US Supreme Court hears climate case: energy firms warn of mass liability

By Isha Marathe Oct 6 (The Insurer) — The US Supreme Court heard arguments on Monday on whether federal law bars Boulder, Colorado, from pursuing state-law tort claims against Suncor Energy and ExxonMobil over alleged climate-related harms, with insurance trade groups backing the energy companies and warning of major aggregation risks. The decision has significant implications for energy companies and manufacturers, potentially opening corporations up to a huge swathe of litigation and economic burden, said their counsel.

The American Property Casualty Insurance Association (APCIA), Complex Insurance Claims Litigation Association (CICLA) and Reinsurance Association of America (RAA) filed an amicus brief supporting Suncor and Exxon, arguing that differing state climate-liability standards could make exposures more difficult for insurers to price and aggregate. The case, Suncor Energy v. County Commissioners of Boulder County, stems from a 2018 lawsuit in Colorado state court in which Boulder County alleged that Suncor and Exxon misled the public about the climate impact of fossil fuels and that they contributed to climate change by refining and producing these products.

Canada's Suncor operates an oil refinery in Colorado, while Exxon is the largest energy company in the US. Boulder sought millions of dollars under claims based on interstate and international greenhouse gas emissions, which are governed by federal law, not individual states’ tort regimes. The county maintains that its demands for the alleged local harms and deceptive conduct and are not an attempt to regulate emissions. In lower courts, the energy companies argued that each state cannot impose its own liability rules for a global emissions problem.

In turn, Boulder said that Colorado was not setting a global emissions policy, but rather applying ordinary state tort law to alleged local injury and wrongful corporate conduct. The Colorado Supreme Court found that Boulder's state claims could go ahead. Exxon and Suncor went to the US Supreme Court in August 2025 and it granted a petition for review in February 2026. Importantly, the lower court did not rule on the merits of whether the energy companies were responsible for the alleged harms, and the US Supreme Court is similarly not making a judgment on that matter.

In Monday's oral arguments, the highest court took up two issues: first, whether it even has jurisdiction over the case, and second, whether the state tort claims can proceed, or if they are superseded by federal law. Justice Samuel Alito is not participating in the case on account of owning stock in oil and gas companies. His absence creates the possibility of a 4-4 tie, which would toss the issue back to Colorado's decision, permitting Boulder's claims to go ahead. Kavanaugh: 'Any Manufacturer, Any Business' Is Vulnerable To A Suit Like This Much of Monday’s argument focused on the distinction between imposing damages through tort law and directly regulating emissions.

Justice Amy Coney Barrett asked Boulder’s lawyer, Kevin Russell, whether Colorado could enact a law purporting to cap emissions in the other 49 states and, after Russell said such a law would face constitutional problems, asked why a tort suit could not produce a similar result. ” Barrett asked. Russell, who is a partner at Russell & Woofter, said the two were different because the lawsuit would not prohibit the companies’ conduct but rather require them to bear the damage allegedly caused by their activities.

Justice Brett Kavanaugh followed up on that exchange, questioning whether the financial consequences of multiple tort actions could themselves affect company behavior. ” He asked why that potential effect should be treated differently from direct state regulation. '90,000 Municipalities' Could Bring Such Claims If The Suit Goes Ahead "If Boulder's claims are allowed to go forward, some 90,000 municipalities across the country will have the ability to make national and international energy policy by asking juries to impose catastrophic damages on selected fossil-fuel producers," said Kannon Shanmugam, attorney for Exxon and Suncor.

He also argued that the pool of potential plaintiffs could extend to individuals alleging climate-related harm. The discussion is particularly relevant to the casualty insurance sector, said amicus briefs filed by the APCIA, CICLA and RAA, although insurance was not directly addressed during oral argument. The groups said insurers need predictable liability standards to price coverage, allocate capital and maintain reserves, and warned that parallel suits based on the same underlying conduct could produce correlated losses and prompt carriers to narrow coverage or exclude climate-related liabilities.

Former California insurance commissioner Dave Jones, who filed an amicus brief supporting Boulder, disputed that characterization. Jones argued that broad restrictions on state tort claims could instead interfere with insurers’ ability to recover losses through subrogation, under which carriers that have paid claims can seek reimbursement from third parties allegedly responsible for the damage. He pointed to the 2018 Camp Fire, for which insurers recovered $11 billion of more than $12 billion paid to victims through subrogation claims against utility PG&E, as an example of the role tort remedies can play in recovering catastrophe losses.

Jones also questioned in his brief the extent to which the underlying climate claims pose direct coverage risk to liability insurers, noting that the industry groups themselves acknowledged that some greenhouse-gas-related liabilities may fall outside standard commercial general liability policies because of occurrence requirements and pollution exclusions. Justice Elena Kagan compared aspects of the case with litigation brought by governments against tobacco companies in the 1990s, noting Boulder’s allegations that fossil-fuel producers made misrepresentations that encouraged use of their products.

Shanmugam rejected her argument, arguing that the tobacco cases involved more conventional misrepresentation claims and that Boulder’s alleged injuries ultimately depend on global greenhouse gas emissions. The procedural posture of the case also drew questions. Justice Ketanji Brown Jackson told Shanmugam that discussions during the argument made the dispute seem “really early” and questioned whether the US Supreme Court's review was premature.

Shanmugam, who is head of Davis Polk's Supreme Court & Appellate practice, responded that the companies already face roughly three dozen similar cases involving more than 60 municipalities and argued that the federal issue warranted resolution now.