A new Supreme Court case will test whether the Trump administration’s war on federal climate regulation also undercuts fossil fuel companies’ primary defense against climate-related lawsuits.
On Monday, the court agreed to weigh in on whether Boulder, Colorado’s climate change lawsuit against major oil companies is preempted by federal law. Now that the federal government has revoked its own authority to regulate greenhouse gases, the justices will have to consider whether there even is any relevant federal law to speak of.
The case is arriving at the nation’s highest court in a particularly fraught moment for climate regulation. The Supreme Court ruled back in 2007 that the EPA had authority to regulate greenhouse gases under the Clean Air Act, preventing states from creating a patchwork of their own emissions rules. The decision also shielded energy companies from federal common law “public nuisance” claims — lawsuits seeking damages for climate change caused by greenhouse gas emissions.
Earlier this month, however, Trump’s EPA essentially challenged that Court decision. It made an official determination that the Clean Air Act did not, in fact, allow it to regulate emissions that have such diffuse, global effects.
“By revoking their authority on this issue, EPA, in our view, is basically eliminating what otherwise would have been a protection for companies against these kinds of lawsuits,” Andres Restrepo, a senior attorney at the Sierra Club, told me. “That really opens them up to a lot of potential legal liability and creates a lot of uncertainty.”
The new Supreme Court case dates back to 2018, when the city and county of Boulder, Colorado sued multinational oil giant ExxonMobil and Suncor, which operates the largest refinery in the state, for damages from climate change, bringing the charges under Colorado law. The oil companies tried repeatedly to get the case dismissed, arguing that it belonged in federal court. But time and again, the courts disagreed.
The Supreme Court already rejected an earlier petition to review the question of whether the case belonged in state or federal court in 2023. Now it has agreed to consider a slightly different petition, filed last summer, over whether federal law preempts Boulder’s state-law claims.
The Trump administration was acutely aware that its deregulatory moves had the potential to kick up a hornet’s nest of challenges for fossil fuel companies, so it tried to get ahead of the issue. In revoking the endangerment finding, the EPA claimed that while it “lacks statutory authority to regulate GHG emissions in response to global climate change concerns,” this has no impact on state preemption under the Clean Air Act. The agency’s final rule cites a section of that law about motor vehicle emission and fuel standards which says that states cannot adopt rules “relating to the control of emissions from new motor vehicles or new motor vehicle engines subject to this part.” In the agency’s view, this section applies broadly to any type of emission from a vehicle, whether or not the agency itself is tasked with regulating it.
The EPA also asserted that the Clean Air Act continues to preempt public nuisance claims, arguing that the Supreme Court did not base its dismissal of such claims on the EPA actually exercising any regulatory authority. The logic gets very circular here. Preemption “is no less applicable where, as here, the EPA does not regulate because Congress has not authorized such regulation as within the scope of its legal standard for determining what air pollution is dangerous and subject to regulation,” the agency wrote in its response to public comments on its initial proposal on this issue, which it published last summer.
“It feels like a bad ex-boyfriend who says, I don’t want to date you anymore, but you can’t date those other people either,” Vicki Arroyo, a law professor at Georgetown University and former Biden administration EPA official, told me.
Before the EPA finalized its decision on the endangerment finding, industry players were skittish about the legal implications. The Edison Electric Institute, the largest trade group for electric utilities, has not responded publicly to the final endangerment finding determination. It did, however, flag legal concerns in comments on the proposed rule last September, implicitly disagreeing with the EPA’s assertion that preemption was safe. It noted that the EPA’s actions could cast doubt on whether greenhouse gas emissions “remain a regulated pollutant under the Clean Air Act” in the power sector. That, in turn, could increase the likelihood that the power sector will be “further exposed to competing and conflicting regulations through a patchwork of state regulations” in addition to “the potential for increased litigation alleging common-law claims,” such as causing a public nuisance.
Automakers have also been virtually silent on the EPA’s actions. The Alliance for Automotive Innovation, the largest trade association for vehicle manufacturers, has not issued a statement on the matter. In its comments on the proposed rule, the group neither welcomed nor condemned the move. Unlike the power industry group, the automakers eagerly agreed with the EPA that rescinding the endangerment finding would not change federal preemption of state rules. It did warn, however, that eliminating greenhouse gas regulations altogether would subject the industry to yet another “rapid and dramatic” swing in policy that “puts billions of dollars of capital investment at risk.”
The only industry group I’ve seen come out firmly against the EPA’s final rule is the Zero Emissions Transportation Association, whose membership includes both automakers such as Rivian and utilities such as Duke Energy. Albert Gore, ZETA’s executive director, said in a statement that rescinding the endangerment finding “pulls the rug out from companies that have invested in manufacturing next-gen vehicles across the United States.” He also warned that it “opens businesses up to unnecessary legal risk,” including “a complicated patchwork of state regulations, threats of costly tort litigation, and inconsistent rules between markets.”
Ken Alex, a former senior assistant attorney general of California, was unequivocal that the EPA’s decision would open new avenues for public nuisance climate lawsuits. These suits are based on a complicated area of law known as federal common law, which permits courts to craft rules in very limited situations that have not been addressed by Congress. Alex represented California in the seminal 2011 Supreme Court case American Electric Power v. Connecticut, which established companies’ protection from federal public nuisance claims over greenhouse gas emissions. That decision sprang from the Court’s earlier 2007 decision that the Clean Air Act covers greenhouse gas emissions — which the EPA is now contesting.
The Boulder case will test how the Court views the EPA’s policy reversal long before legal challenges to the Trump administration get a hearing. SCOTUSblog reports that the Supreme Court is likely to hear oral arguments in the case, known as Suncor Energy Inc. v. County Commissioners of Boulder County, as soon as this fall. While the Boulder case contains similar public nuisance allegations to the American Electric Power case, Boulder brought them under state law, which means the legal questions and implications will be slightly different.
As for the possibility of a “patchwork of state regulations,” that’s a long ways away, if it is even possible at all, Alex said.
If the Supreme Court agrees with the EPA that the Clean Air Act does not apply to greenhouse gases, then there’s an argument that states are not precluded from acting, he told me. But there’s a counter-argument that any state action to regulate tailpipe greenhouse gas emissions will necessarily impact tailpipe emissions of other pollutants, bleeding into areas where Congress has explicitly preempted states from operating. “That’s also a good argument,” Alex said. “So it’s not clear to me how that would come out.”
Regardless, if the EPA’s final rule makes it through the highest court — which, to be sure, is not a foregone conclusion — Alex had no question that states would try to act. They will still have to meet the Clean Air Act’s general limits on air pollution, and California, for instance, “cannot meet those requirements without mobile source control,” he said. “They’ve got no choice but to seek regulations.”
