Even Lawyers Who “Empathize” With AGs’ Goal Say Climate RICO Campaign Setting “Dangerous” Precedent

If activists and the Attorneys General launching climate RICO investigations were expecting a groundswell of legal support for their efforts, they must be pretty disappointed.  That was especially apparent this week when Bill McKibben, in an incredibly defensive op-ed, proclaimed that ExxonMobil was

“currently mounting a major public relations offensive, using all the standard right-wing media outlets to spread the notion that various state attorneys general are squelching its First Amendment rights by investigating its decades of deception on climate change. It’s hard to think of a more up-is-down argument this side of Donald Trump.”

But of course, it’s not just industry or the “right-wing media” that have been criticizing the AGs’ climate investigations.  Nearly every day over the past few months, neutral voices, and even voices from the far left, have been calling these investigations legally unsound and an “abuse of power.”

Just this week, Tristan Brown – a lawyer and assistant professor of Energy Resource Economics at The State University of New York – published a column in Seeking Alpha, which points out that what the AGs are doing is “concerning” and setting a “dangerous” precedent.  Brown isn’t exactly a “climate denier,” either. As he states in his column, “I am in the camp that believes that climate change is occurring, and that it will ultimately impose tremendous costs on the global financial system as its impacts increase in magnitude” – he even admits that he can “certainly empathize with the Democratic attorneys general coalition’s ultimate goal.” Yet Brown concludes,

That said, the Democratic coalition is pursuing a dangerous means of achieving its goal of reducing greenhouse gas emissions. Its unprecedented definition of fraud threatens to impose an undue and possibly unachievable regulatory burden on energy firms and their investors. New York’s attorney general position has a great deal of sway over corporate law given its jurisdiction over some of the world’s most important financial markets. A successful fraud conviction against Exxon Mobil in the state would quickly lead to the adoption of the expanded fraud definition by plaintiffs’ attorneys and prosecutors in New York and other states.” (emphasis added)

As Brown noted, fraud allegations in the energy sector have “historically taken the form of companies falsely inflating the value of past capital inflows or failing to report actual losses.” But what these AGs are doing “takes what has been a backward-looking requirement and expands it to include the future,” which has enormous implications.  For one, it requires companies to know what scientists are right. As he explains:

In addition to being forward-looking, it also requires corporate management to know when the scientists are correct. It is often said that the scientific consensus supports the contention that humans are causing global climate change, and this is correct. Even now, however, one in six climate and earth scientists still hold the opinion that the human role in climate change is “little or none.” A minority, to be certain, but minority opinions in science often become the consensus with time.

As an example, at one point, the majority of physicists, Albert Einstein among them, believed that black holes were incompatible with reality. We now know that not only are black holes abundant in the observable universe, but that complex life only exists because of them. It is a tall order to require companies to be able to distinguish between minority opinions that will forever remain in the minority, such as the now-discredited link between childhood vaccines and autism, and those that will eventually become the consensus, such as the existence of black holes and anthropogenic climate change.

Brown notes that since the 21st century has seen “pause” in global warming, which wasn’t predicted by climate models, this means that clean energy companies could just as easily be accused of “fraud”:

“Imagine that another unpredicted pause occurs at some point in the near future. The Democratic coalition’s new fraud definition has become precedent. Republican attorneys general will have the grounds and quite possibly the will to investigate clean energy firms and their backers for committing fraud in the form of “climate change alarmism.” By changing the definition of securities fraud in this way, the Democratic coalition is potentially setting the stage for the vagaries of climate change to become the basis of legal attacks against opposing ideologies rather than just of political attacks.” (emphasis added)

Interestingly, a Wall Street Journal editorial this week made exactly the same point when it reported on the letter that the 13 Republican AGs sent to New York Attorney General Eric Schneiderman:

But the AGs’ letter points out that, “If Exxon’s disclosure is deficient, what of the failure of renewable energy companies to list climate change as a risk?” If climate change turns out to be less serious than advertised, then “‘clean energy’ companies may become less valuable and some may be altogether worthless,” the letter adds.

That’s not to mention the slew of legal experts that have agreed that prosecuting companies under RICO charges simply don’t work. Columbia law professor Philip Hamburger explained in a Wall Street Journal column,

“But with the usurped subpoena power, he can engage in a roving investigation, unlimited by any formal accusation, and then can use the results to bring criminal charges. This is a dangerous amalgam of grand-jury and prosecutorial power in one person. Mr. Schneiderman’s subpoena to Exxon Mobil thus stands apart. His ability to demand information in this way is a quintessential case of the fox guarding the henhouse.

