Free Market Environmental Law Clinic

Free Market Environmental Law Clinic (FMELC)

Background

The Free Market Environmental Law Clinic (FMELC), formerly known as the George Mason Environmental Law Clinic, operates as litigation counsel for the Energy & Environment Legal Institute (E&E Legal). According to public tax forms, FMELC's business address is the home of David Schnare, the general counsel for E&E Legal. The group shares staff with attorneys working for E&E Legal. [1]

According to the 2012 IRS filing of the George Mason Environment Law Clinic (EIN 45-1602963), “The law clinic serves as the attorneys for the American Tradition Institute. The billable hours in these matters is shared by the FME Law Clinic and ATI, the division made on a case by case basis.” The American Tradition Institute is the former name for E&E Legal.

According to its website, “FME Law seeks to provide a counter-weight to the litigious environmental movement that fosters an economically destructive regulatory regime in the United States.” [2]

The FMELC originally maintained its own website at fmelawclinic.org, however that URL now redirects to the Energy and Environment Legal Institute. According to an archive of its website, The FME Law Clinic was originally incorporated as the George Mason Environmental Law Clinic until “the Directors of FME Law engaged in a friendly and supportive discussion with the Dean of the George Mason University School of Law and recognized that the clinic could better perform its function by servicing multiple law schools as a stand-alone clinic. The Board thus directed a name change to reflect this broadened purpose. Until completion of the legal transition to its new name, the Clinic is doing business as the Free Market Environmental Law Clinic but must retain its original name for banking and tax purposes.” [1]

Notably, George Mason University has received more in funding from the Koch Brothers than any other academic institution, with the GMU and GMU Foundation alone having received over $70 million from Koch-connected foundations since 1986. Charles Koch sits on the board of directors of the Mercatus Center. [3]

In 2018, FMELC became involved in a dispute with its leadership, with claims on one side of extortion, lying to the IRS in order to obtain its tax-exempt status, and other accusations. The primary dispute is between David Schnare, who faces allegations of misrepresenting the group to obtain tax-exempt status, and coal-industry lawyer Chris Horner. Horner and Schnare had conceived FME Law, then George Mason Environmental Law Clinic, in 2011. [4], [5]

Free Market has repeatedly sent Freedom of Information Act (FOIA) requests targeting climate scientists including Michael Mann and James Hansen. They have also filed lawsuits fighting against Colorado's Renewable Energy Standard, and against the EPA's efforts to impose water quality standards in Virginia. [6]

Coal Industry Ties

E&E Legal, which works closely with the Free Market Environmental Law Clinic, has received funding from Arch Coal, the coal company's 2015 bankruptcy proceedings revealed[7] 

The Intercept reported s that Alpha Natural Resources, another large coal company declaring bankruptcy, was directly funding Chris Horner, who works at both E&E Legal and FMELC[8]

The Wall Street Journal reported Alpha paid Horner at least $18, 600 before it declared bankruptcy. The Free Market Environmental Law Clinic itself was listed as an Alpha Creditor, HuffPost noted. [9], [10]

FMELC Legal Battle

David Schnare has served as a director of FMELC and co-founded the group with with Chris Horner in 2011. In 2018, legal documents obtained by DeSmog contributor John Mashey found that Schnare was forced to give out $630,000 from FMELC in settlement as part of a heated legal dispute between Schnare and another lawyer, Matthew Hardin, over the control of FMELC and its financial assets. Schnare was accused of using FMELC as his own personal bank account. DeSmog reported the funds were released to Horner and Hardin's new venture, Government Accountability and Oversight (GOA), a group with many of the same targets as FMELC[18], [19]

In an email to DeSmog, Schnare said the dispute was closed, but claimed the settlement had “memorialized” his denials, which he claimed had not been disputed. He added that the August settlement came after he threatened to challenge in court the allegations against him. [19]

They (the allegations) were without foundation. Horner et al settled because we were about to go before a judge and document that none of them were true. Basically, we let him off the hook.” [19]

This case is an example of what happens to a law partnership when the partners end up unhappy with each other. No one at FME Law wanted to work with Horner any longer. So, we let him go and gave him some of the capital so he could start over on his own,” Schnare told DeSmog. [19]

