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Supreme Court Open to Oil Industry’s Stance in Climate Case (1)

Jan. 19, 2021, 6:08 PM; Updated: Jan. 19, 2021, 7:00 PM

The U.S. Supreme Court appeared open to the oil industry’s arguments in a high-stakes procedural spat that will set the course for climate litigation across the country.

The closely watched climate case, BP Plc v. Mayor & City Council of Baltimore, centers on a technical question: What’s the proper scope of appellate review in certain disputes over federal-versus-state court venue? The outcome will affect more than a dozen other high-stakes cases pending across the country.

“I think this is a close call, this case,” Justice Brett Kavanaugh said midway through Tuesday’s arguments.

Kavanaugh and others expressed concern that oil and gas companies’ argument in favor of broad appellate review could encourage gamesmanship in lower courts. But they also indicated they think the underlying legal text cuts in favor of the industry’s position.

The Trump administration argued alongside the oil and gas industry on Tuesday, the day before President-elect Joe Biden’s inauguration. Biden hasn’t weighed in on the procedural issue in the Baltimore case, but has expressed general support for climate litigation.

Justice Samuel Alito, who has previously disclosed investments in energy companies, didn’t participate in the case. Justice Amy Coney Barrett did participate, despite outside pressure to recuse in light of family connections to defendant Shell Oil Co.

Court Venue

Baltimore sued BP, Shell, Exxon Mobil Corp., and other oil giants in Maryland state court in 2018. Companies raised a variety of jurisdictional arguments to bump the case to federal court, including that it falls under what’s called “federal officer jurisdiction.” A federal district court rejected the arguments and remanded the case to state court.

The venue dispute is important because federal courts are generally viewed as a safer option for the industry defendants.

Remand orders usually can’t be appealed, but there’s an exception when “federal officer” arguments are at play, so industry lawyers took the case to the U.S. Court of Appeals for the Fourth Circuit.

The Fourth Circuit focused its review on the federal officer issue, sided with Baltimore, and upheld the remand order. But industry lawyers say the Fourth Circuit should have taken a broader approach to its review and considered oil companies’ additional arguments for federal court jurisdiction.

‘Floodgates’

Industry lawyer Kannon K. Shanmugam, of Paul, Weiss, Rifkind, Wharton & Garrison LLP, noted during arguments that federal law allows appeals of remand “orders” when the federal officer issue is at play.

That means the entire order, he argued, not just the part of the order addressing that issue.

Brinton Lucas, assistant to the solicitor general who was arguing for the U.S., said appellate courts must be able to “address legal error” even if it’s not within the narrow confines of the federal officer issue.

Several justices from the court’s conservative wing signaled they agreed with the industry’s argument about the meaning of the word “order.”

“I think the text in isolation is a problem for you, and that means the text is a problem for you,” Kavanaugh said.

But Sher Edling LLP attorney Vic Sher, representing Baltimore, countered that the approach when lead to gamesmanship, encouraging defendants to make meritless claims of federal officer jurisdiction just to ensure a chance to appeal. Sher argued that the plain language of the statute in fact “limits and tethers” appellate courts’ review.

Justice Sonia Sotomayor said the broader approach supported by the industry could “open the floodgates of appellate litigation in the federal system.”

What’s Next

The outcome of the case will affect more than a dozen other climate lawsuits pending from state and local governments around the country. Phil Goldberg, special counsel for the industry-aligned Manufacturers’ Accountability Project, said the arguments seemed to go well for the industry.

“The statute is pretty clear, and justices across the political spectrum seem to understand that,” he said during a Federalist Society call Tuesday.

A win for industry—depending on the breadth of an opinion—would, at a minimum, create further delay for lawsuits that have been pending for years. Industry lawyers have pushed the Supreme Court to go a step further than the narrow appellate review question and declare that the cases belong in federal court because they “arise under” federal common law.

Supreme Court endorsement of the industry’s view could hamstring the plaintiffs’ claims, as high court precedent from 2011 says the Clean Air Act displaces federal common law claims related to greenhouse gas emissions.

A win for Baltimore would allow climate litigation to move forward in state court, where the industry has a variety of other legal maneuvers and arguments available to try to derail the merits of the claims.

“We appreciate the court’s inquiry today and eagerly await their ruling. It is time for the case to start moving,” Sara Gross, Chief of Affirmative Litigation Division in the Baltimore City Department of Law, said in a statement. She added that Baltimore “continues to suffer the costs and consequences” of the oil and gas companies’ “decades of deception” about their role in climate change.

The case is BP Plc v. Mayor & City Council of Baltimore, U.S., No. 19-1189, oral arguments held 1/19/21.

(Additional reporting throughout.)

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

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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