California Court Ruling on Climate Liability Raises Stakes for Refiners—and National Security

In re Fuel Industry Climate Cases :: 2026 :: California Courts of Appeal Decisions :: California Case Law :: California Law :: U.S. Law :: Justia

TL;DR: A California appeals court ruled that Citgo can be sued for climate damages based solely on distributing gasoline in the state decades ago—even without refining operations there. The January 5 decision expands potential liability across the fossil fuel supply chain as California's refining capacity shrinks by 20% and fuel prices hit record highs. The ruling triggers unresolved constitutional questions about whether state courts can regulate global climate impacts affecting interstate commerce and national defense, with Supreme Court review likely within 2-3 years.

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California's expanding climate litigation collides with a contracting fuel supply, raising fundamental questions about who pays for climate adaptation—and whether state courts can impose that burden on a global industry with national security implications.

The First District Court of Appeal's decision in County of San Mateo et al. v. Citgo Petroleum Corporation breaks new ground by holding that fossil fuel distributors can face California lawsuits even without production facilities in the state. The unanimous ruling, issued January 5, 2026, found that Citgo's gasoline distribution activities from the 1980s through mid-2000s—supplying approximately 330 retail locations through partnerships with Sears, 7-Eleven, and Jack in the Box—establishes sufficient legal jurisdiction for climate damage claims.

But the decision arrives as California faces mounting fuel supply challenges that could affect both consumer prices and military readiness, while raising constitutional concerns about whether 50 state court systems can separately regulate an inherently interstate and international problem.

The Legal Framework: From Asbestos to Fossil Fuels

The appellate court's central innovation was applying product liability law's "failure to warn" doctrine to climate change. Justice Therese M. Petrou wrote that "Citgo's participation in the distribution of fossil fuel products in California, combined with its alleged knowledge of the risks associated with fossil fuels and the undisputed lack of any warning to consumers regarding those risks, satisfy the 'related to' factor. Nothing more is needed."

The court rejected Citgo's argument that it acted merely as a "middleman" providing limited branding to retailers. Between 1983 and 2007, Citgo purchased gasoline from California refiners, arranged transportation, required retailers to display Citgo's Tristar logo, and reserved rights to control product quality and branding. Purchase contracts showed Citgo bought 16-22 million gallons monthly from California suppliers.

"By using its logo and point of purchase branding materials, Citgo 'advertise[d] the product' by associating the gasoline with its brand," the court found, noting that courts have long recognized trademarks as a form of advertising that guarantees quality and promotes sales.

The decision draws heavily on California asbestos precedents, particularly Webb v. Special Electric Co. (2016), where the state Supreme Court held that "the duty to warn applies to all entities in a product's chain of distribution," including raw material suppliers. The appellate court found Citgo's role even more direct than equipment manufacturers whose products merely used asbestos-containing materials.

The ruling also relies on the U.S. Supreme Court's 2021 decision in Ford Motor Co. v. Montana Eighth Judicial District Court, which clarified that specific jurisdiction exists when claims "relate to" a defendant's forum-state contacts, without requiring strict causation. Just as Ford's service network and parts distribution justified Montana jurisdiction over product liability claims for vehicles sold elsewhere, Citgo's distribution infrastructure supports California jurisdiction over climate claims.

San Francisco Superior Court Judge Ethan P. Schulman had previously denied similar jurisdictional challenges by ExxonMobil, Shell, BP, and other major producers, finding their extensive California marketing created sufficient contacts. But he granted Citgo's motion, concluding plaintiffs hadn't demonstrated actual deceptive marketing in California. The appellate court reversed, holding that failure to warn—not affirmative misrepresentation—provides adequate grounds for jurisdiction.

The Cases: Seven Local Governments Seek Billions

The consolidated litigation involves the Counties of San Mateo, Marin, and Santa Cruz; the Cities of Imperial Beach, Richmond, and Santa Cruz; the San Mateo County Flood and Sea Level Rise Resiliency District; and a parallel suit by San Francisco. They assert seven causes of action: public nuisance (on behalf of California and individually), strict liability for failure to warn, private nuisance, negligence, negligence for failure to warn, and trespass.

Plaintiffs target over 30 defendants identified as "vertically integrated extractors, producers, refiners, manufacturers, distributors, promoters, marketers, and sellers of fossil fuel products," including Chevron, ExxonMobil, BP, Shell, ConocoPhillips, Phillips 66, Marathon, and other major companies.

