VIGILANTE REGULATION: When Anti-Pipeline Activism Becomes Tortious Interference Prepared by Phil Goldberg, Jamie Thompson and Dalton Mott of Shook Hardy and Bacon LLP Vigilante Regulation: When Anti-Pipeline Activism Becomes Tortious Interference i Executive Summary After years of failing to stop pipeline projects around the nation through normal regulatory processes, some opposition groups to oil and gas have become radicalized. They have crossed the line from peaceful, acceptable protests to sabotaging pipelines and their funding. This report discusses their recent efforts to target private banks to force the banks into breaching their existing contractual obligations to fund pipeline construction. These tactics are unlawful, and, as this report explains, tort law is available for holding people accountable when they tortiously interfere with such valid contractual relations. • A Group of Activists Are Using Unlawful • Activists Should Be Accountable for Unlawful. Tactics. Some activists have turned to Protests. Illegal campaigns to undermine campaigns of intimidation, coercion, threats, and banking relations meet the elements and other illicit tactics to force banks into cutting off purpose of a tortious interference claim. Such funding to pipeline projects. Activists have also conduct is unlawful, and courts should apply the backed up these so-called “defunding protests” tort in this context. with illegal sit-ins and other inappropriate actions calculated to apply economic pressure • These Claims Do Not Interfere with Free to banks to breach their contractual obligations. Speech. Protesting is a time-honored American tradition, but it is not free speech to use unlawful • Pipeline Projects Already Receive Extensive tactics, such as coercion and threats, to destroy Scrutiny. The purpose of these protests is to another’s property or their property interests impose their own regulatory agendas onto the in a contract. American public, regardless of the law, facts or efforts made to address their concerns through • Pipeline Companies Should Consider Suit. the normal regulatory processes. Pipelines If a pipeline developer has a contract with a already undergo many levels of government bank broken by protesting activity, the company review, including for environmental impacts. should consider filing a claim for tortious Any individual can participate in these interference against the activists who caused processes. Once a decision is final, vigilante the breach. regulation should be unacceptable. • Tort Law Provides a Remedy. There is a common-law cause of action for intentional interference with a contract. This tort provides a remedy against anyone who intentionally interferes with the contractual rights and interests of private parties. The tort’s purpose is to preserve the sanctity of contracts, which are essential to orderly societies, and prevent tactics such as coercive pressure, threats, and fraud. Vigilante Regulation: When Anti-Pipeline Activism Becomes Tortious Interference 1 Introduction In business, people who intentionally interfere with the lawful business of another can be subject to liability through tort law for the damages they cause. Activists bent on stopping the use of fossil fuels are The tort is called “tortious interference” and is increasingly taking matters into their own hands. actionable when companies, such as the banks here, One of their key targets is stopping the infrastructure are pressured to breach their contractual obligations needed to move oil and natural gas, namely pipelines. to another party. We are a society of laws. Abusive, Their goal is not merely to back-alley campaigns to ensure that pipelines are built disrupt lawful commerce can in an environmentally friendly be actionable misconduct. way, but to stop pipeline construction at all costs. They America still needs America still needs pipelines are now publicly pressuring pipelines to deliver the to deliver the affordable banks to pull out of contracts affordable energy we all energy we all need to fuel to fund pipeline construction. our economy, security, and need to fuel our economy, way of life. Political battles, Protesting, of course, is a time- security, and way of life. over where and how to build honored American tradition, pipelines or over fossil fuels as is the right to organize and generally, must remain with use the political and regulatory the government bodies processes to advance political responsible for deciding these agendas. Government agencies intensely vet and issues. People who disregard the law and pursue approve all intrastate, interstate, and international vigilante regulation should be held accountable for the pipelines. These processes require comprehensive unlawful damages they cause. environmental