After it was “put up or shut up” time, the New York Attorney General’s office finally came forward with its #ExxonKnew lawsuit. To say it was a dud would be an understatement.

New York Attorney General (AG) Barbara Underwood today filed a lawsuit against ExxonMobil alleging that the company deceived investors on the potential impact that yet-to-be-enacted climate change regulations could have on the company’s value.

The lawsuit comes more than three years after disgraced former New York AG Eric Schneiderman announced his investigation of ExxonMobil, and four years since the investigation itself began. Since that time the New York AG has forced ExxonMobil to turn over millions of pages of documents as one conspiracy theory after another failed to withstand scrutiny.

Finally, Justice Barry R. Ostrager ordered the New York AG earlier this year to wrap up the endless investigation and decide whether to press charges. According to InsideClimate News, Ostrager stated:

‘“This cannot go on interminably,’ he said. The company has provided millions of pages of documents and answered questions over some three years of investigation, Ostrager said. ‘It’s not my place to tell you when an investigation ends, but it is my place to put an end date on the requests for information and the filing of a compliant.’”

Or as ExxonMobil’s lawyer bluntly put it, “They should put up or shut up.”

The lawyer representing the New York AG warned that they had “smoking gun” evidence. Backed into a corner, New York AG Barbara Underwood was forced to show her cards today or accept the embarrassment of publicly folding after committing countless resources to a baseless investigation.

Unfortunately for Underwood, it appears that her office was bluffing when they claimed to have a “smoking gun.” The arguments presented in the compliant today have already been scrutinized and soundly rejected.

The New York AG’s argument is premised on the claim that ExxonMobil misrepresented the potential cost of future climate change regulations – regulations which do not even currently exist – because they used a different internal assumption for a price on carbon than what it externally reported. According to a press release accompanying the complaint:

“The complaint further alleges that in various other aspects of its business – including evaluating the volume of its oil and gas reserves, determining whether to write down its major assets, and estimating demand for its products in the transportation sector – Exxon chose not to apply proxy costs in the manner it represented to investors. By applying a lower proxy cost or not applying any proxy cost at all, Exxon repeatedly and consistently underestimated the potential financial risk that increasing climate change regulation posed to its assets and value.”

However, ExxonMobil has already explained the alleged discrepancy in costs:

“…ExxonMobil considers two costs when assessing the potential impacts of climate policies on certain parts of the business. ‘Proxy Costs’ assess the potential impacts of a broad mosaic of climate policies and regulations on global demand for oil and gas. By contrast, ‘GHG Costs’ forecast the direct effect of actual and anticipated greenhouse gas (“GHG”) related regulations on specific ExxonMobil projects.”

In other words, where a cost on carbon has already been established, ExxonMobil uses the price that actually exists, rather than the proxy cost they use as a conservative stand-in. The New York AG had specifically faulted ExxonMobil for using the existing carbon tax in Alberta instead of its proxy cost, and ExxonMobil pulled no punches in its response:

“Grasping for any justification to support its Motion, OAG faults Alberta Planners for applying carbon taxes imposed by law…But there is no basis in law, logic, or ExxonMobil’s public statements for Planners to have done otherwise. When an actual tax is known, it defies common sense to ignore that cost and replace it with one that is hypothetical.” (emphasis added)

ExxonMobil further explained that this information is available in a public document for investors to see: “Significantly, these exact terms appear and are described in Managing the Risks…”

A similar line of attack has also already been deployed in federal court in a class-action lawsuit brought by current and former company employees who accused ExxonMobil of not adequately disclosing climate risk. That case was ultimately dismissed. In that case, Judge Keith Ellison said:

“Plaintiffs allege that Exxon employed an inaccurate ‘price of carbon’ when evaluating the value of its reserves…In the Amended Complaint, Plaintiffs reproduce language from Exxon’s 2015 Corporate Citizenship Report, which explains that Exxon estimates a ‘proxy cost of carbon’ which ‘may approach $80 per ton by 2040.’…Plaintiffs do not allege any facts to show why this particular price of carbon was a misrepresentation or did not account for the current or an anticipated regulatory landscape. Plaintiffs seem to believe that the estimated price of carbon was wrong, but they do not plausibly link inaccuracies about the price of carbon to the eventual write-down in reserves or stock price decline. Nor do they allege a regulatory landscape that would change the price of carbon.” (emphasis added)

In addition to being rejected in court, the U.S. Securities and Exchange Commission (SEC) has also investigated how ExxonMobil factors climate-change regulations into the calculations underlying the value of its assets. After an extensive review, the SEC declined to take any enforcement action against the company.

Given the lack of a “smoking gun” in this case and the prior scrutiny of the New York AG’s claims, it is likely that this case will close with a similar conclusion. It is increasingly clear that New York AG Underwood is only bringing this case to avoid admitting that the New York AG’s office oversaw a case that was a colossal waste of resources in order to harass a company for political purposes.