The basic operating principle of corporate America is that you can't push back against the government, no matter how outrageous the campaign against you may be. Fight the government, and they can put you out of business, either by indicting you, or maybe by holding up hundreds of regulatory approvals that you need to operate. Your better bet is always to buy off the corrupt and predatory regulators and prosecutors by throwing shareholder money at them. They get their headline and their career advancement, and you move on with life. See my Phony Prosecutions tag for a few hundred examples of this phenomenon: big banks making multi-billion dollar payments over and over again for the most preposterous of shake-downs; pharmaceutical companies paying multi-billion dollar amounts over and over for constitutionally-protected truthful marketing speech that is nevertheless prosecuted criminally; hedge funds making billion dollar payments over trading on market tips and rumors, something not prohibited by any statute; etc., etc., etc. This is how the reputation of the Justice Department and FBI (as well as many state-level counterparts) originally got into "tatters," at least among those who follow the subject, long before these organizations were also revealed as corruptly advancing the interests of the favored political party over the adversary.
Over in the field of the climate wars, it has long been the same. Might you think that companies in the business of producing and selling fossil fuels would make some effort to stand up for their products in the face relentless attacks that they are "destroying the planet"? After all, even if there were something to the hypothesis that human CO2 emissions might be warming the atmosphere (I don't think so, but assume that hypothesis is true for these purposes), you would think that the purveyors of the fossil fuels would be loudly proclaiming that their products provide light and heat and electricity and transportation, and at far lower prices than anyone else can, and that they have enormously furthered human advancement. But you would be wrong. Instead, the major energy-producing companies have done their very best for years to lie low in the shadows and hope that no one notices them. Who, us?
Well, as we all learned in history class, enough appeasement eventually gets you the invasions of Poland and France. The analog to the invasion of Poland came back last summer, when a series of California municipalities, including the counties of Marin and San Mateo and cities of San Francisco and Oakland, sued five major oil companies (Chevron, ConocoPhillips, ExxonMobil, BP, Royal Dutch Shell) in multiple lawsuits, seeking billions of dollars supposedly to protect against rising sea levels projected to be caused by "climate change." Not to be outdone, it appears that New York City has piled onto this bandwagon just as of yesterday, filing its own suit in federal court in New York. (The New York suit is so new that I can't even find it on the court's public access system; but there is a WSJ report on the case here, probably behind paywall.)
Even if you believe in the basic global warming narrative, the idea that sea level rise will threaten to swamp San Francisco within anyone's current lifetime borders on the delusional. Still, if these companies intended to follow the normal form of prior corporate capitulations, you would expect that after some decent interval (say one to two years) there would be settlements of a few billion dollars or so.
But wait! Perhaps someone has recognized that further appeasement is not the right strategy in this case. On Monday, Exxon filed a Petition in state court in Tarrant Count (Fort Worth), Texas, seeking "pre-suit depositions" of a list of people including environmental activist attorney Matthew Pawa (who appears to be the guy orchestrating this campaign against the oil companies) plus some fifteen of the attorneys for the various city and county plaintiffs in the California lawsuits. This is not your usual lie-down-while-they-kick-you response. In particular, the complaint accuses the plaintiffs of wrongly using governmental powers to suppress political dissent, and accuses the named attorneys, including government attorneys, of "dishonesty." For example, from Paragraph 1 of the Petition:
A collection of special interests and opportunistic politicians are abusing law enforcement authority and legal process to impose their viewpoint on climate change. This conspiracy emerged out of frustration in New York, Massachusetts, and California with voters in other parts of the country and with the federal government for failing to adopt their preferred policies on climate change. But rather than focusing their efforts in the marketplace of ideas and adopting a strategy of persuasion, the members of this conspiracy chose to advance their political objectives by imposing unlawful burdens on perceived political opponents.
The Petition describes the development of a strategy, led by Mr. Pawa, to "delegitimize" Exxon and the other oil companies from participating in the climate debate, through a series of lawsuits accusing them of harm to the climate and the citizenry. For purposes of their complaints against the oil companies, the California municipalities cooked up wild projections of climate-change-driven sea level rise threatening to swamp them all. Unfortunately, no one seems to have thought to check prior statements made by the same municipalities on the same subject. Much of the Petition consists of contrasting the statements in the complaints to such prior statements, particularly statements made in prospectuses intended to sell bonds.
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. It is reasonable to infer that the municipalities brought these lawsuits not because of a bona fide belief in any tortious conduct by the defendants or actual damage to their jurisdictions, but instead to coerce ExxonMobil and others operating in the Texas energy sector to adopt policies aligned with those favored by local politicians in California.
The Petition goes one-by-one through the statements of each of the municipalities. For example, there is San Mateo County, home of Silicon Valley. From the San Mateo Complaint against the oil companies:
[T]here is a 93% chance that the County experiences a devastating three-foot flood before the year 2050, and a 50% chance that such a flood occurs before 2030. Average sea level rise along the County’s shores are expected to rise by almost three feet by the year 2100, causing multiple, predictable impacts, and exacerbating the impacts of extreme events.
But unfortunately there is then this from San Mateo County's 2014 and 2016 bond prospectuses:
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 effect on the business operations or financial condition of the County and the local economy.
Or consider the City of Oakland. This is from its Complaint against the oil companies:
[B]y 2050 a ‘100-year flood’ in the Oakland vicinity is expected to occur . . . once every 2.3 years . . . by 2100. . . almost once per week.
And this is from Oakland's 2017 bond prospectus:
The City is unable to predict when seismic events, fires or other natural events, such as searise or other impacts of climate change or flooding from a major storm, could 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 or the local economy.
Of course, having been caught red-handed, these California municipalities may now back down, or alternatively regroup and start some other more-carefully-vetted lawsuit. But it does look to me like ExxonMobil is gearing up for a long, hard fight. Welcome to the struggle, guys! Now, what about those other four wimps who are also defendants in these cases?
Full disclosure: I have never received a penny from Exxon, and I wouldn't take anything if they offered.