Court Thwarts Seattle Climate Power Play

News today that the Washington state supreme court has blocked a scheme by Governor (and erstwhile candidate for climate President) Inslee from taking over the energy industry.  Washington state is a place where leftist progressives live in large numbers in and around Seattle and impose their virtue signalling ideas on the rest of the population who are more skeptical.

This story is also of interest since the maneuver follows the practice of weaponizing environmental law to overthrow society’s dependence on energy from fossil fuels.  For example, NGO lawyers have attacked permits for infrastructure like pipelines by demanding that the assessment also include emissions from end users burning the gas or oil after it has left the pipeline.  In the Washington state case, Inslee tried to put the Department of Ecology in charge of taxing energy used by the transportation industry under the auspices of a Clean Air Act. This was in fact an end run around the defeat of a state carbon tax in the last election.

The story from the Seattle Times is State Supreme Court limits Gov. Inslee’s rule cutting greenhouse-gas emissions  Excerpts in italics with my bolds.

The Washington State Supreme Court has invalidated key portions of a rule imposed by the administration of Gov. Jay Inslee capping greenhouse-gas emissions by fuel distributors, natural-gas companies and other industries.

In a 5-4 ruling Thursday, the court upheld a 2017 lower-court decision that the state Department of Ecology had exceeded its legal authority in trying to apply clean-air standards to “indirect emitters” that don’t directly burn fossil fuels.

“The issue is not whether man-made climate change is real — it is,” wrote Chief Justice Debra Stephens in the majority opinion. However, Stephens wrote, the department’s efforts to enforce the state Clean Air Act went beyond what had been authorized by the law.
[That is a social opinion not a legal one since IPCC suppositions have not yet been litigated.]

“We are confident that if the State of Washington wishes to expand the definition of emission standards to encompass ‘indirect emitters,’ the Legislature will say so. In the meantime. Ecology may not claim more authority than the Legislature has granted in the Act,” Stephens wrote.

The state had projected the rule would reduce emissions by 20 million metric tons by 2035 — about two-thirds of the target established by the Legislature in 2008. But three-quarters of that reduction would have come from applying the regulation to indirect emitters, according to the court ruling.

[The hypocrisy is striking; people who burn gasoline in their cars and trucks are directly responsible for those emissions, not their suppliers.  Energy products are provided in a free society to those who want and can afford to pay for them.  Those who want to live without such energy are also free to make that choice.  But beware, in modern nations like the G20 nearly 90% of energy comes from burning fossil fuels. CO2 zealots want to shut off the supply for everyone else instead of themselves.  Socialism is another name for shared misery]

Figure 12: Figure 9 with Y-scale expanded to 100% and thermal generation included, illustrating the magnitude of the problem the G20 countries still face in decarbonizing their energy sectors.

During a news conference, Inslee said he disagreed with the court majority’s central conclusion but hasn’t yet decided whether to ask lawmakers to amend the Clean Air Act to include indirect emitters.

State Sen. Doug Ericksen, R-Ferndale, praised the court ruling in a statement calling the clean-air rule “a classic example of government arrogance and overreach.”

A longtime opponent of Inslee’s climate agenda, Ericksen, the ranking Republican member of the state Senate’s environment committee, said the rule would have imposed “onerous new regulations on oil refiners and distributors of natural gas” and passed potentially billions of dollars in costs on to consumers.

Ericksen added he hoped the decision would “quell the enthusiasm of other agencies” to push legal boundaries, citing the Puget Sound Clean Air Agency’s decision to develop a low-carbon fuel regulation.

Frustrated by legislative inaction, Inslee had directed Ecology in 2015 to use executive authority under the Clean Air Act to regulate carbon emissions.

After a lengthy rule-making process, the state issued regulations in 2016 which would have targeted dozens of top emitters, from Skagit County oil refineries to Boeing’s Everett plant and Eastern Washington food processors. The rule required such facilities to cut their carbon footprint by an average of 1.7% a year — either by cleaning up their own facilities or paying for carbon-reduction projects off-site.

But the rule was quickly challenged in a lawsuit by business groups led by the Association of Washington Business. The association’s president, Kris Johnson, said in a statement he welcomed the court’s ruling and intends to work with lawmakers “to find a bipartisan solution” to reduce the state’s carbon emissions.

A trade association for paper mills said its members remain concerned about the effects of even a more limited version of the clean-air rule.

And Justice Wept

Environmentalist judge gives free pass to climate activists.  Where will this lead?

CGTN reports approvingly Climate activists win landmark case over Federer demo at Credit Suisse.  Excerpts in italics with my bolds.

Swiss climate protesters have won a landmark legal battle against investment bank Credit Suisse, which could transform the way that climate activism is prosecuted in Switzerland in future.

A judge ruled on Monday that the danger posed by climate change means activists from the climate group Breakfree were not guilty of trespassing when they occupied a branch of the Swiss investment bank two years ago to demonstrate against the financiers’ funding of fossil fuel projects.

In November 2019, a group of young people wearing tennis kits and wigs staged a tennis-themed sit-in at a Credit Suisse branch in Lausanne. Their goal was to convince Swiss tennis player Roger Federer to end his sponsorship deal with the investment bank and highlight what they said was Credit Suisse’s investments in industries which are seen as adding to climate change.

The group was charged with trespassing and slapped with a 21,600 Swiss franc fine ($22,200), but during their appeal hearing on Monday, Judge Philippe Colelough stated that the activists had acted proportionately and ruled that they did not have to pay the fine.

The judge agreed with the protesters that they had entered the bank in the face of an “imminent danger” from climate change.

Because of the insufficient measures taken to date in Switzerland, whether they be economic or political, the average warming will not diminish nor even stabilize, it will increase,” he said. Adding that: “In view of this, the tribunal considers that the imminence of danger is established.

“The act for which they were incriminated was a necessary and proportional means to achieve the goal they sought.”

The ruling, given in the Lausanne municipality of Renens, was greeted with cheers from the crowded court room. The Swiss state will cover the cost of the fine instead.

“I didn’t think it was possible,” said Beate Thalmann, one of those accused in the trial. “If Switzerland did this, then maybe we have a chance.”

Credit Suisse said last week that, while it respected the protesters’ cause, it considered the occupation of the bank’s property unacceptable.

“Combating global warming is important,” the financier said in a statement. “Credit Suisse respects freedom of expression as a fundamental democratic right. [However,] to protect its clients, employees and branches, it does not tolerate unlawful attacks on its branches, irrespective of the perpetrators and their motives.”

Since the decision from the court, there has been fresh Swiss climate activism.

On Tuesday, protesters dumped coal inside a branch of bank UBS in the same city of Lausanne, while carrying a banner reading: “We will leave when you quit fossil fuels.”

Bullying in the name of Climate is now sanctioned by the courts  How many more times will CO2 Hystericals be allowed to overthrow others’ rights? Thanks a lot Judge Colelough.

Footnote:

Given how much Switzerland depends on the financial industry, this is looking like the barbarians attacking the main gate.  That didn’t work out so well for Rome in 410:

ExxonKnew While NYAGsClueless

At Real Clear Energy is a good reflection on the collapsed climate legal crusade by three NYAGs Exxon and Evidence 101 by John S. Baker, Jr. Excerpts in italics with my bolds.

The problem for all these attorney generals is that states have no jurisdiction over climate change. Whatever one thinks about climate change, the climatic phenomena know no borders. If anything should be done about climate change, it is properly committed to the federal government.

Untroubled by these fundamental facts, current New York Attorney General Letitia James nevertheless charged ExxonMobil with fraud in misleading investors regarding the threat posed to the company by the costs allegedly associated with by climate change. New York State’s notoriously broad and vague Martin Act.

In the court of (elite) public opinion, ExxonMobil had already been found guilty. For three years prior to trial, the Attorney General’s office claimed that ExxonMobil was clearly engaged in fraud. The whole point of the “#Exxon Knew” media campaign was to convince the public that the fraud was unquestionable. The fraud claim was that, for decades, Exxon had knowingly and willingly mislead the public and that investors had relied on the allegedly false information.

Then, at trial, reality set in. After weeks of evidence, the States’ attorney suddenly and without explanation conceded during his closing argument –but only when pressed by the judge—that he had to drop the fraud claims. So, after screaming “fraud” for four years, the Attorney General’s office could produce absolutely no evidence of fraud.

That left two charges which were much less serious– but should have been much easier to prove — under the Martin Act. The two remaining charges did not require proof of any intentional act by ExxonMobil. Nevertheless, the State was unable to muster even this minimum level of proof.

Judge Ostrager wrote that regardless of ExxonMobil’s role with respect to climate change, this was a securities case– not a climate-change case. Indeed, the State’s attorney had insisted this was a securities case. The judge wrote that “the Attorney General failed to prove, a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor.

