Exxon Says Boulder Climate Case Aims to Reshape Energy Policy

Source: By Ellen M. Gilmer, Bloomberg • Posted: Thursday, May 7, 2020

A sign displays fuel prices at an Exxon Mobil Corp. gas station.
A sign displays fuel prices at an Exxon Mobil Corp. gas station. Photographer: Ty Wright/Bloomberg

Federal judges are weighing the fate of a high-stakes climate lawsuit in Colorado, one of many cases taking aim at fossil fuel companies for their role in global temperature rise.

During oral arguments Wednesday before the U.S. Court of Appeals for the Tenth Circuit, Exxon Mobil Corp. argued that litigation from Boulder, Colo., and other local governments shouldn’t proceed in state court.

The hearing is the latest in climate litigation ping-pong, as local governments and energy companies spar over the proper venue—state court or federal court—for allegations that the industry should pay for local damages associated with climate change.

Boulder County, the city of Boulder, and San Miguel County sued oil and gas companies in state court in 2018. Industry lawyers pushed the case to a federal court, which sent it back to the state level. The Tenth Circuit is reviewing that decision.

The procedural debate is important, as industry advocates think they’ll have an easier time making their case in federal court.

Exxon lawyer Kannon K. Shanmugam, of Paul, Weiss, Rifkind, Wharton & Garrison LLP, argued Wednesday that state tort law “is not an appropriate vehicle” for the case because it involves “reshaping national and, indeed, global energy policy.”

Emissions Case?

The circuit court addressed both technical issues and the merits of the debate over climate litigation during Wednesday’s telephone arguments.

Lawyers for industry and local governments disagree over whether Boulder’s case, filed under state common law, actually falls under an area of federal common law that is displaced by the Clean Air Act—meaning no court can decide it.

Judge Carolyn B. McHugh took aim at the industry argument, saying she “had a hard time accepting a complete preemption argument under the Clean Air Act.”

Shanmugam responded that Boulder’s case is the kind of “transboundary pollution suit” that a series of U.S. Supreme Court decisions clearly preempts.

Judge Carlos F. Lucero pressed the lawyer for Boulder and the other local governments to explain how their case is different.

EarthRights International lawyer Richard Lawrence Herz responded that Boulder’s lawsuit isn’t about emissions, but about local-level harms linked to “unchecked sales” of fossil fuels and intentional misrepresentation about their leading role in causing climate change.

The lawsuit names specific climate-linked problems in Boulder and San Miguel County, including increased risks of floods, droughts, and wildfires.

Federal Officers

McHugh zeroed in on a key technical issue in the appeal: whether the Tenth Circuit has authority to review the lower court’s decision in full.

At issue is the scope of appellate review when a defendant bumps a state-court case to federal court by citing “federal officer” grounds, a doctrine that says cases involving U.S. officials generally belong in federal court.

Many circuits say they can review only that single issue, not an entire remand order, when a federal court returns such a case to state court. Industry lawyers want courts to review additional arguments for placing a case in federal court.

Judge Jerome A. Holmes appeared skeptical of the argument, questioning whether it would be appropriate for the court to weigh issues that wouldn’t usually be subject to judicial review.

Shanmugam argued that Congress never imposed any limitations on the grounds for judicial review in cases with venue disputes.

Similar climate cases from state and local governments are pending in the federal appellate courts in the First Circuit, Second Circuit, and Ninth Circuit.

The Fourth Circuit recently rejected an appeal from industry defendants and allowed a climate case from Baltimore to proceed in Maryland state court.

The case is Bd. of Cty. Comm’rs v. Suncor Energy, 10th Cir., No. 19-01330, oral arguments 5/6/20.

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