The threats to privacy in our society are not merely technological; they also are legal. In addition to electronic surveillance, nonjudicial subpoenas allow government to examine private documents as if they were an open book. And as shown by Mr. Schneiderman, when attorneys general can issue such subpoenas, a valuable judicial power becomes a prosecutorial threat to liberty and due process.”

Wall Street Journal columnist Kim Strassel published a piece last week, which quotes two legal experts – Harvey Silverglate of the ACLU and Columbia Law professor Merritt B. Fox:

The Exxon investigation is “pure harassment,” civil-liberties attorney Harvey Silverglate told the Boston Herald this week. “It is outrageous for any law enforcement official,” he continued, “to be seeking to win this battle for minds by flexing law enforcement muscle and trying to shut up the other side.”

That goal is all the more clear given the dishonesty of the legal claim. New York Attorney General Eric Schneiderman is pursuing Exxon under his state’s sweeping Martin Act, which covers securities fraud. Yet at a recent panel discussion in New York, Columbia Law Professor Merritt B. Fox noted that Exxon’s actions were irrelevant in a market already “well supplied with information about climate change.” He skewered Mr. Schneiderman for pursuing a case “so unlikely” to “be a winner.” This was even as he expressed solidarity with concerns about global warming. (emphasis added)

The Washington Times interviewed Walter K. Olson, senior fellow at the Cato institute, who said pursuing fraud charges against Exxon is like pursuing fraud charges against candy or ice cream makers.

 “Every ice cream maker is disliked by some obesity expert, but it doesn’t mean that every time an ice cream maker tells its stockholders, ‘Everything is great, we’re selling more ice cream this year,’ they’re committing consumer fraud,” said Cato Institute senior fellow Walter K. Olson. “It doesn’t matter even if the critique of ice cream is correct. You still don’t have fraud.”

The Examiner also interviewed Brendan Collins, a partner with the law firm Ballard Spahr and an expert on environmental regulations, who put it this way:

“The evidence brought against the tobacco industry two decades ago is “pretty substantially different from the idea that Exxon may have duped me from getting a low-mileage [car] and now the island of Tuvalu is going to get covered by water,” Collins said. It’s a “very big leap” to link what Exxon “did or didn’t do” to the harm posed by climate change.

And as Kevin Ewing, an attorney with the Houston law firm Bracewell, explained to the Daily Caller,

“Tobacco was shown to cause specific harm to specific individuals,” he added. “Not so with climate change, where we cannot yet discern the factual connection between a company’s conduct and individual harm, even though we can observe the global effects of climate change at large.”

Lincoln Caplan, a senior research scholar at Yale Law School and the author of five books, wrote in a column:

“Is the ‘tobacco strategy’ the way to try to document that ExxonMobil fraudulently deceived the public about climate change and hold the giant energy company accountable? It is a promising but hugely expensive and gruelling model. Even if such a measure succeeds against ExxonMobil and perhaps against other big oil companies, it is likely to be one victory in a very long war.”

Finally Bloomberg News interviewed Brooklyn Law School professor James Fanto, who said:

“You wonder why this is the sort of thing that a New York attorney general should be doing,” said James Fanto, a professor at Brooklyn Law School. “It seems like it’s just completely politically motivated.”

As we’ve mentioned before, the only lawyers speaking in favor of investigating oil companies under RICO laws just happen to be the ones involved in the campaign itself.  And the only media outlets supporting them – the likes of Media Matters and Desmog Blog – are funded by the Rockefellers, who are also bankrolling the entire climate RICO campaign. In fact Jim Hoggan of Desmog Blog even attended that now infamous 2012 conference organized by the Union of Concerned Scientists and the Climate Accountability Institute (also funded by the Rockefellers) in La Jolla, Calif in which activists brainstormed ways they could launch racketeering investigations into ExxonMobil.

Meanwhile, the mainstream media editorial boards – such as Financial Times, USA Today, Bloomberg View, Washington Post, and the Wall Street Journal just to name a few – have all said the legal basis for the AG investigations is “flimsy” and has alarming implications for free speech.

With so much criticism coming their way – and considering that even lawyers who “empathize” with the AGs’ goals are saying this whole thing is ridiculous – it’s no wonder Bill McKibben is starting to sound a little bit defensive.


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