The complaints allege defendants knew since the 1980s that fossil fuel combustion drives climate change but "mounted disinformation campaigns" to protect investments by "undermining scientific data on climate change, creating doubt about the consequences of burning fossil fuels, and delaying transitions away from using fossil fuels." Internal documents show companies' own scientists accurately predicted warming trends while executives publicly questioned climate science.

California-specific harms cited include extreme flooding, sea level rise threatening coastal infrastructure, increased wildfire risk, drought, and landslides requiring billions in adaptation investments. California's Fourth Climate Change Assessment projects climate impacts could cost the state economy $113-150 billion annually by 2050 through wildfire damage, coastal flooding, reduced agricultural productivity, and public health impacts.

The Legislative Analyst's Office estimated sea level rise alone could cause $8-10 billion in coastal property damage by 2050, escalating to $63 billion by 2100 under moderate scenarios—or over $150 billion under high-emissions projections. The 2017-2020 wildfire seasons caused over $90 billion in insured losses and $200 billion in total economic damages.

"These aren't abstract future costs—we're paying them now," San Mateo County Supervisor David Canepa told the San Jose Mercury News in December 2024. "We spent $40 million last year on emergency storm response and infrastructure repairs. Climate adaptation isn't optional; the question is who pays for it."

The Supply Crunch: Refining Capacity Down 20%

The Citgo decision compounds challenges facing California's petroleum sector, where refining capacity has declined from approximately 2.1 million barrels daily in 2015 to 1.7 million by 2024—nearly 20% reduction—according to U.S. Energy Information Administration data.

Phillips 66 announced in October 2024 it would permanently cease operations at its Los Angeles-area refinery in late 2025, eliminating 139,000 barrels daily—roughly 8% of state capacity. The company cited "long-term sustainability of the business" and California's "policy and regulatory environment."

Marathon Petroleum shuttered its 157,000-barrel-daily Martinez refinery in 2020, converting it to renewable fuels. Valero closed its Benicia refinery's crude unit in 2020. Shell sold its Martinez facility to PBF Energy, which announced renewable diesel conversion plans.

"The Phillips 66 closure is just the latest in a series of exits," said Severin Borenstein, faculty director of UC Berkeley's Energy Institute. "When you add increased litigation risk on top of regulatory uncertainty, you create an environment where companies reassess their California exposure."

The California Energy Commission's 2024 Fuels Assessment Report warned that "the state faces increased risk of supply disruptions and price spikes as refining capacity contracts and the market becomes more dependent on imports and fewer in-state suppliers."

California already imports 10-15% of gasoline, primarily from South Korea and Saudi Arabia. Projections suggest import dependence could reach 20-25% by 2030 as domestic capacity declines. The state's unique California Air Resources Board (CARB) gasoline specifications—required for air quality—mean fuel from other U.S. states generally can't substitute for local production, creating supply isolation.

"California is essentially an island when it comes to gasoline supply," explained Jamie Court, president of Consumer Watchdog. "The special CARB formula means we can't easily bring in fuel from other states when we have shortages. As refineries close and litigation risk increases, we're creating a perfect storm."

The Price Impact: Nation's Highest Costs Climbing

California consumers already face America's highest gasoline prices—$4.65 per gallon as of January 2026 versus $3.12 nationally, according to AAA. The October 2024 differential reached $1.85 per gallon, the widest on record.

The Western States Petroleum Association estimates California's unique regulations—specific fuel blends, cap-and-trade compliance, Low Carbon Fuel Standard—add approximately $1.27 per gallon beyond federal and state taxes. Association president Catherine Reheis-Boyd warned that "every additional cost gets passed through to consumers. Climate litigation creates financial uncertainty that affects investment decisions, insurance costs, and ultimately retail prices."

A 2023 UC Davis study estimated reduced competition in California's gasoline market costs consumers approximately $1.3 billion annually in higher prices beyond competitive market levels. As concentration increases, these costs could escalate.

The Energy Commission's Petroleum Market Advisory Committee noted in 2024 that "unexpected refinery outages have increasingly significant price impacts as the number of operating facilities declines. A single refinery outage that might have caused a 15-cent price increase five years ago now routinely causes 30-40 cent spikes."

Independent analyst Tim Hamilton testified before the legislature in November 2024 that California was entering "uncharted territory" regarding supply concentration. "We're one major refinery incident away from supply shortages and price spikes that could reach $6-7 per gallon," he warned.

California refineries already face compressed margins compared to other regions—$37.14 per barrel average gross product worth in 2023 versus $48.22 on the Gulf Coast, per Energy Commission data. The Western States Petroleum Association reported California refineries face approximately $2.8 billion annually in compliance costs from state-specific environmental regulations, excluding federal requirements.

