Today, the New York Attorney General’s office will finally face off against ExxonMobil in court, following years of investigation and millions of documents turned over and reviewed. As we’ve pointed out, the NYAG considered an array of changing legal theories and had to settle on the decidedly less glamorous claim of questionable accounting practices rather than charges of repressing climate research and misleading the entire world on climate change, as was the original goal.
While activists (and their funders) would much prefer this case to be about #ExxonKnew—and have tried to change the focus toward those allegations—the media isn’t buying it.
Here’s a sample of what they’re saying about the NYAG’s lawsuit against Exxon in the lead up to the opening statements. [This article is being updated to reflect ongoing developments in the trial]
David Blackmon, independent energy analyst, “New York Goes Out With A Whimper In Its Case Against ExxonMobil”
Thus, at long last, the case that originated as a much-ballyhooed multi-state effort to prosecute ExxonMobil under the false allegation that it somehow knew all about “greenhouse gas” theory decades before Dr. James Hansen and then-Senator Al Gore started talking about it in the late 1980s, concludes with the Attorney General for the State of New York admitting that she can’t even prove that the company’s public disclosures about its bookkeeping damaged a single investor.
New York Daily News editorial board: “Out of gas: Attorney General Tish James’ dubious lawsuit against ExxonMobil looks even weaker than when the trial began”
From the start, the AG’s case has been built on a foundation shakier than an off-shore oil rig. Exxon, they say, had what amounted to two sets of books. For the public and investors, it put one price tag on the estimated cost of future climate regulations and, by extension, how those might drag down the company’s future bottom line. For internal purposes, it used a smaller number.
Except, for more than a decade, Exxon has been open about its use of these two sets of cost-projection metrics.
Double except, both were projections based on analyses of the shifting political winds, not known facts.
Triple except, try to get your head around how overstating liabilities to shareholders — effectively hiding the supposed good news while advertising the bad — can be nefarious.
This is the sum total of the state’s case against Exxon after years of deep digging into the company’s files.
The judge will rule in about a month. He should do so in the sound of a sad trombone.
New York Post editorial board: “New York AG’s office totally disgraced itself in the Exxon trial”
To be clear, the main blame for this debacle falls on disgraced former AG Eric Schneiderman, who started the whole thing as an exercise in headline-hunting back in 2015. He handed off the actual work to subordinates who repeatedly revised the entire theory of the case — that is, the wrong they claimed Exxon had committed — with the charges growing less explosive every time…
It seems the prosecutors feared it would just be too humiliating to admit they had nothing, and hoped they’d somehow stumble on . . . something…
Judge Ostrager has 30 days to issue a decision. The prosecutors are surely praying he’ll find the Martin Act gives them so much leeway that he actually has to find Exxon guilty. If so, it’ll be a blaring alarm to businesses to have nothing to do with New York, because they have no hope of a fair break here.
Otherwise, the judge should explore every possible option for censuring the state’s attorneys — whose abuse of power here has been utterly mind-blowing.
Wall Street Journal editorial board: “Parody of a Climate Trial”
Well, that was anti-climactic. New York’s attorney general spent the past three weeks in state court trying to prove that Exxon Mobil deceived investors with its climate-change disclosures. The trial ended this week with the AG dropping two charges of fraud, proving the lawsuit’s dirty political provenance.
Current AG Letitia James is now hoping to salvage this joke of a case by resorting to the much lower level of proof required by New York’s Martin Act, which allows that a “reasonable” investor might have been deceived and doesn’t need proof of fraudulent intent. Investors were more likely fooled by the AG’s deceptive press releases than Exxon’s disclosures.
Paul S. Atkins, a former member of the Securities and Exchange Commission: “NY’s pathetic case against Exxon is outrageous abuse of prosecutorial powers”
“This anti-Exxon lawsuit — closing arguments for which are expected to begin Thursday — is a blow to the very rule of law that the attorney general’s office is supposed to uphold, and a tragic waste of New York taxpayer money…
“There really is no indication that the company misled anyone or fudged its books. Its only crime is that it produces and distributes a fossil fuel, oil, which currently happens to be enormously critical for the modern world to function.”
Manny Alicandro, former candidate for New York Attorney General: “New York AGs’ favorite anti-fraud weapon misfires in ExxonMobil case”
“The allegation of outright fraud seems a little thin considering that ExxonMobil has been open about the fact that it uses two metrics for projecting costs and revenues for more than a decade…
“Of course, this trial is not really about corporate accounting standards and securities laws. It is about the politics of climate change and the determination by environmental activists to hang this problem around the necks of one company or the energy industry more broadly…
“It is not duplicitous for a company that is making long-term, multi-billion investments to run numbers on aggregate demand estimates as well as the actual costs of regulations and taxes on actual projects…
“You can expect politicians to continue using this law to try to burnish their images as scourges of corporate power, regardless of the facts and any evidence of corporate fraud. In their pursuit of ExxonMobil and other companies, however, using a battering ram has gotten a lot of attention but revealed no wrongdoing.”
