The Lever - Big Oil Tries To Buy Its Own Courts

A little-known bill that could be coming up for a vote today in Texas could hand fossil fuel companies a major legal advantage in state courts, just after the Supreme Court ruled that climate cases could proceed there. As Rebecca Burns reveals in today’s featured story below, Texas lawmakers are poised to allow oil and gas firms and other corporations to have many of their business cases heard by judges handpicked by a close political ally: Gov. Greg Abbott.

Rock the boat.

Texas Governor Greg Abbott (Nick Wagner/Austin American-Statesman via AP, Pool) & oil rig (AP Photo/Ross D. Franklin, File)

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When Texas oil and gas companies need to remove a legal roadblock to drilling, or answer for alleged wrongdoing, they head to court — and a bill that could be considered by the state legislature as early as Thursday would hand them considerable sway in picking the judges that hear some of their cases.

The state’s $200 billion fossil-fuel industry has thrown its weight behind legislation that would create a new system of district courts to hear certain disputes involving corporations. While 26 states already have so-called business courts, the Texas proposal has a unique feature: Republican Gov. Greg Abbott, who has been bankrolled by fossil fuel donors, would have the power to personally appoint judges, who would then serve two-year terms — a tenure that would let Abbott quickly remove judges if they deny favorable rulings to his supporters.

The legislation backed by the oil industry comes just after the U.S. Supreme Court allowed climate cases against fossil fuel companies to proceed in state courts. Opponents of the business-court plan say that not only would it run afoul of the state constitution, which mandates the popular election of district and appellate judges, it could also set a dangerous national precedent by undermining the independence of the judiciary.

As a result, cases that would otherwise be heard by judges elected by communities in their districts could instead be forced into courts controlled by the governor — and by extension, his donors.

Abbott, who has raked in more than $42 million of campaign cash from the oil and gas industry during his career, has already raised eyebrows by appointing some of those donors to political positions — including an oil tycoon whom he tapped to head the agency overseeing the state’s energy grid.

Some experts also raised alarms about a separate intervention by Abbott into the legal process last month, when he called for the pardon of a man convicted of killing a protester before his sentencing had even taken place.

The business court bill exacerbates those concerns by allowing the governor to handpick judges overseeing cases impacting some of his largest contributors.

Since they serve terms shorter than his own, “there’s a real danger that he can just swap them out every two years if they aren't making the kinds of rulings he wants,” said Texas-based commercial practice attorney Michael Smith. “It’s a basic separation of powers issue.”

Smith testified against the bill last month on behalf of the Texas chapter of the American Board of Trial Advocates (ABOTA), one of three statewide legal associations opposing the measure alongside several Democratic appeals court judges and state consumer groups.

The push for business courts is backed by a broad swath of industries, including lobbying groups representing the different segments of the state’s fossil fuel sector, as well as Energy Transfer, the pipeline company owned by billionaire Abbott donor Kelcy Warren.

Those groups rely on the state’s district courts for a range of issues that help maintain business as usual — from suing Texas cities over municipal bans on fracking to removing regulatory roadblocks to pipeline development and filing condemnation petitions against residents who resist it.

Fossil-fuel companies also frequently end up in the state’s district courts when they’re accused of wrongdoing. Energy Transfer, ExxonMobil, and Kinder Morgan — all of which have delivered big donations to Abbott — are among the energy companies currently facing a spate of lawsuits over claims of profiteering during the state’s deadly winter blackouts in 2021, though the new business courts would not have jurisdiction over claims already before district courts.

The Texas House passed the bill last week on a party-line vote; the state Senate is scheduled to vote on it as soon as Thursday.

Neither Abbott’s office nor Energy Transfer responded to The Lever’s request for comment.

A Court Of Their Own

Since the 1990s, a growing number of states have established specialized business courts, modeled in part on Delaware’s 200-year-old Chancery Court, which presides over corporate disputes and helps give the state its pro-business reputation. The exact jurisdiction of business courts varies by state, but they typically hear high-dollar, complex cases.

The U.S. Chamber of Commerce, a business lobbying group, publishes annual rankings of industry-friendly courts — and firms that have access to those courts enjoy higher returns, according to a recent study.