"The California market has specific challenges that make it less attractive for investment," said Tom Kloza, global head of energy analysis at Oil Price Information Service. "You have higher operating costs, stricter environmental regulations, earthquake risks, and now expanding legal liability. Companies are doing the math and deciding they can deploy capital more profitably elsewhere."

The National Security Dimension: 32 Military Bases at Risk

California hosts 32 military installations consuming approximately 2 billion gallons of fuel annually, according to a 2023 Defense Logistics Agency report. Major facilities include naval bases at San Diego, Marine Corps installations at Camp Pendleton and Twenty-Nine Palms, Air Force bases at Edwards, Vandenberg, and Beale, and the Army's Fort Irwin National Training Center.

The Defense Fuel Support Point in San Diego is one of the world's largest military fuel distribution facilities, supporting Pacific Fleet operations. Naval Air Station Lemoore operates the Navy's master jet base for the West Coast, requiring substantial aviation fuel.

"If state tort litigation drives refiners out of California, the Pentagon faces a logistics nightmare," said retired Vice Admiral John Bird, former Seventh Fleet commander. "We can't run carrier strike groups and air wings on imported fuel with uncertain supply chains. National defense requires reliable domestic refining capacity in strategic locations."

California's aerospace industry contributes approximately $150 billion annually and supports 500,000 jobs, many in defense sectors. Northrop Grumman, Lockheed Martin, Boeing, General Dynamics, and Raytheon operate major facilities requiring reliable energy supplies.

The 2022 National Defense Strategy identifies "ensuring energy security" as a critical priority, noting that "strategic competitors seek to weaponize energy dependencies" and that "maintaining diverse, resilient domestic energy production capabilities reduces vulnerabilities."

"The military can't depend on hoping South Korean refineries ship enough CARB-compliant fuel when we need it," said retired General Robert Neller, former Marine Corps Commandant. "That's a logistics vulnerability in any conflict scenario involving Pacific operations."

The Constitutional Questions: Can States Regulate Global Problems?

The Citgo decision heightens unresolved constitutional tensions about whether state tort law can address climate change—an inherently global phenomenon with interstate commerce and national security implications.

The Dormant Commerce Clause Problem

The Constitution's Commerce Clause prohibits states from regulating commerce in ways that unduly burden interstate trade or discriminate against out-of-state interests. Several scholars argue California's climate litigation violates these principles.

"California is effectively attempting to regulate global greenhouse gas emissions through its tort system," argued Professor Bradford Clark of George Washington University Law School. "The Supreme Court has repeatedly held that states cannot control conduct occurring wholly outside their borders. Climate change is the ultimate extraterritorial problem."

In Healy v. Beer Institute (1989), the Supreme Court held that state laws have impermissible extraterritorial effects when they "directly regulate commerce occurring wholly outside that State's borders." California's cases seek damages based on global emissions and worldwide sales, not merely in-state conduct.

"Plaintiffs allege global warming harms from worldwide fossil fuel combustion," noted Professor Michael McConnell of Stanford Law School. "They're asking California courts to impose liability for lawful activity occurring across all 50 states and 190 countries. That's precisely what the Commerce Clause forbids."

The Court addressed similar concerns in BMW of North America v. Gore (1996), striking down punitive damages based partly on out-of-state conduct. "No State can 'legislate beyond its borders,'" Justice Stevens wrote.

Clean Air Act Preemption

Industry defendants argue the Clean Air Act establishes a comprehensive federal framework for regulating greenhouse gases that preempts state tort claims. EPA gained authority to regulate CO2 following the Supreme Court's 2007 Massachusetts v. EPA decision.

"Congress designed the Clean Air Act as the exclusive remedy for air pollution harms," argued Theodore Boutrous, representing Chevron. "Allowing states to impose separate tort liability for the same emissions creates exactly the patchwork the Act was designed to prevent."

The Supreme Court recognized in American Electric Power v. Connecticut (2011) that the Clean Air Act displaces federal common law nuisance claims for greenhouse gases. "The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions," Justice Ginsburg wrote. However, AEP left open whether state law claims survive, creating the opening plaintiffs exploit.

"The distinction between federal and state common law is formalistic," argued Professor Ann Carlson of UCLA Law School, former EPA chief counsel. "If federal common law is displaced because Congress gave EPA regulatory authority, the same logic should displace state tort law. Otherwise you have 50 states imposing potentially inconsistent liability for the same federal air pollutant."

