A lawsuit for damages related to climate change brought by the city of Baltimore can be heard in Maryland state courts, a federal appeals court ruled on Friday. The decision is a setback for the fossil fuel industry, which had argued that the case should be heard in federal court, where rulings in previous climate cases have favored the industry.

In a unanimous ruling, a three-judge panel of the Fourth U.S. Circuit of Appeals dismissed the industry's argument that the lawsuit was more appropriate for federal court because the damage claims should be weighed against federal laws and regulations that permitted the industry to extract oil and gas, the primary cause of the greenhouse gas emissions that drive global warming.

Pending any further appeals, the ruling leaves the door open for the case to proceed in a Maryland court, where the city is relying on state laws covering a number of violations, including public nuisance, product liability and consumer protection.

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The court's decision Friday is the first federal appeals court to rule in a string of climate cases under appeal across the country over the question of federal or state jurisdiction. It affirmed an earlier ruling by a lower federal court that the case was best heard in state court.

The ruling is not binding on other pending appeals, but legal scholars say that other federal appeals courts will take notice of the findings.

Although the ruling blocks one avenue of defense for the industry, the judges did not foreclose other possible challenges related to the question of jurisdiction. There was no immediate indication from the industry of whether further legal options might be considered or what those might be.

Baltimore's top legal officer, acting City Solicitor Dana Moore, hailed the ruling as a rebuke to the industry.

"We were confident in our case and are grateful that the Court of Appeals agreed," Moore said in a prepared statement. "We look forward to having a jury hear the facts about the fossil fuel companies' decades-long campaign of deception and their attempt to make Baltimore's residents, workers, and businesses pay for all the climate damage they've knowingly caused."

The foundation for the appeals court ruling was laid last year when lawyers representing the city argued before the appeals court that the foundation of the case rested on the promotion of a harmful product by the fossil fuel industry. That equated to violations of state product liability laws best decided by state courts, the city's lawyers argued.

The essence of the fossil fuel companies' argument was that much of the oil and gas was extracted from federal land under permits issued by the federal government so the allegations must be resolved under federal law.

Ann Carlson, an environmental law professor at the Emmett Institute on Climate Change and the Environment, part of the University of California, Los Angeles' School of Law, said the ruling is significant because it steamrolls one of the primary roadblocks used by the industry in an attempt to block the city's day in court.

"This ruling removes an obstacle to the plaintiffs moving forward in state courts and puts these cases much, much closer to a trial where the facts and the truth will emerge," said Carlson, who has done limited pro bono work on the Baltimore case.

Carlson called the ruling "well-reasoned" and "solid," so that other appellate courts considering similar climate cases could take notice.

"There could be some influence," she said. "The issues are much the same and this ruling could provide some guidance to the other courts."

The Baltimore case, filed two years ago, seeks to hold 26 fossil fuel companies financially accountable for the threats posed by climate change. The lawsuit alleges that fossil fuel companies, including Exxon, Chevron and Phillips 66, knowingly sold dangerous products for decades and failed to take steps to reduce that harm.

Baltimore's lawsuit claims that the 26 companies are responsible for approximately 15 percent of the carbon dioxide emissions in the five decades from 1965 to 2015.

Among the consequences of that increase in atmospheric carbon have been extreme weather events and sea level rise, both particular threats to Baltimore.

"As a direct and proximate consequence of defendants' wrongful conduct ... flooding and storms will become more frequent and more severe, and average sea level will rise substantially along Maryland's coast, including in Baltimore," the city argued in its suit.

The Baltimore case joins more than a dozen lawsuits—including claims filed by the state of Rhode Island and cities and counties in California, Colorado, New York and Washington State—that are currently pending to hold fossil fuel companies financially accountable for their role in creating climate change and for deceiving the public about the impact of their business practices.

The industry is trying to steer the climate cases into the federal courts, where the U.S. Supreme Court could ultimately end up ruling on the issue.