A federal appeals court ruled on Wednesday that lawsuits by Delaware and New Jersey seeking compensation from oil companies for the impacts of climate change should be decided in state, not federal, courts.
The lawsuits asserted that the oil and gas industry should be held liable for damages caused by fossil fuels. The problem: These lawsuits are a Pandora’s box that would destroy the U.S. fossil fuel industry by taxing the companies out of existence.
Fossil fuels are not opioids. Fossil fuels are not tobacco. Fossil fuels are not sugar — 100 million Americans have diabetes, costing society over $300 billion annually. Fossil fuels and capitalism have provided the energy necessary to lift billions out of poverty. So now, the Supreme Court will decide the matter of whether oil and gas companies can be held responsible for climate change.
At some point, the Supreme Court will have to consider this climate change issue. First, because there is a conflict among the federal courts of appeal. Some appeals courts allow state and local governments to litigate the matter in state courts; other federal courts of appeals say “no.” Second, because climate change cases have sweeping implications for the economy, society, and national security.
Under the major questions doctrine, Congress must clearly authorize action by any entity of government, state, local, or federal, that would have a profound effect on interstate commerce and the national economy. No clear authority has been granted by Congress for state and local governments to litigate out of existence the oil and gas industry.
What will the Supreme Court decide?
I think it’s likely the court’s future ruling will focus on two key elements. First, that state and local governments cannot hold oil and gas companies liable for climate change because Congress has preempted local government action through the myriad pieces of environmental legislation it has passed and the president has signed into law. Second, because the oil and gas industry touches all parts of the economy and society, that industry is part of the tapestry of interstate commerce. Congress regulates interstate commerce, not the states, and not the executive branch of the federal government.
This is a very important point. Congress uses the commerce clause to exercise legislative power. The commerce clause has historically been viewed as both a grant of congressional authority and as a restriction on the regulatory authority of the states and local governments.
Moreover, the U.S. economy would collapse if state and local governments were authorized to tax out of existence the oil and gas industry. Just look at the economic chaos in Western Europe caused by flawed green energy policies. Prices for energy in Europe are often 7-8 times higher than in the United States. And don’t even get started about gas prices in Europe.
I suspect that the oil and gas industry, the economy, and, ultimately, Americans will win.
James Rogan is a former foreign service officer who later worked in finance and law for 30 years. He writes a daily note on finance and the economy, politics, sociology, and criminal justice.
