Michael Toth is the director of research at the Civitas Institute at the University of Texas at Austin.
On Monday, lawyers for the city and county of Boulder, Colorado, will argue before the U.S. Supreme Court that their lawsuit seeking to hold energy companies liable under state law for global greenhouse-gas emissions, Suncor Energy v. County Commissioners of Boulder County, should proceed. But the case has implications that stretch far beyond Colorado. If the plaintiffs prevail, local rules could be used to shake down companies for emissions that occur elsewhere.
Suing companies over carbon emissions is nothing new. The gambit began more than two decades ago, when New York City and a handful of states and nonprofits sued four private utility companies for burning fossil fuels. In 2006, California sued General Motors and five other automakers over emissions from their gas-powered vehicles.
Both cases sought to hold major industries liable for emissions tied to basic goods: electricity and transportation. Neither succeeded. The California case stalled in 2007, when federal district judge Martin Jenkins, a Clinton appointee whom Gov. Gavin Newsom (D) later appointed to the California Supreme Court, determined that regulating emissions from a critical sector of the economy was a job for Congress and the executive branch, not judges.
The power plant case met a similar fate. After the trial judge dismissed it as a “political question,” an appeals court revived the lawsuit, setting up the Supreme Court’s first major climate dispute, American Electric Power v. Connecticut, in 2011. The result was a rout. In an 8-0 decision, the court held that delegating regulation of interstate emissions to federal judges “cannot be reconciled with the decisionmaking scheme Congress enacted.” Justice Ruth Bader Ginsburg wrote the opinion.
Undeterred, climate litigants regrouped around a new strategy: Bring the claims under state law and keep them in state court. The earlier cases had relied on federal common law, under which judges had fashioned nuisance standards for cross-border environmental disputes. American Electric Power closed that door, holding that the Clean Air Act displaced federal common-law nuisance claims over interstate emissions and assigned that “complex balancing” to the Environmental Protection Agency.
But the justices were never asked whether state nuisance law could be applied to the same emissions. That gap is the opening climate litigants have since walked through. The Boulder case is one of dozens now pending in state courts across the country.
The underlying question should be straightforward: Can a state or local government regulate emissions that occur somewhere else? Under the city’s theory, any company that sells products in a state or municipality could be sued there for its worldwide emissions, even if only a tiny fraction occurred in the jurisdiction bringing the suit. Nearly 90 percent of emissions originate outside the United States. Letting a state court apportion responsibility for global energy demand isn’t adjudication — it’s a usurpation of the federal government’s exclusive authority over foreign affairs. Boulder invokes a Clean Air Act provision preserving states’ authority to set stricter emissions standards than Washington. But the Constitution does not allow a state to impose its standards on emissions occurring beyond its borders.
If the Supreme Court sides with Boulder, the floodgates will open. The Suncor defendants face billions in potential damages, yet just 0.23 percent of global emissions can be traced to Colorado. An Oregon county is seeking more than $50 billion from energy companies in a nearly identical case.
Other companies would be exposed to similar shakedowns from any of the 50 state or about 40,000 local governments. Obvious targets include industries with heavy carbon footprints: utilities (27 percent of global greenhouse-gas emissions), transportation (15 percent), agriculture (11 percent), and iron and steel manufacturing (6 percent). Even ostensibly carbon-light industries aren’t safe. Financial firm Morgan Stanley estimates that demand for new artificial intelligence chips by 2029 will require adding the electricity equivalent of 18 New York Citys.
American companies would bear a disproportionate share of the litigation risk. The world’s largest corporate emitters are overwhelmingly foreign state-owned entities, including Saudi-owned Aramco (No. 1), Coal India (No. 2) and China’s CHN Energy (No. 3). Yet the Foreign Sovereign Immunities Act (FSIA) gives qualifying foreign state-owned companies a right to remove cases brought against them in state court to federal court. The result of a Boulder victory would be a stark asymmetry: Privately owned companies based in the U.S., Canada and Europe could face potentially massive liability in state courts, while major state-owned emitters in China, Russia, Saudi Arabia and Iran could move the litigation to federal court, where climate plaintiffs have repeatedly lost, and invoke the FSIA’s sovereign immunity protections.
Carbon emissions aren’t disappearing. Global fossil-fuel consumption has risen roughly 50 percent over the past 25 years despite widespread decarbonization efforts. That trend is unlikely to reverse soon. Foundational materials for feeding, housing, and caring for the world’s population generate as much as a quarter of carbon emissions and have no known substitutes. For companies in those industries, local climate-litigation risk would have no expiration date.
Suncor is bigger than oil and gas. It is about whether any company meeting global demand for its products can be regulated from any courthouse in America, at any time, for conduct occurring somewhere else. Ginsburg had it right: “Borrowing the law of a particular State” to regulate worldwide emissions “would be inappropriate.” The climate plaintiffs deserve to lose again.
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