The judge continued, saying that “the Attorney General produced no testimony either from any investor who claimed to have been misled by any disclosure, even though the Office of the Attorney General had previously represented it would call such individuals as trial witnesses.”

Of course, environmentalist groups are slamming the decision. They seem to think that because they disagree with a corporation’s policies and practices that their corporate opponents are evil and must be branded as criminals.

These critics include lawyers, at least some seem to think that the purity of their purpose justifies a finding of fraud against ExxonMobil despite the lack of evidence.

This verdict represents a devastating defeat for New York Attorney General James, as well as for the “#Exxon Knew” campaign. That media campaign may have energized Democratic officials; but in the courtroom, slogans cannot substitute for facts and the law.

It remains to be seen what effect the New York verdict will have on the Massachusetts case filed against ExxonMobil. The Massachusetts Attorney General is proceeding on a different theory, one focused on consumer protection. For environmental extremists, however, the end-game is the same. So, they are likely to redouble their public-opinion efforts in hopes of encouraging the Massachusetts Attorney General to go forward.

Nevertheless, trial lawyers in the Massachusetts Attorney General’s office are likely taking a hard look at their evidence and the judge assigned to the case. They undoubtedly appreciate support from the environmental movement, but they surely also want to avoid the extreme embarrassment of a second devastating loss to ExxonMobil.

Misguided idealism, environmental or otherwise, can become impatient with the basic principles of the rule of law. When that impatience is teamed with incompetent and/or ruthless litigators, the courts can become a forum for tyranny. Thankfully, “old fashioned” trial judges still look at whether or not the evidence presented supports the charge filed.

Footnote:  Today’s social discourse is poisoned by people believing that accusations are proof without any need for evidence. The media is rife with empty climate claims, while Kavenaugh and now Trump have been smeared with rumors, hearsay and innuendo.  Substituting feelings for facts is not the path to find the truth.

See Also Activist-Legal Complex Perverts Science

Dutch Judges Dictate Energy Policy

From Fortune Climate Change Litigation Enters a New Era as Court Rules That Emissions Reduction Is a Human Right Excerpts in italics with my bolds.

The Supreme Court of the Netherlands in The Hague on Friday delivered what may be the most unequivocal legal statement so far that governments are responsible for acting to address climate change.

In a closely-watched case that could have wide ramifications for litigation worldwide, the court ruled that the Dutch government must reduce emissions by at least 25% by the end of 2020 compared to 1990 levels, going beyond the EU-wide objective of 20%.

The ruling denied the Dutch government’s appeal of an earlier ruling in favor of the Urgenda Foundation, an environmental group that first filed the case in 2013 on behalf of a group of Dutch citizens who wanted the government to move faster to reduce emissions. The government has argued that a legal obligation to meet a specific target would limit its flexibility in determining how to reduce emissions.

The Supreme Court said on Friday that it based its judgement on the UN Climate Convention and the obligations of the state under the European Convention on Human Rights.

“There is a great deal of consensus in science and the international community about the urgent need to reduce greenhouse gas emissions by at least 25 percent by developed countries by the end of 2020,” the court said in its summary, translated from the Dutch. “[The Netherlands] has not explained why a lower reduction can be considered justified and can still lead in time to the final goal accepted by the State.”

In a brief summary read in English, the judge presiding over the court noted that European Human Rights Convention Articles 2 and 8—the right to life and the right to respect for private and family life—indicate that action on climate change falls under the umbrella of human rights protection.

“These articles entail the positive obligation for the Dutch state to take reasonable and appropriate measures to protect the residents of the Netherlands from the serious risk of a dangerous climate change, that would threaten the lives and wellbeing of many people in the Netherlands,” he said.

That obligation to apply the provisions of the Convention trumped the state’s argument that politicians—not the courts—are responsible for determining emissions reductions, the Court said.

“This could have significant consequences for governments’ freedom to make climate policy and in other areas,” the government said. The statement noted that the state was still committed to lowering emissions by 25% by 2020.

In 2018, emissions in the country were down 14.5% from 1990 levels, according to Statistics Netherlands.

The Urgenda case has gotten the furthest of all international litigation regarding climate change, according to Michael Gerrard, founder and director of the Sabin Center for Climate Change Law at Columbia University. Together with the law firm Arnold & Porter, the Center runs a database to track climate change litigation both internationally and in the U.S.

“There have been 1,442 climate change lawsuits worldwide. This is the strongest decision ever,” said Gerrard. “The Dutch Supreme Court has upheld the first court order anywhere directing a country to slash its greenhouse gas emissions. This decision may inspire even more cases in other countries.”

That was a sentiment that was echoed by Markus Gehring, an expert in sustainable development law at the University of Cambridge.

“The beauty is you only need one successful case,” he said. “There is [now] an expectation that climate litigation will multiply.”

See Also Judges Now Deciding US Energy Policy

Going Dutch: How Not to Cut Emissions

A primer for judges and others wanting to meddle with today’s energy system: Kelly’s Climate Clarity

Activist-Legal Complex Perverts Science

This article was published at the American Council on Science and Health Activist-Legal Complex Will Destroy American Science And Industry by Alex Berezow and Josh Bloom. Excerpts in italics with my bolds and added images.

American science and industry are under threat by this complex, known to be an unholy alliance of activists and trial lawyers who deploy various pseudoscientific tricks to score multibillion-dollar lawsuits against large companies. No industry is safe from these deceptions.

In his Farewell Address, President Eisenhower warned of the military-industrial complex, a partnership between the military and defense industry that was financially incentivized to promote war over peace. Today, we face a different threat – the “activist-legal complex,” which is responsible for scoring multibillion-dollar verdicts against some of America’s biggest companies.

One partner in this unholy alliance are activists who falsely claim that the food we eat, the water we drink, the air we breathe, and the products we use are all secretly killing us. They pervert scientific uncertainty to nefarious ends by magnifying hypothetical risks and downplaying relevant facts, such as level of exposure.

They exploit widespread misunderstanding of science and a general hatred of “corporations” – especially those that manufacture chemicals, drugs, or consumer products – to instill fear into the public.

The other partner is the legal industry, which relies on activist scaremongering to win jackpot verdicts. They identify sympathetic patients, often suffering from cancer or some other debilitating disease, and blame their maladies on a company with deep pockets. They buy television commercials to recruit more “victims” for the inevitable class-action lawsuit.

This formula works nearly every time, and the result is always the same: A giant bag of money. In this way, the activist-legal complex recently won a $4.7 billion lawsuit against Johnson & Johnson’s baby powder for causing ovarian cancer and a $2 billion lawsuit (subsequently reduced to merely $87 million) against Monsanto’s glyphosate for non-Hodgkin’s lymphoma.

There is no credible scientific evidence in support of either verdict.

But the absence of genuine scientific evidence is typically irrelevant in trials of this type. With the aid of flawed or cherry-picked toxicological and epidemiological studies – often published by activists in low-quality journals – the activist-legal complex can subvert science using well-established pseudoscientific tricks.

The first involves undermining long-held truths about toxicity. Thanks to Paracelsus, it has been known since the 16th Century that “the dose makes the poison.” Yet, the activist-legal complex promotes an alternate theory, namely that the mere presence of a chemical is an indicator of its potential harm. It is not.

Given advances in analytical instrumentation, it is now possible to detect almost any chemical in your body or in the environment at levels as minute as “one part per trillion,” which is roughly equivalent to a drop in an Olympic-sized swimming pool. There are very few, if any, chemicals on Earth that pose a health risk at such a low concentration.

But using the activist-legal complex’s doctrine – that we are constantly swimming in a sea of harmful chemicals – it is easy for lawyers to argue that any exposure to a potential carcinogen could be responsible for a cancer that develops decades later. Usually, the chemicals that are blamed have been used for decades and have been present in our bodies in tiny amounts all along without causing health concerns.

The second trick is to play on society’s belief that regulators and activists are righteous, unbiased people with no conflicts of interest. For example, jurors in the Monsanto glyphosate trial heard that the International Agency for Research on Cancer (IARC), a subsidiary of the World Health Organization, classified glyphosate as a probable human carcinogen. What they did not hear is that one of the key members of the IARC panel received £120,000 from trial lawyers who stood to benefit financially from the classification.

The third trick is to foment conspiracy theories, usually involving a few old, obscure documents or emails taken out of context. The activist-legal complex uses this tactic to convince jurors, already eager to “punish” Big Business, that the company was engaged in malfeasance.

Game, set, match. The only question left is how big the bag of money is going to be.

