Evolving Climate Litigation: Updates and Implications for Business
Sign Up for PublicationsIn our May 2024 memorandum, “Climate Change Will Impact Almost Every Major Area of Commercial Litigation” (May 2024 Memorandum), we discussed the rapidly expanding scope of climate-related litigation and its growing impact on numerous business sectors, including fossil fuel and energy, real estate, insurance, corporate governance and disclosure, finance, and resource management. In this updated memorandum, we highlight developments in climate-related litigation since May 2024 and their potential future outcomes.
TABLE OF CONTENTS
I.......... Fossil Fuels/Energy.
II........ Corporate Governance and Disclosure.
IV....... Constitutional and Human Rights Litigation.
VIII.... Environment and Resource Management.
I. Fossil Fuels/Energy
In the early 2000s, a small number of states, municipalities, and proposed classes filed suits against major energy providers, alleging that the defendants’ purported contributions to climate change constituted public and private nuisances. In our May 2024 Memorandum, we observed that, following the failure of this first-wave of cases in federal courts, plaintiffs shifted their approach. Specifically, the several dozen plaintiffs who have filed since have structured their lawsuits to resemble other mass tort actions, such as those involving tobacco and opioids, and have predominantly filed in state courts. Unlike the first-wave of climate tort cases, at least some claims of these cases have survived motions to dismiss, including Minnesota v. American Petroleum Institute, 62-cv-20-2827 (Minnesota District Court Feb. 14, 2025); Annapolis v. BP, C-02-CV-21-000250 (Md. Cir. Ct. Jan. 23, 2025); Board of County Commissioners of Boulder v. Suncor Energy, 2018CV030349 (Colo. Dist. Ct. Jun. 21, 2024); Vermont v. Exxon Mobile Corp. et al., No. 21-cv-02778 (Vermont Superior Court Dec. 11, 2024); and Honolulu v. Sunoco, 1CCV-20-0000380 (Haw. Cir. Ct. Apr. 7, 2022). Motions to dismiss are also pending in more than a dozen other cases, with decisions expected over the next several months.[i] As of writing, no climate change-related tort case has progressed to discovery.
One crucial question in almost all of the second-wave cases concerns preemption—that is, whether some federal law—be it federal common law or a federal statute—preempts the viability of the state law claims. Several courts have dismissed cases as preempted by federal law, including City of New York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021), Mayor & City Council of Baltimore v. BP P.L.C. No. 24-C-18-004219 (Md. Cir. Ct. July 10, 2024), and City of Annapolis v. BP PLC, C-02-cv-21-250 (Cir. Ct. Md. Jan. 23, 2025).
Other courts have come to the opposite conclusion. For example, in a case brought by the City and County of Boulder, a Colorado state court rejected the defendants’ arguments that federal common law or the Clean Air Act preempted plaintiffs’ claims. Bd. Of County Comm’rs of Boulder County v. Suncor Energy (U.S.A.), Inc., No. 2018-cv-30349 (Colo. Dist. Ct. June 21, 2024). Similarly, in a lawsuit brought by the City and County of Honolulu against a number of oil and gas producers, the Hawaiʻi Supreme Court affirmed the circuit court’s denial of defendants’ motions to dismiss. City & County of Honolulu v. Sunoco LP, 537 P.3d 1173 (Haw. 2023). The Court held that the Clean Air Act did not preempt plaintiffs’ claims. On January 13, 2024, the U.S. Supreme Court denied several defendants’ petitions for writs of certiorari, allowing the Hawaiʻi litigation and related cases to move forward.
Still other court have adopted a middle road. For example, in State ex rel. Jennings v. BP Am. Inc., No. N20C-09-097 MMJ CCLD, 2024 WL 98888 (Del. Super. Ct. Jan. 9, 2024), the Delaware Superior Court dismissed several claims, while allowing others to proceed. Distinguishing itself from the City of New York court, the court clarified that federal law does not pre-empt state law claims for damages resulting from greenhouse gases originating within Delaware. The Supreme Court of Delaware denied the State’s interlocutory appeal and the defendants’ cross-appeal. State ex rel. Jennings v. BP Am. Inc., No. 54, 2024.
