Climate's green turf is in the courts

Jan 14, 2025

THE BIG IDEA

FILE - The Supreme Court is seen on Capitol Hill in Washington, Dec. 17, 2024. (AP Photo/J. Scott Applewhite, File)

The Supreme Court rejected an appeal from oil companies to shield them from state-level lawsuits seeking climate damages. | AP

BIG OIL’S BIG LOSS — Fossil fuel giants are gearing up for a more friendly regulatory environment under President-elect Donald Trump — but a new Supreme Court ruling means they’ll still need to deal with state-level lawsuits blaming them for driving climate change.

The high court on Monday rejected pleas to stop that litigation, Alex Guillen reports, paving the way for trials that the companies have warned could lead to “potentially enormous judgements.”

Of course, the success of the states and localities bringing those lawsuits remains to be seen, but the court's decision is certain to increase Big Oil's anxiety.

The city and county of Honolulu sued a group of oil companies in 2020, accusing them of misrepresenting the effects of climate change while producing fossil fuels — and dozens of similar lawsuits have followed.

After lower courts allowed the case to move forward, the companies went to the Supreme Court — arguing that the case presented "the ideal opportunity" to settle the question of whether federal law blocks state law claims on climate change.

Ben Sullivan, executive director of Honolulu’s Office of Climate Change, Sustainability and Resiliency, praised the decision.

“This landmark decision upholds our right to enforce Hawaii laws in Hawaii courts, ensuring the protection of Hawaii taxpayers and communities from the immense costs and consequences of the climate crisis caused by the defendants’ misconduct,” he said in a statement.

Meanwhile, Phil Goldberg, special counsel to the Manufacturers’ Accountability Project, part of the National Association of Manufacturers, called the denial “unfortunate” but said the oil companies ultimately will prevail in court.

“Selling us the energy we need to power our everyday lives is not a liability-inducing event and, if it becomes one, it will make energy much more expensive for all of us,” he said in a statement.

Also: Democrats are pushing legal strategies in other venues to hold polluters accountable or fight Trump on climate issues.

More than 40 lawmakers led by Sen. Jeff Merkley (D-Ore.) and Rep. Jan Schakowsky (D-Ill.) filed an amicus brief to the Supreme Court to support 21 youth plaintiffs suing the U.S. for failing to curtail climate change.

And California Gov. Gavin Newsom is planning a special session specifically devoted to “Trump-proofing” the state. That will include $25 billion to strengthen state and local legal action, likely to include climate issues, along with a disaster relief plan for the Los Angeles area hit by devastating wildfires in the face of Trump’s threats to withhold federal relief funding for the state.

WASHINGTON WATCH

DATA STAMP — President Joe Biden issued a sweeping executive order today aimed at fast-tracking data center development by opening up federal lands to construction, ensuring they’re powered by clean energy and sticking Big Tech with the bill, your host reports.

The order comes less than a week before Trump’s inauguration — and it’s not yet clear how the incoming president will deal with the policy rollout. Both Biden and Trump have emphasized the need for the U.S. to beat China and other nations in developing data centers to power artificial intelligence, but Trump has focused on expanding oil and gas production to power them.

Biden’s order directs the Defense and Energy departments to each identify at least three potential sites for building and operating data centers by the end of next month and the clean power capacity to fuel the data centers on federal lands by the end of 2027. Those departments would solicit competitive bids to lease the sites "all at private expense."

Speed is a key element of the order, which guides the DOD to fast-track environmental reviews and tasks agencies with "expeditious permitting."

The order also requires data center developers to bring on the clean power needed for their technology and pay for the construction and operations on federal lands.

"We will not let America be out-built when it comes to the technology that will define the future, nor should we sacrifice critical environmental standards and our shared efforts to protect clean air and clean water," Biden said in a statement.

The president’s move is a significant step aimed at leaving his mark on the future of AI, which has been criticized by environmental activists for its energy-intensive processes that they say could worsen pollution and raise power costs for consumers.

POLITICO reported last month that Biden was weighing taking action to fast-track data centers. Some of the more far-reaching measures under internal debate, like giving the tech firms priority access for available power supply and allowing data centers to run past pollution limits, didn’t make it into the final version after receiving blowback from Democratic lawmakers and progressive groups.

DOGE BALL — Public Citizen wants a seat alongside Elon Musk and Vivek Ramaswamy at the cool kids table.

