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Judges Grapple with ‘Radical’ Federal Expansion in Climate Cases

June 21, 2022, 6:53 PM

An East Coast circuit panel on Tuesday wrestled with issues of federal preemption, jurisdiction, and more as it heard arguments in consolidated climate change cases out of Delaware and New Jersey.

Judges from the U.S. Court of Appeals for the Third Circuit were the latest appellate adjudicators to hear arguments in two climate change cases looking to hold oil and gas companies such as Chevron Corp. and Royal Dutch Shell PLC accountable for an alleged overconsumption of fossil fuels.

The case is an appeal of a lower court decision to toss the cases back to state courts, where they could be on track for potentially explosive trials against oil and gas companies.

The panel questioned attorneys for the industry respondents and U.S. petitioners, probing the arguments over whether the cases are about emissions or deception.

One judge wondered whether the nature of the cases—which petitioners across the U.S. claim are rooted in oil company deception about fossil fuel impacts—could be separated from emissions. Misrepresentation is a part of it, but the combustion of fossil fuels is also one of the things petitioners are complaining about, the judge said.

Vic Sher of Sher Edling LLP, who represents Delaware, said that wasn’t a fair read of the complaint, which centers more than 50 pages on laying out a “sophisticated campaign of deception” on the part of the oil industry. They must mention emissions to prove the bad conduct made a harmful impact, he said.

Companies “control all the means of production and all the information, and it’s because of that knowledge and their failure to warn in the affirmative steps—that’s what contributed to the creation of the nuisance,” Sher told the panel.

‘Massive Expansion’

The limits of federal preemption and whether state courts can handle federal claims also weighed heavy on the judges’ minds.

Judge Stephanos Bibas asked Kellogg Hansen Todd Figel & Frederick partner David C. Frederick, representing the industry, where they have authority to suggest a “radical expansion” of federal law.

“You basically have to be arguing that all these state nuisance laws, trespass laws, etc., are preempted. That would be a massive expansion of federal common law preemption doctrine,” Bibas said.

But what companies are asking isn’t radical, according to Frederick, especially since the case involves interstate pollution that prevents any one state from imposing its own rules on everyone.

“The gravamen of their claim is that the defendants are responsible for every effect that has occurred on a worldwide basis of the combustion of fossil fuels,” Frederick told the panel. “That clearly has to be federal.”

Second Circuit

Judges also expressed skepticism over industry use of a climate decision handed down by the U.S. Court of Appeals for the Second Circuit, a case central to a Supreme Court petition filed by companies earlier this month.

The issue presented in that case, filed by New York, didn’t have anything to do with jurisdiction, one judge noted.

“The court there never addressed the issue before us and that was removeability, because it was already filed in federal court,” he said.

The Second Circuit did decide the nature of the claims in that case though, which makes the decision useful here in determining whether the case belongs in federal court, Frederick countered.

At issue in these cases, and many others in courts across the U.S., is whether oil and gas companies can remove climate complaints out of state courts into federal venues where they may have a better shot at getting them dismissed under federal laws.

States, cities, and counties who have filed the cases in state courts argue that their consumer protection claims belong with local judges.

Judges Theodore A. McKee and L. Felipe Restrepo also sat on the panel.

The cases are Hoboken v. Chevron Corp, 3d Cir. App., No. 21-02728, Arguments 6/21/22 and Delaware v. BP America Inc, 3d Cir. App., No. 22-01096, Arguments 6/21/22

To contact the reporter on this story: Jennifer Hijazi in Washington at jhijazi@bloombergindustry.com

To contact the editor responsible for this story: Zachary Sherwood at zsherwood@bloombergindustry.com