These second-wave climate change tort cases are also notable for pulling in a wider range of defendants. While earlier cases primarily targeted fossil fuel companies, plaintiffs in recent cases have started to expand their focus to other types of energy providers. For example, in City of Charleston v. Brabham Oil, 2020-CP-1003975 (Charleston Court of Common Pleas), plaintiff sued Colonial Pipeline Company, which does not manufacture or refine any fossil fuels, but only transports them. In County of Multnomah v. Exxon Mobil Corp., the plaintiff added Northwest Natural Gas Company as a defendant. Northwest is the largest provider of gas to Western Oregon and Southwest Washington. Similarly, on December 4, 2024, the town of Carrboro, North Carolina, filed what some consider the nation’s first-ever climate-change lawsuit against an electric utility, Duke Energy, Carrboro v. Duke Energy Corp., 24cv003385-670 (N.C. Superior Ct. 2024).
More recently, plaintiffs have also named industry groups and consultants as defendants in their climate change lawsuits, even though these entities do not themselves manufacture, refine, or sell any types of fuels. As an example, the County of Multnomah litigation named industry groups American Petroleum Institute and the Western States Petroleum Association as defendants, as well as the consulting firm McKinsey & Company.
On May 22, 2024, 19 states filed a motion to file a bill of complaint in the U.S. Supreme Court, seeking to enjoin climate-change lawsuits filed by California, Connecticut, Minnesota, New Jersey, and Rhode Island. Alabama et al. v. California, 220158 (U.S. 2024). The motion, which invokes the Court’s original jurisdiction, is still pending. On October 7, 2024, the Court called for the views of the Solicitor General, who, on December 10, 2024, urged the Court to deny the motion. The Supreme Court is expected to rule on the states’ motion soon. If the Supreme Court grants it, the parties will proceed to brief the argument that the climate-change lawsuits violate the horizontal separation of powers doctrine by effectively allowing states to regulate emissions outside of their borders.
In addition to these active cases , a few states are enacting legislation to achieve the same result. In December 2024, the Governor of New York signed the Climate Change Superfund Act, which would require major energy companies to pay a combined total of $75 billion to the State of New York to mitigate the effects of climate change. The first payments are due in 2028. A coalition of 22 states has already filed suit to block the Act, arguing that the law imposes liability in New York for emissions that occurred in other states. See State of West Virginia v. James, 1:25-cv-00168 (N.D.N.Y. Feb. 6, 2025). The coalition also argues that federal law preempts New York’s effort to levy payment for nationwide emissions. The State’s Answer is due in early March 2025.
Vermont also adopted a Climate Superfund Cost Recovery Program in 2024, but delegated many of the details to a regulatory body. Proposed rules are expected this year. The Vermont law has already been challenged in a lawsuit filed in late December 2024, U.S. Chamber of Commerce et. al v. Moore, 2:24-cv-1513 (D. Vt. Dec. 30, 2024). The plaintiffs assert that the Vermont statute is preempted by federal law and violates several constitutional provisions, including the due process clause, the commerce clause, the excessive fines clause of the 8th Amendment, and the takings clause of the 5th Amendment.
In spite of the pending legal challenges, other states are considering similar “climate superfund” legislation. In February 2025, California’s legislature introduced a proposal that would allow victims of natural disasters to sue fossil fuel companies for damages caused by climate change. The California proposal, titled the “Polluters Pay Climate Superfund Act,” is still pending in the legislature. Similar proposals have been introduced into other state legislatures, including in Maryland (the Responding to Emergency Needs from Extreme Weather Act), Massachusetts (the Massachusetts Climate Change Adaptation Cost Recovery Act), New Jersey (the New Jersey Climate Superfund Act), and Oregon (the Oregon Climate Change Recovery Act).
Climate change litigation is advancing outside the United States as well. The May 2024 Memorandum noted the widely discussed decision of Milieudefensie v. Royal Dutch Shell, where three judges of the Hague District Court ordered Shell to reduce its CO2 emissions by 45% by 2030 to comply with the 2015 Paris Agreement. See also Royal Dutch Shell Ordered to Reduce Its Global Emissions by 45% by 2030 (May 28, 2021). On November 12, 2024, the Hague Court of Appeal reversed that decision. See Corporate Climate Change Obligations in Milieudefensie v. Royal Dutch Shell. While the Court reaffirmed that Shell had an obligation to reduce its emissions, it clarified that Shell does not have the legal obligation to achieve a 45% reduction, or other alternative target, because “companies are free to choose their own approach to reducing their emissions . . . as long as it is consistent with the Paris Agreement’s climate targets.” This is probably not the end of the litigation, as the Court of Appeal decision will very likely be appealed to the Dutch Supreme Court.
