The legal battle over whether cities, counties and states can hold fossil fuel companies financially accountable for heat waves, flooding and other effects of climate change is entering a critical new phase.

Since 2017, parties in the cases have squabbled over whether the lawsuits should be heard in federal or state courts. Now that federal appeals courts have agreed the cases belong before state judges — and the Supreme Court has so far declined to say otherwise — oil companies are pushing for the lawsuits to be scrapped altogether.

“This is really, ‘Does it belong in any court?’“ said Pat Parenteau, emeritus professor at Vermont Law and Graduate School. “That’s what the companies are counting on: a decision that the cases won’t be heard anywhere.”

Though previous court battles have centered on jurisdictional issues, the next phase will determine whether the cases are sufficient to proceed to discovery and trial, Parenteau said.

“It’s substantial,” he said, “and it’s potentially game-ending.”

During arguments in Delaware’s climate liability case last month and filings in two Maryland lawsuits in Annapolis and Anne Arundel County, industry attorneys have argued that a finding in favor of the local governments would require state judges to set energy policy far beyond their borders.

The challengers are “asking this court to regulate the nationwide — and even worldwide — marketing and distribution of lawful products on which billions of people beyond the state’s jurisdiction rely,” industry lawsuits told the Anne Arundel County Circuit Court in Maryland.

Allowing the claims to proceed, they continued, “would not only usurp the power of the legislative and executive branches [both federal and state] to set climate policy, but would do so retrospectively and far beyond the geographic boundaries of Maryland.”

The oil companies’ motions to dismiss the climate liability cases have already been rejected by one court in Hawaii and are under appeal.

Industry lawyers made similar claims in cases filed by the city and county of Honolulu, as well as Delaware and Hoboken, N.J. They are expected to soon lodge motions to dismiss in cases brought by Puerto Rico; New Jersey; and Charleston, S.C.

The municipalities are among more than two dozen local governments to file climate liability lawsuits since 2017. The cases accuse the oil industry of misleading the public about the dangers of burning fossil fuels, and they seek money to address the ravages of climate change.

If successful, the lawsuits could leave the oil industry on the hook for hundreds of billions of dollars.

California last month became the latest and largest state to file a climate liability suit, and observers said the Golden State’s participation could spur other governments to act.

Maryland at the forefront

Maryland has long been an epicenter for climate liability litigation.

The city of Baltimore’s lawsuit against BP and other companies went up to the Supreme Court in 2021, when the justices sided with industry in a narrow jurisdictional dispute. The justices have since declined to intervene again in the cases, allowing proceedings to begin in the state courts where the lawsuits were originally filed.

Annapolis and the coastal county of Anne Arundel each filed suit the same year the Supreme Court decided the Baltimore case. The lawsuits take aim at more than two dozen oil and gas companies — including BP and Exxon Mobil — as well as the American Petroleum Institute.

At the time Annapolis sued, Mayor Gavin Buckley said the case was a way to “hold the fossil fuel industry to account.” He said the lawsuit did not seek to solve climate change, but would help the low-lying city survive it.

In motions to dismiss the Maryland cases, attorneys for the oil and gas industries argue that state courts can’t regulate a global issue like climate change. They say the municipalities failed to raise a claim that can be decided by a state court.

“Maryland’s courts lack the authority to regulate lawful activity beyond the state’s borders,” said Theodore Boutrous, counsel for Chevron, which was named in the Annapolis and Anne Arundel lawsuits.

The companies argue that the federal Clean Air Act preempts the lawsuit. And although the lawsuits charge the companies with misleading consumers, the companies say they had “no duty to warn” when, they say, the “alleged impact of fossil fuel use on the global climate has been ‘open and obvious’ for decades.”

Industry attorneys point to steps taken by Maryland, including a 2009 law aimed at reducing greenhouse emissions. And they argue that even as the state addresses climate change, it promotes petroleum products and maintains a fund to oversee drilling and oil and gas well development.

In the Annapolis lawsuit, industry attorneys argue that local governments are seeking relief that would likely require a fund to compensate them. But they pointed to a court ruling in the case Juliana v. United States, which calls on the federal government to phase out fossil fuels, to argue that it is “beyond the power of the court” to devise such a plan.

The 9th U.S. Circuit Court of Appeals rejected the Juliana challenge in 2020, finding it raised questions better addressed by lawmakers than the courts.

The Anne Arundel motion quotes from the 9th Circuit’s Juliana decision, arguing that administering a fund could include “determining what infrastructure projects — from sea walls, to transit, to levees — are supposedly necessary to prevent climate change-related harms.”

And it adds that, “given the complexity and long-lasting nature of global climate change, the court would be required to supervise the [fund] for many decades, if not forever.”

Where Big Oil does business

Industry lawyers are also raising “personal jurisdiction” claims, arguing that because most of the companies targeted in the Maryland climate liability cases are not incorporated or headquartered in the state, they cannot be tried before its courts.

Local governments are trying to hold the companies liable for injuries that stem “from the cumulative worldwide use of all oil, natural gas, coal, and other sources of emissions — the vast majority of which have no connection to defendants, much less to Maryland,” the attorneys argue.

But Victor Sher of the law firm Sher Edling LLP, which represents the Maryland governments and many others suing the oil industry, countered similar arguments in August before the Hawaii Supreme Court, telling the judges that state judges have jurisdiction because the companies have operations on the islands, including gas stations, storage facilities and refineries.

“Hawaii was big enough for them to invest in the market here, to promote and sell their fossil fuel products here,” Sher said.

Sher added that the Supreme Court earlier this year in the case National Pork Producers Council v. Ross rejected an effort to constrict application of a California animal welfare law in other states, suggesting it was the cost of doing business.

“If they don’t want to be hauled into court in Hawaii, they could choose not to do business here,” Sher said of the oil companies.

In addition to the companies’ motions to dismiss, Chevron has filed its own motion on the grounds that the Maryland lawsuits target corporate speech that is protected by the company’s first amendment rights — as well as a state law aimed at preventing so-called strategic lawsuits against public participation that can be wielded to silence critical speech.

The motion charges that the allegations “are especially meritless” because they do not identify statements that Chevron in particular made.

“The only statements plaintiff alleges Chevron made involve its support for renewable energy, which plaintiff calls ‘greenwashing,’“ the motion says.

A similar motion was dismissed by a Hawaii court last year and is now on appeal.