Free Speech and Climate Fraud Prosecution Follies
The First Amendment does not protect fraud, but it does protect public debate over climate change.
Over the weekend, the Democratic Party platform included a climate change plank that "respectfully request(s) the Department of Justice investigate allegations of corporate fraud on the part of fossil fuel companies accused of misleading shareholders and the public on the scientific reality of climate change." This is in line with a set of Democratic state attorneys-general (AGs United for Clean Power) who are pursuing climate change fraud investigation against oil giant ExxonMobil.
The allegedly motivating idea is that ExxonMobil possibly defrauded stockholders by not telling them about how projected climate change might damage its business prospects. One member of the global warming legal cabal is the particularly ambitious (and quite clueless) attorney-general for the U.S. Virgin Islands Claude Walker. Earlier this year, Walker issued a subpoena demanding that ExxonMobil turn over all records of any communications that the oil company may have had since 1977 with over 100 think tanks, advocacy organizations, and so forth. (The Reason Foundation that publishes this website was included in the subpoena dragnet.) Many of those organizations had expressed doubts about the significance of man-made global warming and the urgency of adopting policies to counter it. Walker clearly believes that such communications might provide evidence that oil company had orchestrated and paid for a conspiracy to mislead the public about the seriousness of climate change.
In addition to the subpoena to ExxonMobil, the USVI attorney-general Claude Walker issued one to the Competitive Enterprise Institute (CEI) demanding it provide "a decade's worth of communications, emails, statements, drafts, and other documents regarding CEI's work on climate change and energy policy, including private donor information. It demands that CEI produce these materials from 20 years ago, from 1997-2007, by April 30, 2016." CEI pushed back in federal court. The result is that Walker withdrew his subpoena, but said that he might file something similar in the future.
CEI is arguing this week in DC Superior Court that the USVI pay for attorney's fees, court costs, and other sanctions. Claude wants CEI's lawsuit against him and his office dismissed, arguing that "CEI has wasted enough of VIDOJ's and the court's limited time and resources." CEI president Kent Lassman points out that CEI didn't start these legal proceedings, adding "Apparently Attorney General Walker believes that Constitutional abuses are are not worth the court's time. As if from a parallel universe where everything is reversed, Walker claims that CEI's motions in response to overreaching and abusive action initiated by his office are a waste of his time and resources. An attorney general is neither above the law nor out of reach of the DC Superior Court."
In the meantime, several Republican attorneys-general have sent a dear colleague letter to the "AGs United for Clean Power" cabal urging them to desist from abusing their prosecutorial powers to stifle free speech on the issue of climate change. They point out that if minimizing climate change is fraud, exaggeration of climate change is also fraud. If oil companies must disclose how projections of worsening climate change might affect their businesses to avoid fraud charges, so too must "clean energy" companies disclose how milder trends to higher temperatures could affect their future profits in order to avoid defrauding shareholders. In addition, the Republican AGs point out that both fossil fuel and clean energy companies provide funding to non-profits who share their viewpoints. "Under the stated theory for fraud, consumers and investors could suffer harm from misstatements by all energy-market participants and the non-profits they support," notes the dear colleague letter. "Yet only companies and non-profits allegedly espousing a particular viewpoint have been chosen for investigation."
The dear colleague letter further notes that the AGs United for Clean Power's "investigation inescapably implicates a public policy debate and raises substantial First Amendment concerns. As our colleagues must know, a vigorous debate exists in this country regarding the risks of climate change and the appropriate response to those risks. Both sides are well-funded and sophisticated public policy participants. Whatever our country's response, it will affect people, communities, and businesses that all have a right to participate in this debate."
The dear colleague letter makes the salient point that what is sauce for the goose is also sauce for the gander: "Once the government begins policing viewpoints, two solutions exist. The first solution is to police all viewpoints equally. Another group of Attorneys General could use the precedent established by the "AGs United for Clean Power" to investigate fraudulent statements associated with competing interests. The subpoenas currently directed at some market participants could be met with a barrage of subpoenas directed at other market participants."
Over at the Washington Post, Yale University law professor Robert Post argues that First Amendment free speech guarantees do not protect fraudulent speech. According to Post's analysis, the Democratic AGs are merely seeking to find out what did ExxonMobil know about climate change and when did it know it. "If ExxonMobil has committed fraud, its speech would not merit First Amendment protection," writes Post. "If the First Amendment does not prevent lawsuits for fraud, it does not prevent subpoenas designed to provide evidence necessary to establish fraud."
Free marketeers are surely against fraud, but was it fraud when biologist Paul Ehrlich asserted that hundreds of millions would die of famine in the 1970s; when Colin Campbell, Jean Laherrère, Kenneth Deffeyes, and Daniel Goodstein all predicted global peak oil production by 2010; when statistician Nassim Taleb claimed that biotech crops could cause an "irreversible termination of life at some scale, which could be planetwide"; when natural remedy huckster Joseph Mercola maintained that exposures to trace amounts of synthetic chemicals is a major cause of cancer? All these claims were sincerely believed and argued by their proponents and yet have now been proven largely wrong. And don't say that the difference is that these folks didn't have a profit motive for saying what they said; they all make money as authors, consultants, and snake oil salespersons.
While styled as a fraud investigation, the AG's investigation amounts to a kind of prosecutorial strategic lawsuit against public participation, widely known as a SLAPP. While the AGs United for Clean Power make no secret that they hope that their investigation will yield them billions in the moral equivalent of climate reparations, the additional goal is to shut up advocacy groups that argue that climate change is not as big problem as the Democratic AGs think it that it is.
As I reported when Schneiderman first filed his subpoena, ExxonMobil had started stating in its annual report in 2006 that climate change policies could affect its business going forward. That also happens to be the year that the Intergovernmental Panel on Climate Change declared in its Fourth Assessment of climate science that "most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations."
With regard to the AGs investigation, ExxonMobil spokesman Alan Jeffers has recently stated, "The great irony here is that we've acknowledged the risks of climate change for more than a decade, have supported a carbon tax as the better policy option and spent more than $7 billion on research and technologies to reduce emissions." He added, "It should make people question what this is really all about."
Actually, it is all too apparent what it is all about.
In any case, it is not as though shareholders and consumers had not heard for years now that burning fossil fuels causes climate change and that regulators were aiming to cut the use of such fuels. Nevertheless, ExxonMobil's stock price has never fallen below its trading January 1, 2006 level even after acknowledging climate change as a possible business factor in its annual reports.
For more background on this issue, please read my colleague Matt Welch's superb article, "The Transparency Bullies." For more background on my history of reporting on climate change, see my 2006 article, "Confessions of an Alleged ExxonMobil Whore."
Disclosure: Over the years I have worked with several groups listed in the USVI subpoena on a wide variety of public policy issues relevant to resisting government encroachments into free markets, mostly not having anything to do with climate change. And I still own 50 shares of ExxonMobil stock that I bought with my own money.