II. Corporate Governance and Disclosure
Climate rulemaking and enforcement are not expected to continue in their prior form under the second Trump Administration. Even before the Presidential election, the SEC disbanded the Climate and ESG Enforcement Task Force against a growing backlash against ESG. The SEC had featured this as a priority every year from 2020 to 2023. The trend away from ESG at the federal level will only accelerate.
Corporate Average Fuel Economy (CAFE) standards are one example. Federal law requires the National Highway Traffic Safety Administration (NHTSA) to set CAFE standards at the maximum feasible level. In June 2024, NHTSA finalized rules that required, among other things, an increase in fuel economy standards for light-duty vehicles from 39.1 miles per gallon (MPG) to approximately 50.4 MPG by 2031. In response, a coalition of 26 Republican-led states filed a petition in the Sixth Circuit Court of Appeals, arguing that the standards violate free-market principles, impose undue costs on automakers, and risk straining the electric grid. Separately, industry groups, including the American Petroleum Institute, challenged the standards in the Fifth Circuit Court of Appeals, arguing that they exceed NHTSA’s statutory authority, unfairly favor electric vehicles, and raise affordability concerns. More recently, the newly appointed federal Transportation Secretary, has asked that the NHTSA review the regulations, stating that “[a]rtificially high fuel economy standards designed to meet non-statutory policy goals, such as those NHTSA has promulgated in recent years, impose large costs that render many vehicle models unaffordable for the average American family.”
There is similar uncertainty about various U.S. Environmental Protection Agency (EPA) rules. During the Biden Administration, the EPA promulgated regulations on numerous matters relating to climate issues, such as emissions limits for long-term coal-fired plants and new baseload gas-fired plants. These rules have faced challenges in the D.C. Circuit Court of Appeals from industry groups and states, as well as emergency applications for immediate stays. The U.S. Supreme Court has declined to block these rules thus far. However, litigation over their legality continues in the D.C. Circuit. In parallel, the EPA has removed references to climate change from certain portions of its website, and the Trump Administration has warned over 1,000 recently-hired EPA employees that their jobs could be eliminated.
Similarly, in May 2024, the SEC finalized the Climate Disclosure Rule, which requires public companies to report emissions and climate-related risks. In the May 2024 Memorandum, we discussed ongoing legal challenges to this Rule, which were consolidated for decision in the Eight Circuit. While the cases remain pending as of writing, it is likely that the new SEC Chair will announce that the Commission will not move forward with the Rule, rendering the lawsuits moot.
While a reconstituted SEC is likely to eschew any climate-related rule-making, steps by various other authorities, including U.S. states and international bodies, are likely to continue. For example, California has passed legislation requiring that, starting in 2026, various companies doing business in the State must disclose greenhouse gas emissions and climate-related financial risks, along with any measures they have adopted to reduce and adapt to those risks. Washington, New York, Illinois, and Minnesota have passed or are considering legislation that would impose similar requirements. Meanwhile, in Europe, sustainability reporting is mandatory for numerous companies. The European Union requires both large and listed companies to report risks and opportunities relating to social and environmental issues, along with how the companies’ activities affect people and the environment.
III. Greenwashing
As we reported in our May 2024 Memorandum, “greenwashing” is the process of conveying a false impression or misleading information that a business’s products are more environmentally friendly or less environmentally damaging than they really are. In the United States, most greenwashing litigation has been brought by private plaintiffs under state consumer protection and tort laws against sellers of goods and services. Recent lawsuits include one filed in January 2025 against Procter & Gamble, challenging the company’s claims to have ethically sourced Charmin toilet paper through sustainable reforestation policies, as well as a case against Target claiming its “Target Clean” products were in fact “unclean.”
