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Environment & Energy Report

Booming Climate Litigation Movement Faces Supreme Court Test

Jan. 14, 2021, 11:00 AM

Baltimore officials had natural disasters on their minds in 2018 when they filed an ambitious climate lawsuit that’s now reached the U.S. Supreme Court.

That spring, the city and neighboring areas were still recovering from flash floods that turned some local streets into rivers and tore up buildings in their path. The destruction came just two years after another storm inundated the region.

Linking the deluges and other extreme weather to climate change, Baltimore is waging a legal war to put oil and gas companies on the hook for the local impacts of burning fossil fuels. The city’s lawsuit accuses the industry of misleading the public about their products’ leading role in warming the planet.

“Baltimore originally filed this lawsuit because we are suffering the costs and consequences of the fossil fuel defendants’ deception campaign targeted at our community,” Baltimore Acting Solicitor Dana P. Moore said.

Beyond disputing the underlying arguments, industry lawyers say the issue belongs in federal court, not the Maryland state court where it was filed. They’ve taken the case on a series of detours to argue their point. Federal courts are seen as more favorable to industry’s arguments.

Made with Flourish

Now the Supreme Court must resolve a procedural question that will set the course for Baltimore’s claims and similar climate litigation that has proliferated across the country.

The Trump administration will argue alongside the oil and gas industry during the Jan. 19 oral arguments, a day before President-elect Joe Biden’s inauguration. Biden hasn’t commented on the case but has expressed general support for climate litigation.

‘Boring’ But Consequential

The question before the justices in BP Plc v. Mayor & City Council of Baltimore isn’t really about climate change. It’s about how federal appellate judges review certain clashes over whether cases belong in state or federal court.

In other words, it’s “completely boring,” said Loyola University professor Karen Sokol, who tracks climate litigation. But how the justices resolve the issue is important, she said, because it’ll determine whether industry defendants get another chance to steer Baltimore’s case from state to federal court.

The venue is critical because judges in federal courts are generally less receptive to “expansive” legal theories like Baltimore’s climate liability claims, George Mason University’s Donald Kochan said. Federal courts are a safer bet for industry defendants.

“Developing national energy policy is a legislative and regulatory matter and should not be driven by a number of state court judges across the country based only on a narrow set of allegations,” said Phil Goldberg, who filed an amicus brief in the case as special counsel for the industry-aligned Manufacturers’ Accountability Project. A spokesman for Chevron Corp. made a similar statement ahead of Supreme Court arguments, saying the case involves “uniquely federal interests.”

A Supreme Court win for BP Plc, Exxon Mobil Corp., Shell Oil Co., and others, depending on the breadth of a ruling, could ultimately hamstring the city’s claims in lower court. At a minimum, it would create further delay for the pioneering climate case.

‘Significant Funds’

A victory for Baltimore, meanwhile, would put the litigation back on track—pending the outcome in an unrelated Supreme Court fight—and could prompt other cities and states to join the rapidly growing movement to hold fossil fuel producers liable for allegedly misleading the public about climate change.

The litigation would still face a steep climb, even if plaintiffs got their pick of venue. The oil and gas industry has an arsenal of counterarguments on the merits of the liability claims. “There is a battle yet to be had in the state courts,” Kochan said.

But for environmental justice attorney Taylor Lilley, who has worked with Baltimore flooding victims, the potential for the city to one day win damages from industry is worth the effort.

“Like many issues surrounding climate change, increased availability of funding and access to funds means a lot for what cities are able to do,” said Lilley, a lawyer for the Chesapeake Bay Foundation, which filed an amicus brief supporting Baltimore at the Supreme Court.

Baltimore’s original complaint notes that it has already spent “significant funds to study, mitigate, and adapt to the effects of global warming.”

Procedural Tug of War

When Baltimore filed its lawsuit in state court in 2018, industry lawyers quickly employed a common legal maneuver to shift it to federal court.

