Republicans look to old wire fraud case to fight new climate change bill

Senior Republicans on the House Energy and Commerce Committee are looking to a closed federal wire fraud conviction in California to bolster their argument against climate legislation.

Rep. Joe Barton (Texas), the senior Republican on the committee, and Rep. Greg Walden (Ore.), the top Republican on the committee’s oversight panel, have asked a federal court to unseal documents in the 2005 conviction surrounding a California pollution credit trading program. Barton calls the case a cautionary tale about setting up a massive nationwide carbon emissions trading market.

The two Republicans, who filed a motion Monday in the United States District Court for the Central District of California, want the pleadings unsealed in the case of Anne Masters Sholtz, who pleaded guilty in 2005 to one count of wire fraud following a six-count federal indictment for trying to game a Los Angeles-area pollution abatement initiative.

Barton strongly opposes mandatory caps on greenhouse gas emissions.

“They are concerned that as Congress considers legislation that would require [the Environmental Protection Agency (EPA)] to establish a broad, national cap-and-trade program, not enough is known about the difficulties that EPA and other regulatory authorities may face in protecting a national cap-and-trade program against the kind of fraudulent activities that are at the heart of the Sholtz case,” according to a memo filed with the court supporting their motion to unseal the pleadings.

Their supporting memo says sealed pleadings in the case might provide valuable insight to Congress as it considers a national climate bill.

Sholtz was convicted for her activities connected to the state’s Regional Clean Air Incentive Market (RECLAIM), a pollution credit trading system set up in the 1990s to help lower nitrogen oxides and sulfur oxides in the Los Angeles metro region.

According to a 2005 Justice Department release on Sholtz’s guilty plea, she admitted to defrauding AG Clean Air, a New York-based company trading in energy credits. Sholtz operated a company that brokered pollution credit trading under the RECLAIM program.

Her indictment involved use of forged documents purporting to be from ExxonMobil Corp. The indictment against Sholtz alleged the scheme caused the New York company to suffer more than $2.5 million in losses, the Justice Department said in 2005 when announcing the guilty plea.

Barton and Walden, according to Barton’s office, said they decided to go to court after EPA did not adequately respond to detailed questions they asked the agency about its role in the case. The agency played a role in the investigation.

But while the lawmakers say the case raises questions about climate legislation, a letter from EPA to Barton in June notes that RECLAIM differs in several ways from cap-and-trade programs run by EPA that are models for the congressional plans.