Where will the activist-legal complex strike next? It could be anywhere. Maybe there will be a class action lawsuit against Coca-Cola for obesity in America. Perhaps lawyers will go after Facebook for making its social media platform too addictive. Or maybe Apple’s iPhone will be blamed for causing car accidents due to distracted driving.

As long as a company has a sufficiently large bank account, quite literally anything is possible. No industry is safe from the activist-legal complex.

Postscript:

The article points to jackpot justice in general.  A number of posts here have discussed how the same dynamic is at work in Climate Litigation (link is to posts so tagged)

NYAG James Exxon Case Goes Down in Flames

Climate Litigation Watch is reporting the ruling by Judge Barry Ostrager ending the case brought by NYAG Leticia James against ExxonMobil.  The loss could hardly be more complete.  The full text of the ruling is here.  The juicy bits are excerpted in italics below with my bolds.

Supreme Court of New York, New York County, the Honorable Barry Ostrager presiding.

Decision After Trial

Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products. ExxonMobil does not dispute either that its operations produce greenhouse gases or that greenhouse gases contribute to climate change, But ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case. Applying the applicable legal standards, the Court finds that the Office of the Attorney General failed to prove by a preponderance of the evidence that ExxonMobil made any material misrepresentations that “would have been viewed by a reasonable investor as having significantly altered the ‘total mix’ of information made available.” TSC Indusiries, Ine. v, Northway, Inc,, 426 U.S. 438 (1976).

The Office Attorney General is Not Entitled to Any Relief.

The Court also finds that the Office of the Attorney General is not entitled to any monetary damages or injunctive relief because the Office of the Attorney General did not prevail on its first and second causes of action. If the Court had reached the issues of damages, the Court would have found that the Office of the Attorney General failed to prove any damages by a preponderance of the evidence for the reasons stated infra.

The Office of the Attorney General had the burden to prove that ExxonMobil made misrepresentations and that ExxonMobil investors would have considered any alleged misrepresentations important in light of the “total mix of information” available to them. TSC Industries, Inc, v. Northway, Inc., 426 U.S. 438, 449 (1976). The Court finds there was no proof offered at trial that established material misrepresentations or omissions contained in any of ExxonMobil’s public disclosures that satisfy the applicable legal standard. The total mix of information available to ExxonMobil investors during the relevant period included an annual, publicly-filed report called the Outlook for Energy, the two March 2014 Reports, ExxonMobil’s Form 10-Ks, ExxonMobil’s annual Corporate Citizenship Reports, and a host of other publicly available information that was not the subject of testimony at trial (including ExxonMobil’s Annual Shareholder reports).

Significantly, there is no allegation in this case, and there was no proof adduced at trial, that anything ExxonMobil is alleged to have done or failed to have done affected ExxonMobil’s balance sheet, income statement, or any other financial disclosure. More importantly, the Office of the Attorney General’s case is largely focused on projections of proxy costs and GHG costs in 2030 and 2040. No reasonable investor during the period from 2013 to 2016 would make investment decisions based on speculative assumptions of costs that may be incurred 20+ or 30+ years in the future with respect to unidentified future projects. See Singh v. Cigna Corp., 918

At bottom, the case presented by the Office of the Attorney General is largely predicated upon the proposition, which this Court rejects, that during the period of time covered by the Complaint, ExxonMobil’s disclosures led the public to believe that its GHG cost assumptions for future projects had the same values assigned to its proxy cost of carbon. The existence of ExxonMobil’s DataGuide with separate sections and appendices for proxy costs and GHG costs is corroborative of ExxonMobil’s assertion that proxy cost of carbon and GHG costs are different metrics, a proposition of the Office of the Attorney General conceded before any testimony was presented at trial. Explicit statements in various publications confirmed this to be the case.

What the evidence at trial revealed is that ExxonMobil executives and employees were uniformly committed to rigorously discharging their duties in the most comprehensive and meticulous manner possible. More than half of the current and former ExxonMobil executives and employees who testified at trial have worked for ExxonMobil for the entirety of their careers. The testimony of these witnesses demonstrated that ExxonMobil has a culture of disciplined analysis, planning, accounting, and reporting.

To support its theory that the alleged misstatements in the March 31, 2014 publications were material, the Office of the Attorney General offered the expert testimony and expert report of Dr. Eli Bartov who concluded that there was inflation on the stock price of ExxonMobil from April 1, 2014 to June 1, 2017. Tr. 1149:25-1150:4. Dr. Bartov posited that the inflation period began after the alleged affirmative misrepresentations contained in the two March 31, 2014 publications. Significantly, the Office of the Attorney General offered no proof that there was any increase in the stock price of ExxonMobil immediately following the publication of Managing the Risk and Energy and Climate and Dr. Bartov perplexingly testified that he did not conduct an analysis of whether or not ExxonMobil’s stock increased as a result of the alleged misrepresentations in the March 31, 2014 publications “because it was completely unrelated to my analysis.” Tr. 1233:8-13. By contrast, ExxonMobil’s expert, Dr. Frank Allen Ferrell,” determined that there was no increase in ExxonMobil stock on April 1, 2014. Tr. 1967. In short, there is no evidence that any misleading statements in these publications inflated the price of ExxonMobil stock. See DX711 ¶ 15 Expert Report of Allen Ferrell.

None of Dr. Bartov’s corrective disclosures contain any statements from ExxonMobil acknowledging a misstatement or correcting a previous disclosure. Tr. 1208. They all pertain to regulatory investigations of ExxonMobil announced in the mainstream press. In short, the news of the California Attorney General’s reported investigation is precisely the kind of news that the Office of Attorney General’s witness Rodger Reed characterized as “headline risk.” Additionally, as ExxonMobil’s highly credentialed expert, Dr. Ferrell, testified, there is something circular about claiming that a stock drop precipitated by the announcement of an investigation constitutes evidence of wrongdoing. Indeed, by Dr. Bartov’s reasoning, any decline in the value of ExxonMobil stock after the June 2, 2017 filing of the Office of the Attorney General’s complaint is the result of an ill-conceived initiative of the Office of the Attorney General.

V. Conclusion

In sum, the Office of the Attorney General failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor. The Office of the Attorney General produced no testimony either from any investor who claimed to have been misled by any disclosure, even though the Office of the Attorney General had previously represented it would call such individuals as trial witnesses. ExxonMobil disclosed its use of both the proxy cost and the GHG metrics no later than 2014. Perhaps, the 2014 paragraph in Managing the Risks which indicated that ExxonMobil applied a GHG cost “where appropriate” and which was the subject of questioning of virtually every witness in the case could have been written in bold type, but the sentence was consistent with other ExxonMobil disclosures and ExxonMobil’s business practices. The publication of Managing the Risks had no market impact and was, as far as the evidence adduced at trial reflected, essentially ignored by the investment community.

The testimony of all the present and former ExxonMobil employees who were called either as adverse witnesses by the Office of the Attorney General or as defense witnesses by ExxonMobil was uniformly favorable to ExxonMobil, and the Court credited the testimony of each of those witnesses. The testimony of the expert witnesses called by the Office of the Attorney General was eviscerated on cross-examination and by ExxonMobil’s expert witnesses. Confronted with the disclosures in ExxonMobil’s Corporate Citizenship Reports, Form 10-K’s, and ExxonMobil’s annually published Outlook, the Office of the Attorney General failed to prove by a preponderance of the evidence that any alleged misrepresentation in Managing the Risks and Energy and Climate (or any other disclosure by ExxonMobil) was false and material in the context of the total mix of information available to the public.

For all of these reasons, the claims asserted by the Office of the Attorney General under the Martin Act and Executive Law § 63(12) are denied, and the action is dismissed with prejudice.
Dated: December 10, 2019
Barry R. Ostrager, JSC

Background: New York AG’s Disgraceful Exxon Trial

Justice Alito Finds Chinks in Mann’s Legal Armor

US Supreme Justice Alito dissented from the majority opinion leaving alone a lower court ruling to allow Mann’s free speech lawsuit to proceed (after seven years).  Background on the case history is later on.  This post provides Alito’s opinion and perspective why the Supreme Court should take up the case, if not now then later after an outcome is reached.  The text comes from the US Supreme Court Orders November 25, 2019.  Excerpts in italics with my bolds.

SUPREME COURT OF THE UNITED STATES NATIONAL REVIEW, INC. 18–1451 v. MICHAEL E. MANN COMPETITIVE ENTERPRISE INSTITUTE, ET AL. 18–1477 v. MICHAEL E. MANN ON PETITIONS FOR WRITS OF CERTIORARI TO THE DISTRICT OF COLUMBIA COURT OF APPEALS Nos. 18–1451 and 18–1477. Decided November 25, 2019 The motions of Southeastern Legal Foundation for leave to file briefs as amicus curiae are granted. The petitions for writs of certiorari are denied.