The Major Questions Doctrine

The Supreme Court's "major questions doctrine" from West Virginia v. EPA (2022) provides another potential limitation. The Court held that agencies claiming authority over issues of "vast economic and political significance" need clear congressional authorization.

"If EPA lacks authority to fundamentally reshape electricity generation without explicit congressional authorization, how can state courts effectively do the same through tort damages?" asked Professor Cass Sunstein of Harvard Law School. "The climate cases seek to accomplish through litigation what the Court said agencies can't do through regulation."

Chief Justice Roberts emphasized in West Virginia that authority to restructure "a significant portion of the American economy" requires clear congressional delegation. State climate litigation seeks damages that would effectively penalize fossil fuel production—potentially more economically significant than the regulatory authority EPA claimed.

Foreign Policy Implications

Climate change implicates foreign relations in ways that traditionally trigger federal preemption. The United States is party to the UN Framework Convention on Climate Change, the Paris Agreement, and numerous bilateral climate agreements.

"State court climate litigation interferes with the President's conduct of foreign relations," argued Curtis Bradley, professor at the University of Chicago Law School. "The Executive Branch negotiates international climate commitments. State courts can't second-guess those negotiations by imposing separate damages regimes."

In Crosby v. National Foreign Trade Council (2000), the Supreme Court struck down a Massachusetts law imposing Burma sanctions because it conflicted with federal foreign policy. State climate litigation could similarly conflict with federal climate diplomacy.

Foreign-owned defendants—BP (UK), Shell (Netherlands), Repsol (Spain), and Eni (Italy)—may have rights under bilateral investment treaties protecting against discriminatory treatment. "If U.S. state courts impose massive liability on foreign energy investors for lawful activities, those investors could invoke treaty arbitration," explained Professor Anthea Roberts of Australian National University. "That could result in the U.S. federal government facing international arbitration claims for state court actions."

Interstate Conflict

State attorneys general have split sharply. Democratic AGs from 20+ states filed amicus briefs supporting plaintiffs, while Republican AGs from 15+ states supported defendants and raised preemption concerns.

"These cases represent California and blue states trying to impose climate policy preferences on the entire country through litigation," argued Montana Attorney General Austin Knudsen. "Energy policy affects every state. California can't unilaterally decide for Wyoming, Texas, and North Dakota how fossil fuel companies should be regulated."

The Western Energy Alliance estimated climate litigation adverse to industry could eliminate 150,000 jobs in Western states and reduce state tax revenues by $8 billion annually. "California gets to drive electric vehicles charged by power imported from neighboring states while imposing liability on companies providing jobs in our communities," charged North Dakota Attorney General Drew Wrigley.

The Broader Litigation Wave

California's case is part of a growing wave of climate accountability lawsuits. The Sabin Center for Climate Change Law at Columbia University tracks over 40 active cases filed by state and local governments against fossil fuel companies in U.S. courts.

Hawaii's Supreme Court ruled in City and County of Honolulu v. Sunoco LP (2023) that claims could proceed under state law. Rhode Island's case against 21 companies, filed in 2018, continues in state court following the U.S. Supreme Court's 2021 refusal to review jurisdictional rulings. Massachusetts, Minnesota, Delaware, Connecticut, Vermont, New Jersey, and Oregon have filed similar suits between 2020 and 2024.

Multiple federal courts have consistently ruled these cases belong in state rather than federal court, rejecting removal attempts. The Supreme Court declined to review those procedural rulings in April 2023, allowing state proceedings to continue. However, the Court hasn't addressed the merits—whether federal law preempts state climate tort claims.

"The removal battles have been about procedure, not merits," explained Andrew Grossman, partner at BakerHostetler representing defendants. "We've argued these cases raise federal questions. Courts have said 'argue preemption as a defense in state court.' That creates an unusual situation where federal defenses get litigated in state court"—but positions federal preemption issues for eventual Supreme Court review.

Internationally, climate litigation has proliferated. The European Court of Human Rights ruled in April 2024 that governments have obligations to protect citizens from climate impacts. The Dutch court ordered Shell to reduce emissions 45% by 2030 in the Milieudefensie case (currently on appeal). Australia and Canada have seen similar corporate climate accountability cases.

Financial and Insurance Market Reactions

The expanding liability scope is affecting insurance markets and corporate finance. Swiss Re noted in its 2024 climate risk report that "climate litigation represents a growing liability exposure for multiple sectors, including energy, transportation, and finance."

