The fight over who should pay for the costs of climate change is heading back to the U.S. Supreme Court, with ExxonMobil and Suncor Energy asking the justices to stop a lawsuit brought by Boulder, Colorado. The companies are challenging claims that they should face financial liability for climate-related harms and alleged deception about the risks associated with fossil fuels. The Supreme Court is scheduled to hear arguments on October 5, at the beginning of its new term.
The case is part of a much larger legal battle. Exxon and Suncor have told the court that nearly 60 state and local governments have filed similar climate-related lawsuits against fossil fuel companies. These cases seek damages for costs associated with climate change, putting potentially billions of dollars in corporate liability at stake.
Deepak Gupta, an attorney who regularly argues before the Supreme Court, described the significance of the dispute during a Georgetown Law preview of the new court term.
“The stakes are enormous here.”
The scale of the litigation explains why the oil industry is once again turning to the Supreme Court. A ruling that limits state climate claims could affect dozens of lawsuits, while allowing Boulder's case to proceed could leave a major avenue of climate litigation open.
The Boulder lawsuit dates back to 2018, when the city and county accused Exxon and Suncor of contributing to climate change while misleading the public about the environmental risks associated with their products. The companies deny wrongdoing. Boulder is seeking damages to help cover climate-related costs it says it has already incurred and expects to face in the future.
Boulder Mayor Aaron Brockett has framed the lawsuit around the growing financial burden that climate impacts place on communities.
“Local communities are living with the mounting costs of climate change.”
That argument gets to the heart of the dispute. Communities are increasingly spending money on infrastructure, emergency response and other measures linked to climate-related risks. Boulder wants a court to determine whether fossil fuel companies can be held financially responsible under state law for some of those costs.
Exxon and Suncor reject that legal approach. Their argument is that federal law, including the Clean Air Act, prevents Colorado from using state-law claims in this way. The Colorado Supreme Court rejected the companies' position last year, prompting the appeal to the U.S. Supreme Court.
The disagreement reflects a major change in the strategy behind climate litigation in the United States. Earlier attempts to use federal law to force reductions in greenhouse gas emissions faced significant obstacles at the Supreme Court. In 2011, the court ruled that states and environmental groups could not use federal law to seek court-ordered reductions in carbon dioxide emissions from power companies.
Climate plaintiffs subsequently increasingly turned toward state-law claims. Rather than asking courts to regulate emissions directly, these lawsuits generally argue that fossil fuel companies should face liability under state laws covering issues such as consumer protection, public nuisance or alleged misleading conduct.
The shift has created a difficult legal question. Fossil fuel companies argue that climate change is a global issue that requires a consistent federal approach, rather than different liability standards being imposed by individual states and cities.
Saikrishna Prakash, a University of Virginia law professor who filed a brief supporting Exxon and Suncor, warned about the potential reach of Boulder's legal theory.
“If Boulder can attach liability to these two companies, I think it can attach liability to thousands of others as well.”
That concern explains why the companies are treating the Boulder case as more than a dispute involving one Colorado community. A decision allowing such claims to proceed could potentially encourage other governments to pursue similar cases under their own state laws.
The Supreme Court has already dealt with related climate litigation involving the oil industry. In 2021, the justices ruled on a procedural dispute involving BP, Chevron, Exxon and other energy companies and whether climate cases should be heard in state or federal court. The ruling helped the companies seeking to move such cases into federal courts.
The Boulder case also reached the Supreme Court in 2023 over that procedural question. The justices left in place a lower court decision that returned the lawsuit to state court. The latest case therefore moves the dispute into another phase, focusing on whether federal law prevents Colorado's state-law claims from proceeding.
There is another unusual feature to the case. Justice Samuel Alito will not participate in the proceedings. Alito owns shares in several oil and gas companies, although he does not own ExxonMobil or Suncor. He also stepped aside when the Boulder case previously reached the Supreme Court in 2023. The court clerk notified the parties that Alito would not participate this time, without giving a reason.
His absence means the case will be heard without one of the court's nine justices. It also highlights the broader financial and legal interests surrounding climate litigation, where decisions can affect companies across the energy sector and governments facing growing climate-related expenses.
At the centre of the case is therefore a question that extends beyond the courtroom: who should ultimately bear the financial costs associated with climate change?
For Boulder and other governments pursuing similar lawsuits, the argument is that communities should have a legal route to recover some of the costs they say are connected to fossil fuel companies' conduct. For Exxon and Suncor, the issue is whether individual states and local governments can use state law to impose liability for a global phenomenon governed in significant part by federal law.
The answer could influence nearly 60 existing cases, according to the companies' Supreme Court filing. A ruling for the oil companies could result in many of those lawsuits being dismissed. A ruling allowing Boulder's claims to continue would leave the broader wave of climate liability litigation open to develop through state courts.
That makes the October 5 hearing important beyond Colorado. The Supreme Court will not be deciding every climate lawsuit in the United States, because the cases involve different laws and factual circumstances. But its decision could help define how far state and local governments can go when seeking financial compensation from fossil fuel companies over climate-related harms.
For the oil industry, the case represents another attempt to establish limits around climate liability. For communities bringing these lawsuits, it represents an effort to determine whether some of the financial burden of climate change can be shifted toward companies they accuse of contributing to the problem.
The outcome could therefore shape an increasingly important part of the climate debate in the United States: whether responsibility for climate-related costs can become a question of corporate liability as well as public policy.