Cities’ Global Warming Lawsuits Raise ‘Serious Questions Of Bond Fraud,’ Attorneys Say
A libertarian think tank has notified the Securities Exchange Commission (SEC) that California cities and counties may have inadvertently admitted to securities fraud in their global warming lawsuits against oil companies.
The Competitive Enterprise Institute (CEI) attorneys pointed out that localities’ suing a group of oil companies for current and future damages allegedly caused by global warming may have misled municipal bond investors.
“A number of California cities and counties have recently filed lawsuits against several oil and gas companies, claiming that these companies failed to disclose the alleged risks of climate change,” CEI attorneys Sam Kazman and Devin Watkins wrote to the SEC.
“However, in these lawsuits the plaintiff cities and counties apparently describe these climate risks in ways that are far different than how they described them in their own bond offerings. In our view, this inconsistency raises serious questions of municipal bond fraud,” the attorneys added.
So far, nine U.S. localities have filed lawsuits against oil companies for damages from extreme weather and sea level rise, which the plaintiffs allege were made worse by manmade warming.
A handful California localities have sued, alleging that oil companies “knowingly” sold products that cause global warming all while trying to suppress the scientific evidence. Richmond became the most recent city to sue over the climate.
“After being warned by their own experts of the potential damage, the fossil fuel industry could have taken steps to transition to a lower carbon future, but they didn’t,” Richmond Mayor Tom Butt said in a statement.
However, ExxonMobil, one of the companies being sued, noted in its legal filings that California cities and counties suing over global warming didn’t disclose climate risks in bond offerings.
“[I]n their lawsuits many of the municipalities claim to be able to accurately be able to predict sea level rise caused by climate change,” Kazman and Watkins wrote. “However, some of the bond offerings of these municipalities state that such predictions were not possible.”
For example, San Francisco’s lawsuit predicts “0.3 to as much as 0.8 feet of additional sea level rise by 2030,” which could cost $5 billion in the long-term. But the city told investors they were “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.”
“Either the City can predict such sea-level rise, as it tells the court, or it cannot, as it tells investors,” CEI’s attorneys wrote.
Representatives for Sher Edling, the law firm handling six localities’ climate suits, did not respond to The Daily Caller News Foundation’s request for comment.
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