Oakland and San Francisco’s city attorneys won an appeal to have a multi-year climate change lawsuit against several oil companies heard in state court.

The decision came Monday in a ruling handed down by U.S. District Judge William Alsup of San Francisco.

The ruling frees the cities to sue major oil companies in California state court for selling fossil fuel products and allegedly deceiving customers about their impact on climate change. The companies sought to keep the case in federal court.

“We agree with and appreciate Judge Alsup’s order to remand our cases back to the state courts where they were filed five years ago and where they belong,” city attorneys David Chiu of San Francisco and Barbara Parker of Oakland said in a joint statement.

The suit, filed in 2017, seeks damages from five oil giants — BP, Chevron, Conoco, Exxon Mobil and Shell — that profit from products causing rises in temperatures and sea levels. Citing their increased costs for sea walls and other protective measures, the cities sued in state court under California’s law allowing damages for a “public nuisance,” private actions that harm the public health.

San Francisco’s offering documents in a 2017 bond sale — which reference climate change — were used by the oil companies to attempt to demonstrate the city couldn’t definitively describe the impact of climate change on seawall rise.

A San Francisco city attorney spokesman, told The Bond Buyer at the time the bond documents for San Francisco’s October 2017 sale do cite climate change and rising sea levels as a risk factor. The bond documents estimate that up to $62 billion in assets including roads, schools, hospitals would be at risk from a 100-year flood.

In regard to Monday’s ruling, the companies prefer federal court, where judges can consider state laws but are generally less receptive to those laws than state courts and are more likely to dismiss such suits.

Alsup initially ruled the case belonged in federal court, saying any attempt to limit air pollution affects other states and is subject to nationwide regulation. He dismissed the suit in 2018, finding that regulation of fuel production was a question for policymakers, not federal judges.

But the Ninth Circuit reinstated the case in 2020, saying Oakland and San Francisco were not accusing the companies of violating federal pollution law, only of harming local governments and their residents, and the state Supreme Court denied review of the companies’ appeal. 

Alsup’s decision follows an April ruling by the Ninth U.S. Circuit Court of Appeals allowing California courts to oversee a similar climate-change suit by other local governments, including San Mateo, Marin and Santa Cruz counties. In Alsup’s court, the oil companies offered additional arguments for federal jurisdiction, including their drilling operations on the Outer Continental Shelf and other federally owned or managed lands, but he ruled against them.

Theodore J. Boutrous, Jr., a partner with Gibson, Dunn and Crutcher and counsel for Chevron Corp., noted in a statement that Alsup made a reference to his hands being somewhat tied by the Ninth Circuit court ruling.

“If we were writing on a clean slate, these allegations in the complaints would seem to sustain removal jurisdiction, given their sustained emphasis and attacks on production and sale of fossil fuels and given the central role of the outer Continental Shelf in America’s oil production,” Alsup wrote.

“Climate change is an issue of global magnitude and importance that requires a coordinated federal policy response, not a disjointed patchwork of state lawsuits,” Boutrous said. “Judge Alsup made clear that, were he writing on a ‘clean slate,’ the allegations in the complaint would support removal to federal court, but he felt constrained by rulings by the Ninth Circuit.

Boutrous added, Chevron will be challenging the Ninth Circuit Ruling in state Supreme Court.

“We are pleased that the district court has stayed remand pending exhaustion of all appeals,” Boutrous said.