By Karen Savage
U.S. Supreme Court justices appeared skeptical of fossil fuel industry arguments in a hearing on Tuesday on an appeal that could determine whether a wave of climate change-related lawsuits filed against the industry by municipalities across the country will be heard in state or federal courts.
The high court had agreed to decide on a legal technicality about the scope of appellate review in a case filed by Baltimore against ExxonMobil, Chevron, Shell, BP and nearly two dozen other fossil fuel companies in Maryland state court in 2018. The justices appear to have brushed off a request by the fossil fuel companies to expand its review to consider whether Baltimore’s case and more than two dozen others like it should be heard in federal court.
The arguments revolved around a little known law—the Federal Officer Removal Statute—that the industry is using to claim it was acting as an officer of the federal government because some of its oil production is on land leased from the federal government. It’s an argument that multiple appeals courts have rejected, but the fossil fuel industry wants the Supreme Court to not only allow it, but use it to make more of its arguments subject to appellate review.
“We believe that the plain language of [the statute] resolves the question presented and really does permit in an appellate court to review the entirety of a remand order where the ground for removal was the federal officer removal statute,” Kannon Shanmugam, an Exxon attorney with Paul Weiss Rifkind Wharton & Garrison who argued on behalf of the fossil fuel companies, told the court.
Justice Clarence Thomas questioned whether the companies’ reasoning would result in parties “smuggling” otherwise unreviewable arguments into appellate court reviews. Justice Steven Breyer similarly reasoned that the companies’ interpretation of the statute could result in a flood of appeals.
“Parties will appeal on everything—and that means added time, added delay,” Breyer said.
The matter will be decided later this year by eight of the justices. Justice Samuel Alito, who owns stock in ConocoPhillips and Phillips 66, recused himself from the case. Justice Amy Coney Barrett—whose father was a lawyer for Shell for decades, potentially working on some of the company’s federal lease agreements at the center of Tuesday’s arguments—did not recuse. Barrett’s father also held leadership positions with the American Petroleum Institute (API).
Baltimore’s Case, and Others, Hang in the Balance
Baltimore’s case alleges the fossil fuel companies knew for decades that their products drive climate change, but deliberately failed to inform the public about those risks. The city is charging the companies with several state law violations, including public nuisance, private nuisance, failure to warn and violations of Maryland’s consumer protection laws.
Defendants in state law cases are allowed by statute to move, or remove, cases to federal court if they think they involve federal issues. The fossil fuel companies moved Baltimore’s case—and nearly all of the climate change-related cases—to federal court, where they think they have a better chance of beating them.
Plaintiffs who feel the case has been wrongly removed, have the right to ask the federal court to return, or remand, the case to state court. Baltimore and other municipalities have been fighting to get the cases remanded back to state court, where nearly all were filed.
The companies have presented several arguments to support their position that the case belongs in federal court, including the argument that because they sold or extracted fossil fuels under government contract, they operated as federal officers. The Federal Officer Removal Statute gives federal courts jurisdiction over civil actions directed at the United States or any federal official.
The U.S. District Court rejected all of those arguments. The Fourth Circuit affirmed the lower court’s ruling that Baltimore’s case belongs in state court, but said it was only allowed to review the federal officer removal argument, which it rejected. The Supreme Court in October granted a request by the fossil fuel companies to review the appellate court’s ruling.
Both parties agree that if presented alone, the other arguments are not reviewable, but the companies contend that because they were presented along with the federal officer removal argument—which is eligible for appellate review—they too should have been reviewed.
Fossil Fuel Companies Argue for Federal Jurisdiction
Exxon’s lawyers pushed back on the justices’ skepticism about their arguments, asserting that the federal officer statute and the civil rights statute, which similarly allows cases to be moved to federal court, are narrow and would not invite a flood of appeals.
“It is certainly not going to be every civil defendant who is going to be able plausibly to invoke those statues,” Shanmugam said, conceding that the fossil fuel companies’ interpretation of the statutes could make it easier for those who do.
