Beto O’Rourke stumping at a ‘Keeping the Lights On’ rally in Houston on February 15, 2022, the … [+]
Texas energy billionaire Kelcy Warren sued O’Rourke for defamation in February in a case that pits a powerful energy billionaire against a high-profile politician.
Former El Paso Congressman Robert “Beto” O’Rourke lost his 2018 bid for the U.S. Senate to Ted Cruz. His 2020 presidential bid didn’t gain traction. On this Election Day, he succumbed in a 55% to 44% wipeout to Texas’ incumbent Republican Governor Greg Abbott.
What’s next for O’Rourke? A court date as a defendant in a potentially high-profile lawsuit.
O’Rourke, 50, is fighting a defamation suit brought by oil and gas pipeline billionaire Kelcy Warren, founder and executive chairman of Dallas-based Energy Transfer
Warren filed suit in February. But O’Rourke refused to back down, and blasted him in a March press conference, saying Warren “not only is trying to influence the political process through the campaign donations he’s making, not only did he make illegal windfall profits off the suffering, misery, and death, of our fellow Texans, he’s now trying to shut us down in the courts through a frivolous lawsuit.”
The context: Energy Transfer made $2.4 billion in windfall profits during Texas’ February 2021 deep freeze, which knocked out power and heat to millions, leading to more than 200 deaths and at least $80 billion in damage. Electricity prices spiked from $30 per megawatt hour to hit the $9,000/mwh cap; natural gas jumped from $3 per million British thermal units to $500. During the freeze, many power plants went down, in some cases because they couldn’t get enough natural gas from pipeline systems that had frozen up or lost power. Energy Transfer’s operations were ready for the cold temperatures — enabling the company to charge escalated prices amid a shortage of natural gas. Their customers, mostly electric power utilities, have had to pass on record fuel prices to the very Texans hurt most by the freeze.
Kelcy Warren in his Dallas office, 2016.
O’Rourke seized on the story of a billionaire pipeline magnate making money while Texans froze to death, after Abbott signed SB 3 in June 2021. The bill required energy companies to winterize their equipment to avoid future freeze offs. But it had a loophole: companies didn’t have to winterize if they declined to “self-identify as critical entities.” Energy Transfer didn’t. Soon after Abbott signed the bill, Warren wrote him a $1 million campaign check. Beto called quid pro quo.
O’Rourke wasn’t alone in casting aspersions. In August 2021, the Houston Chronicle published an editorial titled: “We froze and Abbott got paid — $1 million from the billionaire profiteer of Texas’ deadly storm.” A San Antonio paper questioned whether the governor really was taking bribes. Not a good look for the billionaire “profiteer from the greatest statewide disaster in recent memory,” as O’Rourke described Warren.
In December 2021, Abbott tweeted that Texas power plants had made upgrades and “they are good to go” for winter. O’Rourke responded that “we won’t be ‘good to go’” until pipeline operators were winterized — “but you let them off the hook b/c gas CEOs like Kelcy Warren donated millions to your reelection campaign…” O’Rourke tweeted that gas companies made $11 billion during the freeze because Abbott “put their profits over our lives” after “they bought him off,” and that they are “trying to do it again.”
O’Rourke likely figured there were political points to win in going after Warren and Energy Transfer. It’s one of the biggest pipeline companies in the United States, with 120,000 miles of pipes moving an estimated 30% of America’s oil and natural gas. The company became a left-wing pariah in 2017 when the path of construction for its Dakota Access Pipeline was blocked for months by hundreds of camped out anti-oil environmentalists. Energy Transfer sued Greenpeace and other groups in 2018 for conspiring against it; that case was dismissed in 2019, prompting Energy Transfer to file another complaint in North Dakota state court. Trial is scheduled for June 2023.
Billionaires tend to have thick skins — so why did Warren let O’Rourke get under his skin rather than let the attacks roll off his back? Because, according to his court filings, Warren is outraged at O’Rourke’s “relentless and malicious attack on [him] by accusing him of serious crimes including extortion, bribery, and corrupt influence.”. These are fightin’ words. Warren sued O’Rourke in San Saba County, where he has owned the 21,000-acre Los Valles Ranch in the town of Cherokee since 2003.
Texas Gov. Greg Abbott, September 2022.
