U.S. Supreme Court to decide whether climate suits can go forward

Tomorrow, the U.S. Supreme Court will hear arguments about whether a lawsuit filed in state court in Colorado seeking damages from two major oil companies for the climate-change related damage inflicted on Boulder County can go forward.

Here's the short version: The Canadian-based Suncor Energy Inc. and Texas-based ExxonMobil say that policies regarding climate change and any alleged damages resulting from it are matters for the federal government and courts only and that therefore the state suit should not be allowed to go forward. Boulder County says that it merely seeks compensation for damage done to Boulder and its residents by decades of emissions from these two companies. It is not seeking to change the policies of the federal government.

The energy companies contend that a victory for Boulder County would allow many similar suits to proceed and could bankrupt the oil industry by essentially creating a judicially ordered "carbon tax" in the form of damages.

I do not have an opinion about whether the Supreme Court will allow Boulder's suit to go forward. But I do know that saying that you will go bankrupt if you lose a lawsuit is not much of defense. Just ask the asbestos industry that suffered a rash of bankruptcies after losing cases for destroying the health of people who worked with and were exposed to their products.

Now, here's the key thing to know about bankruptcies. Large companies with valuable assets very often reorganize under court supervision and continue to operate while paying their debts. Even if the oil industry were hit with hundreds of billions in damages, it would most likely reorganize so that much of its future profits go to those entities that sued successfully. That would mean that shareholders would probably have little remaining value or get wiped out. Bondholders might take a serious drubbing. And, of course, executives owning their company's stock would fare no better. No wonder the industry is apoplectic at the prospect of these suits going forward!

In the extreme, the large jury awards could be satisfied by handing over chunks of ownership of the losing companies to the municipalities, states and others who have sued. Perhaps the most prominent recent example of this is a lawsuit against podcaster Alex Jones whose InfoWars empire was ordered sold to satisfy a $1.3 billion jury verdict against him, an order that, as far as I can tell, remains under litigation.

But I am, of course, getting ahead of myself. Months from now the Supreme Court will decide whether these cases can go forward. If they do go forward, prepare for a huge cry from the industry that if the plaintiffs prevail, it will be the end of the world as we know it—when all that would really change is who owns the profits and possibly the assets of the industry. In other words, a key industry that profited from damaging the climate would finally have to pay for that damage.

Kurt Cobb is a freelance writer and communications consultant who writes frequently about energy and environment. His work has appeared in The Christian Science Monitor, Resilience, Common Dreams, Naked Capitalism, Le Monde Diplomatique, Oilprice.com, OilVoice, TalkMarkets, Investing.com, Business Insider and many other places. He is the author of an oil-themed novel entitled Prelude and has a widely followed blog called Resource Insights. He can be contacted at kurtcobb2001@yahoo.com.