Oil & Gas News

Oil Industry Appeals Climate Lawsuits to Supreme Court

Oil, Climate Change, Energy

Oil and gas companies are escalating their efforts to block a series of high-profile lawsuits aimed at holding the industry accountable for billions of dollars in climate change-related costs. From California to Massachusetts, these lawsuits, filed by various states and municipalities, seek to impose substantial damages on the energy sector. The companies are now appealing to the U.S. Supreme Court, urging the justices to rule that climate change is a global issue that should be governed by federal law, rather than being subject to disparate state-by-state claims.

“The stakes could not be higher,” the companies stated in their appeal, which is scheduled for consideration by the court on Thursday. “Over two dozen cases have been filed by various states and municipalities across the country seeking to impose untold damages on energy companies… and attempting to assert control over the nation’s energy policies. This court should put a stop to it.”

Mineral RightsThese climate change lawsuits are modeled after the successful mass litigation brought against the tobacco industry over cigarettes and the pharmaceutical industry over opioids. In those cases, the industries legally sold their products, but were accused of conspiring to deceive the public about the dangers of their highly profitable goods. Similarly, the current suits allege that oil and gas companies have long misled the public about the environmental risks associated with fossil fuels.

Last September, California Governor Gavin Newsom and Attorney General Rob Bonta filed a lawsuit in San Francisco County Superior Court against five major oil and gas companies—Exxon Mobil, Shell, Chevron, ConocoPhillips, and BP—and the American Petroleum Institute. They accused these entities of engaging in a “decades-long campaign of deception” that has resulted in significant climate-related damage in California.

“For more than 50 years, Big Oil has been lying to us—covering up the fact that they’ve long known how dangerous the fossil fuels they produce are for our planet,” Newsom declared when announcing the lawsuit. Bonta added that these companies “have privately known the truth for decades—that the burning of fossil fuels leads to climate change—but have fed us lies and mistruths to further their record-breaking profits at the expense of our environment. It is time they pay to abate the harm they have caused.”

Under state law, plaintiffs can seek damages for broad and open-ended claims such as failure to warn of a danger, false advertising, or creating a public nuisance. All three claims are central to California’s lawsuit. In contrast, federal law typically limits damage claims to those arising from federal statutes.

City and state officials pursuing these cases aim to keep them in state courts, while industry lawyers have persistently tried—without success thus far—to move them to federal courts. Over the past four years, the Supreme Court has declined procedural appeals from the energy industry seeking to shift these cases to federal jurisdiction.

This week, however, the industry’s lawyers are asking the justices to address the broader issue affecting all these cases: whether federal law and the Clean Air Act preempt states and their courts from penalizing the oil industry for the damage caused by greenhouse gases.

“This is the end game for the oil companies,” said Pat Parenteau, an environmental law expert at Vermont Law School. “They want to get this in front of the conservative Supreme Court. It’s an attempt to knock out all of these cases.”

Los Angeles lawyer Theodore J. Boutrous Jr., representing Chevron, argued that the lawsuits are based on an “outlandish” legal theory rooted in false advertising claims, rather than the actual greenhouse gas emissions. “It is extremely important for the Supreme Court to grant review now,” he said. “Global climate change requires a coordinated international policy response, not the unleashing of dozens of baseless local lawsuits that could wreak havoc on federal energy policy and go on for years, even if they are ultimately doomed to failure.”

If the court agrees to hear the cases, such as Sunoco vs. City of Honolulu and Shell vs. Honolulu, it would be a significant win for the energy industry and likely indicate that the justices intend to block the climate change lawsuits. The Supreme Court would hear arguments in the fall.

Conversely, if the appeals are rejected, it would likely encourage even more cities and states to file their own claims and seek billions in damages from fossil fuel companies.

The case currently under appeal began four years ago when the city and county of Honolulu sued Sunoco and 14 other major oil and gas producers, alleging a failure to warn and creating a public nuisance. Last year, the Hawaii Supreme Court refused to dismiss the case.

“Simply put, the plaintiffs say the issue is whether defendants misled the public about fossil fuels’ dangers and environmental impact. We agree,” the state court said in a unanimous opinion. “This suit does not seek to regulate emissions and does not seek damages for interstate emissions. Rather, plaintiffs’ complaint clearly seeks to challenge the promotion and sale of fossil-fuel products without warning and abetted by a sophisticated disinformation campaign.”

The issue has created a divide between red and blue states. At an early stage of the Sunoco case, California, along with 12 other Democratic-leaning states, urged the U.S. 9th Circuit Court of Appeals to keep the suit in Hawaii state court. They argued that the case was about protecting consumers from “deceptive conduct,” an area traditionally regulated by the states.

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When the case reached the U.S. Supreme Court, Alabama and 19 other Republican-led states filed a friend-of-the-court brief supporting the oil companies. They contended that Hawaii and its courts do not have “power to enact disastrous global energy policies via state tort law… and imperil access to affordable energy.”

Separately, Alabama filed an unusual motion in May asking the Supreme Court to allow an “original” claim to raise the same issue. Typically, original claims arise from state disputes over boundaries or river water. Legal experts doubt the court will grant such a claim.

Lawyers for Honolulu have urged the court to stand aside for now and wait, likely for several years, until there is a final verdict in its lawsuit.

The justices could announce by mid-June whether they will take up the climate change cases.

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