Who Gets to Price Carbon

The Supreme Court opened its October 2026 term on Monday 5 October with a case about who gets to put a price on carbon. Not Congress, which has never enacted one. Not the Environmental Protection Agency, in a field where energy companies have built a largely winning record before the justices over two decades. The question in Suncor Energy (U.S.A.) Inc. v. County Commissioners of Boulder County, No. 25-170, is whether a Colorado city and county can use state tort law to make oil companies pay for the local costs of a warming planet, or whether federal law forbids the attempt before it begins.

The facts are local and concrete. On 17 April 2018, the city of Boulder and Boulder County sued Suncor Energy and ExxonMobil in Colorado state court, asserting claims for public nuisance, private nuisance, trespass, unjust enrichment, civil conspiracy and violation of the Colorado Consumer Protection Act, according to the companies’ petition to the Supreme Court. They want the companies to bear past and future costs such as infrastructure repairs, environmental damage, emergency management and harms to public health. The Colorado Supreme Court let the case proceed in May 2025. The companies appealed to Washington, where they found an ally in the Trump administration, which has backed Exxon and Suncor and argues that federal law precludes Boulder’s claims, Reuters reported.

Nearly 60 state and local governments have brought similar suits seeking billions of dollars from fossil fuel companies, Exxon and Suncor told the justices, according to Reuters, and a ruling for the companies could lead to many of them being dismissed. That is what makes this the term’s opening act rather than a footnote: the decision will not set climate policy, but it may decide whether climate costs can be argued over in courtrooms at all. Justice Samuel Alito has recused himself, so eight justices heard the case; a 4–4 tie would leave the Colorado ruling in place and let Boulder’s suit go forward, SCOTUSblog noted.

Two conservative principles walk into a courtroom

What makes the case genuinely interesting, rather than merely important, is the collision it stages between two ideas the Court’s conservative majority has championed for years. The first is federalism: the states are sovereign laboratories, and their courts are competent to apply their own law to injuries suffered within their borders. The second is a deep skepticism of regulation by litigation, the sense that tort suits are a poor substitute for democratic lawmaking and an invitation to forum shopping.

Boulder’s lawyer, Kevin Russell, leaned on the first. “Since the founding, states have had the power to provide tort remedies for injuries occurring within their borders, even when the conduct causing those injuries occurred elsewhere,” he told the justices, CBS News reported. He said Boulder had sued not over emissions, which the Clean Air Act regulates, but over production and allegedly deceptive marketing, and that Congress “stands at the ready” to preempt state law if it chooses. Chief Justice John Roberts seemed receptive, observing that state courts routinely hear suits over conduct elsewhere that has effects within the state. Justice Elena Kagan compared the case to the tobacco suits of the 1990s and the opioid litigation.

The companies leaned on the second. Their lawyer, Kannon Shanmugam, called Boulder’s suit an “unprecedented effort to use state law to regulate global conduct,” and warned that if it went forward, 90,000 municipalities could follow and “have the ability to make national and international energy policy by asking juries to impose catastrophic damages on selected fossil-fuel producers.” Sarah Harris, the principal deputy solicitor general, said that “interstate air pollution is an inherently federal area, and Congress hasn’t authorized this suit in the Clean Air Act.” There is real force in the worry about a patchwork. But notice what the companies’ theory requires of the Court. To end Boulder’s suit, the justices must find state law displaced where Congress has written no such rule. Justice Brett Kavanaugh’s answer was that they need not write it: the Court’s own decisions, he said, make “crystal-clear that interstate air and water pollution are matters for federal law” unless Congress says otherwise, SCOTUSblog reported. For a Court that has spent a decade preaching judicial restraint and the separation of powers, it is still an awkward posture: closing a state forum on the strength of judge-made doctrine to stop others from making policy from the bench.

The docket beyond Boulder

The climate case is only the first of several confrontations the term has queued up, and the pattern is instructive. About a dozen states have banned semiautomatic rifles such as AR-15s, and the justices will consider a challenge to those laws in December. They will hear Arizona’s bid to enforce laws requiring proof of citizenship from people registering to vote with a state form, and regular purges of voters whose citizenship cannot be confirmed. In November they will hear a Catholic parish’s claim that it has been shut out of Colorado’s publicly funded universal preschool program because its admissions policies exclude children from LGBTQ+ families. And they will take up immigration disputes over mandatory detention and deportations to third countries, the Associated Press reported.

Read together, the docket asks a single question in different registers: how much room do the states have left? On guns, the Court has been shrinking that room. On climate, the oil companies are asking it to shrink further. On voting and religious funding, the states are the ones asserting their own rules against federal or constitutional challenge. There is no tidy ideological through line, which is precisely why the term matters. Each case forces the justices to choose which master they serve when federalism and their policy preferences point in opposite directions.

Boulder’s suit may fail on its own terms. State tort law is a clumsy instrument for pricing a global externality, and damages awarded by a Colorado jury will not build a seawall anywhere else. But the alternative the companies propose is not a better forum. It is no forum at all: no federal statute creating a remedy, and now, if they prevail, no state remedy either. A legal system that closes every door does not resolve the underlying dispute. It merely announces that the dispute has no legal answer, which is another way of saying the costs will fall where they fall, on whoever cannot afford to move them elsewhere. That, in the end, is also a way of pricing carbon. It just prices it at zero for the seller and at whatever the buyer cannot escape.

Sources

The case name, number, argument date, the grant of review and Justice Alito’s withdrawal are from the Supreme Court’s docket in No. 25-170. The filing date of Boulder’s suit, the parties and the list of claims are from the companies’ petition for certiorari, read on the Court’s website. The costs Boulder seeks, the Trump administration’s position, the companies’ count of nearly 60 similar suits and the energy industry’s record before the Court are as Reuters reported them on 4 October; the companies’ merits brief was not read directly. The quotations from the argument are as CBS News and SCOTUSblog reported them; the argument transcript was not read directly. The other cases on the term’s docket are as the Associated Press described them, read in syndication; the individual dockets were not checked.