They argued, among other things, that the lawsuit triggered “federal officer jurisdiction,” the rule that says cases involving U.S. officials usually belong in federal court. They argued that because the federal government directed some of the defendants’ oil and gas production, the litigation should go to federal court.

A federal district judge wasn’t swayed by any of the industry’s arguments and remanded the lawsuit to state court. Remand orders usually can’t be appealed—but there’s an exception when the federal officer argument is in play. Industry lawyers used that exception to challenge the district court’s order at the U.S. Court of Appeals for the Fourth Circuit.

The appeal failed. The Fourth Circuit determined it had to limit its review to the federal officer question—and not look at the industry’s other arguments for federal jurisdiction—because that’s the only issue that gave the companies the right to file an appeal in the first place.

Other circuit courts have reached the same conclusion in similar climate cases. But the industry defendants say the federal removal statute requires the courts to take a broader approach and consider all arguments for federal jurisdiction. That’s the narrow disagreement the Supreme Court has agreed to resolve.

Supreme Court Recusals?

The exact composition of the court for argument day is unclear. Justice Samuel Alito hasn’t participated in any orders related to the case; previous financial disclosures show personal investments in energy companies involved in the case.

Some advocates have called on Justice Amy Coney Barrett to recuse from the case due to family connections to Shell Oil and previous recusals from Shell-related cases while she was an appellate judge.

In the end, the technical nature of the case and its implications beyond the climate context mean it’s less likely to split the justices “on what’s sometimes perceived as ideological lines,” Kochan said.

A Broader Ruling?

The oil and gas companies in the case have pushed for a ruling that resolves the wonky “federal officer” issue in their favor and goes a step further by declaring that Baltimore’s claims involve interstate air pollution and therefore arise exclusively under federal law.

Such a decision from the Supreme Court could be a powerful tool for the industry; legal precedent says the Clean Air Act displaces federal common law claims related to greenhouse gases. Baltimore has maintained that its lawsuit focuses not on emissions, but on traditional state-level issues, including public nuisance. The city’s lawyers have accused its opponents of trying to shoehorn a broader issue onto the court’s docket.

But many outside lawyers don’t expect the Supreme Court to take the industry’s invitation. George Mason’s Kochan said the justices will likely leave those additional issues for the circuit court to resolve.

Jenner & Block attorney Gabrielle Sigel, who follows climate cases, agreed. “It’s most likely that the court will focus on the interpretation of the removal statute and scope, which has ramifications beyond climate change litigation,” she said.

Industry lawyers have maintained in briefs that the high court should “preserve judicial resources” by clarifying that Baltimore’s “extraordinary” claims have no place in state court.

‘Deciding Factor’

Other cities and states across the country are watching the Baltimore case closely to see how it will affect their own climate litigation.

Rhode Island and local governments in California and Colorado—many of which are represented by the same law firm, Sher Edling LLP— filed similar climate liability cases in 2017 and 2018 that have bounced between state and federal courts. With recent Supreme Court petitions filed, those cases are poised to have procedural issues resolved according to the Baltimore outcome.

“The fact that this is the case that will be a deciding factor for some of the other cases that are still wrestling with these issues is certainly a little nerve-wracking,” said Chesapeake Bay Foundation attorney Brittany Wright, who worked on the group’s amicus brief in the Baltimore case.

Nearly a dozen more climate-related cases against the oil and gas industry are pending from other state and local governments, including Minnesota, Charleston, S.C., and Washington, D.C.—featuring a variety of legal theories.

Lilley, CBF’s environmental justice lawyer, said she is hopeful about both the Supreme Court outcome, and the ability of Baltimore’s case to send a broader message.

“These companies and the idea of climate change, in general, can seem insurmountable, like they can’t be faced,” Lilley said. “To the extent that awareness is raised about this case and that it continues, I think it’s important for people to know that there is something to be done.”

The case is BP Plc v. Mayor & City Council of Baltimore, U.S., No. 19-1644.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editor responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com

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