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Supreme Court questions Big Oil effort to duck liability

The Supreme Court expressed concern today that attorneys for the oil and gas industry were hiding elephants in mouse holes in a wonky jurisdictional battle with high stakes for climate change litigation.

During oral arguments in BP PLC v. Baltimore, justices posited that industry lawyers might be leveraging a dispute over a narrow technical question to quash lawsuits by state and local governments contending that energy companies should be on the hook for flooding, wildfires and other disasters fueled by rising global temperatures.

“It seems as though we are smuggling into appellate review other issues that are not necessarily the issues that are front and center of the federal law concerned,” Justice Clarence Thomas said to a government attorney arguing alongside lawyers for BP, Royal Dutch Shell PLC and other companies in the lawsuit.

“Can you somehow help me eliminate that sense of awkwardness?”

A lawyer for the Trump administration, which argued alongside the oil and gas industry in the case, waved away Thomas’ concern, noting that the issue triggering the need for a review doesn’t necessarily define the scope of that review.

At issue in the case is a narrow technical question involving the transfer — or “removal” — of climate liability cases from their traditional venue, state courts, to federal courts, where industry lawyers may have a better shot at convincing a judge to kill the challenges.

The question has the potential to derail a slew of lawsuits filed by Baltimore and other local and state governments seeking to hold the oil and gas industry financially responsible for flooding, wildfires and other disasters fueled by rising global temperatures. The cases raise claims under state public nuisance, corporate misinformation and other laws (Climatewire, Jan. 15).

Federal district courts have determined that climate liability lawsuits do, in fact, belong in state courts.

Appellate courts, including the 4th U.S. Circuit Court of Appeals in this case, have generally agreed that those remand orders aren’t eligible for appeal, except under certain limited circumstances, such as in cases that involve federal officers.

BP, Shell and other companies involved in the case argued that federal appeals courts should instead be allowed to review the entire scope of remand orders that send climate cases back to state court. The Supreme Court agreed to take up that question.

Attorneys for the companies later expanded their argument, saying the court should save judicial resources and find that any case like Baltimore’s belongs in federal court.

Most of this morning’s arguments focused on the narrow jurisdictional issue at the heart of the case. But Justices Brett Kavanaugh and Amy Coney Barrett periodically checked in on the broader implications of the legal battle.

“Don’t you think it would be fairly aggressive for us to resolve the federal common law question here assuming that we agreed with you here on the antecedent removal point?” Barrett asked Kannon Shanmugam, a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP representing the companies involved in the case.

Shanmugam noted the Supreme Court’s precedent in the 2011 American Electric Power case, which said that states and private entities cannot use federal common law to force reductions in carbon dioxide emissions from power plants.

He added that there are 23 other cases like Baltimore’s waiting in the wings, as well as a handful of pending Supreme Court petitions raising similar questions as the Baltimore case.

“In light of all those considerations, it would be appropriate for this court to answer that question,” he said.

Kavanaugh told Sher Edling LLP partner Vic Sher, arguing on behalf of Baltimore, that the city’s argument had problems in light of the statutory language at issue in the case and prior case law.

“You really want to be in state court,” Kavanaugh said. “Why?”

Sher responded that the case raises claims of fraud, deception, denial and misinformation, which are squarely in the purview of state courts.

“At this point, there is no federal analogue,” Sher said.

Eight of the justices heard arguments in the case this morning, despite calls for Barrett to recuse herself from the proceedings. Barrett’s father worked for Shell Oil Co., and she recused herself from cases involving some Shell entities during her time on the 7th U.S. Circuit Court of Appeals.

Justice Samuel Alito sat out on arguments in today’s case. Alito owns stock in ConocoPhillips and Phillips 66.

The Supreme Court is expected to reach a decision in the case by early summer.


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