assessments with many and substantial opportunities for public input. Once the government America’s Pipelines and makes a final decision, though, the law requires that people follow that decision. Taking matters into one’s The Defund Protests own hands through use of threats and force should not America’s pipelines are the veins and arteries that be tolerated in an orderly society. pump a stable energy supply through vast reaches of this county—both populous and rural—in a safe Sabotaging private funding commitments for pipeline and cost-effective manner. According to the U.S. development crosses this line from normal opposition Department of Homeland Security and the U.S. to unlawful conduct. These actions fall outside the Department of Energy, the country’s pipelines are law and norms of public protest. The campaigns seek critical infrastructure, essential to national security.1 to use intimidation and exert extreme pressure on banks to tear up existing financing agreements with Oil and natural gas heat our homes, churches, developers. It is immaterial to these protests that hospitals, factories, and offices; they fuel our vehicles developers obtained all of the necessary government and keep us safe. The pipelines that transport these approvals, including those related to environmental energy resources are vital parts of this process; they matters, and satisfied also support thousands of high-paying American jobs. financing contingencies. 1 U.S. Dep’t of Homeland Security, Securing the Veins of the American Economy, https://www.tsa.gov/news/testimony/2016/04/19/hearing- pipelines-securing-veins-american-economy; U.S. Dep’t of Homeland Security & U.S. Dep’t of Energy, Energy: Critical Infrastructure and Key Resources Sector-Specific Plan as Input to the National Infrastructure Protection Plan (Redacted), (May 2017),https://www.energy. gov/sites/prod/files/oeprod/DocumentsandMedia/Energy_SSP_Public.pdf. Vigilante Regulation: When Anti-Pipeline Activism Becomes Tortious Interference 2 For the most part, activist organizations with abundant the Line 3 Pipeline,6 the Pilgrim Pipeline,7 and the resources have failed in their efforts to block major Bayou Bridge Pipeline.8 Well-funded organizers have pipeline projects through normal regulatory and developed websites and published articles identifying political channels. Their efforts, though, have made the banks with existing funding commitments for these approvals more burdensome, costly, and time- pipelines. The websites and articles often disseminate consuming.2 Administrations of both political parties false or misleading information about the projects and have carefully considered the activists’ steadfast provide roadmaps on how their supporters should opposition, and have approved these needed attack the banks. projects anyway. One tactic is to incite institutional investors to pull Undeterred, the anti-pipeline movement has now their money from banks that do not give into their opened a new front in its ever-evolving war on pipeline demands. In 2017, activists convinced the City of infrastructure. Banks are the activist organizations’ Seattle to withdraw more than $3 billion from Wells new targets of attack. These banks are subjected to Fargo to punish the bank for not retracting its funding coordinated “defund protests” urging them to sever commitment for the DAPL project.9 Other cities have existing obligations to pipeline builders. joined them, and the protesters plan to target many more financial institutions with known credit facilities Across the nation and around the globe, banks are for pipeline infrastructure projects. Their hope is to being besieged by these activists demanding that start a “nationwide divestment drive.”10 they breach their contracts to fund pipelines or face campaigns of mischief orchestrated to harm the banks’ business and reputation. Some banks have surrendered to this pressure. In 2017, the Norwegian Bank DNB, one of the original funders of the Dakota Access Pipeline (DAPL), reportedly canceled its $2.5 billion credit line to pipeline developers after a delegation of tribal protesters traveled 5,000 miles to face off with bank executives.3 Other targeted European banks have done the same, resulting in millions of dollars in severed financing commitments from ING of the Netherlands and BNP Paribas of France. Now, environmental activists are pressuring domestic The activists have also engaged in disruptive actions banks to withdraw funding from all major U.S. pipeline at bank offices and branches and at shareholder projects, including TransCanada’s Keystone XL meetings. In Baltimore in 2016, a group of Pipeline,4 Energy Transfer Partners’ DAPL project,5 environmental activists staged a sit-in at a Wells 2 David Blackmon, Anti-Pipeline