Hardin offered a different version of events. Responding to Schnare's statement, Hardin told DeSmog in an email that the lawsuits brought by the FMELC board  “accurately detail what happened.” [19]

He wrote: “Mr. Schnare's settlement was to get out from under those suits. His comments to you seem to bear no relation to either the suits or the settlement.” [19]

In documents provided to DeSmog, Hardin also revealed he had requested the IRS investigate FMELC and showed copies of the IRS referral and the letter to authorities in Virginia.  [19]

The legal battle has been documented at a number of sources including Lachlan Markey at the Daily Beast (Ex-EPA Official’s Legal Advocacy Outfit Embroiled in Vicious Leadership Struggle) and by John Schwartz of the NY Times (He Sues to Discredit Climate Scientists. Now He’s Being Sued by His Allies). [20], [21]

Stance on Climate Change

The FMELC has a pattern of supporting climate change deniers such as Sallie Baliunas and Willie Soon while impeding mainstream climate scientists such as Michael Mann. One of the FMELC/American Tradition Institute's efforts requested records of Dr. Michael Mann from the University of Virginia including 12,000 emails that FMELC claims “chronicle the history of keystone efforts in the early climate change alarmism.” [6]

Funding

FMELC has given money to E&E Legal. FMELC's 2014 990 form shows that it gave the Energy and Environment Legal Institute $40,000 that year for “general support”. That funding increased to $172,500 in 2015, and lowered to $32,083 in 2016.

990 Forms

Key People

Staff

From 2013 to 2017, the FMELC only listed two staff members on its website: [11]

Board of Directors

According to 990 forms:

2012 2013 2014 2015 2016 Description
Christopher C. Horner Y Litigation Attorney
David Schnare Y Y Y Y Y Clinic Director and Chairman of the Board
Michael Thompson Y Y Y Y Y Board Director
Steven Gold Y Y Y Y Y Board Director

Actions

May 9, 2018

In an interview with the Washington Times, Schnare denied all allegations of his mismanagement of FMELC—including extortion, lying to the IRS, harassment and other claims.

It’s filed as pure harassment. The basis for the argument is a mistake on their part … It’s the most inefficient way to resolve a dispute,” he said. According to Schnare, Chris Horner was trying to use the court to get money for himself.

There were mistakes about understanding what our structure was … or what we thought it wasn’t,” he continued. “Chris [Horner] decided he could exploit them, the purpose of which was to solve the personnel problem by dissolving the organization and giving all of the money to Chris Horner and a new organization he was forming.” [5]

The Times recorded audio of a January 27 meeting between Matthew Hardin, the newly elected chairman of the board, and Schnare. In the recording, a man purported to be Schnare asked Hardin if he wanted a “s—t storm,” a statement interpreted by FMELC as a threat. [5]

FMELC said that it might need to close its operations as a result of the dispute. [5]

Schnare threatens and is attempting to saddle Free Market with further financial consequences of his behavior, in furtherance of his express threats to drain Free Market’s assets if interested parties did not agree to his demands,” the court filing reads. “Schnare’s multiple errors and mistakes, to which he has admitted, have caused Free Market irreparable harm in that it may no longer fulfill its mission and must be dissolved as a result. Schnare’s continuing behavior is causing Free Market further and continuing repetitional and financial harms and is placing the organization at risk.”

April 24, 2018

The Free Market Environmental Clinic filed a complaint against David Schnare, the group's chair, after he spent time working in a senior EPA position.  FME Law contended Schnare had improperly obtained the group's tax-exempt status by misrepresenting its structure. The Daily Beast reported the troubles began when Schnare took a leave of absence from the group in January 2017 and installed fellow attorney Chaim Mandelbaum as FME Law's executive director. [12]

Schnare told colleagues he expected to spend three or four years working with the EPA. He withdrew from day-to-date operations.[12]

In late 2017, a new board with incoming chairman Matthew Hardin asked to review the group's finances. Mandelbaum initially proved a bullet list of assets and liabilities, but resisted providing more information.[12]

