New York Attorney General Eric Schneiderman’s “ever-shifting and unravelling” investigation into ExxonMobil’s climate record is an “abuse of power” that should have been squashed before it even began, according to court documents the oil company filed Friday.
Exxon suggested in the court filings that Schneiderman’s recent subpoenas into the company’s climate records amount to conspiracy theories drummed up to gain media attention and further the Democrat’s political ambitions. The company speculated that the Democrat’s investigation has deviated from its initial purpose and meandered into mere speculation about Exxon’s business dealings.
“From the outset of this investigation, it has been clear that the Attorney General is working backwards from an assumption of ExxonMobil’s guilt, searching in vain for some theory to support his prejudgment,” the oil producer stated in the filing. “These subpoenas are just the latest gambit in the Attorney General’s pursuit of favorable press and harassment of ExxonMobil. They should be quashed.”
Schneiderman submitted to a federal court documents June 3 that he believes show Exxon has been using public and secret numbers to calculate the future impact of Earth’s warming on its assets.
The secrets numbers show the effects climate regulations have on the company’s future assets, the Democrat said. The U.S. Securities and Exchange Commission (SEC) is also conducting an examination of Exxon’s accounting practices. Republican lawmakers believe Schneiderman orchestrated SEC’s investigation.
Exxon presented its investors with a “proxy cost,” laying out the costs from Obama-era climate regulations, the cost of which got as high as $80 per ton in 2040 in some scenarios. Schneiderman argued in the court documents that the company’s former CEO, Secretary of State Rex Tillerson, used an internal carbon price proxy that was lower than they presented to public investors.
Exxon said in a 2014 report that it applied a cost of $60 per ton of greenhouse gas emissions in 2030 to its projects in developed countries. Schneiderman’s documents appeared to show the oil producer used a price of $40 per ton internally. The company told the court Friday that the numbers were separate and distinct, and that shareholders would not conflate them.
Schneiderman has been unable to find a shred of evidence in the millions of pages of documents the company forked over indicating the it lied to investors. “Despite having 2.8 million pages of ExxonMobil’s documents and eighteen months to review them, the Attorney General has found no valid basis for believing misrepresentations have taken place,” the company’s filing stated.
The New York Attorney General’s office had remained undeterred. Amy Spitalnick, NY AG’s spokeswoman, told The Daily Caller News Foundation that Schneiderman “has a substantial basis to suspect that Exxon’s proxy cost analysis may have been a sham. This office takes potential misrepresentations to investors very seriously and will vigorously seek to enforce this subpoena.”
The New York AG’s case against Exxon was initially based on claims that Exxon downplayed the severity of global warming to the public and investors, but it has since shifted to arguing the oil company. Schneiderman’s most recent change prompted the Washington Post to report June 5 that the, “New York Attorney General Eric Schneiderman has gotten very far away from where he started in his office’s investigation into ExxonMobil.”
Legal analysts suggested last year that Schneiderman’s initial claims, which suggest Exxon had been hiding information about global warming for decades, were unlikely to bear much fruit in a court of law.
Merritt Fox, a professor of law at Columbia Law School, for instance, noted in 2016 that it’s inappropriate to use laws such as the Martin Act to target the company for potential fraud.
The law requires the likelihood that a reasonable investor would consider the omitted important information and decided “not to vote or buy, sell, or hold, and that it has to significantly alter a total mix of information available to this reasonable man or reasonable investor,” he told a Columbia Law School panel in 2016.
However, since the information was already easily acquired using a computer, television, or some other tool, according to Fox, then whatever data Exxon chose to hide or withhold was not “material,” or likely to affect the decision making of its investors.
Much of Schneiderman’s initial probe is based on reports from liberal-leaning media outlets InsideClimate News and Columbia University, both of which claim Exxon has known the risks of global warming for decades but kept such knowledge under wraps.
Federal regulators have criticized Susanne Rust, one of the lead researchers responsible for Columbia’s Exxon reports, in the past for allowing her environmental activism to dictate her research on the oil company. She has been responsible in recent years for research generating fear about other issues.
Regulators dismissed much of Rust’s research, for instance, showing that an additive called BPA found in plastic bottles can poison foods and water. The Federal Drug Administration has researched such claims and found the chemical “contained no health risk.”
Exxon and Schneiderman will meet next week in another hearing over the issue.
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