“One benefit of our interpretation is that it gives the court of appeals flexibility in the other direction, if the court of appeals concludes that there is an easier ground than federal officer removal on which to reverse, it can do so,” Shanmugam said.
When asked why the companies want the case heard in federal court, Shanmugam told the justices “there is something profoundly counter-intuitive about the notion that these cases which seek relief for injuries caused by worldwide greenhouse gas emissions should be litigated in state courts, under the laws of different states.”
“This court has long made clear that as a matter of constitutional structure, such claims necessarily arise under federal law—the United States has agreed with that proposition and resolving that issue now will preserve the resources of the judiciary and the parties and ensure the orderly resolution of these cases,” Shanmugam added.
Trump Administration Sides With Big Oil
Assistant U.S. Solicitor General Brinton Lucas, who argued in favor of the oil giants on behalf of the Trump administration, told the justices there is no reason to limit the scope of appellate review to the federal officer argument, particularly not if the goal is to avoid delay.
“At the end of the day, [Baltimore’s] arguments are really about policy, namely a legislative desire to prevent delay—but when Congress has already authorized an appeal of a remand order, considering multiple issues, it’s unlikely to prolong litigation much further and may in fact expedite it,” Lucas said.
Justice Sonia Sotomayor disagreed, pointing out that Congress has indicated its intent to allow appellate review only of jurisdictional arguments involving federal officer and civil rights issues.
“Don’t you think that if I’m trying to figure out what Congress intended … that when it [indicated] it didn’t want appellate review of all issues, and that it only wanted appellate review of [federal officer and civil rights arguments] that our review should be limited to what it wanted,” Sotomayor said adding that she believes “what Congress intended is not what [the fossil fuel companies] say.”
Baltimore: Companies are Misreading the Statute
Victor M. Sher, who is representing Baltimore, said the companies are misreading the statute.
“According to petitioners merely referring to [the federal office removal statute] in a removal notice guarantees a defendant an appeal … of every ground rejected by the district court, even if the [federal officer argument] is meritless, and even if the defendant drops it on appeal,” Sher told the justices.
“You cannot allow a party that has a non-meritorious issue as [the fossil fuel companies] have here to use that issue as a hook to open up issues that this court and the statute have plainly barred,” Sher added.
Citing an amicus brief submitted by several state attorneys general, Sher said attempting to remove state law cases to federal court “has become a tactic of defendants in a wide range of cases, including environmental regulation, opioids, subprime lending and financial institutions and others.”
“In every one of those instances, these involve national industries, heavily regulated by the federal government, and you could have colorful assertions,” Sher told the court. “A rule that broadly opened the gates to other issues and appellate rights would not only result in longer delays, but would burden the records of the courts—not just our cases, your honor, but cases involving large companies and important interests frequently bump up against federal interest, and the issue here is whether there’s a federal officer connection, which there is not.”
Sher also told the court the cases belong in state court because there is no federal remedy for Baltimore’s claims.
“We don’t believe that federal court jurisdiction exists in these cases, there is no federal claim to assert here, your honor,” Sher said. “The tort that we’re concerned with—and the Fourth Circuit addressed this in detail in its opinion, as did the Judge Hollander in the District Court, it’s on pages 201 and 228 of the circuit court’s opinion in the record—pointed out that the conduct complained of is fraud, deception, denial and disinformation.”
Tuesday’s hearing did not delve into the merits of the case, but Sara Gross, chief of the affirmative litigation division in the Baltimore City Department of Law, said the city is eager to move forward.
“In the two and half years since we filed this case in Maryland state court, defendants have done everything they can to delay and avoid accountability for their decades of deception about climate change while Baltimore continues to suffer the costs and consequences of their actions,” Gross said in a statement.
“We feel confident in our argument that the Fourth Circuit, along with many other sister circuits, got that question right in affirming the U.S. District Court of Maryland’s order sending the City’s case back to state court. The statute’s bar on appellate review applies here, and the court of appeals got the clear reading exactly right.”