Schnare admitted the reason for resistance in an email: “It appears I made some significant errors when preparing the by-laws and related papers for FME Law.” [12]

One of those errors resulted in FME Law becoming legally paralyzed. When the outside law firm Gross & Romanick was consulted to sort out the issue, they concluded that “As currently organized, FME cannot act.” [12]

The board of directors is not properly constituted to manage a [professional limited liability corporation]” they concluded in a January 2018 memo. Schnare claimed that conclusion was based on incomplete documentation. [12]

The outside law firm also concluded that Schnare had made misstatements in the group's application for 501(c)(3) nonprofit status, which would make it more difficult to resolve the issues in corporate structure. If a court-appointed receiver were brought on to address the issues, they would be legally required to report the issues to the IRS. Schnare claimed he had already informed the IRS of the underlying issues. [12]

If the IRS were to investigate and rule that tax exempt status was improperly obtained, FME would likely be forced to disgorge any monies raised and any contributors would have to amend their personal tax returns to reflect donations to a nonexempt entity,” Gross & Romanick had warned. “In such a scenario, it is likely that the members of the board would have some exposure for misrepresenting the status of the organization.”[12]

A legal complaint by FME Law alleged that Schnare began requesting “a payout” in the range of $280,000 to “keep things quiet” around the legal issues created in the initial 2011 tax filing. Schnare claimed that the money was to fulfill contractual obligations, and was not hush money. [12]

FME Law's complaint further alleged Schnare had threatened to go to the authorities. In a January 27 email to Chris Horner, Schnare wrote: [12]

Things are getting out of hand. It is in no one’s interest to end up in court, especially yours as it would be discovered that you engaged in fundraising without FME Law or yourself being registered to do so, placing you subject to criminal penalties.”

In a meeting that same day, Schnare suggested the Democratic attorney general of Virginia would be interested to investigate the group. Schnare denied his former colleagues' allegations that his statements had been threats: [12]

I have no idea how thin their skin is. There were no threats, absolutely none.”

Regarding allegations, including that he had misrepresented the group's nonprofit states, extracted funds for himself and a partner, and the threat of reporting FME Law, Schnare told The Daily Beast: [12]

The arguments aren’t grounded in facts,” Schnare told The Daily Beast in an interview. “It’s all based on incorrect data.” He described the situation as “like a bad divorce.”

July 27, 2016

The Free Market Environmental Law Clinic filed a complaint against the Rhode Island Department of the Attorney General demanding the release of additional climate-change-related emails. According to the complaint, FMELC had previously demanded records and had received all but 21 that were withheld or partially redacted, citing exemptions to the Access to Public Records Act. [13]

April 11, 2014

The Free Market Environmental Law Clinic filed a lawsuit on behalf of energy traders STS Energy Partners LP (STS Energy) against the Federal Energy Regulatory Commission (FERC). The lawsuit sought to force the FERC to release documents to STS Energy under a Freedom of Information Act (FOIA) request. [14]

The records this case seeks should bring fresh scrutiny of the Commission’s enforcement agenda and may shape how other participants approach trades and FERC investigations in the future. Further, It should produce a more thoughtful and reasoned FERC enforcement policy,” said Dr. David W. Schnare, Director of FME Law. [14]

July 25, 2012

FME Law sued the U.S. Environmental Protection Agency (EPA) on behalf of Occoquan Watershed Coalition (OWC), alleging the EPA had violated the Tenth Amendment by imposing water quality standards on Virginia and Fairfax County. [15]

April 4, 2011

American Tradition Institute’s Environmental Law Center sued the State of Colorado “challenging the constitutionality of Colorado’s Renewable Energy Standard” and claiming it violated the U.S. Constitution. [6], [16]

Related Organizations

Torcastle Law

As of November 2018, metadata at Torcastle Law included “Free Market Environmental Law Clinic” in its “site name” content. The precise connectoin between the organizations is unclear, however David Schnare of FMELC is also sited as an attorney at Torcastle. 

