by Lesley Clark
A federal appeals court sided with Baltimore yesterday in the city’s climate liability lawsuit against major oil and gas companies, saying the case should be heard in state court in a victory for cities and states that are seeking to force fossil fuel giants to pay for local climate impacts.
In a unanimous decision by the 4th U.S. Circuit Court of Appeals, judges rejected eight arguments that the oil and gas companies have raised in a bid to move a flurry of similar cases to federal courts, where the companies believe they face better odds.
The judges said they found no reason that Baltimore’s case should not be heard by a state court.
“The impacts of climate change undoubtedly have local, national, and international ramifications,” Judge Henry Floyd wrote for the court. “But those consequences do not necessarily confer jurisdiction upon federal courts, carte blanche.”
The ruling is the second win for states, cities and counties following a Supreme Court decision last May that sent a host of climate liability cases back to the appellate level. A federal appeals court in February agreed to keep a Colorado lawsuit before a state bench (Climatewire, Feb. 9).
The Baltimore and Colorado rulings come as a landmark U.N. climate report this week highlighted climate litigation in the United States and across the globe as a burgeoning trend that could influence “the outcome and ambition of climate governance.”
The 4th Circuit did not offer an opinion on the merits of the case, which claims that the oil and gas industry engaged in a disinformation campaign to deflect from what it knew were the dangers of burning fossil fuels.
But the judges said they “resoundingly agree with Baltimore” that the case does not raise federal issues. They added that they are “confident that Maryland courts can capably adjudicate claims arising under their own laws.”
Sara Gross, chief of the affirmative litigation division in the Baltimore City Department of Law, said the city welcomes what she called a “forceful rejection of defendants’ ongoing attempts to mischaracterize our case and avoid accountability for the costs and harms their deception has imposed on Baltimore.”
She called the decision a “big win for Baltimore’s residents, workers, businesses and taxpayers.”
But the ruling makes it more likely that the liability cases will wind up at the Supreme Court once again, where a 6-3 conservative majority has eyed climate lawsuits with skepticism, said Phil Goldberg, special counsel for the Manufacturers’ Accountability Project, an initiative of the National Association of Manufacturers that opposes the litigation.
“It makes no sense to spend years litigating climate cases in state courts when it is clear that climate change is global in nature, has many causes and requires broad-based policy solutions that only Congress has the ability to enact,” Goldberg said.
He said the ruling misses the real issue: “The nature of climate change, this litigation and the remedies they seek are all inherently beyond the scope of any state.”
BP PLC, the lead industry defendant in Baltimore’s case, did not reply to a request for comment yesterday.
Baltimore originally filed its climate liability lawsuit against BP, Exxon Mobil Corp. and 24 other oil companies in state court in 2018, but the energy companies moved the case to federal court.
The 4th Circuit in March 2020 rejected industry’s bid to move the case out of state court, but it reviewed the entire case again after the Supreme Court last year found that federal appellate judges should consider every argument that companies raise when deciding the proper venue for the climate liability cases.
‘Defies logic’
In yesterday’s decision, Floyd, who was appointed during the Obama administration, detailed in 93 pages why the 4th Circuit found that none of industry’s eight arguments proves that the case belongs in federal court.
He said Baltimore’s case is rooted not in federal common law but in state-level claims that BP and other oil firms misled the public about climate change.
The opinion several times chides the oil companies, saying at one point that they failed to point to any “significant conflict” between Maryland law and the companies’ federal interests — which Floyd called a “complete abdication” of the effort to get the case removed to federal court.
“Essentially, defendants believe that removal is proper based on federal common law even when the federal common law claim has been deemed displaced, extinguished, and rendered null by the Supreme Court,” Floyd wrote. “We believe that position defies logic.”
The opinion also says the companies’ argument, in part, is based on a “misunderstanding” of the city’s lawsuit.
“Baltimore essentially challenges the efficacy and safety of defendants’ fossil-fuel products and sales practices promoting them,” the opinion says. “The complaint is not solely about the initial act of fossil-fuel extraction, nor is it concerned with setting and regulating greenhouse-gas emissions.”
The opinion also rejects the argument that the case is preempted by the Clean Air Act, finding that the argument rests on a “fundamental confusion” about the city’s case.
“None of Baltimore’s claims concern emission standards, federal regulations about those standards, or pollution permits,” the opinion notes. “Their complaint is about defendants’ fossil-fuel products and extravagant misinformation campaign that contributed to its injuries.”
Floyd also rejected the argument that cited the companies’ operations on the outer continental shelf, saying their “marketing practices, which led to increased consumption of their fossil-fuel products and then climate change, are far removed” from those operations.
He also rejected the companies’ argument that the federal courts should hear the case because it is tied to the bankruptcy of a Chevron subsidiary, Texaco, in 1987.
The opinion notes that the companies “speculate that other corporate entities” may be operating under bankruptcy and filed a presentation that cites 134 bankruptcy filings from energy companies from 2015 to 2017.
But, the opinion notes, “defendants do not specify if any of those corporate entities are actually related to any of them, nor do they indicate if or when those bankruptcy cases were confirmed by federal courts. By failing to direct us to anything further, we find this is insufficient to carry any burden for bankruptcy removal and decline to do counsel’s work.”
Floyd was joined in the opinion by Chief Judge Roger Gregory, a Clinton and George W. Bush appointee, and Stephanie Thacker, an Obama appointee.
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