Mark Stoeckle, CEO of Adams Funds, as quoted by Marketplace:
“Exxon Mobil calls the case against it a ‘baseless theory’ and that its two separate cost assumptions for future climate change regulations represented apples and oranges. One assumption was meant for specific energy projects and the other was for projected climate regulations and taxes in the future.
“’One, you’ve got actual hard costs that you can actually consider,’ said Mark Stoeckle, CEO of Adams Funds, which holds Exxon stock. ‘The second is a bunch of assumptions you have to make many years down the road. I’m not sure that’s fraud. Sounds like good business judgment.’” (emphasis added)
Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia University, as quoted by InsideClimate News:
“If Exxon prevails, that could discourage other efforts to try to go after companies for their climate disclosures, said Michael Gerrard, who runs the Sabin Center for Climate Change Law at Columbia University. The oil giant already faces a second fraud lawsuit filed last month by the Massachusetts attorney general.
“‘Because so much information about Exxon has come out,’ he said, ‘if the (New York) attorney general can’t ultimately lay a claim, that would be a bad sign for such future litigation.'”
Bloomberg: “New York Struggles to Show Exxon Misled Investors on Climate”
“New York rested its securities-fraud case against Exxon Mobil Corp. after nine days of trial testimony without appearing to produce any definitive evidence that the oil company intentionally misled investors about how it accounted for climate-change risks…
“For the second time during the three-week trial, climate protesters, most of them young people, picketed outside the courthouse, though the group was almost outnumbered by police. They held signs reading #ExxonKnew with variations on claims the company lied about climate change — which isn’t really what the case is about.” (emphasis added)
Andrew Langer, president of the Institute for Liberty: “The Big Apple’s ‘Show Trial’ Circus”
“But the trial, based on flimsy arguments and fearmongering, is already starting to collapse under the feet of Attorney General Letitia James. That’s because the case, from its origins with disgraced former Attorney General Eric Schneiderman, has been more about using prosecutorial power to grab headlines and chase a political agenda than about serving the public good…
“Under the weight of the truth, the New York’s case against ExxonMobil is starting to unravel at the seams. That’s because it was never constructed with the facts in hand or the truth in mind. It was a case built to push a private ideological agenda and to grab headlines on a hot button issue. And who really loses? It likely won’t be the chosen target, one of the world’s biggest energy providers, but the people of New York whose tax dollars have footed the bill for this sideshow. It’s time prosecutors folded up the tent and spent their time on better and more fruitful ventures.”
Bloomberg: “New York Doesn’t Need a Smoking Gun to Win the Exxon Climate Trial”
“New York’s $1.6 billion securities-fraud lawsuit against Exxon Mobil begins a second week of trial Monday, after a series of witnesses failed to provide any concrete evidence that the oil giant knowingly misled shareholders about its climate change accounting.” (emphasis added)
Jennifer C. Braceras, director of Independent Women’s Law Center: “The climate change shakedown”
Although a massive multiyear investigation by disgraced former New York attorney general Eric Schneiderman revealed no evidence that ExxonMobil committed corporate malfeasance, Schneiderman’s successors have latched onto a novel legal theory they hope will bring the energy giant to its knees…
In short, prosecutors say ExxonMobil should pay the government unspecified monetary damages because it used one set of metrics in its public disclosures and another for internal purposes. Never mind that there exists no uniform accepted method of calculating potential business costs of new climate policies. Never mind that ExxonMobil disclosed its risk assessments to investors. Never mind that the Securities and Exchange Commission reviewed the company’s disclosures and found no basis for legal action.
Never mind all that. The New York and Massachusetts attorneys general are moving full speed ahead, attacking ExxonMobil’s economic modeling and accounting practices in an attempt to confuse state courts into awarding damages.
Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York: “State abusing law with ExxonMobil suit”
The fallacy of this lawsuit is that the attorney general is litigating climate change on behalf of ExxonMobil’s investors. Forgive me for doubting the disgraced attorney general’s concern for investors, but this lawsuit has every appearance of being a political statement. Further, this action is a symptom of a dangerous precedent in which the Martin Act is wielded against political enemies based on the whims of the holder of the office of the attorney general.