Several major carriers have reduced fossil fuel operations coverage. Allianz, Munich Re, Swiss Re, AXA, and Zurich Insurance announced restrictions on insuring coal, oil, and gas projects between 2021 and 2024, citing climate risk and reputational concerns.

"Directors and officers insurance for energy companies has become more expensive and harder to obtain," said attorney Kevin LaCroix, who tracks D&O insurance. "Insurers are specifically excluding or limiting climate litigation coverage. Companies face higher premiums and larger retentions."

Bond rating agencies have incorporated climate litigation risk into credit assessments. Moody's published a framework in September 2024 noting "state and local climate litigation represents a material credit consideration." Standard & Poor's stated in November 2024 that "the proliferation of climate lawsuits and recent jurisdictional rulings create meaningful credit risk for energy sector issuers."

ExxonMobil spent approximately $312 million on climate litigation costs between 2020 and 2023 per securities filings. BP disclosed $187 million over the same period. Marsh McLennan estimated the global fossil fuel industry could face cumulative legal defense costs of $10-15 billion through 2030 across all climate litigation, before accounting for potential damage awards.

Carbon Tracker estimated aggregate potential liability of $100-500 billion across all pending U.S. state and local climate cases if plaintiffs prevail. "The range is wide because we don't know how courts will handle causation, damages calculation, and apportionment," explained founder Mark Campanale. "But even the low end represents material financial exposure."

The Climate Attribution Science

A critical element involves climate attribution science—linking specific emissions to sources and resulting impacts. This field has advanced significantly through improved modeling and data analysis.

A 2017 Climatic Change study by the Climate Accountability Institute quantified emissions traceable to specific companies, finding 90 companies responsible for approximately 63% of cumulative worldwide greenhouse gases between 1751 and 2010. Chevron, ExxonMobil, BP, and Shell were among top contributors.

"We can now quantify with reasonable precision how much specific emission sources contribute to sea level rise, temperature increase, and extreme weather intensification," noted Dr. Benjamin Strauss, CEO of Climate Central. "The science has moved from 'climate change is real' to 'we can measure specific contributions.'"

Research published in Nature Climate Change in September 2024 by Lawrence Berkeley National Laboratory scientists demonstrated methodologies for attributing specific wildfire intensity increases and sea level rise increments to cumulative emissions from identified sources. "Attribution science has reached a level of sophistication that makes it possible to support legal causation arguments," said lead author Dr. Michael Wehner.

However, causation remains contested. Defense attorneys argue global climate change results from worldwide emissions over a century, making it impossible to attribute specific damages to specific defendants' conduct in specific jurisdictions. "The causation chain is too attenuated," Boutrous argued. "Plaintiffs can't show our clients' lawful sale of products used worldwide caused specific injuries in California versus emissions from other sources or natural climate variability."

California's Energy Transition Context

The litigation intersects with California's aggressive decarbonization goals under SB 100, requiring 100% clean electricity by 2045, and Executive Order N-79-20, mandating all new passenger vehicles be zero-emission by 2035. The Air Resources Board projects these policies will reduce petroleum demand approximately 50% by 2045.

"The industry sees the writing on the wall in California," said Danny Cullenward, policy director at CarbonPlan. "Between demand reduction policies, litigation risk, and regulatory costs, the business case for maintaining petroleum infrastructure is deteriorating. The question is whether the transition happens in an orderly way that maintains supply reliability."

The Energy Commission's 2023 Integrated Energy Policy Report projected gasoline demand declining from 14.6 billion gallons in 2023 to 10.2 billion by 2035—a 30% reduction—driven by electric vehicle adoption and fuel economy improvements.

However, the transition timeline creates a gap period where demand remains substantial while supply contracts. "We still have 30 million conventional vehicles on California roads," Borenstein noted. "Those vehicles will need gasoline for the next 10-15 years minimum. If refining capacity exits faster than demand declines, we'll see price volatility and potential shortages."

California Independent Petroleum Association president Rock Zierman warned the legislature in December 2024 that "California is pursuing an energy transition without adequate attention to interim supply reliability. We're creating conditions where companies exit the market, but consumers still need the product."

Policy and Legislative Responses

California lawmakers are monitoring litigation's progression and economic impacts. State Senator Scott Wiener introduced SB 187 in December 2024, requiring the Energy Commission to conduct annual petroleum supply adequacy assessments and develop contingency plans for disruptions. "We need to ensure reliable energy supply during the transition period," Wiener stated.

