New York’s attorney general is pursuing another lawsuit against Exxon Mobil Corp, alleging the oil company has misled investors about how climate change regulation could affect business.
The New York Times reports the suit, filed in the state Supreme Court, seeks undisclosed damages and a court-ordered review of Exxon Mobil’s representations. Attorney General Barbara Underwood also seeks to compel the company to correct its “numerous” misleading statements.
The Times says Exxon has ‘assured investors it had properly evaluated the impact of climate regulations on its business using a “proxy cost” for the likely effects of future events on its business.’ However, Underwood’s office claims those figures were never used in internal planning or actual cost assumptions.
Neither, for that matter, has Exxon factored risks into its drilling estimates. The volume of oil and gas extractions remains unaffected, with no assets being revalued in light of potential and passed legislation.
“The company claimed to be factoring the risk of increasing climate change regulation into its business decisions,” Underwood said in a statement. “Yet our investigation found, Exxon often did no such thing.”
Exxon’s argued that Underwood’s claims are trivial.
Company spokesman Scott Silvestri said Exxon attorneys “look forward to refuting these claims as soon as possible and getting this meritless civil lawsuit dismissed.”
Silvestri also characterized the suit as “the product of closed-door lobbying by special interests, political opportunism and the attorney general’s inability to admit that a three-year investigation has uncovered no wrongdoing.”
The suit, writes the Times, ‘was brought under the Martin Act,’ a civil statute which lets New York state prosecutors pursue fraud claims against publicly traded corporations.
“It’s an unusually strong state-level securities law,” Michael Gerrard, environmental law professor with Columbia University, said of the Martin Act. “New York State’s law is stronger than that of most states.”
Unlike other suits launched by New York against Exxon Mobil and other oil companies, a violation of the Martin Act is framed as favoring the interests of investors rather than ordinary American consumers.
Environmental law professor Patrick Parenteau, of Vermont Law School, said Exxon is trying to diminish the suit’s feasibility by preemptively condemning it as ill-conceived.
“Contrary to Exxon’s attempts to spin this as a political witch hunt, this is a very serious enforcement action alleging illegal conduct that reaches to the highest levels of the corporate structure,” Parenteau.
Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, has blasted Underwood’s initiative as an unnecessary and inappropriately motivated case.
“In bringing this case, the state is yet again using the Martin Act as a political weapon,” Rickard said, adding that the suit is “nothing more than a contortion of the securities litigation system.”
“Litigation will not help us confront the challenge of climate change,” Rickard said.
Some environmental groups and advocates suggest there may be more to Underwood’s suit. Ken Kimmell, president of the Union of Concerned Scientists, notes that Exxon failed to fight off probes led by the attorneys general of New York and Massachusetts.
“This is a very significant lawsuit,” Kimmell said. “The New York state attorney general has gotten a lot of documents and we should assume they filed the suit based on the information received during that process.”
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