ExxonMobil: Calif. localities suing over climate change failed to mention alleged risks to investors

The risks posed by human-caused climate change were apparently alarming enough to prompt seven California municipalities last year to sue ExxonMobil, but not serious enough to disclose in full to their investors.

In a Monday filing in Texas state court, ExxonMobil accused the localities of exaggerating the climate-change threat in court documents, arguing that they failed to raise red flags about climate-driven disasters such as drought, wildfires and ocean acidification in their earlier bond offerings.

“Notwithstanding their claims of imminent, allegedly near-certain harm, none of the municipalities disclosed to investors such risks in their respective bond offerings, which collectively netted over $8 billion for these local governments over the last 27 years,” said ExxonMobil in its petition in Texas District Court.

“To the contrary, some of the disclosures affirmatively denied any ability to measure those risks; the others virtually ignored them,” said the petition.

ExxonMobil was one of 18 Texas-based energy companies sued between July and December by the seven liberal municipalities — San Mateo County, Imperial Beach, Marin County, Oakland, San Francisco, and the city and county of Santa Cruz — over what they described as the disastrous consequences of greenhouse-gas emissions.

The company indicated it plans to file a countersuit and asked for permission to conduct pre-suit discovery on whether the localities abused their authority by engaging in a conspiracy with climate activists to violate ExxonMobil’s constitutional rights.

John Cote, the spokesman for San Francisco City Attorney Dennis Herrera, called it “exactly what you would expect from a company like Exxon,” according to SFGate.

“It is repugnant that oil companies might sue public servants personally in an attempt to intimidate them from protecting their communities and environment,” said John Beiers, county counsel for San Mateo County. “We will not be intimidated.”

The local governments have sought billions to cover costs associated with climate change, including sea walls and other infrastructure projects, even though little about such risks was said in their bond offerings.

For example, San Mateo County said in its lawsuit that there was a 93 percent chance of a “devastating three-foot flood before the year 2050,” as well as an average sea-level rise of almost three feet by 2100, despite its earlier statements to investors that such flooding could not be predicted.

“The County is unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur, when they may occur, and if any such events occur, whether they will have a material adverse impact on the business operations or financial condition of the County and local economy,” said San Mateo County in its 2014 and 2016 bond offerings.

Responded ExxonMobil: “The stark and irreconcilable conflict between what these municipal governments alleged in their respective complaints and what they disclosed to investors in their bond offerings indicates that the allegations in the complaints are not honestly held and were not made in good faith.”

The company seeks communications between public officials and anti-Exxon climate activists like Matthew Pawa, a Massachusetts-based attorney involved in the coalition of state attorneys general pursuing ExxonMobil, who represents Oakland and San Francisco in their lawsuits.

Mr. Pawa coordinated with the Rockefeller Family Fund on a campaign “to establish in the public’s mind that Exxon is a corrupt institution,” according to a January 2016 agenda obtained by the Washington Free Beacon.

“The discovery ExxonMobil seeks concerning the municipal respondents’ conversations with third parties would allow ExxonMobil to identify potential defendants who may have participated in a conspiracy to commence litigation for the ulterior motive of coercing ExxonMobil to adopt preferred policy responses to climate change,” said the motion.

Linda Kelly, senior vice president and general counsel of the National Association of Manufacturers, cheered ExxonMobil’s response, calling it “a move in defense of all manufacturers against lawsuits made in bad faith and coordinated by politically motivated plaintiffs’ attorneys and public officials.”

She said the discrepancy between the climate-change claims in the lawsuits and the investor statements raises the question of fraud.

“The level of potential coordination is suspect and the conflicting representations the parties appear to have made suggest two possible conclusions: either the claims against energy manufacturers are frivolous, or the municipalities have made misleading, and perhaps fraudulent, statements to investors,” she said in a statement. “Either way, the integrity of the lawsuits and the government officials and lawyers behind them has been called into question.”

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