Assemblymember Luz Rivas proposed AB 245, establishing a transition assistance fund for workers and communities affected by refinery closures. "A just transition means supporting affected communities," she said.

The Energy Commission opened a proceeding in November 2024 examining "petroleum market concentration and supply reliability concerns," with findings expected by June 2026.

Governor Gavin Newsom hasn't taken public positions on specific cases but emphasized in his January 2026 State of the State address: "We will hold polluters accountable for climate damage while ensuring California families have access to affordable, reliable energy. These goals aren't contradictory—they require smart planning."

At the federal level, Congress could resolve federalism tensions through legislation but remains divided. Senator Sheldon Whitehouse's "Polluters Pay Climate Fund Act" (2023) would establish a federal fund financed by assessments on major emitters. Senator Kevin Cramer's "State Lawsuit Immunity from Climate Cases Act" (2024) would preempt state claims. Neither advanced.

"Congress could solve this by establishing a comprehensive federal compensation scheme similar to the September 11th Victim Compensation Fund or the oil spill liability trust fund," suggested Professor Jonathan Nash of Emory Law School. "That would provide uniform national rules while avoiding state-by-state litigation chaos."

The Path to the Supreme Court

Legal observers expect the Supreme Court will ultimately address state climate tort claims' viability, possibly within 2-3 years as cases progress. The Court's composition and recent federalism decisions suggest skepticism toward expansive state authority over national and international matters.

"This Court is highly protective of federal prerogatives in areas of national concern," said veteran Supreme Court advocate Carter Phillips of Sidley Austin. "Five or six justices likely view climate policy as inherently federal. The question is whether they'll find a doctrinal vehicle—preemption, dormant Commerce Clause, major questions doctrine—to limit state climate litigation."

Justice Kavanaugh's concurrence when the Court declined to hear the Baltimore procedural removal issue suggested sympathy for preemption arguments: "The lawsuits are governed by federal common law, federal statutory law, or both." While the Court didn't reach merits, Kavanaugh signaled openness to federal preemption once cases progress sufficiently.

The current Court has consistently favored federal authority over state regulation in areas with national implications. In National Pork Producers Council v. Ross (2023), Justice Gorsuch's concurrence warned against state laws with "dramatic downstream consequences" on interstate commerce.

Many scholars across the political spectrum agree climate policy's scope and complexity require congressional action rather than state-by-state litigation. "Whether you support aggressive climate action or prioritize energy affordability, everyone should agree that federal legislation is the appropriate venue," argued Professor Richard Lazarus of Harvard Law School. "Tort litigation is a terrible way to make national energy and climate policy. It's unpredictable, inconsistent across states, and doesn't allow for comprehensive planning."

Conclusion

The First District Court of Appeal's Citgo decision marks a significant expansion of potential climate liability, applying product liability principles to fossil fuel distribution and emphasizing the "relate to" standard from Ford Motor. By establishing that distributors can be held liable for failure to warn about climate risks even without direct production activities in California, the court has broadened the universe of potentially liable parties and increased litigation risk throughout the supply chain.

The ruling arrives at a critical juncture where California's petroleum sector faces contracting refining capacity, increasing import dependence, and substantial regulatory compliance costs. Additional litigation risk creates further pressure on companies evaluating California operations, potentially accelerating industry consolidation and exit decisions that could affect supply reliability, consumer prices, and military fuel security.

Yet fundamental constitutional questions remain unresolved: Can state tort law appropriately address a global problem driven by worldwide emissions over more than a century? Does allowing 50 different state court systems to impose potentially conflicting liability regimes violate constitutional principles governing interstate commerce, foreign policy, and national defense? Should climate policy be made through state court tort litigation or through comprehensive federal legislation?

The broader economic stakes encompass hundreds of billions of dollars in climate adaptation costs California communities must address over coming decades, questions about how those costs should be distributed, and practical considerations about maintaining energy reliability during a complex transition to lower-carbon systems.

As the case returns to San Francisco Superior Court for merits proceedings, and as similar cases advance in other states, the intersection of tort liability, regulatory policy, market transformation, and constitutional federalism will shape not only legal outcomes but also the practical reality of America's energy future.

The ultimate resolution may require coordination among judicial, legislative, and regulatory actors—and likely Supreme Court intervention—to balance legitimate accountability for climate harms against constitutional limits on state authority, practical considerations of supply reliability and national security, and equitable cost distribution during fundamental energy system transformation.

The question whether climate regulation can be "left to state" courts given its global nature and national security implications—captures the core tension. Whether federal courts and the Supreme Court agree, and what doctrinal framework they use to assert federal authority, remains one of the most significant unresolved questions in American constitutional and environmental law.

