Some Cities, States Say Big Oil Should Pay for Climate Damage
In the waning days of 2021, a grass fire broke out in Boulder County, Colorado. Fueled by extreme drought and high winds, the fire swept through the communities of Superior and Louisville. Within hours, it had destroyed more than a thousand structures—making the Marshall Fire the most destructive in the state’s history.
The December fire was an extraordinary event, but perhaps a preview of the new normal under the conditions caused by climate change. Late last month, another fire forced the evacuation of 18,000 residents in and around Boulder. Fortunate winds saved the city from catastrophic damage, but the near-miss—and the timing well outside of the region’s traditional fire season—was a warning sign of what’s to come.
“We've already experienced impacts [from climate change], but nowhere near the amount that we're likely to experience in the coming decades,” said Aaron Brockett, Boulder’s mayor. “We have a lot of work to do to make our community more resilient.”
Boulder leaders are working to reduce fuel loads in the forests and open spaces owned by the city. They’re seeking to make the neighborhoods bordering those lands more fire resilient. They’re hoping to upgrade fire stations and equipment. And they’re planning projects to reduce flood risk from the severe storms that climate change is likely to bring.
That work will cost tens, if not hundreds, of millions of dollars. And local leaders think oil companies should pay for it.
In February, the city and county of Boulder, along with San Miguel County in western Colorado, scored a significant win in their legal fight against ExxonMobil and Suncor energy companies when a federal appeals court ruled that the case would remain in state court.
Local governments earned another win last week when a different federal appeals court ruled that Baltimore’s case against oil companies also belonged in state court.
The decisions were the first under new U.S. Supreme Court guidelines, established last May as part of Baltimore’s climate lawsuit, directing appeals courts to take a more expansive look at oil companies’ arguments that the cases belong in federal court. The rulings have been closely watched by the nearly two dozen states, cities and counties that have filed lawsuits likewise seeking payment from fossil fuel companies for the damages caused by climate change.
Oil companies, with the backing of some other states, have fought to move the cases to federal court, where they think national regulations around drilling, refining, emissions and air quality would invalidate the legal claims against them. The local governments that have sued say their cases rest on Big Oil’s deception about the harm its products would cause, giving them a foothold under state law to seek damages.
The jurisdictional battle, which more federal appeals courts are likely to rule on this year, will have massive implications for whether the climate lawsuits proceed to local jury trials. If they do, it would set up a high-stakes showdown over the still uncertain territory of legal accountability for climate change—with billions of dollars on the line.
Several states and industry groups have weighed in to support the oil companies, arguing that rulings against them could devastate the industry and make energy more expensive.
“If it’s in federal court, [the oil companies] win,” said Hannah Wiseman, a professor of law at Penn State University’s College of Earth and Mineral Sciences. “These cities are wise to the precedent, and they’ve made clear they’re raising issues of state tort law and not arguing for federal climate policy. They're doing a good job of that, and it’s hard to predict how the courts will ultimately come out.”
The governments suing the oil industry come from regions facing sea-level rise, wildfires, drought, flooding and severe weather. They cite extensive news reporting—including investigations from the Los Angeles Times, Inside Climate News and The Guardian—that shows oil companies understood the dangers of climate change decades ago but led campaigns to undermine the scientific consensus that their products were contributing to a growing crisis.
“By the ‘70s, [oil companies] knew that a lack of action on moving away from fossil fuels would cause dramatic changes to the climate,” Brockett said. “Meanwhile, the burden for repairing the damage falls on local communities, and we don't have the financial wherewithal to bear that burden.”
Backers of the lawsuits compare them to landmark cases against tobacco and opioid manufacturers, which resulted in multibillion-dollar settlements over the public health crises fueled by their products and business practices.
“They're just saying, ‘You violated state law, because you deceived us about what you knew about your products in order to sell more of them,’” said Bob Percival, director of the University of Maryland’s environmental law program. “The oil companies are desperate to avoid a public trial that would focus attention on what they knew, when they knew it and how they tried to deceive the public.”
The cases mark an unprecedented attempt to assert legal accountability for climate change, a crisis with worldwide causes and consequences.
“The fact that it's a global phenomenon is obviously the thing that distinguishes these tort actions from any case we've seen before,” said Pat Parenteau, a professor of environmental law at Vermont Law School, who also serves in an informal advisory group that supports some of the governments’ cases.
The oil companies named in the cases argue that federal energy and pollution policies should preempt state claims. ExxonMobil and Suncor have contended in court filings in the Colorado lawsuit that they followed federal regulations on drilling, refining and distributing fossil fuels. The companies also assert that the lawsuits are backdoor attempts to establish climate policy through the courts, since Congress has failed to take meaningful action.
"On jurisdictional matters, climate change is a national issue that requires a federal solution, not a patchwork of various state-based rulings," said William Allison, spokesperson for Energy In Depth, a research and public outreach project of the Independent Petroleum Association of America, a trade group.
Major companies facing the lawsuits—BP, Chevron, ExxonMobil, Suncor, the American Petroleum Institute, Koch Industries and Shell—did not respond to Stateline’s requests for comment.