As of 2024, prospective plaintiffs were expected to have a new tool for such claims in the form of updates to the Federal Trade Commission’s “Green Guides.” These Guides can form the basis for enforcement action by the FTC and are used as a benchmark by private plaintiffs. While the FTC had been working on such updates for several years, they were not finalized before the end of the Biden Administration and it remains to be seen what approach the second Trump Administration will take.
Nonetheless, greenwashing litigation will likely proceed in other forums or using different theories. For example, state Attorneys General will likely continue to bring greenwashing lawsuits against companies accused of inflating their environmental credentials. In August, Minnesota settled claims with Walmart and Reynolds Consumer Products, which alleged that the companies falsely marketed their bags as recyclable. Minnesota v. Reynolds Consumer Products, Inc., at al., Case No. 23-3104 (June 6, 2023). Private plaintiffs have also sued other companies alleging they falsely advertised their plastic bags as “recyclable.” See, e.g., Peterson v. Glad Products Co., Case No. -CV-00491 (N.D. Cal. Feb. 2, 2023). This fall, California and several environmental groups sued Exxon, claiming the company misled the public about the limitations of recycling “through misleading public statements and slick marketing promising that recycling would address the ever-increasing amount of plastic waste ExxonMobil produces.” People v. Exxon Mobile Corp., Case No. CGC24618323 (Cal. Super. Ct. Sep. 23, 2024). The case remains pending.
Meanwhile, as we reported in our May 2024 Memorandum, the European Securities and Markets Authority (ESMA) and other EU financial regulators have called for stricter oversight of sustainability-related claims, urging national authorities to allocate more resources for enforcement.
IV. Constitutional and Human Rights Litigation
In the May 2024 Memorandum, we discussed the growing trend of human rights and constitutional litigation predicated on climate-related harms. One highlighted decision was Juliana v. United States, in which the Ninth Circuit Court of Appeals held that the plaintiffs lacked standing to assert a due process violation for the federal government’s alleged failure to mitigate climate change. Since then, the Juliana plaintiffs petitioned the U.S. Supreme Court for a writ of certiorari. The Court has yet to rule on the petition, but granting it would set the stage for a landmark ruling on standing in the context of climate change and GHG pollution. Conversely, if the Supreme Court denies the petition, that will send a strong signal that the Court believes the Ninth Circuit’s ruling should apply across the country.
The May 2024 Memorandum also canvassed several cases involving Environmental Rights Amendments (ERAs) to state constitutions, including the Montana Supreme Court’s August 2023 decision in Held v. Montana. In that case, the court invoked an ERA guaranteeing Montanans the right to a “clean and healthful” environment to invalidate a state law banning the consideration of GHG emissions in state agency environmental reviews. The Held plaintiffs recently notched another victory in December 2024, when the Montana Supreme Court affirmed its 2023 ruling and clarified that the right to a stable climate system fell within the environmental provision of the state constitution; the plaintiffs had standing to sue; and strict scrutiny applied to the law at issue.
The plaintiffs in Navahine F. v. Hawaii Department of Transportation also achieved a victory in June 2024. Couched in Hawaiiʻs constitutional public trust doctrine, the suit alleged that the Government’s operation of its fossil fuel–based public transportation system infringed the plaintiffs’ right to a clean and healthy environment. The plaintiffs defeated a motion to dismiss and, on the eve of trial, extracted a robust settlement, including: an agreement that the state would issue a “Recognition of Rights,” clarifying Hawaiians’ environmental rights and the Government’s obligations to protect those rights; the establishment of a zero emissions target for 2045 for the public transit system, with a schedule of interim milestones; and the establishment of a climate mitigation unit within the Department of Transportation, among other things.
Recent developments in Fresh Air for the Eastside Inc. v. State of New York, however, show that not all state courts are as amenable to suits claiming ERA violations. In Fresh Air, a non-profit challenged New York’s operation of a landfill as violative of the ERA guaranteeing New Yorkers the right to clean air, alleging that the government’s mismanagement caused harmful pollutants (including GHGs) to escape from the landfill. In July 2024, after a lower court allowed the case to proceed, the Appellate Division granted the State’s motion to dismiss, finding that the allegations only implicated the state’s discretionary enforcement actions relating to the landfill, making the remedy of mandamus unavailable. Similarly, in June 2024, the plaintiffs in Layla H. v. Commonwealth of Virginia suffered a defeat when the Virginia Appellate Court affirmed the dismissal of their suit. That suit alleged that the State was violating the plaintiffs’ rights under the state doctrine of jus publicum (public trust) and the substantive due process principles of the Virginia Constitution. The court found that plaintiffs did not claim a particularized injury and failed to adequately plead a causal nexus between the alleged wrongdoing and any claimed injury.