Beto doesn’t appear to be particularly worried about some High Noon showdown with Warren, even after the court denied his motion for an early dismissal of the case in July. In their appeal, filed a week after their motion to dismiss was denied, O’Rourke’s attorneys note there are strong protections for the “First Amendment rights of a gubernatorial candidate to speak freely regarding matters of utmost importance to Texans” — like the “exorbitant fees charged” by gas suppliers. They insist that O’Rourke’s “sharp language” to describe payment of a $1 million campaign check and its effect on public policy is “core protected political speech.” It’s likewise legitimate to question Abbott’s failure to prohibit gas price gouging that enabled Warren’s company to generate massive profits. O’Rourke’s brief says that his use of the word “bribe” was in “its nondefamatory colloquial sense.”
Even in San Saba County, where Warren hosts an annual music festival open to the public on his ranch, O’Rourke could win his appeal to dismiss the case if he can convince the appellate judges that his words are shielded by the Texas Citizens Participation Act, an “anti-SLAPP” statute that “protects citizens from retaliatory lawsuits that seek to intimidate or silence them on matters of public concern.” However, this defense isn’t a sure thing – O’Rourke’s motion for an early dismissal on TCPA grounds alone failed in July.
O’Rourke will increase his chances of winning if he can convince a judge or jury that Warren is not a private citizen, but rather a public figure “who has drawn substantial public attention” due to fame or notoriety or wealth (which would make him harder to defame). Warren first appeared on The Forbes 400 list of richest Americans in 2009, was first featured in Forbes magazine in 2010, and this year rose to No. 227 on The Forbes 400, with a fortune estimated at $4.6 billion.
Because name-calling is generally not considered defamatory, O’Rourke can safely compare Abbott to Vladimir Putin and characterize Warren as one of his corrupt oligarchs. Warren, in his brief, responds that he “is a life-long Texan, not a Russian, and a self-made businessman.”
Warren contends that it is malicious, false and absurd for O’Rourke to allege that Abbott and Warren conspired to leave the Texas power grid vulnerable in order to make a few extra bucks. His original complaint says the allegation, “ignores the roles that [the Electric Reliability Commission of Texas], the [Public Utility Commission] and the Texas Legislature play in the management of Texas’ power grid and the oversight thereof.”
Warren’s attorneys, in briefs filed with the court, say O’Rourke has damaged their client’s reputation and wrongly dragged him into a public fight. And why him? Energy Transfer was far from the only winner in the deep freeze. Dallas Cowboys billionaire Jerry Jones crowed when the gas company he controls, Comstock Resources, made a billion dollars that week, as did another pipeline giant, Kinder Morgan
No evidence has surfaced indicating that Warren’s campaing donation was illegal. The only civil action Energy Transfer appears to be involved in related to the deep freeze is a case brought by San Antonio utility CPS Energy, which seeks to convince a Texas court to invalidate $257 million in charges owed to Energy Transfer for emergency gas on the grounds that high prices violated state price-gouging bans. Energy Transfer in its response says CPS should have had better risk management.
It’s significant too that, despite O’Rourke’s Chicken Little protestations, there were no problems with the Texas grid last winter. The state also managed to meet record high power demand during record-breaking summer heat without any reported blackouts. “Beto should stop cheering for the failure of Texas,” an Abbott spokesman said in July.
Warren, like many other energy CEOs, has supported Abbott in nearly every race for more than a decade. His lawyers claim in their brief that O’Rourke knows full well that Warren’s donation to Abbott “was legal and does not constitute a ‘bribe’ or ‘corruption.’ Defendant knows that because he himself has actively solicited millions of dollars in donations (including by those in the energy industry), including a $1 million campaign contribution from billionaire George Soros.” It’s dangerous to condemn opponents’ campaign donors lest they look into yours. In addition to $1.5 million from Soros, O’Rouke received a $1 million check from now-humbled crypto tycoon Sam Bankman-Fried.
Vicki Granado, a spokesperson for Energy Transfer, tells Forbes that O’Rourke’s central assertion — that Warren wants the Texas grid to fail so he can make more money — is just demonstrably false. “We have been designing and weatherizing our systems for years, so they are equipped to operate in all weather conditions. We have spent more than $30 million in Texas alone on this effort,” says Granado. Why would Warren bribe Abbott to avoid having to make investments they’d already made?
Oral arguments before a Texas appeals court panel on whether Warren vs. O’Rourke ought to be dismissed are set for December 27.
