Welcome
Environment & Energy Report

Big Oil Loses Bid to Move California Climate Court Fight (2)

May 26, 2020, 4:25 PMUpdated: May 26, 2020, 9:44 PM

California cities and counties cleared an important hurdle in their legal fight to get major oil companies including BP Plc, Exxon Mobil Corp., and Chevron Corp. to pay tens of billions of dollars to deal with the effects of climate change.

The U.S. Court of Appeals for the Ninth Circuit said Tuesday that San Francisco, Oakland, San Mateo County, and other jurisdictions can pursue their lawsuits in state court rather than in a federal venue thought to be more favorable to the energy industry.

The decision doesn’t guarantee the local governments will ultimately prevail, but it paves the way for a full airing of their arguments in state court.

The cities and counties “live another day to put forth their claims and argue their case,” said Hana Vizcarra, a staff attorney at Harvard Law School’s Environmental and Energy Law Program.

The suits seek to reimburse taxpayers for costs associated with adapting to impacts such as rising sea levels—from building multibillion-dollar sea walls and repairing damage from powerful storms to—perhaps soon—moving whole communities inland.

Lawyers for the cities and counties have long argued that such local infrastructure damage raises classic local-level concerns that belong in state court. Industry lawyers, supported by the Trump administration, have countered that climate change is a global issue, pushing the litigation to a federal jurisdiction.

“We hold that the state-law claim for public nuisance does not arise under federal law,” Judge Sandra S. Ikuta wrote for a three-judge panel on Tuesday, reviving a case from San Francisco and Oakland.

The George W. Bush appointee also penned a related ruling Tuesday that rejected oil companies’ bid to jettison a separate set of climate cases from state to federal court.

More Claims?

The ruling could spur more such claims and influence whether cases in other states are decided under local nuisance statutes, rather than under federal laws cited by courts that threw out similar complaints.

“Venue is really important to the cities” because it allows them to “get to the point of arguing the merits of their case,” Vizcarra said before the ruling. But there’s still “another round of consideration” at the federal district court before the case fully moves forward in state court, she later said.

And cities and counties face an uphill climb on the climate change-linked claims at the heart of the dispute, something state courts haven’t yet grappled with, she said.

Similar disputes over court venues have dominated climate liability cases playing out in Colorado, Maryland, New York, Rhode Island, and Hawaii.

“We’re pleased that we can proceed with this case to protect our residents, workers, and businesses from the costs and damage these fossil fuel companies knowingly imposed on our communities,” San Francisco City Attorney Dennis Herrera said in a statement.

The coalition of local governments involved in the San Mateo case issued a joint statement saying they’re looking forward to proceeding in state court, “where the Californians we represent will have a chance to present the facts about what the defendants knew about the climate change-related dangers their fossil fuel products pose.”

But Chevron spokesman Sean Comey said the lawsuits aim to penalize reliable and “ever cleaner” energy.

“They present substantial issues of national law and policy which makes them inappropriate for state law,” he said in an email. “In whichever forum the cases are ultimately determined, these factually and legally unsupported claims do nothing to sensibly address the significant national economic, legal, and policy issues presented by climate change.”

Reconciling Competing Opinions

Industry groups could push the issue to the Supreme Court, where they’re already seeking review of another appellate decision that allowed a climate case from Baltimore to proceed in state court.

The rulings reconcile competing opinions issued by two federal judges in cases several municipalities filed in 2017.

The appeals court overturned a decision from U.S. District Judge William Alsup, who sided with the industry and dismissed cases brought by San Francisco and Oakland. Tuesday’s ruling sent the case back to federal district court for further proceedings.

The panel affirmed a ruling by U.S. District Judge Vince Chhabria, who permitted cases by San Mateo County, Marin County, Imperial Beach, and others to proceed in state court.

“We conclude that the defendants did not carry their burden of establishing this criteria for removal,” the court wrote in the San Mateo decision. “Because we lack jurisdiction to review other aspects of the remand order, we dismiss the remainder of the appeal.”

Narrow Question

Ama R. Francis, a fellow at the Sabin Center for Climate Change Law at Columbia University, said the Ninth Circuit rightly confined its review to a narrow legal question in the San Mateo case: whether the litigation triggered federal court jurisdiction by involving federal government officers.

Industry lawyers had encouraged the court to consider a host of other grounds for placing the case in federal court.

“The Ninth Circuit San Mateo decision protects the critical balance of power between state and federal courts,” said Francis, who co-authored a friend-of-the-court brief supporting the local governments. “This case raises standard state law claims, and belongs in state court.”

‘Abundantly Clear’

Industry advocates, meanwhile, criticized the court’s analysis.

“It makes no sense to spend years of judicial resources on these procedural rulings when it is abundantly clear that this is a policy issue for executive or legislative bodies, not courts,” said Phil Goldberg, special counsel for the Manufacturers’ Accountability Project, an industry advocacy group.

“In fact,” he said, “today’s ruling underscores why the U.S. Supreme Court should hear the climate tort cases now and resolve them once and for all.”

The U.S. Court of Appeals for the Fourth Circuit recently allowed Baltimore to litigate a similar case in state court. Industry attorneys have asked the Supreme Court to reverse that decision.

The cases are Cty. of Oakland v. BP Plc, 9th Cir., No. 18-16663, 5/26/20 and Cty. of San Mateo v. Chevron Corp., 9th Cir., No. 18-15499, 5/26/20.

(Updates with additional reporting throughout.)

To contact the reporter on this story: Ellen M. Gilmer (Bloomberg Law) in Washington at egilmer@bloombergindustry.com and Malathi Nayak (Bloomberg News) in San Francisco at mnayak21@bloomberg.net

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergenvironment.com

To read more articles log in. To learn more about a subscription click here.