Nonetheless, the trend of state lawsuits allege constitutional harms continues to increase. In July 2024, plaintiffs sued several state officials, including the Governor of New York, in Riders Alliance v. Hochul. The Complaint, which survived motions to dismiss in September 2024, alleges that Governor Hochul (and others) violated New York’s ERA and Climate Leadership and Community Protection Act by halting the implementation of a congestion pricing regime aimed at reducing automobile traffic in Manhattan. The Governor has since implemented the congestion pricing policy.
In another pending case, Healthy Gulf v. Secretary, Louisiana Department of Natural Resources, an environmental group challenged Louisiana’s issuance of a Coastal Use Permit for a liquified natural gas pipeline. The group alleges that the Government failed to adequately consider the climate and environmental impacts of the pipeline, and that the permit was issued arbitrarily and capriciously in violation of the public trust duty enshrined in the State’s Constitution. Likewise, in the recently filed Climate Solutions v. State of Washington, the plaintiffs invoke the Washington Constitution in seeking to invalidate a law that would allegedly reverse the current legal regime that encourages the development of clean energy. And in Reynolds v. Florida Public Service Commission, the plaintiffs request a declaratory judgment that the Florida Government violated citizens’ constitutional rights by promoting fossil fuel developments that contributed to climate harms, such as sea level rise, worsening storms and hurricanes, and extreme heat events.
There are active proposals and initiatives for ERAs in Arizona, California, Connecticut, Delaware, Florida, Hawai'i, Iowa, Maine, New Jersey, New Mexico, Texas, Vermont, Washington, and West Virginia. In New Mexico, the proposed ERA passed its first committee vote, teeing up another vote in the Energy and Natural Resources Committee. In Connecticut, public hearings to discuss the merits of the proposed ERA are underway. If these states adopt ERAs, it is likely that we will see an increase in the trend of constitutional challenges to laws and conduct that implicate climate change.
The trend of climate-related litigation grounded in constitutional or human rights principles also continues overseas. For example, in Fridays for Future Estonia vs. Environmental Board, Estonian activists challenged their government’s approval of the development of a new shale oil power plant. The Estonian court granted a short-term injunction blocking progress on the plant, but declined to extend the injunction beyond the initial period.
V. Finance
As we reported in our May 2024 Memorandum, ESG investing is a philosophy linking asset-outlay decisions to an assessment of a company’s sustainability efforts and social impact. ESG remains a legal Catch-22, with state governments producing a patchwork of inconsistent rules with which it is difficult, if not impossible, for investment professionals to comply in full.
On the one hand, as of early 2025, over half the states in the United States had passed legislation prohibiting investment fiduciaries from considering ESG factors, except to the extent they support pecuniary value. In line with these laws, in late November 2024, nearly a dozen Republican-led states sued BlackRock, Vanguard, and State Street, accusing them of collaborating to push “green” objectives in violation of antitrust laws. Texas et al. v. BlackRock, Inc. et al., 24-CV-00437 (E.D. Tex. Nov. 27, 2024). The case remains pending. This January, yet another multi-state coalition announced it had sent a letter to several major Wall Street firms, including J.P. Morgan and Goldman Sachs, warning legal action for diversity and climate-related investing policies.