JUSTICE ALITO, dissenting from the denial of certiorari. The petition in this case presents questions that go to the very heart of the constitutional guarantee of freedom of speech and freedom of the press: the protection afforded to journalists and others who use harsh language in criticizing opposing advocacy on one of the most important public issues of the day. If the Court is serious about protecting freedom of expression, we should grant review.

I.  Penn State professor Michael Mann is internationally known for his academic work and advocacy on the contentious subject of climate change. As part of this work, Mann and two colleagues produced what has been dubbed the “hockey stick” graph, which depicts a slight dip in temperatures between the years 1050 and 1900, followed by a sharp rise in temperature over the last century. Because thermometer readings for most of this period are not available, Mann attempted to ascertain temperatures for the earlier years based on other data such as growth rings of ancient trees and corals, ice cores from glaciers, and cave sediment cores. The hockey stick graph has been prominently cited as proof that human activity has led to global warming. Particularly after e-mails from the University of East Anglia’s Climate Research Unit were made public, the quality of Mann’s work was called into question in some quarters.

Columnists Rand Simberg and Mark Steyn criticized Mann, the hockey stick graph, and an investigation conducted by Penn State into allegations of wrongdoing by Mann. Simberg’s and Steyn’s comments, which appeared in blogs hosted by the Competitive Enterprise Institute and National Review Online, employed pungent language, accusing Mann of, among other things, “misconduct,” “wrongdoing,” and the “manipulation” and “tortur[e]” of data. App. to Pet. for Cert. in No. 18–1451, pp. 94a, 98a (App.).

Mann responded by filing a defamation suit in the District of Columbia’s Superior Court. Petitioners moved for dismissal, relying in part on the District’s anti-SLAPP statute, D. C. Code §16–5502(b) (2012), which requires dismissal of a defamation claim if it is based on speech made “in furtherance of the right of advocacy on issues of public interest” and the plaintiff cannot show that the claim is likely to succeed on the merits. The Superior Court denied the motion, and the D. C. Court of Appeals affirmed. 150 A. 3d 1213, 1247, 1249 (2016). The petition now before us presents two questions:

(1) whether a court or jury must determine if a factual connotation is “provably false” and

(2) whether the First Amendment permits defamation liability for expressing a subjective opinion about a matter of scientific or political controversy. Both questions merit our review.

II.  The first question is important and has divided the lower courts. See 1 R. Smolla, Law of Defamation §§6.61, 6.62, 6.63 (2d ed. 2019); 1 R. Sack, Defamation §4:3.7 (5th ed. 2019). Federal courts have held that “[w]hether a communication is actionable because it contained a provably false statement of fact is a question of law.” Chambers v. Travelers Cos., 668 F. 3d 559, 564 (CA8 2012); see also, e.g., Madison v. Frazier, 539 F. 3d 646, 654 (CA7 2008); Gray v. St. Martin’s Press, Inc., 221 F. 3d 243, 248 (CA1 2000); Moldea v. New York Times Co., 15 F. 3d 1137, 1142 (CADC 1994). Some state courts, on the other hand, have held that “it is for the jury to determine whether an ordinary reader would have understood [expression] as a factual assertion.” Good Govt. Group of Seal Beach, Inc. v. Superior Ct. of Los Angeles Cty., 22 Cal. 3d 672, 682, 586 P. 2d 572, 576 (1978); see also, e.g., Aldoupolis v. Globe Newspaper Co., 398 Mass. 731, 734, 500 N. E. 2d 794, 797 (2014); Caron v. Bangor Publishing Co., 470 A. 2d 782, 784 (Me. 1984). In this case, it appears that the D. C. Court of Appeals has joined the latter camp, leaving it for a jury to decide whether it can be proved as a matter of fact that Mann improperly treated the data in question. See App. 29a, 52a–53a, 65a, n. 46.

Respondent does not deny the existence of a conflict in the decisions of the lower courts. See Brief in Opposition at 30. Nor does he dispute the importance of the question. Instead, he argues that the D. C. Court of Appeals followed the federal rule,* but the D. C. Court of Appeals’ opinion repeatedly stated otherwise. See App. 29a (asking what “a jury properly instructed on the applicable legal and constitutional standards could reasonably find”); id., at 52a–53a (repeatedly describing what a jury “could find”); id., at 65a, —————— *Respondent’s lead argument in opposition to certiorari is that we lack jurisdiction under 28 U. S. C. §1257, see Brief in Opposition 27–30, but petitioners have a strong argument that we have jurisdiction under Cox Broadcasting Corp. v. Cohn, 420 U. S. 469 (1975). If the Court has doubts on this score, the question of jurisdiction can be considered together with the merits. 4 NATIONAL REVIEW, INC. v. MANN ALITO, J., dissenting n. 46 (stating that in a case like this one, involving what it characterized as a claim of “‘ordinary libel,’” “the standard is ‘whether a reasonable jury could find that the challenged statements were false’” (emphasis in original)). This last statement is especially revealing because it appears in a footnote that was revised in response to petitioners’ petition for rehearing, see id., at 1a, n. *, which disputed the correctness of the standard that asks what a jury could find, see id., at 65a, n. 46. We therefore have before us a decision on an indisputably important question of constitutional law on which there is an acknowledged split in the decisions of the lower courts. A question of this nature deserves a place on our docket.

This question—whether the courts or juries should decide whether an allegedly defamatory statement can be shown to be untrue—is delicate and sensitive and has serious implications for the right to freedom of expression. And two factors make the question especially important in the present case.

First, the question that the jury will apparently be asked to decide—whether petitioners’ assertions about Mann’s use of scientific data can be shown to be factually false—is highly technical. Whether an academic’s use and presentation of data falls within the range deemed reasonable by those in the field is not an easy matter for lay jurors to assess.

Second, the controversial nature of the whole subject of climate change exacerbates the risk that the jurors’ determination will be colored by their preconceptions on the matter. When allegedly defamatory speech concerns a political or social issue that arouses intense feelings, selecting an impartial jury presents special difficulties. And when, as is often the case, allegedly defamatory speech is disseminated nationally, a plaintiff may be able to bring suit in whichever jurisdiction seems likely to have the highest percentage of jurors who are sympathetic to the plaintiff ’s point of view.  See Keeton v. Hustler Magazine, Inc., 465 U. S. 770, 781 (1984) (regular circulation of magazines in forum State sufficient to support jurisdiction in defamation action). For these reasons, the first question presented in the petition calls out for review.

III.   The second question may be even more important. The constitutional guarantee of freedom of expression serves many purposes, but its most important role is protection of robust and uninhibited debate on important political and social issues. See Snyder v. Phelps, 562 U. S. 443, 451–452 (2011); New York Times Co. v. Sullivan, 376 U. S. 254, 270 (1964). If citizens cannot speak freely and without fear about the most important issues of the day, real selfgovernment is not possible. See Garrison v. Louisiana, 379 U. S. 64, 74–75 (1964) (“[S]peech concerning public affairs is more than self-expression; it is the essence of selfgovernment”). To ensure that our democracy is preserved and is permitted to flourish, this Court must closely scrutinize any restrictions on the statements that can be made on important public policy issues. Otherwise, such restrictions can easily be used to silence the expression of unpopular views.

At issue in this case is the line between, on the one hand, a pungently phrased expression of opinion regarding one of the most hotly debated issues of the day and, on the other, a statement that is worded as an expression of opinion but actually asserts a fact that can be proven in court to be false. Milkovich v. Lorain Journal Co., 497 U. S. 1 (1990). Under Milkovich, statements in the first category are protected by the First Amendment, but those in the latter are not. Id., at 19–20, 22. And Milkovich provided examples of statements that fall into each category. As explained by the Court, a defamation claim could be asserted based on the statement: “In my opinion John Jones is a liar.” Id., at 18. 6 NATIONAL REVIEW, INC. v. MANN ALITO, J., dissenting This statement, the Court noted, implied knowledge that Jones had made particular factual statements that could be shown to be false. Ibid. As for a statement that could not provide the basis for a valid defamation claim, the Court gave this example: “In my opinion Mayor Jones shows his abysmal ignorance by accepting the teachings of Marx and Lenin.” Id., at 20.

When an allegedly defamatory statement is couched as an expression of opinion on the quality of a work of scholarship relating to an issue of public concern, on which side of the Milkovich line does it fall? This is a very important question that would greatly benefit from clarification by this Court. Although Milkovich asserted that its hypothetical statement about the teachings of Marx and Lenin would not be actionable, it did not explain precisely why this was so. Was it the lack of specificity or the nature of statements about economic theories or all scholarly theories or perhaps something else?

