Adds Exxon comment in paragraph 6

By Nate Raymond

May 12 (Reuters) - Colorado's highest court on Monday rejected efforts by Exxon Mobil XOM.N and Suncor Energy SU.TO to dismiss a lawsuit by the city of Boulder seeking to hold the fossil fuel companies responsible for climate change.

The Colorado Supreme Court in a 5-2 decision said federal law did not block Boulder and its surrounding county from claiming that the energy companies violated state law by misleading the public about the dangers associated with fossil fuels.

The ruling marked only the second time a state supreme court has allowed one of the numerous lawsuits by state and local governments against major energy companies over climate change to move forward in the years-long litigation.

The Hawaii Supreme Court allowed a similar lawsuit by Honolulu to move forward against Exxon, Sunoco and several other companies in a decision that the U.S. Supreme Court in January declined to review.

"This ruling affirms what we’ve known all along: corporations cannot mislead the public and avoid accountability for the damages they have caused," Boulder Mayor Aaron Brockett said in a statement.

Exxon in a statement said it would continue to fight Boulder's claims. "We've maintained from the beginning this case is meritless and has no place before a state court," the company said.

Suncor did not respond to a request for comment.

Boulder sued in 2018, alleging the companies violated various state laws and created a public and private nuisance by misleading the public about the role their fossil fuel products played in exacerbating climate change.

Boulder argues they should be forced to pay for the costs it will incur to protect its community from climate change.

The companies deny wrongdoing. They had fought for years to have the case heard in federal court. State courts are often considered a more favorable venue for plaintiffs.

But following years of litigation and two trips to the U.S. Supreme Court, the case ultimately returned to state court, where a trial judge declined to dismiss the lawsuit.

On appeal, the companies argued that Boulder's lawsuit would interfere with the federal regulation of greenhouse gas emissions under the Clean Air Act and impair the federal government's ability to conduct foreign affairs.

But Justice Richard Gabriel, who like all of the Colorado Supreme Court's other members was appointed by a Democratic governor, said "a lawsuit does not amount to regulation merely because it might have an impact on how actors in a given field behave."

Justice Carlos Samour dissented, expressing concern that Boulder's case sought to effectively regulate interstate air pollution and could lead to "regulatory chaos."

(Reporting by Nate Raymond in Boston, Editing by Alexia Garamfalvi and Sonali Paul)

((Nate.Raymond@thomsonreuters.com and Twitter @nateraymond; 347-243-6917; Reuters Messaging: nate.raymond.thomsonreuters.com@reuters.net))