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INSIGHT: State Courts Are a Proper Climate Change Battleground

June 12, 2020, 8:01 AM

The Ninth Circuit Court of Appeals ruled May 26 that billion-dollar lawsuits brought by several California cities and counties against multiple energy companies for their purported roles in global warming can proceed in state court.

In County of San Mateo v. Chevron Corp., San Mateo and Marin counties and the city of Imperial Beach sued 30 energy companies alleging that their “extraction, refining, and/or formulation of fossil fuel products … is a substantial factor in causing the increase in global mean temperature and consequent increase in global mean sea surface height.” The lawsuits claim public and private nuisance, strict liability for failure to warn, strict liability for design defect, negligence, negligent failure to warn, and trespass.

In City of Oakland v, BP PLC, the city and county of San Francisco sued five energy companies asserting similar claims to the San Mateo County. Specifically, the suit contends that the energy companies’ production of fossil fuels caused or contributed to global warming, induced sea level rise that led to coastal flooding of low-lying shorelines, and increased shoreline erosion and interference with stormwater infrastructure.

The Ninth Circuit Weighs in

On appeal in the City of Oakland, the Ninth Circuit first considered whether the district court erred in denying the municipalities’ motions to remand based on its determination that it had federal-question jurisdiction under 28 U.S.C. § 1331. The Ninth Circuit held that the district court did not have jurisdiction because the California state law-based public-nuisance claim did not raise a substantial federal question.

The court reasoned that adjudication of the public-nuisance claim did not require interpretation of a federal statute or challenge the constitutionality of a federal statute. The court also held that the Clean Air Act did not completely preempt the state law public-nuisance claim.

Because the nuisance claim did not raise a substantial federal question and the claim was not preempted by the Clean Air Act, the Ninth Circuit held that the district court erred on those issues in holding that it had jurisdiction under at the time of removal.

In the City of San Mateo, the Ninth Circuit reviewed the district court’s order remanding the complaints back to state court. Specifically, the Ninth Circuit analyzed whether the energy companies had shown that the underlying conduct in the municipalities’ lawsuit was the product of the energy companies’ close relationship with the federal government. The energy companies attempted to meet their burden based on three agreements with the federal government.

The Ninth Circuit held that these agreements evidenced arm’s-length transactions between the energy companies and the federal government rather than conduct so closely related to the government’s implementation of federal law that the energy companies would face a significant risk of state-court prejudice. The panel, therefore, affirmed the district court’s ruling that the district court lacked subject-matter jurisdiction under 28 U.S.C. § 1442(a)(1).

What This Means

At least for now, the May 26 decisions give municipalities and other litigants hope that they can litigate climate change claims in state court. These municipalities feel much better having a perceived home-field advantage with state court judges applying state court laws, with judicial forums that may be more sympathetic to establishing remedies for climate related impacts.

For example, Judge William Alsup, the district judge presiding over the city of Oakland cases, before dismissing the municipalities’ claims expressed concern over the breadth of liability asserted in the lawsuits and the notion of holding energy companies across the globe liable for the effects of global warming.

The decisions also make less likely a circuit split regarding the scope of review of remand orders. Energy companies have recently appealed to the U.S. Supreme Court a Fourth Circuit Court of Appeals decision. The decision for which the energy companies are seeking Supreme Court review is congruent with the Ninth Circuit’s City of San Mateo decision on federal officer removal.

Further, the Tenth Circuit is currently reviewing the order to remand to state court the city of Boulder, Colorado’s, climate change-based tort lawsuit against certain energy companies. At oral argument, the Tenth Circuit panel expressed doubt regarding whether it could review the remand order for any issue other than the federal officer removal doctrine.

Finally, the energy companies now face the daunting task of facing climate change suits in various state courts that apply varying tort laws and that have varying procedures. On the other hand, the municipalities and other potential plaintiffs in these climate change suits have dodged the obstacles that have beset climate change litigation at the federal level, including preemption of claims by federal statutes, whether plaintiffs have standing and whether the impacts of climate change are more of a political issue better addressed through legislation and not through litigation.

The bottom line is that at a time when the fossil fuel energy industry is facing huge obstacles due to the Covid-19 pandemic, business just got a lot riskier.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Tim McMahan chairs Stoel Rives LLP’s Climate Change Initiative and is a partner in the firm’s Environment, Land Use and Natural Resources practice group. His practice focuses on the areas of energy facility permitting, land use, environmental and municipal law.

Jose Abarca is an associate in Stoel Rives LLP’s Litigation group. Abarca’s practice focuses on energy, infrastructure, and natural resources, resolving disputes involving engineering, procurement, master services, purchasing, development, and construction agreements.