And the taxpayers will foot the bill for this political grandstanding. The time spent by the attorney general’s office and the courts could ultimately cost New Yorkers millions of dollars so politicians can grab headlines and make a point.
Wall Street Journal Editorial Board: “New York’s Climate Show Trial”
“Yet Exxon’s public ‘proxy cost’ of $80 per ton of carbon by 2040 was merely an estimate based on its expectations for how the politics of climate change would proceed. The present cost of a carbon tax as we approach 2020 is $0 a ton. Exxon was probably overestimating how fast the climate alarmists would convince the public to tax fossil fuels. Its sin if anything isn’t climate denial but underestimating public skepticism about climate alarm.
As for Exxon’s internal GHG measure, it is proprietary and managers use it as a guide for investment decisions. The measure can’t have defrauded investors because no investors see it. Exxon says it never included it in an SEC filing. If the estimate is wrong, then Exxon would only be hurting itself. The idea that Exxon’s managers would tell the truth to the public while lying to themselves about investment risks when profits and potential bonuses are at stake is ludicrous.
The only reason New York has any chance to win this case is because it is using the Martin Act, the notorious New York statute that doesn’t require proof of fraudulent intent. The AG also doesn’t need to prove that an actual investor was deceived, only that a “reasonable investor” might have been deceived.”
New York Post Editorial Board: “The incredible collapsing ‘#ExxonKnew’ climate change lie”
“And the case that now-AG Letitia James takes to trial Tuesday is a huge comedown from even that claim, charging that Exxon fraudulently used two sets of books to state the risks. The company says it merely releases different estimates for different purposes, with full disclosure.
“The charge is not only a far cry from the original #ExxonKnew allegations, it’s also almost certain to fail. Putting the best face on this fact, climate-change warrior Andrew Revkin tweeted Wednesday: ‘Some lawsuits are fought for the win, some are fought for the documents. The NYS #exxonknew suit is far more likely to be the latter.’
“In fact, the entire thing has been a shameless exercise in prosecutorial abuse, from the outrageous harassment of nonprofits whose research the climate-crisis crew dislikes to the ethically dubious private funding of staff in the New York AG’s Office.”
Bloomberg: “A landmark global warming case comes down to … accounting”
A landmark global warming case comes down to … accounting https://t.co/wnz0KYOSJR
— Bloomberg (@business) October 22, 2019
From the piece:
“James Fanto, a professor at Brooklyn Law School, said he’s unsure that litigation is even the best way to deal with Exxon’s climate policies in the first place, given the sharply partisan nature of global warming as an issue—despite the now-settled science.
’The political arena seems the right one to deal with fossil fuels and the firms selling them,’ Fanto said.”
Fox Business’s Stuart Varney:
“The climate warriors are not doing that well with voters, so they’ve gone to court. New York’s attorney general is suing Exxon Mobil. The trial begins today, and it is, in fact, a Soviet-style show trial—purely political. This is how ‘progressives’ foist their views on the rest of us when they can’t win votes…”
“This is what happens when ‘progressives’ use the courts for their own political purposes. Injustice and lousy economics is what you get.”
Bloomberg: “How Exxon’s Climate Change Trial Became a Battle Over Numbers”
“…what was originally advertised as a frontal assault on Big Oil for fueling the planetary climate crisis has—over the years—been transformed into the kind of hair-hurting corporate accounting lawsuit more common to the courthouses just a few subway stops north of Wall Street…”
“But when New York state finally got its hands on some 4 million pages of documents, they weren’t enough to make the bigger case: that Exxon lied about climate science or the future value of its yet untapped assets.”
J.W. Verret, associate professor at the George Mason University Antonin Scalia Law School: “New York Attorney General’s disdain for rule of law exposed in ExxonMobil case”
“In recent lawsuits filed against the Trump administration, New York Attorney General Letitia James has insisted on the importance of the rule of law in our society. Ironically, James has filed suit against ExxonMobil this week in a manner that poses a direct threat to the rule of law. In this case, the lawsuit remedy has become a tool for political purposes featuring dubious claims about ExxonMobil’s accounting for the cost of carbon emissions…”
“Also of concern in this entire affair are potential violations of New York government transparency laws committed by James, by conducting official business through private communications. She refuses to comply with requests from ExxonMobil for those messages.
“Debates about climate change regulation should take place in the appropriate political sphere, the legislature. By attempting to circumvent voters and the legislative process, and instead regulate climate change through the backdoor of abusive lawsuits unbound by the common law, the New York Attorney General Letitia James shows her office’s disdain for the rule of law.
