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Cities Get Second Chance to Hold Big Oil Liable for Climate Change

A Ninth Circuit panel on Tuesday ordered a federal judge to reconsider if he had proper jurisdiction over two lawsuits seeking to hold the world’s five biggest oil companies liable for climate change when he dismissed them in 2018.

SAN FRANCISCO (CN) — A Ninth Circuit panel on Tuesday ordered a federal judge to reconsider if he had proper jurisdiction over two lawsuits seeking to hold the world’s five biggest oil companies liable for climate change when he dismissed them in 2018.

The three-judge panel found the basis for keeping those suits in federal court, rather than state court, was flawed.

The twin lawsuits brought by the cities of Oakland and San Francisco sought to make oil and gas giants cover the costs of sea walls and other projects needed to protect the two Bay Area cities from rising sea levels and other consequences of climate change.

In their complaints, the cities accused BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell of organizing massive disinformation campaigns to deceive the public about the dangers of fossil fuel production. They claimed the companies knew about the perils of fossil fuel-driven climate change as far back as 1968, when a scientist working as a consultant for the American Petroleum Institute warned that carbon dioxide emissions were “almost certain” to cause an increase in temperatures and a rise in sea levels.

The cases were originally filed in state court but later removed to federal court.

In June 2018, U.S. District Judge William Alsup dismissed both lawsuits, finding the scope of liability proposed in their complaints was “breathtaking” and could lead to an absurd result — making nearly every supplier of fossil fuels in every corner of the globe liable for rising sea levels.

But before Alsup dismissed the complaints, he denied the cities’ request to send the cases back to state court. The cities had alleged state law claims of public nuisance, but Alsup concluded the misconduct claimed by the cities occurred on a global scale and therefore fell under the federal court’s jurisdiction.

On Tuesday, a three-judge Ninth Circuit panel reversed that decision.

Writing for the panel, U.S. Circuit Judge Sandra Ikuta, a George W. Bush appointee, found that while deciding whether energy companies should spend billions of dollars to deal with the consequences of climate change is undoubtedly an important policy question, it nevertheless “fails to raise a substantial federal question.”

The panel also rejected the oil companies’ argument that state law public nuisance claims are pre-empted by the federal Clean Air Act.

“While the Clean Air Act allows a plaintiff to file a petition to seek judicial review of certain actions taken by the Environmental Protection Agency, it does not provide a federal claim or cause of action for nuisance caused by global warming,” Ikuta wrote.

The panel remanded the cases to Alsup so he can reconsider if alternative grounds justify keeping the two lawsuits in federal court. If no such grounds exist, the judge would have to send the cases back to state court.

In 2018, University of San Francisco law professor Alice Kaswan explained that the cities likely prefer litigating their claims in state court because state court judges tend to be more familiar with and willing to wade into the intricacies of state common law, which is based on judicial precedent rather than written statutes.

“Federal courts may be more resistant to making determinations based purely on judge-made law,” Kaswan said. “State courts may be somewhat more comfortable playing that role, and perhaps less likely to boot the cases out of court.”

Also on Tuesday, the same Ninth Circuit panel affirmed U.S. District Judge Vincent Chhabria’s 2018 decision to remand three other lawsuits seeking to hold Big Oil liable for climate change to state court. Those suits were filed by San Mateo County, Marin County, and the city of Imperial Beach in San Diego County.

U.S. Circuit Judges Morgan Christen, a Barack Obama appointee, and Kenneth Lee, a Donald Trump appointee, joined Ikuta on the panel.

San Francisco City Attorney’s Office spokesman John Coté said the city is pleased with the Ninth Circuit’s decision, adding that the lawsuit belongs in state court where it was originally filed.

“San Francisco and Oakland taxpayers are already incurring the costs of dealing with the damage these fossil fuel companies knowingly caused,” Coté said. “It is time for these companies to pay their fair share. They should not be able to stick taxpayers with the bill for the damage they knew they were causing.”

Reached by email, Chevron spokesman Sean Comey said the cities' lawsuits would "penalize" the production of affordable, reliable and cleaner energy, which has been authorized and encouraged by government policy makers for decades.

Comey added that the lawsuits belong in federal court because they present "substantial issues of national law and policy" which make them inappropriate for resolving under state law.

"In whichever forum the cases are ultimately determined, these factually and legally unsupported claims do nothing to sensibly address the significant national economic, legal and policy issues presented by climate change," Comey said.

The Oakland City Attorney’s Office and Chevron attorney Theodore Boutrous Jr. of Gibson Dunn & Crutcher in Los Angeles did not immediately return emails seeking comment Tuesday morning.

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Categories / Appeals, Environment

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