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Comprehensive Sources and Citations

Primary Legal Documents

1. County of San Mateo et al. v. Citgo Petroleum Corporation, California Court of Appeal, First Appellate District, Division Three, Case No. A172719 (filed January 5, 2026). Superior Court No. CJC-24-005310, JCCP No. 5310.

2. Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. 351 (2021) https://www.supremecourt.gov/opinions/20pdf/19-368_1an2.pdf

3. Webb v. Special Electric Co., Inc., 63 Cal.4th 167 (2016) https://www.courts.ca.gov/opinions/

4. American Electric Power v. Connecticut, 564 U.S. 410 (2011) https://www.supremecourt.gov/opinions/10pdf/10-174.pdf

5. Massachusetts v. EPA, 549 U.S. 497 (2007) https://www.supremecourt.gov/opinions/06pdf/05-1120.pdf

6. West Virginia v. EPA, 597 U.S. 697 (2022) https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf

7. City and County of Honolulu v. Sunoco LP, 153 Hawai'i 326 (2023) https://www.courts.state.hi.us/opinions-orders/

8. Healy v. Beer Institute, 491 U.S. 324 (1989)

9. BMW of North America v. Gore, 517 U.S. 559 (1996)

10. Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000)

11. National Pork Producers Council v. Ross, 598 U.S. 356 (2023)

12. Bettencourt v. Hennessy Industries, Inc., 205 Cal.App.4th 1103 (2012)

13. Bader v. Avon Products, Inc., 55 Cal.App.5th 186 (2020)

14. Anderson v. Owens-Corning Fiberglas Corp., 53 Cal.3d 987 (1991)

15. Escola v. Coca Cola Bottling Co., 24 Cal.2d 453 (1944)

Government Reports and Data

16. California Energy Commission, "2024 Fuels Assessment Report" https://www.energy.ca.gov/data-reports/reports/transportation-energy-reports

17. California Energy Commission, "Integrated Energy Policy Report 2023" https://www.energy.ca.gov/data-reports/reports/integrated-energy-policy-report

18. California Energy Commission, "Petroleum Market Advisory Committee Reports" (2024) https://www.energy.ca.gov/data-reports/california-petroleum-market-oversight

19. California Legislative Analyst's Office, "Preparing for Rising Seas" (November 2019) https://lao.ca.gov/reports/2019/4121/coastal-adaptation-112019.pdf

20. California Natural Resources Agency, "California's Fourth Climate Change Assessment" (2018) https://climateassessment.ca.gov/

21. U.S. Energy Information Administration, "Refinery Capacity Data" https://www.eia.gov/petroleum/refinerycapacity/

22. California Air Resources Board, "Advanced Clean Cars II Regulation" https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program

23. Defense Logistics Agency, "Military Fuel Consumption Report" (2023)

24. U.S. Department of Defense, "National Defense Strategy" (2022)

25. Federal Energy Regulatory Commission, regulatory frameworks and reports https://www.ferc.gov/

Industry and Economic Analysis

26. Phillips 66 Press Release, "Los Angeles Refinery Closure" (October 2024) https://www.phillips66.com/newsroom

27. Western States Petroleum Association, "Economic Impact Analysis" (2024) https://www.wspa.org/

28. AAA Fuel Price Data (January 2026) https://gasprices.aaa.com/

29. Oil Price Information Service (OPIS), market analysis

30. UC Berkeley Haas School of Business, Energy Institute Severin Borenstein et al., research on California gasoline markets https://haas.berkeley.edu/energy-institute/

31. UC Davis Institute of Transportation Studies, "California Gasoline Market Study" (2023) https://its.ucdavis.edu/

32. Western Energy Alliance, employment and revenue impact analysis (2024)

33. Consumer Watchdog, California energy market analysis https://www.consumerwatchdog.org/

Climate Science and Attribution

34. Climate Accountability Institute, "Carbon Majors Report" Heede, Richard (2017), Climatic Change 144(4): 579-590 DOI: 10.1007/s10584-017-1933-3 https://climateaccountability.org/

35. Lawrence Berkeley National Laboratory, "Attribution of Extreme Weather Events" Wehner, M.F. et al. (September 2024), Nature Climate Change

36. Climate Central, climate attribution research https://www.climatecentral.org/

37. Intergovernmental Panel on Climate Change, "Sixth Assessment Report" (2021-2023) https://www.ipcc.ch/assessment-report/ar6/

