He Sues to Discredit Climate Scientists. Now He’s Being Sued by His Allies.

FAIRFAX, Va. — The Free Market Environmental Law Clinic has long sought to inject doubt into the public conversation about global warming. Now, the future of the group itself is in doubt.

Its founders are battling in court over control of the group, as well as some $900,000 in its bank account. One of them, David Schnare, has been accused by his former allies of botching the group’s tax-exempt status and of attempting to extort a quarter-million dollars from its coffers.

It all comes at a time when Free Market — which made a name for itself using the legal system to obtain climate scientists’ emails — should be ascendant. The Trump administration shares its views on environmental regulation and its dismissal of climate science. And Schnare, 70, was part of the Trump “beachhead team” at the Environmental Protection Agency during the transition between presidential administrations, though he did not last long there.

Schnare, in an interview, initially expressed reluctance to discuss the situation at Free Market. “Attorneys are not supposed to talk about and try cases in the press,” he said. Then he added, “I completely deny all these nasty accusations.”

The legal battle sprawls across three lawsuits filed against Schnare by Matthew Hardin, 28, chairman of Free Market’s board. Neither side recognized the other’s claim of control, so the fight began with Free Market essentially suing itself. If that sounds confusing, it certainly was to Chief Judge Bruce D. White of Fairfax County Circuit Court. “We have a plaintiff and defendant who are the same party,” he said at a brief hearing here last month. “That’s not something I see every day.”

White said he would consolidate the cases under a single judge who, he seemed relieved to say, would not be himself. The parties were due back in court this week, but entered into settlement talks as this article neared publication.

The litigation, which was first reported by The Daily Beast, pits two former partners against each other: Schnare and Christopher Horner, another lawyer who has worked to discredit climate scientists. The two worked together when Horner was a senior legal fellow at a related organization, the Energy & Environment Legal Institute. Now Horner, 53, is aligned with Hardin in the battle over Free Market.

The efforts by Schnare and Horner to obtain climate scientists’ emails followed a trail blazed in 2009 in an episode known as Climategate, when hackers exposed a trove of private messages between scientists. Global warming denialists took the blunt discussions out of context to allege that researchers had tampered with data, but subsequent investigations found no evidence of fraud.

Schnare and Horner have tried to legitimize the process by using freedom of information laws to pursue document releases in a half-dozen states. The Virginia Supreme Court rejected one such request in 2014, saying it would cause “impairment of free thought and expression” at the University of Virginia. Another case is likely to reach the Arizona Supreme Court before long.

Schnare founded Free Market with Horner in 2011 as a legal group working with E&E. Free Market has since earned tens of thousands of dollars from legal fees and penalties assessed against government agencies for not speedily or fully responding to freedom of information filings.

Schnare took a leave of absence in January 2017 to join the Trump administration’s transition team at the EPA. He had previously worked at the agency for 33 years, until 2011, “fighting the conservative fight” from within, as he put it in a message to a colleague. Schnare does not deny that climate change is occurring, but has questioned the potential impacts and the costs of fighting it and has criticized those who disagree as alarmists.

His return to the EPA was brief; he resigned within two months after clashing with Scott Pruitt, then the administrator, over issues like Pruitt’s proposal for a “red team, blue team” exercise to debate climate change, which Schnare said displayed “ignorance of the scientific progress or science itself.”

But when Schnare tried to return to Free Market, Hardin told him he was not welcome. By then, it had become clear that Schnare had made an enormous error when he created the group: He had applied for status with the IRS that would let Free Market accept tax-free donations, but he had created the organization as a limited liability company, which cannot normally be tax-exempt.

Schnare acknowledged in a letter to Free Market’s board last December that he had “made some significant errors.” But the lawsuit states that Schnare offered conflicting explanations and produced “different versions of organizational documents, as circumstances dictated.” The suit suggests that those papers, some filed with the court, were faked.

An outside lawyer warned Free Market that the IRS could force the group to return contributions, require donors to amend their tax returns and expose Free Market to legal liability. He advised dissolving the group, a resolution favored by Hardin and Horner, who created a new group that would get Free Market’s money. But the disposition of the Free Market bank account, which was tied to Schnare’s Social Security number, is still in contention.

Discussions reached a breaking point in January, during a meeting between Hardin, Schnare and Chaim Mandelbaum, a lawyer Schnare had installed as executive director of Free Market before his brief return to the EPA.

According to Hardin’s suit, Mandelbaum suggested the “Democratic attorney general of Virginia” would love to investigate the conservative group, and Schnare demanded “approximately a quarter of a million dollars to ‘keep things quiet,'” including money to buy out Mandelbaum’s contract, along with an agreement that they would not be sued.

In a recording of the meeting reviewed by The New York Times, Schnare can be heard saying that if Hardin and Horner did not comply, he could take control of the money. But, he added, “that’s not what I want to have to go in front of a judge and have to deal with.”

After that meeting, Hardin, who also serves as commonwealth’s attorney for Greene County, Virginia, alerted the IRS to the group’s problems.

Hardin and Horner declined to comment. Mandelbaum said he did not recall making the comment about the Virginia attorney general. “All I can say is I believe their allegations are without merit,” he said.

Free Market does not disclose its donors, though ties to fossil fuel companies have emerged. In 2015, The Intercept reported that a bankruptcy filing by Alpha Natural Resources, a major coal company, listed payments to Free Market and to Horner. Horner is also a senior fellow at the Competitive Enterprise Institute, which receives support from the fossil fuel industry.

DonorsTrust, a conservative group that provides an avenue for anonymous donations, had an attorney present at the Fairfax County hearing last month. Lawson R. Bader, its chief executive, said in an interview his group was an “interested party” not taking sides. If a donation “has been made under false pretenses, that is a problem,” Bader said. “We need that money back.” Some of Schnare’s targets are also watching the case. Michael E. Mann, a climate scientist at Pennsylvania State University who has long been a focus of Schnare’s legal maneuvers, said in an email that he had been following the fight with “some interest (and not a little bit of schadenfreude).”

Lauren Kurtz, executive director of the Climate Science Legal Defense Fund, which supports scientists in legal battles, said while the conservative groups had pursued researchers’ emails in the name of transparency, there had been “complete lack of transparency in how they were running their own organization.”

Schnare said the lawsuit should never have happened. “We’re going to waste a whole lot of money that could have been used to do good things,” he said. “It will end; I just don’t know whether I will have lost my mind by then.”