Supreme Court climate case could bankrupt oil companies, send gas prices soaring, experts warn

A Supreme Court showdown over climate change lawsuits could leave oil companies bankrupt, gas stations facing financial ruin and Americans paying more at the pump if the justices allow cities and states to pursue billions in damages against the fossil fuel industry, energy policy experts warn.

“You would see mass exodus and that would create more scarcity with fuel, more so than we’re seeing already today, higher prices,” Jason Isaac, CEO of American Energy Institute, told Fox News Digital. “And that’s really what this is about. It’s about controlling these companies and stopping the use of hydrocarbons.”

The Supreme Court heard arguments Monday in Suncor v. Boulder, a dispute over whether federal law prevents cities and states from suing oil companies under state law for alleged climate damage linked to emissions that cross state borders.

During oral arguments, Justice Clarence Thomas pressed Boulder’s attorney, Kevin Russell, on whether the legal theory could expose businesses beyond oil producers to similar lawsuits, including large retailers.

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“Nothing in our theory prevents that,” Russell acknowledged, although he noted that state tort law could impose additional limitations.

Justice Brett Kavanaugh separately raised concerns about the potential financial consequences of widespread litigation, warning that enough lawsuits could “bankrupt” defendants and questioning whether virtually any manufacturer or business could face similar claims.

The city and county of Boulder, Colo., sued oil giants ExxonMobil and Suncor Energy in 2018, accusing the companies of knowingly contributing to climate change while misleading the public about the alleged dangers of fossil fuels. The municipalities are seeking damages to help cover the mounting costs of climate-related harms. There are roughly 30 similar lawsuits pending in jurisdictions across the country, including cases in Portland and Baltimore.

Boulder’s lawsuit alleged ExxonMobil and Suncor knew for decades about the climate risks associated with fossil fuels but misled the public about those risks. The complaint pointed to a 1977 internal memo from ExxonMobil that circulated among the company’s highest-level managers. The memo reported that “current scientific opinion overwhelmingly favors” that fossil fuels contribute to the rise in CO2 emissions.

David Bookbinder, who previously served as counsel of record for Boulder but is no longer involved in the case, described the lawsuit as a way to implement an “indirect carbon tax” during a Federalist Society forum last year.

But Boulder has maintained that the case is not an attempt to regulate national climate policy, arguing instead that Colorado has the authority to hold companies accountable under state law for alleged harms suffered within its borders.

“Since the founding, states have had the power to provide tort remedies for injuries occurring within their borders even when the conduct causing those injuries occurred elsewhere,” Russell told the justices.

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O.H. Skinner, executive director of the Alliance for Consumers, argued that the lawsuits are an attempt to accomplish through the courts what climate advocates have been unable to achieve through Congress.

“When you really boil it down, and you separate it from all the legal arguments, the advocates who push these cases are very clear,” Skinner told Fox News Digital. “That it’s an effort to get a backdoor carbon tax, because carbon taxes have never passed in Congress, or to bankrupt the energy industry.”

Justice Samuel Alito has recused himself from the case without providing an explanation.

Isaac warned that a Supreme Court ruling in Boulder’s favor could open “Pandora’s box,” allowing thousands of jurisdictions to pursue similar lawsuits. He said a 4-4 split could have a similar practical effect by leaving the lower court’s ruling in place, although a tie would not establish nationwide precedent.

“There are over 90,000 levels of government — government entities just in the United States alone — that could also begin lawsuits against energy companies,” Isaac told Fox News Digital. “Driving up cost to consumers because the cost to defend those would be astronomical.”

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Skinner argued that who could be sued could extend beyond oil producers to businesses across the energy supply chain, including gas stations, automakers and utilities that sell or use fossil fuels.

“From Boulder’s perspective, anybody who’s contributed to climate change would reliable, any sort of company, big or small, and the problem here is that to the left, climate change is everything and everything is climate change,” Skinner told Fox News Digital. “So it’s very hard to find a line for who isn’t contributing to climate change.”

But Isaac said the case is different from lawsuits against tobacco or opioid companies because greenhouse gas emissions come from countless sources around the world and cross state and national borders, making it difficult to isolate responsibility for climate-related damage.

“Emissions are a global phenomenon,” Isaac told Fox News Digital.

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ExxonMobil and Suncor argue that because greenhouse gas emissions travel globally, Colorado cannot use state law to hold companies liable for emissions originating outside its borders. The companies contend that such disputes should instead be governed by federal law.

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Meanwhile, other states such as Utah have barred these types of state tort lawsuits from being pursued.

“If the energy companies were to lose and Colorado were to win, this would in effect drive up the prices of gas all across the country,” Utah Attorney General Derek Brown told Fox News Digital. “And so those kind of decisions ultimately, it’s the province of Congress.”