In recent years, the Court has made a point of vigilantly enforcing the Free Speech Clause even when the speech at issue made no great contribution to public debate. For example, last Term, in Iancu v. Brunetti, 588 U. S. ___ (2019), we upheld the right of a manufacturer of jeans to register the trademark “F-U-C-T.” Two years before, in Matal v. Tam, 582 U. S. ___ (2017), we held that a rock group called “The Slants” had the right to register its name.

In earlier cases, the Court went even further. In United States v. Alvarez, 567 U. S. 709 (2012), the Court held that the First Amendment protected a man’s false claim that he had won the Congressional Medal of Honor. In Snyder, the successful party had viciously denigrated a deceased soldier outside a church during his funeral. 562 U. S., at 448–449. In United States v. Stevens, 559 U. S. 460, 466 (2010), the First Amendment claimant had sold videos of dog fights.

If the speech in all these cases had been held to be unprotected, our Nation’s system of self-government would not have been seriously threatened. But as I noted in Brunetti, 588 U. S., at ___ (slip op., at 1) (concurring opinion), the protection of even speech as trivial as a naughty trademark for jeans can serve an important purpose: It can demonstrate that this Court is deadly serious about protecting freedom of speech. Our decisions protecting the speech at issue in that case and the others just noted can serve as a promise that we will be vigilant when the freedom of speech and the press are most seriously implicated, that is, in cases involving disfavored speech on important political or social issues.

This is just such a case. Climate change has staked a place at the very center of this Nation’s public discourse. Politicians, journalists, academics, and ordinary Americans discuss and debate various aspects of climate change daily—its causes, extent, urgency, consequences, and the appropriate policies for addressing it. The core purpose of the constitutional protection of freedom of expression is to ensure that all opinions on such issues have a chance to be heard and considered.

I do not suggest that speech that touches on an important and controversial issue is always immune from challenge under state defamation law, and I express no opinion on whether the speech at issue in this case is or is not entitled to First Amendment protection. But the standard to be applied in a case like this is immensely important. Political debate frequently involves claims and counterclaims about the validity of academic studies, and today it is something of an understatement to say that our public discourse is often “uninhibited, robust, and wide-open.” New York Times Co., 376 U. S., at 270.

I recognize that the decision now before us is interlocutory and that the case may be reviewed later if the ultimate outcome below is adverse to petitioners. But requiring a free speech claimant to undergo a trial after a ruling that may be constitutionally flawed is no small burden. See Cox 8 NATIONAL REVIEW, INC. v. MANN ALITO, J., dissenting Broadcasting Corp. v. Cohn, 420 U. S. 469, 485 (1975) (observing that “there should be no trial at all” if the statute at issue offended the First Amendment). A journalist who prevails after trial in a defamation case will still have been required to shoulder all the burdens of difficult litigation and may be faced with hefty attorney’s fees. Those prospects may deter the uninhibited expression of views that would contribute to healthy public debate. For these reasons, I would grant the petition in this case, and I respectfully dissent from the denial of certiorari

From Previous Post: Courts Shielding MIchael Mann from Climate Exposure

An editorial from National Review summarizing how the courts function as Michael Mann’s protective shield  NR Won’t Be Cowed by a Litigious Michael Mann  December 21, 2018.  Excerpts below with my bolds.

At this rate, Jarndyce v. Jarndyce will be replaced in the Western canon as the go-to example of the court case that never ends by National Review, Inc. v. Michael E. Mann, which is now well into its seventh year as a live proposition and, alas, showing no end in sight.

For those who have forgotten, this is the 2012 case in which Mann sued National Review for libel over a 270-word blog post that criticized his infamous “hockey stick” graph portraying global warming, in response to which National Review refused to acquiesce to what was, and remains, nothing less than an attempt to use the law to bully the press into submission. That this case is both frivolous in nature and clear-cut in National Review’s favor seems to be obvious to everyone except for Michael Mann and the D.C. Court of Appeals. Indeed, in the years since Mann made his play, National Review has been joined by a veritable Who’s Who of American media organizations — including, but not limited to, the ACLU, the National Press Club, Comcast, the Cato Institute, the Washington Post, Time Inc., Reporters Committee for Freedom of the Press, and the Electronic Frontier Foundation, all of which have filed amicus briefs on NR’s side. Tellingly, National Review has also been supported by the City of Washington, D.C., in which jurisdiction the case was brought. And yet, inexplicably, the D.C. Court of Appeals continues to drag its feet.

This is extraordinary, especially given that at stake here is the integrity of the First Amendment. It is extraordinary foremost because National Review’s case is both straightforward and strong: that it is not, and it has never been, the role of the courts to settle literary or scientific disputes. But it is also extraordinary because National Review’s case is being heard under rules laid out by Washington, D.C.’s robust “anti-SLAPP” law, the explicit purpose of which is to make it more difficult to harass people and organizations with frivolous libel threats and thereby to protect a sturdy culture of free speech. How, we ask, can this be reconciled with a case such as ours, in which, among other inexplicable delays, the court has taken two years to add a single footnote to the records (and modify another)? That a slam-dunk case that is being examined under an expedited process should have yielded so many years of expensive radio static is a genuine national disgrace, and should be widely regarded as such.

National Review neither encourages nor enjoys protracted, expensive, tedious litigation. Indeed, it is our resolute view that questions such as these must be resolved outside of the courtroom. But we will be cowed neither by pressure nor by the passage of time, and we are proud of our role as a champion of the First Amendment. To those who would abridge, undermine, or attempt to circumvent that bulwark of free expression, our response is, as it ever was: Get Lost.

See also:  Rise and Fall of the Modern Warming Spike

Judges Now Deciding US Energy Policy

Petroleum Engineer or Federal Judge?

A previous post World Energy Policies A Minefield  reported on mistaken climate policies and their threat to our energy system.  Adding to the danger are actions by courts meddling in energy affairs on behalf of anti-fossil fuel activists.  Nicholas Kusnetz writes at alarmist website Inside Climate News U.S. Suspends More Oil and Gas Leases Over What Could Be a Widespread Problem. Excerpts in italics with my bolds.

Fossil Fuel leases totaling hundreds of thousands of acres have been suspended as courts rule against the BLM for ignoring climate impact. 

The federal Bureau of Land Management’s (BLM) Utah office in September voluntarily suspended 130 oil and gas leases after advocacy groups sued, arguing that BLM hadn’t adequately assessed the greenhouse gas emissions associated with drilling and extraction on those leases as required by law.

Nearly a quarter of the nation’s carbon dioxide emissions come from fossil fuels developed on federal lands, according to a government report. Credit: Bureau of Land Management.

The move was unusual because BLM suspended the leases on its own, without waiting for a court to rule.

Some environmental advocates say it could indicate a larger problem for the bureau.

“It is potentially a BLM-wide issue,” said Jayni Hein, natural resources director at the Institute for Policy Integrity at NYU School of Law, which has been involved in similar litigation in other states. “It could have the effect of suspending even more leases across the West, and not just for oil and gas, for coal as well.”

Officials in Utah had already pulled back several other lease sales earlier this year. In effect, BLM appears to be trying to get ahead of potential court rulings, advocates say.

A series of court rulings have established that BLM must conduct a thorough analysis of the climate impacts of drilling before it allows development in order to comply with the National Environmental Policy Act (NEPA).

In the latest ruling, a federal district court in Washington, D.C., in March ordered the bureau to redo its environmental analysis for a slate of leases in Wyoming to better assess climate impacts. In response, BLM suspended the Wyoming leases, as well as leases in Utah and Colorado that were included in the lawsuit but not directly addressed by the ruling.

The new Utah suspensions cover a different set of leases, including many sold last year. In letters sent in September to energy companies that had bought the leases, BLM said it was suspending them “based on the parallels” between the lawsuit over them and the case that resulted in the March ruling in Washington, D.C.

All told, nearly 1 million acres may now be suspended across the West, said Rebecca Fischer, an attorney with WildEarth Guardians, which filed the lawsuit in the Washington, D.C., circuit, including more than 460,000 acres covered by that lawsuit and some 300,000 acres that Utah’s BLM office has suspended since the March ruling.

Environmental advocates say the Trump administration is unlikely to cancel the leases. In Wyoming, BLM issued a new analysis soon after the Washington, D.C., court’s decision in March, arguing that there were no significant climate impacts. Fischer’s group has challenged that new assessment, saying that it too fails to meet the legal requirements. The court has yet to rule on the latest challenge.

Fischer said the lawsuits are part of a larger strategy by advocacy groups to try to block fossil fuel development that they say is incompatible with the need to rapidly cut greenhouse gas emissions to slow climate change. They say the bureau has the authority to deny leases based on their climate impacts, and those climate impacts would become apparent if it conducted a thorough analysis.