On the other hand, investors who want the flexibility to consider ESG-related risks have challenged these restrictions in court, and in some instances have succeeded. For example, in August 2024, a federal court in Missouri struck down a rule requiring client approval to consider non-financial factors in investment decisions. Sec. Indus. & Fin. Markets Ass’n v. Ashcroft, No. 23-CV-04154-SRB (W.D. Mo. Aug. 14, 2024), The court found for a securities industry trade association on all counts and issued a permanent injunction barring the anti-ESG rules, which it found preempted by the Employee Retirement Income Security Act (ERISA) and the National Securities Market Improvement Act (NSMIA). The court also found that the rules, which required securities firms and professionals to obtain consent forms from investors before incorporating certain “social” or “non-financial objectives into investment decisions, failed to withstand intermediate scrutiny under the First Amendment and were unconstitutionally vague. Similarly, in October 2024 an Oklahoma district court struck down a law prohibiting investment funds from boycotting fossil fuel companies, ruling that the statute violated the state constitution and was vague and unclear. Sec. Industry & Fin. Markets Ass’n v. Ashcroft, 23-CV-04154 (W.D. MO. Oct. 17, 2024). And some states, such as Illinois, have passed legislation promoting ESG factors in investment or proxy voting decisions. See Ill. HB2782.
Given the current patchwork of ESG investment-related laws and rulings, many companies find themselves caught in the middle, needing to downplay ESG initiatives in some jurisdictions, while complying in others. These companies may engage in so-called “greenhushing,” where they attempt to keep ESG-related goals and considerations but do not advertise them. Within the past year, major financial institutions like Morgan Stanley, Bank of America, BlackRock, and Vanguard have pulled out of ESG-related collaborations. Another response is to attempt to tie ESG measures to pecuniary goals and value creation, thus attempting to tie ESG considerations financial risk and reward.
VI. Real Estate
As we noted in the May 2024 Memorandum, real estate has also become a focus for climate-related laws, regulations, and policies. In 2024, the Biden administration released the first ever national blueprint for decarbonizing the building sector, which includes a comprehensive plan to reduce emissions from buildings 65% by 2035, and 90% by 2050. It promotes four objectives (1) increasing building energy efficiency; (2) accelerating onsite emission reductions; (3) transforming the interactions between buildings and the electricity grid; and (4) minimizing the emissions from producing, transporting, installing and disposing building materials.
On state and local levels, as previously detailed in the May 2024 Memorandum, New York has enacted Local Law 97 imposing limits on building emissions. The law requires a 40% reduction from large buildings by 2030 and an 80% reduction by 2050. In California, the city of Burlingame passed Title 25, which prohibits building within 35 feet of wetlands and requires the disclosure of site-specific sea level rise analysis with every real estate transaction.
Many of these laws and regulations have been the subject of litigation. For example, on December 10, 2024, the Supreme Court heard argument in Seven County Infrastructure Coalition v. Eagle County, which involves a challenge to the reach of the National Environmental Policy Act (NEPA). NEPA requires federal agencies to analyze the environmental impact of their actions, including the grant of building permits. While Eagle County involves an agency’s decision regarding a railroad, the Supreme Court will review the scope of environmental impacts that an agency must consider, and curtailment of those requirements could have important implications for any regulated entities in the real estate industry that build large projects.
Likewise, Rinnai America Corp. v. South Coast Air Quality Management District, No. 2:24-cv-10482 (C.D. Cal., filed Dec. 5, 2024) challenges the California’s South Coast Air Quality Management District’s (“AQMD”) Rule 1146.2, which mandates zero-NOx emissions standards for certain natural gas appliances in new construction. The plaintiffs, including various industry associations representing home builders, restaurants, hotels, and apartment owners, argue that the rule effectively bans gas appliances and is preempted by the federal Energy Policy and Conservation Act (EPCA). The complaint contends that, because NOx is an inevitable byproduct of natural gas combustion, the zero-NOx requirement amounts to a de facto prohibition on all gas appliances.
The case builds on recent precedent from the 2024 decision in California Restaurant Association v. City of Berkeley. 89 F.4th 1094 (9th Cir. 2024). There, the Ninth Circuit Court of Appeals held that the EPCA preempted the City of Berkeley’s attempt to prohibit gas piping in new construction, which would effectively ban gas appliances. This represents a significant challenge to local climate regulations that are intended to phase out natural gas usage through emissions standards, rather than direct prohibitions.
Theses cases could have broader national implications for real estate development and construction. If successful, they could limit the ability of state and local governments to use air quality regulations as a tool for reducing natural gas use in buildings. This would potentially require policymakers to find alternative approaches to meeting climate goals or seek changes to federal law. The outcome could influence similar regulations being considered in other jurisdictions and shape the legal framework for building electrification efforts nationwide.
