On The Case

Big Oil repeatedly remanded to state courts - will SCOTUS come to the rescue?

(Reuters) - Oil companies facing suits by state and local governments that want them to bear a share of the cost of responding to the consequences of global warming do not want to litigate in state court. In case after case, when localities have filed climate change suits in state court, oil company defendants have removed the cases to federal court. They’ve cited all kinds of rationales for federal jurisdiction, ranging from preemption by the Clean Air Act to federal common law governing interstate pollution.

But so far, those arguments have failed. On Tuesday, the 10th U.S. Circuit Court of Appeals refused to overturn a Colorado trial judge’s decision to remand the city of Boulder’s suit against Exxon Mobil and Suncor to state court. The 10th Circuit is the third federal circuit in the past several months to rebuff oil company defendants invoking federal jurisdiction. In June, the 9th Circuit let stand a remand order sending San Mateo County’s case back to state court. That opinion followed a 9th Circuit decision in May to overturn a trial court ruling that Oakland’s climate change suit belonged in federal court.

The 4th Circuit kicked off the trend in March, holding in Baltimore v. BP that the city can litigate its climate change case in Maryland state court.

I know, I’m hitting you with a lot of precedent. My point is that the appellate courts have so far agreed unanimously on the appropriate jurisdiction for climate change suits originally filed in state court by state or local governments. (A caveat: The 1st Circuit is considering the same issue in Rhode Island v. Chevron so there’s a chance the appellate consensus won’t hold up.) That’s a big deal. Wachtell, Lipton, Rosen & Katz put out a client alert after the 9th Circuit’s Oakland decision, warning that climate change litigation had taken “an ominous turn.” The jurisdictional decisions, it said, would invite “countless actions by states, municipalities and private litigants in state courts all over the country.”

And here’s the fundamental problem for the oil companies: They can’t even get the appellate courts to consider the vast majority of their arguments for federal jurisdiction. The 4th, 9th and 10th Circuits have all concluded that under Section 1447 of the U.S. Code, their review of trial courts’ remand orders was limited to the issue of whether the federal courts had jurisdiction under the federal officer removal provision. (The oil companies contend, broadly speaking, that because much of their drilling is conducted under leases from the federal government, they are “acting under” the direction of federal officials and are therefore entitled to litigate in federal court.)

Climate change defendants have tried - and failed - to persuade the 4th, 9th and 10th Circuits that because they invoked federal officer removal in the trial court, appellate courts have discretion to review all aspects of trial courts’ remand orders. The oil companies have pointed to a 2015 decision to that effect by the 7th Circuit in Junhong v. Boeing - but the appellate courts reviewing climate change remand decisions have refused to follow the 7th Circuit’s lead.

The 10th Circuit ruling this week examined the circuit split exhaustively. Judges Carlos Lucero, Carolyn McHugh and Jerome Holmes concluded that the text of the relevant clause in the removal statute, which allows appellate courts to review remand orders addressing federal officer removal, is “arguably ambiguous,” but that the law is properly read to create only a narrow exception permitting appellate review only of trial judges’ analysis of the federal officer issue.

The oil companies’ best hope now for federal jurisdiction in climate change suits would seem to be the U.S. Supreme Court. In March, climate change defense lawyers from Paul Weiss Rifkind Wharton & Garrison filed a petition for Supreme Court review of the 4th Circuit’s ruling in Baltimore’s climate change suit. The oil companies argued that the justices must step in to resolve a split in the circuits over the scope of appellate review of remand orders, citing the 7th Circuit’s decision in Junhong v. Boeing. (The defendants contend that the 5th and 6th Circuits have since followed the 7th Circuit.) The Chamber of Commerce, the National Association of Manufacturers and 13 Republican-led states have filed amicus briefs backing the oil companies, arguing that the federal circuits should broaden the scope of appellate review of remand orders.

Baltimore’s lawyers at Sher Edling filed their opposition brief at the Supreme Court late last month. They argued that the 7th Circuit’s Boeing ruling is an outlier and that the 5th and 6th Circuit decisions cited by the oil companies do not even offer statutory interpretation. Just last year, the opposition brief said, the Supreme Court declined to take a case that presented the exact same issue as the oil companies’ petition. Since then, the brief said, the appellate authority for limiting the scope of review to analysis of the federal officer removal question has only mounted.

That brief was filed after the 9th Circuit’s decisions in the Oakland and San Mateo cases but before the 10th Circuit’s ruling Tuesday in the Boulder case. I suspect that in the oil companies’ reply brief next week, Paul Weiss will try to find a silver lining in the 10th Circuit’s concession that the relevant statute is ambiguous and subject to different readings – a more nuanced view than the 4th Circuit’s flat conclusion that the oil companies’ interpretation is “wrong.”

On the other hand, three federal circuits have weighed oil companies’ arguments about the scope of their review of remand orders, and none of them have sided with climate change defendants.

We’ll know next fall whether Big Oil can get some help from the Supreme Court.