits filed by states and municipalities that have been stalled for years by oil industry efforts to move the cases from state to federal court, where the companies believe they have a better chance to win. The lawsuits ask for compensation to help pay for local responses to the effects of climate change.

“The high court’s decision is a major victory for communities across the country that are fighting to hold Big Oil accountable and make them pay for the climate damages they knowingly caused,” said Richard Wiles, president of the Center for Climate Integrity, which backs the cases. “Now it’s time for these polluters to face the evidence of their deception in court.”

The industry had argued that the cases carry “potentially enormous consequences for an entire sector of the global economy.”

Phil Goldberg, special counsel for the Manufacturers’ Accountability Project, an initiative of the National Association of Manufacturers that opposes the climate liability lawsuits, said the Supreme Court’s decision not to hear the cases “risks the creation of a patchwork of state court approaches to important public policy matters that are inherently federal and global in nature.”

But he argued that “even under state law, selling Americans the energy they need and use every day is not a liability inducing event.”

Goldberg predicted that when the courts get to the substance of the claims, “it will be evident that this litigation has no legal or factual foundation.“

Nearly two dozen local governments from Hawaii to Delaware have filed climate liability lawsuits, seeking compensation for the costs of responding to eroding coasts, raging wildfires and other effects of a warming planet. They accuse the industry of knowing about the dangers of climate change for decades, but deceiving consumers.

The lawsuits — which take a page from tobacco litigation and could ultimately cost Exxon Mobil Corp., BP PLC and other companies hundreds of billions of dollars — have largely been stymied by the industry’s efforts to move the cases.

Trial could be ‘years away’

The Supreme Court decision Monday could persuade other communities to file similar litigation, said Korey Silverman-Roati, a climate law fellow at the Sabin Center for Climate Change Law at Columbia Law School.

He noted that because of the high court’s order, 11 cases will be sent to state court, where new motions will likely be filed to dismiss, to begin discovery or go to trial. The decision will also help challengers in 12 other cases argue that their lawsuits against fossil fuel companies should be heard in state court, rather than federal court, he said.

“If the cases move towards discovery and trial, the governments would aim to gather more evidence that fossil fuel companies knew that their products would cause climate disasters, deceptively marketed them as safe, and as a result, communities have been on the hook for billions in repairs,” Silverman-Roati said.

More immediately, the Supreme Court will hear a sixth request by the industry to move the lawsuits to federal courts on May 11, but it will likely reject the petition, said ClearView Energy Partners LLC, a Washington-based research firm.

The high court’s decision Monday came after six federal appeals courts rejected the industry’s arguments that the lawsuits belong in federal court.

The reviews by the appeals courts came after the oil industry secured a preliminary win in 2021 from the Supreme Court, which ordered federal appellate judges to consider a broad set of arguments against state jurisdiction. Following that ruling, however, federal appeals courts sent the cases back to state judges.

Monday’s high court decision also finds that the Clean Air Act does not completely bar state law claims regarding interstate pollution, ClearView noted, adding “therefore, these cases can and should be adjudicated by state courts.” The industry wagered that the state lawsuits might be quashed by the Clean Air Act, which federal agencies have used to address carbon emissions.

The research firm noted that the state court process can take a year or more and any decision on the actual merits of the cases “could still be years away.”

It also said that allowing the cases to play out in state court does not prevent the energy companies from winning on the merits — by arguing that federal law bars the cases. Nor does it prevent federal review of future state court rulings.

“The Supreme Court may still yet be the final word on the merits of the climate liability cases — several years from now,” ClearView wrote.

Minor decision or important milestone?

The court’s latest decision came a month after the Biden administration — at the court’s request — weighed in on the venue dispute by urging the justices to forgo a review.

That may have played a factor in the court’s decision-making, said Karen Sokol, a Loyola University law professor.

“After asking for the [Solicitor General’s] brief and then getting such a powerful argument for why there is no basis for federal jurisdiction, one would be hard-pressed to justify” taking up the case, Sokol said, noting that Justice Brett Kavanaugh, though, “apparently thought otherwise.”

In a note, the court said that Kavanaugh would have granted the petition in the Colorado case before it, Suncor Energy Inc. v. Board of County Commissioners of Boulder County.

Mona Dajani, global head of renewables, energy and infrastructure at Shearman & Sterling LLP, cautioned that the court’s decision should not be overstated.

“It’s being perceived as a significant victory for climate justice and those who believe they have been harmed by climate change, but at the end of the day it’s a narrow, procedural decision that will now be decided in state court,” said Dajani.

She noted that the decision is rooted in the doctrine of removal, which allows defendants to remove a civil lawsuit from state to federal court, but only under limited circumstances.

Donald Kochan, a professor and deputy executive director of the Law & Economics Center at George Mason University’s Antonin Scalia Law School, said the denial should not be read as “signaling anything about the merits” of the cases.

The court’s refusal to take up the case may only have signaled “that the court likely does not see climate change cases as special in the context of the very rigid rules about removal,” he said.

But Rhode Island Attorney General Peter Neronha (D), whose state was the first to file a climate damage and deception lawsuit nearly five years ago, said the ruling “marks an important milestone” in the state’s efforts.

“After decades of climate change deception by the fossil fuel defendants, and now nearly half a decade of delay tactics in our lawsuit to hold them accountable for it, our residents, workers, businesses and taxpayers are ready for their day in court,” he said. “Now that the Supreme Court has affirmed the decisions of dozens of federal judges across the country, it is time to prepare for trial.”