“That is our ultimate goal,” she said. “That we can start to keep these oil and gas leases in the ground and start to transition away from dirty fossil fuels.”

FootnoteAttorney General William Barr addressed the intrusion of judges upon Presidential authority as part of his recent speech on the Constitution’s approach to executive power. (here). Some pertinent excerpts in italics with my bolds.

In recent years, both the Legislative and Judicial branches have been responsible for encroaching on the Presidency’s constitutional authority. . .Let me turn now to what I believe has been the prime source of the erosion of separation-of-power principles generally, and Executive Branch authority specifically. I am speaking of the Judicial Branch. checks-and-balances

Apart from their overzealous role in interbranch disputes, the courts have increasingly engaged directly in usurping Presidential decision-making authority for themselves. One way courts have effectively done this is by expanding both the scope and the intensity of judicial review.

In recent years, we have lost sight of the fact that many critical decisions in life are not amenable to the model of judicial decision-making. They cannot be reduced to tidy evidentiary standards and specific quantums of proof in an adversarial process. They require what we used to call prudential judgment. They are decisions that frequently have to be made promptly, on incomplete and uncertain information and necessarily involve weighing a wide range of competing risks and making predictions about the future. Such decisions frequently call into play the “precautionary principle.” This is the principle that when a decision maker is accountable for discharging a certain obligation – such as protecting the public’s safety – it is better, when assessing imperfect information, to be wrong and safe, than wrong and sorry.

It was once well recognized that such matters were largely unreviewable and that the courts should not be substituting their judgments for the prudential judgments reached by the accountable Executive officials. This outlook now seems to have gone by the boards. Courts are now willing, under the banner of judicial review, to substitute their judgment for the President’s on matters that only a few decades ago would have been unimaginable – such as matters involving national security or foreign affairs.

What is true of police officers and gerrymanderers is equally true of the President and senior Executive officials. With very few exceptions, neither the Constitution, nor the Administrative Procedure Act or any other relevant statute, calls for judicial review of executive motive. They apply only to executive action. Attempts by courts to act like amateur psychiatrists attempting to discern an Executive official’s “real motive” — often after ordering invasive discovery into the Executive Branch’s privileged decision-making process — have no more foundation in the law than a subpoena to a court to try to determine a judge’s real motive for issuing its decision. And courts’ indulgence of such claims, even if they are ultimately rejected, represents a serious intrusion on the President’s constitutional prerogatives.

The impact of these judicial intrusions on Executive responsibility have been hugely magnified by another judicial innovation – the nationwide injunction. First used in 1963, and sparely since then until recently, these court orders enjoin enforcement of a policy not just against the parties to a case, but against everyone. Since President Trump took office, district courts have issued over 40 nationwide injunctions against the government. By comparison, during President Obama’s first two years, district courts issued a total of two nationwide injunctions against the government. Both were vacated by the Ninth Circuit.

IT is no exaggeration to say that virtually every major policy of the Trump Administration has been subjected to immediate freezing by the lower courts. No other President has been subjected to such sustained efforts to debilitate his policy agenda.

New York AG’s Disgraceful Exxon Trial

The New York Post Editorial Board reviews the New York Attorney General’s blundering performance before the Judge in their investor fraud case against Exxon.  Their article is New York AG’s office totally disgraced itself in the Exxon trial.  Excerpts in italics with my bolds.

Closing arguments finished up Thursday in the People of New York v. ExxonMobil — a trial that has utterly disgraced the people’s representatives, prosecutors from the state Attorney General’s Office.

Time and again, state Supreme Court Justice Judge Barry Ostrager chided the prosecution — for being unprepared, for indulging in “agonizing, repetitious questioning about documents that are not being disputed”; for pretending a witness was an expert when she wasn’t; for presenting an expert (paid $1,050 an hour) who wouldn’t stop “rambling” and more.

At one point, he snapped: “OK, that’s the fifth time that he has given you the same answer.” At another, he all but accused the state of manipulating Exxon’s stock price on the basis of false information — in a trial where the state was trying to show that Exxon was doing that.

In a final bit of self-disgrace, late Thursday the prosecutors dropped two of their three main charges — the ones that required proving intent.

All that’s left is a charge under the Martin Act, which allows for criminal guilt for an accidental misrepresentation that might mislead the public. But the state failed to even produce any clear evidence that Exxon ever misled the public in any respect, even inadvertently.

That’s a huge comedown for a prosecution that opened under the banner “#ExxonKnew.”

To be clear, the main blame for this debacle falls on disgraced former AG Eric Schneiderman, who started the whole thing as an exercise in headline-hunting back in 2015. He handed off the actual work to subordinates who repeatedly revised the entire theory of the case — that is, the wrong they claimed Exxon had committed — with the charges growing less explosive every time.

They originally claimed Exxon had suppressed research — when in fact its scientists have always published freely, and the company has openly discussed the risks of climate change and so on in its annual reports and on its website.

Then they suggested the company had deceived investors by “overstating” its assets by “trillions.” But it turned out Exxon had clearly disclosed all the relevant info.

Finally, they claimed it used one risk-assessment standard in public, another in private. But the Securities and Exchange Commission cleared Exxon on that front before this trial even opened.

It seems the prosecutors feared it would just be too humiliating to admit they had nothing, and hoped they’d somehow stumble on . . . something.

Still, Thursday’s final retreat, dropping most charges at the very end, was a shocker. It left the judge dismissing those charges “with prejudice,” so the state can never refile them. And Exxon’s infuriated lawyers say those claims “have cost in many respects the most severe reputation harm to the company and to the executives,” so they want still stronger sanctions.

Judge Ostrager has 30 days to issue a decision. The prosecutors are surely praying he’ll find the Martin Act gives them so much leeway that he actually has to find Exxon guilty. If so, it’ll be a blaring alarm to businesses to have nothing to do with New York, because they have no hope of a fair break here.

Otherwise, the judge should explore every possible option for censuring the state’s attorneys — whose abuse of power here has been utterly mind-blowing.

Background from Previous Post

A legal summary of this week’s proceedings comes from Seth Kerschner Laura Mulry article at White & Case
Trial Concludes for Exxon in New York Climate Change Investor Fraud Case. Excerpts in italics with my bolds.

Overview

In New York Supreme Court, Exxon was on trial for allegedly misleading investors about the business costs of climate change. The central allegation was that Exxon fraudulently used two distinct sets of metrics to calculate financial risks relating to climate change: one that was shared with investors and another that was used internally. New York State alleged that the practice exposed investors to greater risks than Exxon had disclosed and inflated the company’s value. Exxon maintained that it made accurate disclosures about the two cost metrics to investors, that the state was conflating the two metrics, and that there was no material impact to Exxon regardless of which metric it applies. The state is seeking between $476 million and $1.6 billion as the basis for a shareholder restitution fund, among other relief. The outcome of the case could have significant implications going forward on (i) how companies disclose and internally account for climate change risks and (ii) the outcomes of future climate change litigation.

(Left) New York Attorney General Barbara Underwood announced her office’s lawsuit against Exxon for climate fraud. October 24, 2018. (Right) Attorney General of New York, Letitia James took over January 6, 2019 and has also opened a civil investigation into President Donald Trump’s business dealings.

The bench trial commenced on October 22, 2019 and was the first lawsuit to go to trial in the United States that addresses how companies manage and disclose climate change-related risks. The New York Attorney General (NYAG) filed the civil lawsuit against Exxon Mobil Corporation (Exxon) in October 2018; it was the culmination of an investigation by NYAG that began in 2015. NYAG alleged statutory and common law securities fraud claims, however, in its closing remarks on November 7, 2019, NYAG dropped two of the four fraud claims. NYAG’s remaining claims include alleged violations of the state’s Martin Act, one of the strictest anti-fraud laws in the country that does not require an intent to defraud or knowledge of fraud for there to be a violation of the law, and a persistent fraud claim. NYAG requests injunctive relief, damages, disgorgement of all amounts gained as a result of the alleged fraud, and restitution.

NYAG asserted that Exxon engaged in a “longstanding fraudulent scheme” to deceive investors by providing misleading statements that (i) Exxon was effectively managing risks posed by regulations to address climate change, such as carbon taxes, and (ii) such regulations did not pose a significant risk to the company. NYAG asserted that Exxon’s internal practices were inconsistent with these statements, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe.

According to the NYAG complaint, Exxon used internal climate change cost projections that differed from publicly-disclosed projections and are in alleged violation of US Generally Accepted Accounting Principles. Exxon claimed NYAG is trying to show a false discrepancy by conflating two cost projections that serve different purposes. NYAG claimed that Exxon provided misleading statements to investors in reports that Exxon drafted in response to shareholder proposals and resolutions requesting information about climate change-related risks, its 2015 Corporate Citizen Report, and in its 2014 and 2016 proxy statements, among other public documents. NYAG asserted that Exxon’s alleged climate cost misrepresentations are material to the company’s investors, who include public pension funds in New York and around the United States that hold billions of dollars of Exxon stock.

