WASHINGTON (Legal Newsline) - Lawyers for the Competitive Enterprise Institute are asking the Securities Exchange Commission to investigate potential fraud involving inconsistent climate change claims of California cities and counties in their bond offerings.
A Feb. 1 letter to the SEC's finance abuse unit chief says that allegations of sea-level rises in recent lawsuits against oil and gas companies don't match statements local governments made to investors that they are unable to predict when impacts of climate change will occur.
The inconsistencies raise "serious questions of municipal bond fraud," the letter states.
"Investors across the country have relied upon the statements by these municipalities in choosing to invest in their bonds," states the letter written by CEI's general counsel Sam Kazman and co-counsel Devin Watkins.
"They deserve accurate information as to the potential risks of their investments. Whether the predictions of sea level rise are correct or not, if they exist, the municipality should not hide these risks from investors."
The letter points to inconsistencies between lawsuits brought by San Francisco, Oakland, Imperial Beach and the counties of San Mateo, Santa Cruz, and Marin, and their bond offerings.
For instance, in San Francisco's lawsuit, the city claims to predict .3 to .8 feet of additional sea rise by 2030, with costs to repair ranging between $500 million short term to $5 billion long term.
"Meanwhile the City is telling 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,'" the letter states.
"Either the City can predict such sea-level rise, as it tells the court, or it cannot, as it tells investors."
The letter also shows Oakland's lawsuit alleging more dire consequences of climate change, with claims of 100-year flood occurring almost once per week by the year 2100, and a cost of the harms at between $22 and $38 billion.
"And yet, the City’s bond offering to investors claims that 'The City is unable to predict when seismic events, fires or other natural events, such as sea rise or other impacts of climate change or flooding from a major storm, could occur, when they may occur,'" the letter states.
One oil company is taking a stand against the inconsistencies.
Last month, ExxonMobil petitioned a state court in Texas to allow it to question lawyers and government officials involved in the California litigation and bond offerings.