Court Nixes Michigan’s Novel Antitrust Case Targeting Big Oil 

A federal court in Michigan has tossed out a pioneering antitrust lawsuit brought by the state of Michigan against four major oil and gas companies and their largest U.S. trade association that alleged a conspiracy to forestall the transition to renewable energy and electric vehicles in order to maintain market dominance of fossil fuels.

Michigan failed to bring a viable claim under federal antitrust law because the state could not prove the higher prices that residents have been paying for a fossil fuel-dependent energy system were specifically caused by the oil companies’ alleged conspiracy, the court said.

The ruling on Tuesday, from the U.S. District Court for the Western District of Michigan, was based on the threshold issue of standing, or the right of a party to bring a case to court. In this case, the court ruled that Michigan lacked standing to bring its antitrust claim because the state did not adequately allege that its harm—overcharges for energy—was caused directly by the fossil fuel defendants’ conduct.

“The distance is too great between the alleged conspiracy and Michigan’s and its residents’ overcharges to find that the conspiracy proximately caused the overcharges,” U.S. District Judge Jane M. Beckering wrote in her decision.

Michigan filed its lawsuit in January against BP, Chevron, ExxonMobil, Shell and the American Petroleum Institute, claiming that they engaged in collusive anticompetitive conduct to suppress the development of renewable energy and EV technologies for the purpose of protecting their fossil fuel business and boosting profits. 

This conduct resulted in consumers having fewer choices for fueling their cars and powering their homes and having to pay more for energy, the lawsuit argued, since renewables are now the cheapest form of energy and do not come with externalized costs like public health and climate damage. The case was brought under federal and state antitrust law, and it was the first suit brought against oil companies focused entirely on antitrust theories in the context of the energy transition.

“By colluding to delay the energy transition away from fossil fuels, defendants have deliberately imposed

staggering external costs on Michigan and the People of Michigan,” the state asserted in its complaint. But Beckering said these kinds of costs, like increased home insurance premiums and climate adaptation expenses, were not relevant to the antitrust claim. The only viable harm the state alleged under antitrust law was overcharges in the energy market, the court determined.

And that harm could not be proven to be caused by the alleged conspiracy by Big Oil to suppress renewables and EVs, according to the court, given there may be other factors or “market forces” involved. “The alleged conspiracy’s success at entrenching supracompetitive fossil fuel prices depends on numerous market forces besides defendants, such as technological developments, other investors, and the public’s interest in renewable energy, as well as the supply of fossil fuels,” Beckering wrote.

The court dismissed Michigan’s federal antitrust claim, and declined to even consider the state antitrust claim, essentially tossing out the entire case.

“Michigan’s lawsuit was part of a coordinated campaign against an industry that is vital to everyday life and serves as the engine of America’s economy. Climate policy is a federal, not state, issue, and we are pleased with the court’s decision,” Ryan Meyers, API senior vice president and general counsel, said in a statement.

BP declined to comment, while Chevron, ExxonMobil, and Shell did not respond to a request for comment.

Michigan has not yet announced whether it will try to appeal.

“The Attorney General disagrees with the opinion and order issued on the energy affordability antitrust case the Department brought on behalf of the People of the State of Michigan,” Danny Wimmer, press secretary for the Michigan attorney general office, said in an emailed statement. “Our office is reviewing the opinion in full and considering our options.”

The ruling comes after the same judge dismissed a lawsuit brought by the Trump administration last year to try to preemptively block Michigan from suing Big Oil over climate harm. Since that lawsuit was filed before Michigan had brought any sort of case, the alleged harm was too speculative, Beckering ruled.

The dismissal of Michigan’s antitrust case is the latest legal win for major oil and gas companies that are facing mounting demands for climate accountability through state laws and lawsuits. A federal court in Syracuse, New York, recently struck down New York’s landmark Climate Change Superfund Act that sought to make large fossil fuel producers pay for a portion of the staggering hundreds of billions of dollars the state is expected to incur to adapt to climate change. In March, the Maryland Supreme Court sided with fossil fuel companies in upholding a lower court ruling dismissing climate tort lawsuits brought by the cities of Baltimore and Annapolis and Anne Arundel County..

The U.S. Supreme Court, meanwhile, is slated to take up a climate tort case filed by Boulder, Colorado, against oil companies Suncor and ExxonMobil, in a hearing on Oct.5 that legal experts say could be “incredibly consequential” for the more than two dozen other climate lawsuits pending against the fossil fuel industry. If the court rules in favor of Suncor and Exxon on the question of whether federal law preempts state climate lawsuits, it could put an end to many of these cases.

“With the [climate] tort cases [the fossil fuel industry] has won some and lost some,” said Michael Gerrard, founder and faculty director of the Sabin Center for Climate Change Law at Columbia University. “But the Suncor case is the main event.”