To account for the impact of future climate change regulations, Exxon stated that it “rigorously and consistently” applied an escalating proxy cost of carbon dioxide and other greenhouse gases (together, GHGs) to its business, according to NYAG’s complaint. NYAG claimed, however, that Exxon’s GHG proxy cost representations were materially false and misleading because Exxon did not in fact apply the GHG proxy cost it represented to investors in its business decisions. NYAG claimed that, in projecting its future costs for purposes of making investment decisions, conducting business planning, and assessing oil and gas reserves, Exxon applied either (i) an undisclosed, lower set of GHG proxy costs in its internal corporate guidance, (ii) an even-lower cost based on existing climate regulations that held flat for decades into the future or (iii) no GHG-related costs at all. Exxon maintained that it made accurate disclosures about the two cost metrics to investors and claimed that NYAG is manipulating the content of such disclosures to make it appear as though Exxon misled the public.

The linchpin of the case may rest on whether Exxon conflated two distinct climate change cost projections. Exxon’s publicly-disclosed GHG proxy cost assumed carbon costs would be significantly higher than the internal GHG cost estimate. Exxon did not dispute that it used two distinct projections for the future impacts of climate regulations and argued that each had a legitimate business purpose: the publicly-disclosed GHG proxy cost was used to project global energy demand (and future prices) and the GHG cost was a proprietary internal number used to evaluate investment opportunities. Exxon representatives, including former Chairman and CEO Rex Tillerson, testified that Exxon’s publicly-disclosed GHG proxy cost represented a “macro level” assessment of climate change mitigation policies that Exxon expects to see adopted around the world, from fuel efficiency standards in the United States to carbon taxes in Europe, and was used in a data guide used by the company. Exxon’s position is that the different, lower GHG costs that Exxon used internally represented “micro level” direct costs and capital projects at specific Exxon facilities and were informed by a more limited set of regulations applicable to specific projects. Exxon has contended in court that the publicly-disclosed GHG proxy cost, which is a purported demand-side estimate of how future regulations, like a carbon tax, would depress global demand for oil, is only one part of its climate cost calculations. NYAG argued that Exxon obfuscated differences in the two accounting projections and a reasonable investor had every reason to believe that Exxon was using the two sets of costs interchangeably.

Exxon maintains that there was and would be no impact on its value or finances, including corporate earnings, regardless of whether it applied a higher or lower GHG cost estimate. Exxon asserted that NYAG failed to identify a specific oil or gas project investment decision that would have been swayed by applying the higher GHG proxy cost and that the practice of having two distinct cost metrics had no impact on how investors assessed the company.

Richard Auter, the head of the Exxon audit team at PricewaterhouseCoopers (PwC), testified that (i) he was not aware of any attempt by Exxon to conceal or manipulate the two cost metrics and (ii) GHG proxy costs do not have a material impact on Exxon’s financial health. Mr. Auter stated that the publicly-disclosed GHG proxy costs “were part of management’s planning and budgeting process, but they do not reflect real costs in many situations.”

NYAG claimed that Exxon’s failure to employ the publicly-disclosed GHG proxy costs was most prevalent in its projections for investments with high GHG emissions. Applying the publicly-disclosed GHG proxy costs to these investments would have had a particularly significant negative impact on the company’s economic and financial projections and assessments, according to NYAG. NYAG alleged that using the lower cost estimate for future GHG costs made projects with high GHG emissions look more attractive than those projects would have looked if the higher GHG proxy cost were applied. NYAG stated that Exxon chose not to use the higher, publicly-disclosed GHG proxy costs in connection with 14 oil sands projects in Canada, which allegedly resulted in understating costs in the company’s cash flow projections by more than $25 billion. Bitumen from oil sands is harder to extract and then must be upgraded into synthetic crudes, so the extraction process from oil sands projects typically emits higher GHG emissions than other oil and gas upstream operations. NYAG claimed that, while corporate estimates projected GHG prices continuing to rise up to $80 per ton in 2040, Exxon planners in Canada applied a cost estimate that held flat at $24 per ton through to the end of the assets’ projected life (decades into the future) and didn’t apply to all of the assets’ GHG emissions.

Throughout the three-year probe and trial, NYAG claimed that Exxon senior management sanctioned the alleged fraudulent conduct, including Mr. Tillerson. NYAG stated that Mr. Tillerson knew for years that the company’s GHG proxy cost representations were misleading, but allowed the gap between the two cost metrics to persist. NYAG alleged that, in May 2014, Exxon’s corporate greenhouse gas manager gave a presentation to the company’s senior management, including Mr. Tillerson, that warned that the way the company had been accounting for climate risks was misleading and recommended aligning the cost metrics in evaluating investments. NYAG asserted that, after Exxon revised its internal guidance, Exxon’s planners realized that applying the increased GHG proxy cost figures would result in severe consequences to its economic and financial projections, such as “massive GHG costs” and “large write-downs” (i.e., reductions in estimated volume) of company reserves. NYAG claimed that, when confronted with the negative impacts from applying GHG proxy costs in a manner consistent with the company’s representations to investors, Exxon’s management directed the company’s planners to adopt what an Exxon employee allegedly called an “alternate methodology.” NYAG claimed that Exxon then applied only the existing GHG-related costs presently imposed by governments (i.e., legislated costs) and assumed that those existing costs would remain in effect indefinitely into the future, contrary to the company’s repeated representations to investors that it expects governments to impose increasingly stringent climate regulations in the future. By applying this “alternate methodology,” NYAG alleged that Exxon (i) avoided the significant write-downs it would have incurred had it abided by its stated risk management practices and (ii) failed to take into account significant GHG costs resulting from expected climate change regulation.

Climate Activists storm the bastion of Exxon Mobil, here seen without their shareholder disguises.

Exxon’s counsel argued that certain of NYAG’s key Exxon investor witnesses are politically-motivated and bought the company’s stock with the sole purpose to lobby the company on climate change issues. Exxon noted that one such investor, the New York City comptroller’s office, supports efforts to divest from fossil fuels.

In its closing remarks, NYAG abruptly dropped its common law fraud and equitable fraud claims. Exxon’s counsel responded that NYAG dropped the claims for strategic purposes before the judge could rule against them due to a lack of evidence and indicated that the two dropped claims caused severe reputational harm to the company and its executives, including Mr. Tillerson in particular. Exxon’s counsel stated that Exxon and its officials deserved a ruling to clear their reputations. The court dismissed the two claims with prejudice and invited Exxon’s counsel to submit post-trial briefing on whether Exxon had a right to a stipulation stating that NYAG lacked evidence to prove the dismissed fraud claims at trial.

Exxon and other energy companies are also the subject of other climate change lawsuits brought by (i) local and state governments seeking damages to help pay for the costs imposed by rising seas and extreme weather caused by climate change and (ii) children and non-profit organizations that claim that the federal and state governments are responsible for preventing and addressing the consequences of climate change. [For more information on climate change litigation see links at end.]

The Commonwealth of Massachusetts Attorney General commenced an investigation of Exxon in 2015 similar to that of NYAG’s and filed a lawsuit against Exxon on October 24, 2019 for alleged violations of Massachusetts’ investor and consumer protection laws relating to the company’s climate change-related disclosure and advertising. Exxon has fought the New York and Massachusetts investigations in courtrooms. In a New York federal court, a judge earlier this year rejected Exxon’s plea to block the dual investigations. Exxon has argued that the states’ attorneys general were violating Exxon’s First Amendment right to free speech relating to climate change. Exxon has asserted that the claims are politically-motivated, targeting energy companies to be held accountable for climate change.

The three-week bench trial in New York began on October 22, 2019 and the parties have until November 18, 2019 to file post-trial submissions. The presiding Justice Barry Ostrager has said that he will issue a ruling within 30 days after such submission deadline, with a verdict expected sometime in mid-December. NYAG requested that the court (i) enjoin Exxon from violating New York law, (ii) direct a comprehensive review of Exxon’s failure to apply a proxy cost consistent with its representations and the economic and financial consequences of that failure, (iii) award damages caused, directly or indirectly, by the fraudulent and deceptive acts, (iv) award disgorgement of all amounts obtained in connection with the alleged violations of law and all amounts by which Exxon has been unjustly enriched, (v) award restitution of all funds obtained from investors in connection with or as a result of the alleged fraudulent and deceptive acts, and (vi) award the state its costs and fees, including attorney’s fees.

The decision reached in this case is likely to be cited in future climate change litigation. If Exxon prevails, litigation over companies’ climate change-related disclosure could wane.

