Climate Litigation: ExxonMobil Strikes Back

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ExxonMobil this week asked a Texas district court for authority to depose and obtain documents from “ExxonKnew” campaign legal strategist Matt Pawa and 15 officials or attorneys representing San Mateo County, Imperial Beach, Marin County, Oakland, San Francisco, and Santa Cruz.

Coached by Pawa, the aforementioned cities and counties recently filed civil tort claims in California against ExxonMobil and numerous other energy companies, including 17 headquartered in Texas. The lawsuits claim the cities and counties face imminent multi-million dollar losses from rising sea levels, and allege that the companies, “through their extraction, promotion, marketing, and sale of their fossil fuel products, caused” a substantial portion of global sea level rise.

ExxonMobil is asking the Texas court for permission to “investigate potential claims of abuse of process, civil conspiracy, and constitutional violations” that the company intends to file against its accusers in a lawsuit in Texas. ExxonMobil’s petition contends that the California cities and counties are “abusing law enforcement authority and legal process to impose their viewpoint on climate change.” The brief explains:

This conspiracy emerged out of frustration in New York, Massachusetts, and California with voters in other parts of the country and with the federal government for failing to adopt their preferred policies on climate change. But rather than focusing their efforts in the marketplace of ideas and adopting a strategy of persuasion, the members of this conspiracy chose to advance their political objectives by imposing unlawful burdens on perceived political opponents.

Surely the cities and counties also have an economic motivation, although ExxonMobil is apparently too polite to mention it. Plaintiffs desire to extract billions of dollars in damage awards from the companies. 

The petition notes that the plotting against ExxonMobil began at a June 2012 conference in California. The meeting was organized by Harvard University professor Naomi Oreskes and Union of Concerned Scientists attorney Peter Frumhoff, who invited Pawa to be the featured speaker.

The anti-Exxon litigation campaign briefly made waves when, in March 2016, New York Attorney General Eric Schneiderman, joined by 16 other state AGs and Al Gore, launched Attorneys General for Clean Power. The AGs vowed to investigate fossil fuel companies and their allies to determine whether those groups “mislead the public about the dangers of climate change or the viability of renewable energy resources.” So far the campaign has been a bust.

Virgin Islands AG Claude Walker dropped his subpoenas of the Competitive Enterprise Institute and ExxonMobil in May and June 2016, soon after CEI and ExxonMobil separately moved to sanction the AG for violating their constitutionally protected free speech rights. Schneiderman, despite obtaining 3 million pages of documents from ExxonMobil since November 2015, has not filed a single charge against the company. Apart from Schneiderman, Walker, and Massachusetts AG Maura Healey, none of the other AGs for Clean Power has subpoenaed documents from the company.

Until this week, the anti-Exxon cabal has pursued two main allegations. One is that “ExxonKnew” all along—since the late 1970s—that climate change could be catastrophic, yet hid this information from the public. Inside Climate News published a trove of internal documents from the 1970s and ‘80s supposedly documenting Exxon’s early agreement with today’s so-called scientific consensus.

However, what Exxon actually knew was not the state of the climate but the state of climate modeling. What Exxon modeling “knew” is that there would be twice as much warming and up to six times as much sea level rise over the next several decades as would actually occur. Some documents also reflect a skeptical attitude regarding certainty and urgency of climate change risks, as well as a lively appreciation of the economic risks of imposing draconian restrictions on global energy use.

Moreover, Exxon could not have known in the ‘70s and ‘80s that climate change was real and dangerous because the Intergovernmental Panel on Climate Change, the self-anointed “consensus of scientists,” did not profess to know even in 1990 that anthropogenic warming was happening. For the details and pertinent links, see this blog post.

The other big allegation is that ExxonMobil, by downplaying climate risks, hid from shareholders the financial risks the company would face in the supposedly inevitable carbon-constrained future. As if Exxon shareholders don’t know that a large, angry, well-funded movement wants to use climate change as a rationale to drive the company into bankruptcy.

As it turns out, though, Schneiderman’s probe found that ExxonMobil “stress tests” all of is investments under an aggressive scenario in which the world’s governments adopt climate mitigation policies equivalent to a carbon tax reaching $60 per ton in 2030 and $80 per ton in 2040. So the accusation that ExxonMobil does not exercise due diligence to protect shareholder value is also bogus.

I expect California coastal cities’ and counties’ litigation will quickly implode. The ExxonMobil petition shows the plaintiffs do not really fear imminent damages from climate change-related sea-level rise. Either that, or they are defrauding investors in their municipal bonds. The ExxonMobil brief notes:

Notwithstanding their claims of imminent, allegedly near-certain harm, none of the municipalities disclosed to investors such risks in their respective bond offerings, which collectively netted over $8 billion for these local governments over the last 27 years. To the contrary, some of the disclosures affirmatively denied any ability to measure those risks; the others virtually ignored them. At least two municipal governments reassured investors that they were “unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur, when they may occur, and if any such events occur, whether they will have a material adverse effect . . . .”

For example, San Mateo’s complaint against ExxonMobil claimed that the county is “particularly vulnerable to sea level rise,” which could “inundate thousands of acres of County land, breach flood protection infrastructure, and swamp San Francisco International Airport (located within the County), among other impacts.” It further stated that, [T]here is a 93% chance that the County experiences a devastating three-foot flood before the year 2050, and a 50% chance that such a flood occurs before 2030. Average sea level rise along the County’s shores are expected to rise by almost three feet by the year 2100, causing multiple, predictable impacts, and exacerbating the impacts of extreme events.”

Yet nearly all of the disclosures San Mateo provided to investors in bond offerings “contain no reference to the risk of rising sea levels.” In the few instances when that topic is mentioned, San Mateo disclaimed any ability to predict whether sea level rise would occur or the costs it might entail. Rather, San Mateo told bidders on bond offerings:

The County is unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur, when they may occur, and if any such events occur, whether they will have a material adverse effect on the business operations or financial condition of the County and the local economy.

ExxonMobil thus finds a “stark and irreconcilable conflict between what these municipal governments alleged in their respective complaints and what they disclosed to investors in their bond offerings.” The company concludes its attackers’ allegations “are not honestly held and were not made in good faith.”

Indeed, the California officials are either falsely alarming the public or scamming their bondholders. As my colleague, attorney Christopher Horner might say if he were conducting the deposition, “Which time were you lying?”