NEW YORK (Legal Newsline) – California officials who made dire climate change predictions about their localities' futures in litigation against energy companies, but not in bond offerings, probably know by now their litigation is doomed, a New York University law professor said during a recent interview.
"My guess is they know they're going to lose those lawsuits," Richard Epstein, who also is director of NYU's Classical Liberal Institute, told Legal Newsline. "I certainly believe they will."
However, backing out of the lawsuits brings its own potential liability issues, especially with a possible Securities and Exchange Commission investigation looming, but if the cities and counties do soldier on and take it to court, "the cross examination is going to be brutal," Epstein said.
Epstein's comments are among a number of voices claiming the counties' and municipalities' lawsuits against the energy companies are inherently flawed. Epstein and those other voices point out that California, which includes the counties and cities that filed the lawsuits, is both a great consumer and producer of the same fossil fuels the litigation claims are sowing the seeds of imminent climate change disaster.
Those same fossil fuels also help drive the state's economy, the sixth-largest in the world, Epstein and others say.
"These counties and cities are huge consumers of energy," Epstein said.
None of that stopped Marin, Santa Cruz and San Mateo counties and San Francisco, Oakland, Santa Cruz and Imperial Beach in California last year when they filed lawsuits against dozens of energy companies, including Exxon Mobile Corp. and 17 other Texas-based businesses, over climate change.
Those lawsuits, pursued by private lawyers working on contingency fees, included predictions about the futures of those cities and counties should the worst of the climate change predictions pan out.
"Everyone should be devoutly praying that what they claim in their complaints was an exaggeration," Epstein said.
For example, San Mateo County claimed in its complaint to be "particularly vulnerable to sea level rise" with a 93 percent the county will experience a "devastating" flood before 2050. Imperial Beach and Marin County also claimed in their separate complaints to be vulnerable to devastating floods because of climate change.
"If sea levels were to raise that high, it most certainly would be catastrophic," Epstein said.
However, bond offerings in the last few years by those counties and cities weren't so forthcoming about those predictions, Exxon said in a verified petition filed last month with the District Court in Tarrant County, Texas.
San Mateo's 2014 and 2016 bond offerings told would-be investors that the county "is unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur," Exxon's petition said.
Imperial Beach and Marin County never disclosed the same information to perspective bond investors that was detailed in their complaints against the energy companies, Exxon's petition said.
Making those claims in their lawsuits against energy companies - but not in their bond offerings - smacks of hypocrisy, Exxon is arguing.
"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," the petition said.
"To the contrary, some of the disclosures affirmatively denied any ability to measure those risks; the others virtually ignored them."
Since Exxon's petition was filed, the Competitive Enterprise Institute sent an open letter to the SEC calling for an investigation of potential fraud in the inconsistent climate change claims in the cities' and counties' litigation and their bond offerings.
The cities and counties "are now in a tough position" because if officials admit their litigation claims were flawed, they kill their own lawsuits. But if they admit they lied to or withheld information from investors, they open themselves up to potential fraud liability, Epstein said.
Either way, officials in the cities and counties have only themselves to blame, Epstein said.
"I think they have put themselves into a very hard place," he said.