Companies should be on alert that they could be scrutinized by shareholders, governmental officials, and the public for how they disclose and internally account for climate change-related risks. It may be prudent for companies to align publicly-disclosed climate-related metrics and methodologies with their internal climate-related risk management and accounting practices. At a minimum, companies should ensure that their public disclosure is not misleading and consider any appropriate disclosure on internal climate-related metrics used in business decisions or in the preparation of publicly-disclosed financial information.

The case is People of the State of New York v. ExxonMobil Corp., case number 452044/2018, in the Supreme Court of the State of New York, County of New York. NYAG’s October 24, 2018 complaint can be found here. Exxon’s October 7, 2019 pre-trial memorandum can be found here.

Click here to download PDF.

Background:  Inside “Blame Big Oil” Litigation

Legal Calamity: Climate Nuisance Lawsuits

Critical Climate Intelligence for Jurists (and others)

 

Update: Climate Hail Mary by Broke Cities

Previous post is reprinted later on.  This update is an article at Issues and Insights last week by Horace Cooper The Shameless Hypocrisy Of Cities Suing For Climate Change ‘Damages’.   Excerpts in italics with my bolds.

North and South American natives once spoke of the mythical El Dorado, a sacred city made entirely of gold. History records that conquistadors embarked on expeditions throughout the Americas in pursuit of El Dorado and legendary riches. Ultimately their quests yielded nothing but misery and loss.

Conquistador Francisco Vázquez de Coronado went through Arizona seeking in vain untold golden treasures to make them all rich.

A modern-day parallel exists among several municipal governments and Rhode Island, which have set out on an equally unrealistic quest for a modern-day “jackpot justice” – a scheme to reap billions from several energy companies.

Using an already discredited “public nuisance” legal claim, Rhode Island and several cities have filed lawsuits that blame all of Earth’s climate change on a few profitable energy companies. The suits allege that, by producing oil, these energy companies have contributed to climate change, which, they argue, may cause damage to their communities in the future. Their cases, incidentally, fail to mention the large amounts of fossil fuels used by these same cities for public transportation, municipal airports, city buildings, and public improvement projects.

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Litigants point to a July ruling in which an activist Rhode Island judge overturned a previous decision to move Rhode Island’s climate change case to federal court. Having watched federal courts dismiss many of these claims outright, the plaintiffs believe they have a better chance of success in lower, state courts. Baltimore was also successful in blocking a motion to move its lawsuit to federal court.

Still, climate litigants would be wise to keep the champagne firmly corked as these recent rulings in Rhode Island and Baltimore will likely be overturned. In North Dakota earlier this year, a similar nuisance case against Purdue Pharma was dismissed by a judge who found the plaintiffs failed to meet the required burden of proof. Moreover, the courts reviewing the Oklahoma case are likely to take a more skeptical view of the nuisance tactic, which has generally fared poorly on appeal. For example, a nuisance suit against lead paint manufacturers initially succeeded, only to fail on appeal in 2009, ironically before the Rhode Island Supreme Court.

A major driver of legal precedent denying the use of nuisance ordinances comes from an Obama-era Supreme Court ruling. In the 8-0 American Electric Power v. Connecticut decision in 2011, the U.S. Supreme Court ruled that corporations cannot be sued for greenhouse gas emissions because the Clean Air Act specifically tasks the Environmental Protection Agency and Congress with the proper regulatory authority. Put another way, only the executive and legislative branches – not the judicial branch – may regulate and impose climate change policy. That precedent was properly cited last year when New York City’s climate lawsuit was bounced out of court. Also last year, a federal judge dismissed Oakland and San Francisco’s lawsuit for being outside the court’s authority.

In addition to the utter lack of legal substantiation, these lawsuits reveal how these municipalities are speaking out of both sides of their mouths. In one setting they downplay risks of climate change and in other settings they pretend the risks have never been higher.

Consider San Francisco’s 2017 municipal bond offering which reassuringly told potential investors, “The City 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 City and the local economy.” Yet in its multi-billion-dollar climate lawsuit, the city went full-on Chicken Little, warning, “Global warming-induced sea level rise is already causing flooding of low-lying areas of San Francisco.”

The example isn’t isolated. Marin County, California’s lawsuit alarmingly asserted that there’s a 99-percent risk of an epic climate-change-related flood by 2050. But a municipal bond offering to potential investors failed to warn of any potential climate change dangers claimed within its lawsuit. San Mateo County’s prospectus advising bond investors that it’s “unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur” didn’t stop it from forecasting a 93-percent chance cataclysmic flood by 2050 in its lawsuit against oil companies. The examples go on.

Aside from the shameless hypocrisy of mayors wooing potential investors while claiming pending climate disaster in court, the motivation behind these lawsuits is clear. Many cities filing lawsuits against energy companies are financial train wrecks, seeking billions to offset their mismanagement. Huge legal awards – enough to make their fiscal troubles vanish – have a powerful allure.

The prospect of jackpot justice has fogged their judgment just as surely as the conquistadors who vainly searched for El Dorado.

If anything, the mayors of Oakland, New York, San Diego, and others are seeking pots of Fool’s Gold. These greedy politicians should stop abusing the legal system, wasting taxpayer dollars, and put a halt to their fantasy gold-digging.

Previous Post:  Climate Hail Mary by Inept Cities

Some cities in desperate financial straits due to their own mismanagement are hoping to bail out by suing oil companies. Several are in California where the current governor blames droughts, fires and mudslides on climate change. So Governor Brown is a role model for all politicians how to scapegoat nature instead of taking responsibility for their own failings as leaders. As I have long said, COP stands not only for UN Conference of Parties, but also for the ultimate political COP-Out. (Note: A “Hail Mary” is a desperate football pass into the end zone as the game ends.)

A recent editorial in the Washington Times exposes the ruse Big talk at City Hall isn’t likely to replace oil, natural gas and coal Excerpts below with my bolds.

The civic shakedown of the oil and gas producers continues, and the frenzy has spread to California. Mayor Bill de Blasio of New York started it in January when he said he would seek billions of dollars in reparations from five major companies, including Exxon, BP and Chevron.

“It’s time for Big Oil to take responsibility for the devastation they have wrought,” he said, “and to start paying for the damage they have done.” He blames the devastation from the 2012 Superstorm Sandy on climate change, “a tragedy that was wrought by the actions of the fossil-fuel companies.” The Sierra Club and other radical environmental groups couldn’t have said it better. These greens have long sought to shut down the oil and coal-mining companies.

San Francisco, Oakland and Los Angeles now threaten similar lawsuits to extort money from the reliable producers of cheap energy. These cities claim that the forest fires and mudslides that devastated Southern California were caused by greenhouse gas emissions. Coal companies are now joining the mayor’s conspiracy. Forest fires in the West? Hurricanes in the East? Heaven forfend. Surely that never happened before.

Many big cities have been living beyond their means for years, running up billion dollar pension liabilities. Someone has to pay the tab for the fiscal hangover, and extortion may be the way to require others to pay the bills. What better target than Big Oil? Attempting extortion has got so out of hand that Richmond, Calif., one of whose largest employers is a large oil refinery, is eager to join the extortion racket.

Even if every American energy company shut down entirely — which may be the hidden agenda here — the enormous increase in carbon emissions from China and India alone would swamp the effects of American fossil-fuel production and consumption. If global warming was actually causing forest fires and hurricanes, Mayor de Blasio should be suing China, not British Petroleum.

Even more fraudulent is that New York City, Oakland, San Francisco and other plaintiffs have been burning fossil fuels for decades to provide power for their cities. Exxon only drills the oil. It’s the cities of New York, San Francisco and Oakland that burn it and send the carbon into the atmosphere. And what about the police cars, trucks, buses, ambulances and thousands of other city-owned vehicles? They use the fuels that Exxon and Chevron produce, and even the batteries in electric vehicles that must be frequently recharged use recharging stations powered mostly by fossil fuels. In the first six months of 2017 more than 70 percent of all the electricity produced in the United States came from coal and natural gas.

Fossil fuel starvation diets are available to all. But the mayors know very well that without cheap and abundant oil, coal and natural gas, their cities and the commerce that springs from there would come to a grinding halt. The schools, factories, shelters, shopping centers, restaurants, apartment buildings and skyscrapers would shut down without the energy from the oil and gas produced by the companies the mayors are suing. The cities wouldn’t survive for a day. Big talk, like oil, gas and coal, is cheap. It’s too bad that all that hot air at City Hall can’t be harnessed to produce electricity. If it could, there’s enough of it to put oil, gas and coal companies out of business.

 

Harnessing hot air for a useful purpose.

See also Is Global Warming A Public Nuisance?