Supporters of the lawsuits say the cases aren’t about enforcing or enacting policies to reduce carbon emissions, but rather about seeking accountability for what they say are decades of dishonesty that contributed to political inaction on climate change.
State or Federal Court?
Many of the cases have been through years of legal wrangling, and the current battle centers on whether they should be heard in state or federal court. Those backing the lawsuits say local juries should hear the cases.
“These cases, which are fundamentally about local injuries to communities, should be heard in state court,” said Marco Simons, general counsel with EarthRights International, which is representing the Colorado communities. “Our cases are not about stopping climate change writ large or broader policy issues. They're about paying for damages suffered by these communities.”
But some states have weighed in to argue that the cases belong in federal court. For example, Indiana has filed multiple amicus briefs in favor of oil companies, including a recent filing with 13 states in the case brought by Baltimore.
“These claims are displaced by the existing federal regulatory scheme, which tells us the limits in advance on extraction, refinement and use of fossil fuels,” Tom Fisher, Indiana’s solicitor general, said in an interview. “If a court in California decides that Exxon and Chevron are responsible under public nuisance theory for causing global climate change and that requires an injunction to limit their output, that's obviously going to affect Indiana and other states.”
Some business groups, including the Manufacturers’ Accountability Project, an arm of the National Association of Manufacturers that fights climate litigation, also have urged federal courts to take jurisdiction.
“[C]limate policy is federal and regulatory in nature—not one that can be decided by state courts,” Phil Goldberg, the project’s special counsel, wrote in an email to Stateline.
The National League of Cities, which advocates for municipal governments, takes a different view.
“This is really about federalism principles and where cases should be heard if there's a local harm,” said Carolyn Berndt, the group’s legislative director for sustainability. “The local harm in this case happens to be climate change, and the right court for this is state court.”
Although federal judges mostly have ruled that the cases belong in state court, a U.S. Supreme Court ruling last May forced federal appeals courts to reevaluate those decisions because they hadn’t considered all the energy companies’ arguments.
This February, the 10th U.S. Circuit Court of Appeals ruled that the case filed by the Colorado municipalities would remain in state court, the first decision under the new Supreme Court guidelines. Last week, the 4th Circuit ruled that Baltimore’s case against oil companies also belonged in state court.
Several other circuit courts have yet to rule under the new guidelines.
“This is an important year,” said Richard Wiles, president of the Center for Climate Integrity, a nonprofit that supports communities that are taking on oil companies. “If these cases end up in state court, that’s a really good sign. If one of the circuits goes [the oil companies’] way, that could create grounds for an appeal to the Supreme Court.”
While several federal appeals court decisions await, some cases are moving ahead. Last month, a Hawaii Circuit Court judge ruled that a lawsuit filed by Honolulu could proceed to trial even as the jurisdictional issues are still being settled. The case could be the first to reach the discovery phase, an outcome advocates say energy companies have fought tooth-and-nail to avoid.
“They absolutely do not want it to get that far,” said Tommy Waters, chair of the Honolulu City Council. “What are they hiding?”
Waters said Honolulu is facing billions in damages from sea-level rise alone, and it also requires expensive upgrades to its stormwater infrastructure to handle extreme precipitation.
“Our roads are falling into the ocean, homes are falling into the ocean, our beaches are disappearing,” he said. “We simply can’t afford it.”
Another case, filed by the state of Massachusetts against ExxonMobil, also is moving toward discovery. That lawsuit, like most of the cases brought by state attorneys general, focuses on consumer fraud violations. Such lawsuits seek civil penalties, rather than restitution for the costs of climate mitigation.
‘They All Go Bankrupt’
If the local governments prove their cases against the oil companies, the implications would be massive. Courts may have to determine the extent to which a given company is responsible for the climate damages in a particular region.
“Science has made great strides in being able to attribute what percentage of temperature rise and what impacts are associated with a particular company's emissions,” said Percival, the University of Maryland professor. “There are now some really distinguished experts who can testify about how to apportion the harm.”
And if some cities and counties are successful, advocates expect a deluge of others to file suits.
“If these cases are ruled in favor of the plaintiffs, then every city in the country could follow suit,” said Wiles of the Center for Climate Integrity. “There isn't a city budget out there that couldn't use help from the oil companies for their climate-driven adaptation costs.”
Backers of the lawsuits acknowledge that the costs of dealing with climate change nationwide are far more than the oil companies could bear.
“If these cases all go to their logical extreme, [the oil companies] all go bankrupt,” said Parenteau, the Vermont Law School professor. “They should.”
Others argue that outcome is why the cases should be dropped.
“We choose to use energy, which is mostly fossil fuel, because it makes our lives better,” said Wayne Winegarden, a senior fellow at the Pacific Research Institute, a California-based think tank that advocates for free-market principles and is supported in part by oil industry-affiliated groups. “Imagine they win $100 billion in one of the suits. That becomes a per-barrel tax that gets passed on to consumers.”