High-stakes case before Supreme Court could have extensive impacts to energy costs

The U.S. Supreme Court could decide as early as Monday whether to review a request by the oil industry to dismiss dozens of lawsuits filed by states, cities and counties that seek to hold energy firms liable for damages they say are caused by climate change.

Experts argue the high court’s decision could have extensive ramifications, impacting national security and the ability to conduct business in the United States. 

A climate lawsuit, which was filed by the city and county of Honolulu in 2020, is one of many such cases seeking compensation from a dozen oil companies for what the plaintiffs claim is damages suffered as result of climate change. 

Honolulu claims that companies knew for decades that burning fossil fuels caused global warming, but they allegedly worked to conceal this fact from the public.

Critics of the narrative point out that oil companies’ research had no greater knowledge about climate change than any other group researching the issue, and what is said to be attempts to hide this information are actually debates of the degree of risk, which still continue today. 

According to Honolulu’s lawsuit, heat waves have stressed the electricity grid, and a wastewater treatment plant had to incur costs to deal with sea level rises.

The city is seeking to be compensated for these and other damages it alleges the oil companies caused. 

In 2023, the Hawaii Supreme Court rejected the oil companies’ request to dismiss the suit, and their petition to the U.S. Supreme Court asks to overturn the Hawaii court’s decision. 

Energy companies have previously asked the Supreme Court for guidance about whether the cases should be heard in federal courts or state courts. In April 2023, the court declined to hear the requests, which allowed the cases to proceed in state courts. 

Now these companies are asking the high court to decide if federal law allows the cases to move forward.

The companies argue the federal Clean Air Act preempts state law, and they’re asking the Supreme Court to clarify if state law can be used to seek damages from the global issue of climate change. 

These climate lawsuits filed by state and local governments take public nuisance suits to a whole new level. As explained in a video by the Alliance For Consumers (AFC), public nuisance lawsuits have traditionally dealt with local problems, such as a lawsuit against the company that makes Sriracha hot sauce. The suit alleged that the factory was causing physical harm and discomfort from the fumes it emitted. 

The climate lawsuits use the nuisance laws to go after a global problem, which the AFC argues would force oil companies to comply with climate activists goals, which is eliminating fossil fuels. The settlements from these cases, should they succeed, would be in the billions of dollars. 

“By shifting the scope of public nuisance away from local, tangible problems … toward amorphous society-wide questions, the left is trying to grab the entire economy and force their preferred lifestyle choices through the legal system,” the AFC argues. 

Alabama Attorney General Steve Marshall led a 19-state coalition in asking the Supreme Court to rule climate lawsuits filed by California, Connecticut, Minnesota, New Jersey and Rhode Island to be unconstitutional. 

“The theory advanced by these states is truly radical: A small gas station in rural Alabama could owe money to the people of Minnesota simply for selling a gallon of gas. The customer might even be liable too. These states are welcome to enforce their preferred policies within their jurisdiction, but they do not have authority to dictate our national energy policy,” Marshall said in a statement. 

Marshall also argued that the settlements would imperil American’s access to affordable energy, which is a threat to national security. 

Alabama also led a 20-state amicus brief in the Honolulu case, arguing cases involving interstate emissions must be brought under federal law, not state law. Otherwise, one state’s actions could violate the sovereignty of every other State to set its own energy and environmental goals.

The Wall Street Journal editorial board also raised concerns that these suits would effectively allow a state or local government to dictate energy policy for the rest of the country. Should the state courts pass down rulings, energy companies would have to stop producing and selling oil and gas products everywhere in order to avoid liability. 

Writing in Forbes, energy analyst David Blackmon argues that allowing states to pursue such claims would create such a high level of complexity and chaos that it would become impossible to do business in the United States. 

“The result could likely be the flight of billions of dollars in capital investment to other countries around the world,” Blackmon warns. 

The AFC video points out that, if carbon emissions create a liability, then everything from airlines to automobile manufacturers to beef producers could be potentially liable for whatever damages a state or local governments claim resulted from climate change. 

For climate activists, rulings unfavorable to the oil companies could accomplish what they’ve always dreamed — the end of fossil fuel production. 

Pat Parenteau, a professor of environmental law at Vermont Law School with business ties to Sher Edling, the law firm spearheading these public nuisance climate lawsuits, told PBS News in 2022 that the goal is to bankrupt oil companies. 

“If these cases all go to their logical extreme, [the oil companies] all go bankrupt. They should,” Parenteau said. 

Wayne Winegarden, senior fellow at the Pacific Research Institute, told PBS that the settlements will effectively become a tax placed on every barrel of oil that consumers buy. 

Sher Edling did not respond to requests for comment.