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Local Governments Can Sue Oil Companies Over Climate Change

A federal appeals court ruled that California’s local governments can proceed with lawsuits against major oil companies for their sale of fossil fuel products and allegedly deceiving the public about the products’ effects.

(TNS) — Local governments in California can proceed in state court with lawsuits against major oil companies for contributing to climate change by selling fossil fuel products and allegedly deceiving the public about their harmful effects, a federal appeals court ruled Tuesday.

The suits, filed in 2017, seek substantial damages from more than 30 companies that profit from products contributing to rises in temperatures and sea levels, which the cities and counties say are forcing them to spend more on sea walls and other protections. The plaintiffs are San Mateo, Marin and Santa Cruz counties and the cities of Richmond, Santa Cruz and Imperial Beach ( San Diego County).

The local governments sued in state court under California's law allowing damages for a "public nuisance," private actions that harm the public health. The companies want the case to be heard in federal court, where judges can consider state laws but are generally less receptive to those laws than state courts, and are more likely to dismiss such suits.

U.S. District Judge Vince Chhabria of San Francisco and the Ninth U.S. Circuit Court of Appeals ruled initially that the suits raised no issues of federal law and belonged in state court. The Supreme Court told the appeals court last year to reconsider its ruling after ordering another court to review possible federal issues in a similar suit by the city of Baltimore. On Tuesday, the Ninth Circuit panel said it had considered all applicable federal laws and reached the same conclusion.

The suits contend the oil companies' "wrongful conduct in producing, selling, marketing fossil fuels contributes to global warming and sea-level rise, which led to property damage and other injuries" to the cities and counties, Judge Sandra Ikuta said in the 3-0 ruling. While the companies produced some of the oil as federal government contractors or on federal land, Ikuta said, they did not carry out government orders or policies, and none of their actions implicated federal laws.

A similar suit by San Francisco and Oakland was dismissed in 2018 by U.S. District Judge William Alsup of San Francisco, who rejected application of the state law and said regulation of fuel production was a question for policymakers, not federal judges. The same appeals court panel reinstated the case in 2020, the Supreme Court denied review of the companies' appeal, and the suit is back before Alsup.

According to the plaintiffs and environmental groups, every other federal court that has considered the issue, including two more appellate courts, has reached the same conclusion: that the local governments are not trying to regulate oil companies but only to recover compensation for actions that violate state laws and harm the public.

"It is time to go to trial to hold these defendants accountable for deceiving consumers about the damages associated with the use of their products, and to protect our taxpayers from having to bear the enormous costs resulting from that deception," said a statement by Marin and Santa Cruz counties and the cities of Santa Cruz and Imperial Beach.

Richard Wiles, president of the nonprofit Center for Climate Integrity, said the ruling was "a major victory for these California communities seeking their day in court against corporate polluters that spent decades lying about their products' role in fueling the climate crisis."

Chevron, the lead defendant, criticized the decision.

"Plaintiffs' claims are based on allegations about worldwide carbon emissions and address global climate change — national and international issues that can be governed only by federal, not state, law," said Braden Reddall, spokesperson for the San Ramon-based oil giant. "Although the court has decided that plaintiffs' claims for now can proceed past this preliminary stage, Chevron looks forward to additional challenges that should put an early end to this meritless lawsuit."

In arguing that the case involved federal laws and could be heard by a federal judge, the companies noted that some of their drilling takes place on the Outer Continental Shelf, coastal waters regulated by the federal government. But the court said the local governments are not claiming any damage to the shelf or its lands, just harm caused by products of the drilling.

The companies also said some of their actions were at the directions of federal officers, like the Navy officials who contracted with CITGO to supply oil to 40 naval installations, and who set the terms of a 1994 agreement with Standard Oil Co. for distribution of petroleum products from Elk Hills Oil Field in Kern County. But Ikuta said the companies engaged in an "arm's-length business relationship" that did not put them under government control or subject them to federal law.

Quoting a 1934 Supreme Court ruling, she said, "Due regard for the rightful independence of state governments means removal laws (transferring cases to federal court) should be construed narrowly."

(c)2022 the San Francisco Chronicle. Distributed by Tribune Content Agency, LLC.
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