VII. Insurance
As a result of more frequent and severe natural disasters, insurance premiums are continuing to rise in many states, such as Florida, California, Texas, and Louisiana. These raising premiums are impacting both commercial and residential real estate markets. After years of significant losses, some carriers are leaving certain markets altogether.
Some states have responded by passing legislation favorable to the insurers. For instance, in Florida, Governor DeSantis signed HB 837, aimed at limiting policyholder’s ability to hold insurers accountable for the failure to pay benefits. In California, Governor Newsom has proposed making it easier for insurers to be approved for rate increases, and Insurance Commissioner Ricardo Laura has put together draft legislation that would require insurers to write more policies.
There has also been litigation surrounding insurance coverage for natural disasters. With enormous potential liabilities stemming from the recent California wildfires, nuanced issues regarding fire damage in particular will draw increasing litigation. For example, insurers had a major win in early February when the California Court of Appeal, Second District, held that after 2019 fires in Los Angeles, “wildfire debris” was not covered by insurance policies, as it did not entail actual damage or physical loss. Gharibian v. Wawanesa General Ins. Co., No. B325859, 2025 WL 426092 (Cal. Ct. App. Feb. 7, 2025). The court held that, for an insurer to be required to cover wildfire damage, there must be physical alteration to the property, and debris was not “direct physical loss.” Id. Given ambiguities about whether smoke damage constitutes a direct physical loss, we can expect litigation over this issue, which, given the scale of the Los Angeles wildfires, could involve hundreds of millions of dollars in claims.
VIII. Environment and Resource Management
As we reported in the May 2024 Memorandum, the climate change movement has led to several lawsuits challenging local attempts to regulate fossil fuel extraction and transportation. In one recent case, a California court ruled that California law preempted an oil drilling ban by the City of Los Angeles. Warren E&P, Inc. v. City of Los Angeles, 3-STCP-00060 (Cal. Super. Ct. Sep. 6, 2024). Several weeks later, the Legislature passed AB 3233, which gave localities greater authority to restrict oil and gas production.
In a similar case filed in November 2024, a developer in Iowa , challenged local regulation of carbon dioxide pipelines, arguing that such regulations were preempted under federal and state law. Summit Carbon Solutions, LLC v. Bremer County, 24-CV-1036 (N.D. Iowa Nov. 13, 2024). And in December 2024, a group known as Communities for a Better Environment filed a lawsuit challenging the California Air Resource Board’s (CARB’s) approval of amendments to the Low Carbon Fuel Standard, alleging that they would effectively subsidize fossil fuels without mitigation of alleged harms. Communities for a Better Environment v. California Resources Board, (Cal. Super. Ct. Dec. 18, 2024).
Litigants also continue to challenge development projects for failure to satisfy state and local siting laws. For example, in June 2024, petitioners filed lawsuits in New York Superior Court, challenging the Kensington Expressway Project in Buffalo, including New York’s consideration of GHG emissions and climate change in its review of the plan. East Side Parkways Coalition v. New York State Department of Transportation, Case No. 808792/2024 (N.Y. Super. Ct. June 14, 2024). In February 2025, a judge halted the project for environmental review.
Siting challenges are also on the rise in the alternative energy space. For example, in September 2024, petitioners challenged the environmental review of a hydrogen production and dispensing facility located in the Port of Stockton, California. Sierra Club v. Port of Stockton, Case No. 2024-0012095 (Cal. Super. Ct. Sep. 19, 2024). And in September 2024, a California court granted a preliminary injunction enjoining a California rule prohibiting solar contractors from working on various battery systems. Cal. Solar Energy Ass’n Inc. v. Contractors State License Board, Case No. 2024-00029818 (Cal. Super. Ct. Sep. 26, 2024). The petitioners had argued that the rule violated the California Administrative Procedure Act and would result in a chilling effect on solar and battery installations, thereby potentially increasing the use of carbon-based energy and GHG emissions.