Robert Weissman and Lisa Gilbert, co-presidents of the consumer advocacy nonprofit, wrote to Trump transition co-chairs Howard Lutnick and Linda McMahon requesting appointment as members of the so-called Department of Government Efficiency that Musk and Ramaswamy are heading up.

While the request is probably a needling move that is likely to go nowhere, it does outline some of the arguments groups like Public Citizen will make to Trump’s new administration.

Weissman and Gilbert argue that Musk and Ramaswamy are tied up in business conflicts of interest and aren’t representative of all stakeholders’ interests. Appointing Public Citizen to DOGE “would be an important step towards compliance” with the Federal Advisory Committee Act, which requires fairly-balanced memberships, they wrote.

AROUND THE NATION

ESG ON NOTICE — A federal judge has ruled that American Airlines broke the law by selecting an investment manager that incorporates environmental, social and governance goals in handling the company’s retirement funds, your host reports.

The extent of the ruling’s impact could hinge on the damages awarded to plaintiffs in the class action led by an American Airlines pilot, but it’s clear companies will be on notice as anti-ESG warriors claim yet another victory.

“The number one reason to think that it may have a very wide effect is that this case, while ostensibly about ESG, doesn't involve any ESG funds or ESG products,” Ropes & Gray partner Joshua Lichtenstein said in an interview. “It's only about mainstream investment funds — widely offered, very popular funds. This is a case that finds a breach of the duty of loyalty just based on the fact that non-ESG funds included ESG considerations as part of their proxy voting decisions. And that will be true of pretty much every 401(k) plan in America.”

And a sizable award to the plaintiffs could prompt copycat litigation, Lichtenstein said.

Judge Reed O’Connor ruled that BlackRock, the company selected to manage most of the airlines’ $26 billion retirement plan, harmed the financial interests of plan participants through its “ESG activism” that dictated that “delivering financial performance was no longer enough.”

BlackRock, the world’s biggest asset manager, is not a defendant in the case, but the ruling suggests there could be more trouble ahead for financial firms.

“The victory against American Airlines is a warning for corporate America: anyone who plays politics with people’s pensions will be held accountable,” said Iowa Attorney General Brenna Bird, who has joined with other Republican attorneys general in antitrust litigation against BlackRock and fellow asset-management giants State Street and Vanguard.

Meanwhile, investor advocates are fuming, coming off another landmark case last year in which ExxonMobil took activists to court over their shareholder proposals.

Danielle Fugere, president and chief counsel of As You Sow, a nonprofit shareholder advocacy group, said the ruling “poses a serious threat to investors’ right to rely on financial advisers and asset managers or make their own informed decisions about how to invest their retirement savings.”

AROUND THE WORLD

ZEROING OUT — A net-zero group’s decision to pause its activities is the latest disruption of global efforts to keep the finance industry involved in the fight against climate change as leading companies back away from high-profile engagement.

The U.N.-affiliated Net-Zero Asset Managers initiative said in a statement Monday that it is pausing tracking of implementation and reporting by members and removing the commitment statement and list of signatories from its website.

“Recent developments in the U.S. and different regulatory and client expectations in investors’ respective jurisdictions have led to NZAM launching a review of the initiative to ensure NZAM remains fit for purpose in the new global context,” the group said in its statement. “Signatories will be consulted throughout the review process and informed of any updates in a timely and transparent fashion.”

NZAM’s pause comes after BlackRock, the world’s leading asset manager, left the group after exits from a similar group by all six of the biggest U.S. banks.

The Glasgow Financial Alliance for Net Zero, the former umbrella organization for the industry groups, softened its membership requirements on Dec. 31 to no longer require companies to set formal net-zero targets to gain access to its guidance.

YOU TELL US

GAME ON — Welcome to the Long Game, where we tell you about the latest on efforts to shape our future. Join us every Tuesday as we keep you in the loop on the world of sustainability.

Team Sustainability is editor Greg Mott and reporter Jordan Wolman. Reach us at gmott@politico.com and jwolman@politico.com.

WHAT WE'RE CLICKING

— The federal government is warning for the first time that "forever chemicals" in sludge used for fertilizer poses a threat to human health, according to the New York Times.

— Hazardous waste exported from the U.S. is part of a "toxic cocktail" of emissions from a Mexican processing plant. The Guardian has that story.

— First they came for the cars. Now, New York City lawmakers are considering legislation aimed at reining in E-bikes, Bloomberg reports.

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