Contact & Address

The Free Market Environmental Law Clinic [17]
9033 Brook Ford Road
Burke, VA 22015
INFO@FMELawClinic.org

Social Media

Resources

  1. Donations,” The Free Market Environmental Law Clinic. Archived September 2, 2013. Archive.is URL: https://archive.li/r22mN

  2. FME Law: THE NATION’S FREE-MARKET ENVIRONMENTAL LAW CLINIC,” The Free Market Environmental Law Clinic. Archived July 4, 2013. Archive.is URL: https://archive.li/8x3KC 

  3. George Mason University,” Conservative Transparency. Accessed May 2018.

  4. Ex-EPA Official’s Legal Advocacy Outfit Embroiled in Vicious Leadership Struggle,” Daily Beast, April 24, 2018. Archived May 10, 2018. Archive.is URL: https://archive.li/UHY1y

  5. Ben Wolfgang. “Free Market Environmental Law Clinic’s effort to roll back regulations splinters amid feuding,” The Washington Times, May 9, 2018. Archived May 10, 2018. Archive.is URL: https://archive.li/aEDgj

  6. Litigation,” The Free Market Environmental Law Clinic. Archived October 11, 2016. Archive.is URL: https://archive.li/jr1uj

  7. Nick Surgey. “Bankruptcy Filing Shows Arch Coal Funding for Climate Denial Legal Group,” PRWatch, February 24, 2016. Archived March 15, 2016.

  8. Lee Fang. “Attorney Hounding Climate Scientists Is Covertly Funded By Coal Industry,” The Intercept, August 25, 2015. Archived March 16, 2016. Archived .pdf on file at DeSmogBlog.

  9. Parick Fitzgerald. “Alpha Natural Discloses Payments to Climate Change Skeptic Chris Horner,” The Wall Street Journal, October 15, 2015. Archive.is URL: https://archive.li/B8bv9

  10. Coal Companies’ Secret Funding of Climate Science Denial Exposed,” HuffPost, April 12, 2016. Archived October 9, 2017. Archive.is URL: https://archive.li/PM3uA

  11. Staff,” The Free Market Environmental Law Clinic. Archived March 28, 2017. Archive.is URL: https://archive.li/8x3KC

  12. Ex-EPA Official’s Legal Advocacy Outfit Embroiled in Vicious Leadership Struggle,” The Daily Beast, April 24, 2018. Archived April 27, 2018. Archive.is URLhttps://archive.li/N4uYX

  13. Free Market Environmental Law Clinic v. Rhode Island Department of the Attorney General,” (PDF), Retrieved from Columbia Law School.

  14. (Press Release). “Free Market Environmental Law Clinic Files FOIA Suit vs. FERC to Compel Production of Emails Related To Opaque, Arbitrary Regulatory Decisions That Unfairly Penalize Small Businesses And Discourage Investment,” The Free Market Environmental Law Clinic, April 11, 2014. Archived October 21, 2016. Archive.is URL: https://archive.li/aeloC

  15. OWC versus EPA,” The Free Market Environmental Law Clinic. Archived October 21, 2016. Archive.is URL: https://archive.li/rGCY9

  16. American Tradition Institute v. State of Colorado (Constitutionality of Renewable Energy Standards),” American Tradition Institute, April 4, 2011. Archived October 10, 2011. Archive.is URL: https://archive.li/p0m4Y

  17. Contact Us,” The Free Market Environmental Law Clinic. Archived March 13, 2017. Archive.is URL: https://archive.li/hEHHK

  18. John Mashey. “David Schnare Forced to Disgorge Dark Money From 'Free Market' Piggy Bank,” DeSmog, November 27, 2018.

  19. Graham Readfearn. “Bitter Legal Fight Between Climate Deniers Ends With $630,000 Transfer to New Group Targeting Climate Scientists and Campaigners,” DeSmog, November 29, 2018.

  20. Ex-EPA Official’s Legal Advocacy Outfit Embroiled in Vicious Leadership Struggle,” The Daily Beast, April 24, 2018. Archived April 27, 2018. Archive.is URLhttps://archive.li/N4uYX

  21. He Sues to Discredit Climate Scientists. Now He’s Being Sued by His Allies,” The New York Times, June 11, 2018. Archive.fo URLhttps://archive.fo/cSpKk

Other Resources