Exxon Mobil, seeking to derail climate lawsuits, targets cities
WASHINGTON — Exxon Mobil Corp. and other fossil-fuel giants are taking legal action against local governments, seeking to undermine a key part of their finances — their relationships with lenders.
Exxon Mobil’s targets are several California cities and counties that have filed state lawsuits, claiming the oil and coal industries worked for decades to cover up their roles in climate change and the consequences. The local governments want the industries to pay for damage and adaptation costs resulting from climate change, including sea-level rise and more extreme storms.
Exxon Mobil responded last month by petitioning a state court in Tarrant County, Texas, to subpoena California officials and lawyers involved with the lawsuits. In a novel legal tactic, Exxon Mobil alleges the local government officials are defrauding buyers of municipal bonds by not disclosing to lenders the climate risks they have claimed in their lawsuits.
It is unlikely Exxon Mobil will ultimately win in court, but the tactic may succeed in discouraging other cities and states from filing similar lawsuits. That may be the point.
“We knew they were going to deliver a counterpunch, but we didn’t know what it would be,” said Ryan Coonerty, a supervisor in Santa Cruz County, one of the local governments suing the oil companies. Exxon Mobil’s response, he said, “is particularly outrageous and clearly an effort of intimidation.”
It is not the first time Exxon Mobil has attempted to pre-empt climate change litigation and investigations that could expose it to court damages. After New York and Massachusetts attorneys general issued subpoenas to investigate Exxon Mobil’s practices, the company sued them, claiming they were part of a politically motivated conspiracy against the company.
“The reasons our investigations came to light was because Exxon actually sued us to shut down our investigations,” Massachusetts Attorney General Maura Healey said last week.
Healey called the Exxon Mobil lawsuits an “unprecedented step” to “squash the prerogative of state attorneys general to do their jobs.” Since then, no other state has joined New York and Massachusetts in going after the company.
For both sides in the ongoing litigation, the stakes are considerable. Climate activists have been preparing for more than a decade to launch mass litigation against the oil industry and other companies responsible for large emission of greenhouse gases. They compare their litigation to lawsuits that eventually cost the tobacco industry billions of dollars.
But the oil companies are not letting this campaign gain momentum. Along with countersuing the jurisdictions that are suing, they’ve been getting help from a collection of industry-friendly think tanks and trade associations. Those groups launched their own recent counterattack against the litigating local governments, which include San Francisco, Oakland, Richmond, Imperial Beach, Marin and San Mateo counties as well as Santa Cruz city and county.
Groups that have received oil industry funding, such as the National Center for Public Policy Research and the Chamber of Commerce’ Institute for Legal Reform, recently have criticized the coastal communities in Fox News and Sacramento Bee op-eds. In January, the National Association of Manufacturers hired a former Bush administration lawyer to counter litigation filed against oil refiners and other companies.
The Competitive Enterprise Institute has also entered the fray. The recipient of millions of dollars in funding from Exxon Mobil and the oil industry, CEI has been among the most effective nonprofit groups in spreading doubt about climate change science.
In May 2016, the group purchased a full-page ad in the New York Times criticizing the attorneys general of New York and the U.S. Virgin Islands for subpoenaing documents from CEI and other groups related to the climate investigation of Exxon Mobil. CEI claimed its free-speech rights were being violated.
“CEI ran an aggressive campaign to generate backlash against the USVI case,” said Kert Davies, founder of the Climate Investigations Center, a group that tracks the oil industry and its nonprofit allies.
It worked. By late June that year, the Virgin Islands dropped its subpoena.
In February, three weeks after Exxon Mobil filed its legal action in Texas, CEI filed a petition with the U.S. Securities and Exchange Commission urging the regulatory agency to investigate the cities and counties suing Exxon Mobil for bond fraud. “The plaintiff cities and counties apparently describe these climate risks in ways that are far different than how they described them in their own bond offerings,” CEI said in its petition.