A new Congressional report first published by the Washington Free Beacon exposes the extent to which billionaire donors have evaded both disclosure and tax obligations by funneling money to Sher Edling, a private law firm, for purposes of advancing a preferred climate policy agenda in the courtrooms.

Back in 2022, Fox News reported on public records obtained by Government Accountability & Oversight (GAO) that revealed Sher Edling’s dark-money funding stream. Through a vehicle called the Collective Action Fund, wealthy foundations like the Rockefeller Brothers Fund and the Leonardo DiCaprio Foundation funneled millions of dollars to Sher Edling through pass-through dark money groups with relative anonymity.

Ann Carlson, an academic and former Biden administration NHSTA nominee, was instrumental in rounding up wealthy donors to support the for-profit law firm. Through Carlson’s nomination process, Republicans on the Senate Commerce Committee and House Oversight Committee caught wind of Sher Edling’s unusual funding structure and began investigating the firm.

Here’s what you need to know about the Committees’ newly released interim findings:

1. Sher Edling confirmed that it’s received nearly $14 million from wealthy donors to fund climate lawsuits.

After months of stonewalling Congressional staff, Sher Edling finally confirmed that it had received a staggering total of $13.8 million from dark-money groups since 2017 to support its work on climate lawsuits, according to the report:

“Eventually, Sher Edling confirmed that from 2017 through 2022, Resources Legacy Fund and New Venture Fund gave the firm $10.8 million in support of its climate nuisance litigation. Sher Edling also revealed two, previously unreported, donations: $2.86 million from New Venture Fund in 2023 and $235,000 from the Tides Foundation in 2022.”

This system – using tax-exempt grants from wealthy donors to fund political lawsuits brought by a for-profit law firm – has been scrutinized by many in the media, including the New Jersey Civil Justice Institute, the Pennsylvania Coalition for Civil Justice Reform, GMU Law Professor Michael Krauss, and more. The committee memo spells out the core concern:

“In effect, American taxpayers are bearing the cost of Sher Edling’s litigation. Wealthy liberals, like George Soros, make tax-deductible donations to foundations like the Resources Legacy Fund, New Venture Fund, and the Tides Foundation (or otherwise make tax-deductible donations to other nonprofit organizations that, in turn, give money to these foundations).

“The foundations then direct that money to Sher Edling to pursue climate change policies through the courts. If these individuals had donated to political candidates or advocacy organizations to enact climate change legislation, however, they would not be able to deduct those donations. Although not illegal, this structure allows the green mafia to achieve its political goals while lowering its tax bill.” (Emphasis added)

Still, much remains unknown about Sher Edling’s funding and its obligations to its donors. Here are the key questions:

• According to Sher Edling, the Tides Foundation grant was for “consulting services” unrelated to cases where the firm currently serves as counsel. What kind of projects is Sher Edling receiving dark money dollars to consult on?
• Sher Edling told the Committees that at least some of its grants were made “pursuant to a written agreement,” but refused to disclose those agreements. What is in these secretive donor agreements, and what, if anything, has Sher Edling promised its funders in exchange for cash?
• Sher Edling refused to answer whether it receives funding from other third parties – like hedge funds or lenders – in addition to grants from nonprofits, to support its activities. Has Sher Edling promised litigation funders a share of any potential damages?

2. Questions remain about Ann Carlson and UCLA Law’s role in bringing climate lawsuits alongside Sher Edling.

Remember that Sher Edling’s funding sources were not publicly known or disclosed until watchdog group GAO obtained emails from UCLA Law through a public records lawsuit.

Ann Carlson, who has returned to her prior post at UCLA law following a failed stint as acting NHTSA administrator, acted as a “pro bono consultant,” a funder, and a plaintiff recruiter for Sher Edling while teaching at the public law school. Revelations about her work for the firm caused widespread backlash among Senate Republicans and industry groups, resulting in the White House pulling her nomination.

Still, although Carlson’s role was made crystal-clear by public records, the staff memo says that “Sher Edling did not provide further detail on Ms. Carlson’s work for Sher Edling, including whether she solicited donors.”

The firm also “failed to address whether Sher Edling provided Ms. Carlson any compensation or benefits or reimbursed any of her expenses” – like the time she traveled to Hawaii to “try to encourage Hawaii to consider a climate nuisance suit.”

As if pro bono consultants and a steady stream of grant money weren’t enough, the staff memo also confirms that Sher Edling received free student labor to support its caseload, but still refuses to hand over the legal services agreement it has in place with UCLA Law clinic:

“Sher Edling confirmed the UCLA Law clinic ‘provide[d] assistance’ to Sher Edling ‘on issues arising in then-pending and potential cases, during approximately 2018 and 2019.’ This arrangement means that UCLA Law students helped Sher Edling’s efforts to secure compensation but received no compensation themselves. In fact, as students receiving academic credit for clinic participation, they paid UCLA to be able to do this work.”

With Ann Carlson back at UCLA Law and the recent flurry of legal activity out of California targeting the energy industry, it begs the question whether the public law school is still a hotbed of support for politicized lawsuits targeting oil and gas companies. Here are the key questions:

• Emails among Sher Edling’s donors revealed the existence of an advisory committee supporting the firm. Did Ann Carlson serve on this committee? Which other academics speaking out as “independent” voices on climate cases also serve on this committee?
• Is Ann Carlson, or UCLA Law, now supporting California Attorney General Rob Bonta on his pair of newly-filed climate and plastics lawsuits targeting the energy industry?  

Bottom Line: Climate lawsuits are unquestionably about the policy aims of wealthy funders – a state judge in Maryland made this clear in her recent dismissal of Baltimore’s climate lawsuit, describing it as it an attempt to change national climate policy through “the back door.”

The joint staff investigation into Sher Edling paints a concerning picture of how wealthy donors are able to abuse the unregulated third-party litigation funding industry to advance these radical climate policies through state courthouses rather than through the democratic process.