Critics of business courts say they effectively create a two-tiered system of justice: one for corporate litigants and another for everyday citizens.

But even advocates of business courts told The Lever that Texas’ current bill may undermine some of the model’s advantages, including the development of judicial expertise to handle lengthy, complex cases that might otherwise bog down civil courtrooms.

Commercial cases often drag on longer than the two-year terms judges would serve under Texas’ current bill, meaning they could be replaced midway through.

“That kind of turnover undermines the features of consistency, predictability, and reliability,” said Georgia State University law professor Anne Tucker, who previously served as a staff attorney for the Fulton County Business Court.

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No other state currently selects business court judges in this fashion, according to legal experts who spoke to The Lever. While North Carolina allows the governor to nominate justices, for example, they must be confirmed by the General Assembly, at which point they serve five-year terms.

The U.S. Justice Department is already attempting to combat the use of Texas’ federal courts for forum-shopping, which is the practice of litigants choosing courts based on where they’re most likely to get a favorable ruling.

Establishing a business court with handpicked gubernatorial appointees could intensify forum-shopping within the state, said Darlene Byrne, the chief justice of Texas’ Third Court of Appeals, who submitted testimony opposing the bill.

“Building a specialized court system for rich companies doesn't seem like equal justice to me,” she said.

Fossil Fuels On Trial

The business court bill is the brainchild of Texans for Lawsuit Reform, a powerful, pro-corporate political action committee that’s shaped state politics since the 1990s.

In addition to successfully pushing legislation to restrict consumer lawsuits, the group has played a role in the political careers of both George W. Bush and Abbott, whom Bush appointed to the Texas Supreme Court. Abbott later cited his record helping “cement tort reform” at the Supreme Court when he campaigned successfully to become the state’s attorney general in 2002.

Texans for Lawsuit Reform remains one of the biggest spenders in state races, contributing more than half a million dollars to Abbott’s campaigns since he first announced he was running for governor in 2014. The group, which did not respond to a request for comment, also donates heavily in state judicial races.

Oil and gas interests contribute heavily to Texans for Lawsuit Reform, donating nearly $4 million to the group in 2022 alone.

Creating a special Abbott-controlled court for corporations could empower donors to use the campaign finance system to exert even more control over the state’s judiciary, according to state legal associations, though an amendment inserted into the bill will require the governor to seek the “advice and consent” of the Republican-controlled Senate on judicial appointments.

“You start donating the hell out of the governor's political action committees,” said TEX-ABOTA’s Smith. “And then you go call up the governor’s office and say, ‘Look, I'm over here getting sued and your damn judge won't grant summary judgment.’”

Abbott’s political rivals have already accused him of delivering favors for one prominent fossil fuel-industry donor: billionaire Kelcy Warren, whose pipeline company Energy Transfer made billions from soaring natural gas prices during the deadly winter storm that knocked out power for 4 million people and killed an estimated 700 people in 2021.

Just weeks after the state legislature allowed gas companies to opt out of costly weatherization upgrades that summer, Warren gave a million-dollar donation to Abbott. The exchange sparked both suggestions of a quid pro quo from Beto O’Rourke and a defamation lawsuit by Warren against the former gubernatorial candidate, as The Lever reported in January.

Now, Energy Transfer is among the oil and gas companies pushing to have some of its suits heard in courts. Sam Hardy, the company’s head of litigation, testified in favor of the bill during a state senate hearing in March, telling lawmakers, “It is important that big commercial cases have a venue and a forum where their unique needs are met.”

Hardy said during the hearing that about a quarter of the company’s 800 open cases are being heard in Texas, about 20 of which would fall under the jurisdiction of business courts. That jurisdiction will depend on the language of the final bill. Its current version excludes many types of actions where the dollar-amount in controversy falls below $5 million.

But lawmakers rejected a proposal from legal associations to explicitly limit jurisdiction to disputes between businesses, according to Texas Trial Lawyers’ Association president Bryan Blevins — leaving the door open to individual plaintiffs being forced to face off against corporations in specialty courts in the future.

“This is going to be a system that plays very favorably to the biggest corporations and the biggest law firms,” said Blevins.