Michigan Attorney General Dana Nessel has launched a copycat antitrust suit against BP, Shell, Chevron, and Exxon Mobil for engaging in a “conspiracy to delay the transition from fossil fuels to renewable energy.” Her suit is a mirror image of the antitrust action that Texas Attorney General Ken Paxton filed against BlackRock and other asset managers for using their financial heft and environmental, social, and governance directives to throttle the fossil fuel industry.
But let’s look beyond whether turnabout is fair play. Does Michigan’s imitation lawsuit make sense?
According to Michigan’s attorney general, these dastardly fossil fuel companies harmed the rollout of renewable energy by abandoning renewable energy projects, by using patents and patent litigation to stymie renewables, and by working through a trade association to discourage capital investment in those technologies.
The first accusation is risible. A company can invest or not invest in whatever it wants. Besides, the oil and gas supermajors are, in fact, investing billions of dollars in renewable energy — Exxon Mobil is investing in low-emission hydrogen as a fuel source, BP in offshore wind power, and Chevron in hydrogen power, solar energy, and research into geothermal energy.
The second accusation — that these companies held back renewables — is also a stretch. For example, Nessel accuses these companies of suppressing the buildout of electric vehicle charging infrastructure at their branded but independently owned gas stations. What do you expect from people whose business is to sell gasoline?
These companies are also charged with not following through on early breakthroughs in battery and hybrid-engine technologies and with hanging on to their unused patents to slow the rollout of renewables. The lawsuit paints the portrait of a paradise in which most people would have EVs today, while gasoline would be the default, but for the evil oil companies. The Teslas came anyway. The principal deterrent to EV adoption is surely EV sticker shock.
Her third accusation is the key element that mimics the Texas ESG lawsuit. Nessel’s lawsuit accuses these fossil fuel villains and their trade association, the American Petroleum Institute, of coordinating marketwide efforts to discourage capital investment in renewable energy.
How? By exercising their free speech rights.
At this point, Nessel’s suit risks running afoul of the Noerr-Pennington legal doctrine, which immunizes businesses when they band together to exercise their First Amendment right to petition the government.
When these companies express their preferences on energy policy through the American Petroleum Institute, they are almost certainly protected, even if their speech is in their self-interest. Imagine what the law would look like if Nessel’s charges stuck. The American Clean Power Association, which also represents big and often highly profitable energy companies, could be sanctioned for advocating policies that “restrict” the nation’s reliance on fossil fuels. Similar suits could be waged against every trade association, from the Aluminum Association to the United Negro College Fund.
Given the great deference courts usually give to a First Amendment defense, this charge is not likely to stick.
Nessel’s lawsuit is, however, useful in one way. It promotes a comparison between Michigan’s lawsuit against the oil-and-gas supermajors and the weightier charges in the Texas ESG lawsuit. In the latter case, Texas alleges that large asset managers conspired to restrict oil and gas production. These actions harmed consumers and investors by steering them toward global ESG funds that for years greatly underperformed the broader market.
The Texas suit alleges this coercion consisted of using large asset funds to discourage investment in oil and gas, working hand in glove with a spider’s web of nongovernmental organizations and shareholder activists to pressure companies in all sectors to give in to ever-higher ESG demands. A duopoly of proxy advisers — Glass, Lewis and Institutional Shareholder Services — cooperated by forcing corporate boards to vote on one left-wing shareholder proposal after another.
This was a strange agenda for asset managers whose sole responsibility is to help grow clients’ investments. Last time I checked, the oil-and-gas industry was a legal business. Since when has it become the duty of a fiduciary to pressure companies and investors into switching to politically favored but lower-performing investments?
The Michigan lawsuit is too clever by half, a way to tweak the anti-ESG antitrust movement by turning its tactics back on it. But it lacks substance. It is unlikely that speeches, videos, and op-eds by a trade association advocating industry positions will be judged as an antitrust violation.
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If anything, Nessel’s suit highlights just how substantive the coercion of the ESG movement actually was, and how much antitrust exposure it created. If you doubt this, consider how quickly BlackRock ran from its climate coalitions and NGO relationships as soon as talk of antitrust suits began.
In the meantime, I doubt that the American Petroleum Institute — or the companies that support it — will be dissuaded by this lawsuit from speaking their minds.
Robert H. Bork Jr. is the president of the Antitrust Education Project.