Legal Analysis and Litigation Tracking

38. Sabin Center for Climate Change Law, Columbia University Climate Change Litigation Databases https://climate.law.columbia.edu/content/climate-change-litigation-databases

39. Center for Climate Integrity, Climate Litigation Tracker https://climateintegrity.org/

40. Environmental Law Institute, "Climate Litigation in the United States" (2024) https://www.eli.org/

Financial and Insurance Analysis

41. Swiss Re, "Climate Risk Report 2024" https://www.swissre.com/

42. Moody's Investors Service, "Climate Litigation Risk Analysis" (September 2024) https://www.moodys.com/

43. Standard & Poor's, "Climate Litigation as Credit Risk Factor" (November 2024) https://www.spglobal.com/ratings

44. Carbon Tracker Initiative, "Potential Liability Exposure" (2024) https://carbontracker.org/

45. Marsh McLennan, "Global Climate Risk Report 2024" https://www.marshmclennan.com/

46. D&O Diary Blog, Kevin LaCroix, insurance coverage analysis https://www.dandodiary.com/

Additional Research Organizations

47. SPUR, "Sea Level Rise Adaptation Investment Needs" (2022) https://www.spur.org/

48. CoreLogic, "California Wildfire Economic Loss Estimates" (2020) https://www.corelogic.com/

49. CarbonPlan, independent climate research https://carbonplan.org/

50. Business Roundtable, corporate policy statements https://www.businessroundtable.org/

51. U.S. Chamber of Commerce, litigation positions https://www.uschamber.com/

52. Foundation for Defense of Democracies, national security analysis

International Precedents

53. European Court of Human Rights, Verein KlimaSeniorinnen Schweiz v. Switzerland (April 2024) https://hudoc.echr.coe.int/

54. Dutch Supreme Court, Urgenda Foundation v. State of the Netherlands (2019) https://www.urgenda.nl/en/

55. Regional Court of The Hague, Milieudefensie et al. v. Royal Dutch Shell (February 2024) https://www.rechtspraak.nl/

56. Canadian Supreme Court, References re Greenhouse Gas Pollution Pricing Act (2021)

57. German Constitutional Court, Neubauer v. Germany (2021)

58. Australian Federal Court, Sharma v. Minister for the Environment (May 2024)

Academic and Expert Sources

59. Harvard Law School, Professor Jody Freeman (environmental law) Professor Richard Lazarus (environmental law) Professor Cass Sunstein (administrative law) https://eelp.law.harvard.edu/

60. Stanford Law School, Professor Michael McConnell (constitutional law)

61. George Washington University Law School, Professor Bradford Clark (constitutional law)

62. UCLA Law School, Professor Ann Carlson (environmental law)

63. University of Chicago Law School, Professor Curtis Bradley (foreign relations law)

64. Case Western Reserve University, Professor Jonathan Adler (environmental law)

65. Emory Law School, Professor Jonathan Nash (civil procedure)

66. UC Berkeley Law School, Professor Daniel Farber (environmental law)

67. University of Melbourne, Professor Jacqueline Peel (comparative climate law)

68. Australian National University, Professor Anthea Roberts (international law)

69. Duke University School of Law, Professor Brian Murray

70. Hoover Institution, Professor Alice Hill (climate adaptation)

71. Notre Dame Law School, Dean Marcus Cole

News and Media Sources

72. San Jose Mercury News, reporting on California climate litigation

73. Wall Street Journal, energy market coverage https://www.wsj.com/

74. Reuters, petroleum industry developments https://www.reuters.com/

State Government Positions

75. California Attorney General's Office, amicus briefs and statements

76. Montana Attorney General, amicus briefs (Austin Knudsen)

77. North Dakota Attorney General, amicus briefs (Drew Wrigley)

78. Various state attorneys general amicus briefs (20+ Democratic AGs supporting plaintiffs; 15+ Republican AGs supporting defendants)

Methodology Note: This article synthesizes primary court documents, government reports, peer-reviewed scientific literature, financial industry analysis, constitutional law scholarship, and news reporting. Economic projections derive from official sources (California Energy Commission, Legislative Analyst's Office, U.S. EIA) and academic research from UC Berkeley, UC Davis, Stanford, Columbia, and Harvard. Legal analysis draws from Supreme Court precedents, appellate decisions, and expert scholarly commentary. Climate science attribution references peer-reviewed literature from established research institutions. Financial data comes from company SEC filings, credit rating agency reports, and insurance industry analyses. All legal citations follow standard California and federal formats.