The same trend seems to hold outside the United States. In 2024, a Portuguese community filed a lawsuit to halt work on a proposed solar farm, claiming it had been approved despite inadequate environmental impact assessments. Elsewhere, indigenous peoples and other communities have launched dozens of cases in connection with the renewable energy supply chain, with a particular focus on the mining sector. These cases assert a variety of harms, including alleged environmental abuses, water rights issues, and violations of indigenous interests.
One such case, against Indonesia’s Ministry of Environment and Forestry, was filed in 2023 by women farmers challenging the environmental permit for a zinc mine in Indonesia. In August 2024, Indonesia’s Supreme Court ruled in favor of the local communities and ordered the revocation of the permit for the mine.[ii] Such cases reveal tensions between the climate transition and competing local concerns, pressures which are likely to continue to grow as communities seek both to adapt to a changing climate and to ensure access to adequate energy sources.
IX. Antitrust
In the May 2024 Memorandum, we noted that coordinated efforts to address climate change face growing antitrust scrutiny. To date, such scrutiny has remained largely political. However, in the closing months of 2024, state Attorneys General initiated the first real wave of antitrust enforcement actions based on climate collaborations. In the coming months, it is likely that the Trump Administration will join in and ramp up these efforts.
To date, the most prominent climate-related collaboration has been the Climate Action 100+ initiative: a coalition of corporations across the financial services industry with a stated goal of voluntarily adopting investment strategies that are intended to reduce carbon emissions. Climate Action 100+ drew antitrust scrutiny from Republican Attorneys General and the House Judiciary Committee, which launched an investigation into the Coalition. The Judiciary Committee released an interim report on its investigation on December 13, 2024. While the Report primarily focused on the alleged involvement of Climate Action 100+ members in a shake-up of the ExxonMobil board of directors in 2021, the Report also signaled that further antitrust investigation was imminent.
Likely in response to these investigations, in the second half of 2024, some of Climate Action 100+’s largest members, including J.P. Morgan and Goldman Sachs, withdrew from the Coalition, citing in part their “obligations under antitrust laws.” And in late November, several Republican state Attorneys General filed a lawsuit against BlackRock, Vanguard, and State Street. The lawsuit alleges that these investment managers, through Climate Action 100+, used their collective ownership interest in several large coal companies to suppress output in the coal industry. Also in November, the Nebraska Attorney General initiated a lawsuit against the country’s four largest semi-truck manufacturers, alleging a conspiracy to phase out gas-powered trucks based on a 2023 agreement the manufacturers reached with the California Air Resources Board. In the coming months, it is likely that the Trump Administration will become involved in these or other antitrust enforcement actions alleging similar conduct.
***
An informed understanding of the evolving legal risks posed by potential climate-related litigation remains essential. Companies are advised to remain proactive in assessing their exposure and preparing for strategic and regulatory challenges in this dynamic area. If you have questions about the issues addressed in this memorandum, or if you would like a copy of any of the materials mentioned, please do not hesitate to contact:
Anthony P. Alden
Email: anthonyalden@quinnemanuel.com
Phone: +1 213-443-3159
Julianne Hughes Jennett
Email: jhughesjennett@quinnemanuel.com
Phone: +44 20 7653-2220
To view more memoranda, please visit www.quinnemanuel.com/the-firm/publications/
To update information or unsubscribe, please email updates@quinnemanuel.com
Endnotes:
[i] These include Anne Arundel County v. BP, C-02-CV-21-000565 (Md. Cir. Ct.), Connecticut v. Exxon Mobil Corp., No. HHD-CV20-6132568-S (Conn. Super. Ct.), District of Columbia v. Exxon Mobil Corp., No. 2020 CA 002892 (D.C. Super. Ct.), Platkin v. Exxon Mobil Corp., MER-L-001797-22 (N.J. Super. Ct.), Bucks County v. BP p.l.c., 2024-01836-0000 (Penn. Ct. C.P.), San Juan, Puerto Rico v. Exxon Mobil Corp., 3:23-cv-01608 (D.P.R.), and Rhode Island v. Shell Oil Products Company, et al., PC-2018-4716 (R.I. Super. Ct.).
[ii] Indonesia Miner, BRMS Subsidiary Will Continue Mining Operations, Aug. 21, 2024, available at Indonesia Miner: BRMS Subsidiary Will Continue Mining Operations