Fourth Circuit ponders jurisdiction for local governments’ climate claims against energy companies

RICHMOND, Va. (CN) — The Fourth Circuit heard arguments Wednesday over whether local governments can bring state claims against energy corporations for their role in the global climate crisis.  

Anne Arundel County and the City of Annapolis filed similar lawsuits in Maryland state court, asserting Maryland common law and statutory claims against 25 of the country's largest producers of fossil fuels, including Exxon, Chevron, BP and Shell. They charge local injuries caused by a decadeslong campaign by the companies to discredit the science of climate change, conceal the dangers of using their fossil-fuel products and deceiving consumers about their role in responding to climate change. 

The corporations removed the cases to a federal court, claiming a myriad of jurisdiction arguments including the federal officer removal statute removal, which permits the removal to federal court of a civil action against any officer or person acting under that officer of the United States. The corporations argued the statute applies because, at times, they worked under the federal government's control when producing and distributing oil and gas products. 

In their brief, the companies pointed to fuel supply agreements between Citgo and the Navy Exchange Service Command — federal oil and gas leases permitting certain corporations to extract resources from the federally owned outer continental shelf to supply the domestic market — and an agreement allowing Standard Oil, a predecessor of Chevron, to jointly operate the Navy's portion of the Elk Hills Reserve. 

But the localities argue they are suing not over the creation nor distribution of oil and gas, for which the federal government may occasionally be involved, but rather because of the corporations' concerted effort to misinform the public about climate change. 

"For decades, defendants have known that their oil, gas and coal products create greenhouse gas emissions that change the Earth's climate, warm the oceans, and cause sea levels to rise," the localities' brief states. "Defendants embarked on a sophisticated campaign of disinformation to cast doubt on the science of global warming while concealing and misrepresenting the climate change impacts of their fossil-fuel products."

The Fourth Circuit ruled against the corporations in a nearly identical case brought by Baltimore's mayor and city council in 2022, finding all five of their jurisdictional arguments without merit. The Maryland federal court cited the Fourth Circuit ruling in Mayor & City Council of Baltimore v. BP P.L.C. as a reason to remand the cases to state courts.

"Defendants present no evidence that the alleged concealment of the harms of fossil fuel products was for or related to their purported federally authorized actions," the Maryland federal court's opinion states. 

U.S. Circuit Judge Toby Heytens, a President Joe Biden appointee, questioned what makes this matter different. 

Attorney Kannon Shanmugam of Paul and Weiss, representing the corporations, said this case's record contains far more thorough evidence supporting their claims that they acted under a federal officer. 

Since 2017, more than 20 states and local governments across the country have brought comparable state common law claims against fossil fuel corporations. Five appellate courts have ruled against federal jurisdiction in similar cases, presenting an uphill battle for the corporations.

U.S. Circuit Judge Stephanie Thacker, a Barack Obama appointee, tuning in virtually, bluntly asked Shanmugam about the lack of success for his clients. 

"Has any climate deception claim case in the country ruled in your favor on this yet?" Thacker asked. 

"Not yet," Shanmugam replied. 

Shanmugam again emphasized that, unlike similar cases, this one's record shows evidence of a link between the federal government and oil and gas production. 

In an attempt to avoid removal, the localities disclaimed in their complaint that they sought no relief for any special-formula fossil-fuel products that the corporations explicitly designed for, and provided exclusively to, the federal government for use by the military, further distancing the perceived conduct from the purported federal authority. 

Shanmugam disagreed that the localities' disclaimer bars the court from linking the corporations' conduct to federal direction. 

"The plaintiffs' claims necessarily arise from the accumulation of all greenhouse gas emissions," Shanmugam said. "The plaintiffs don't offer any method to isolate the alleged injuries that have resulted from defendants' non-federally directed conduct from their federally directed conduct." 

Attorney Victor Sher of Sher Edling, representing the localities, disagreed, and said scientists could measure how many emissions came from the government-contracted projects and subtract that from the total emissions. 

U.S. Circuit Judge James Andrew Wynn, a Barack Obama appointee, completed the three-judge panel. Attorneys representing the localities and the corporation declined to comment.

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