New York Attorney General Eric Schneiderman’s investigation of Exxon Mobil Corp. about the company’s decadeslong positions on climate change has been hidden from public view.
While the two camps have shared hundreds of thousands of documents, the scope and focus of the probe have remained opaque. The lack of transparency has prompted wild and often misleading speculation from politicians and outsiders about what the Democratic attorney general is looking for, laws Exxon could have broken and the origins of the case.
That fog lifted late last week after Exxon attorneys published the subpoena that Schneiderman’s office sent Nov. 4, 2015, to launch the investigation.
The subpoena provides the most detailed glimpse to date of the focus of inquiry, which has roiled the energy industry, vexed Republican lawmakers who believe the corporation is the target of political assault and heartened environmentalists who feel oil companies have long suppressed what they know about climate change.
It also shows that the investigation has centered around uncovering financial fraud from the start.
Finally, it also raises questions about why Exxon has submitted documents to Schneiderman but sued to block Massachusetts Attorney General Maura Healey (D) — who recently began a similar investigation of Exxon — from enforcing her request for company documents.
Similar requests, dissimilar responses
Evidence is building that the case is about possible financial wrongdoing.
The subpoena cites financial protection statutes, including the Martin Act, a muscular New York state law that allows the attorney general to conduct investigations discreetly and issue subpoenas without a court order (ClimateWire, Sept. 6).
Schneiderman subpoenaed PricewaterhouseCoopers (PwC), Exxon’s auditor, in August. The Securities and Exchange Commission is investigating Exxon, too.
"PwC has cooperated with this investigation since first receiving the subpoena," PwC spokeswoman Caroline Nolan said in a statement. "The firm has responded promptly to the request and will continue to do so."
Exxon contends that the New York and Massachusetts investigations are politically motivated. "Improper political bias" has driven Schneiderman and Healey, who began her inquiry in April, Exxon said in a statement last week.
However, officials for both attorneys general say fraud, not politics, is driving their efforts. Spokespeople for both officials declined to comment.
The subpoena from New York demands documents dating back to 1977 about a swath of climate change topics: ocean acidification, Arctic ice, permafrost melt, shipping routes, flooding, rising seas, extreme weather and migration patterns.
It also requests internal information from the company about its energy forecasts, demand for fossil fuels, "physical risks and opportunities" of climate change, communication with fossil fuel trade groups, and advertisements and consumer complaints Exxon released and received in New York.
The Massachusetts inquiry asks for comparable types of documents, including communication between Exxon and organizations that deny climate change, statements of former Chairman Lee Raymond and atmospheric reports by company scientists.
Yet while the two investigations are alike, Exxon has shut out Massachusetts.
‘Why are y’all poking this bear?’
Exxon has sent at least 700,000 and as many as 1.2 million documents to the New York attorney general, according to court papers. Healey, meanwhile, hasn’t been "able to receive a single document from Exxon or depose a single Exxon witness."
The judge who is overseeing a lawsuit the company filed against Healey in Texas noticed that apparent discrepancy at a court hearing in September.
"Is it true what [counsel for Attorney General Healey] said about y’all cooperating in New York and not cooperating with them?" Judge Ed Kinkeade asked an Exxon attorney in court, according to a transcript excerpt.
The company lawyer said that was the case.
"So why the heck are we having this big fight?" Kinkeade asked. "Why are y’all poking this bear? If you are agreeing to cooperating there, why aren’t you cooperating with them?"
Schneiderman sued Exxon and PwC in New York on Oct. 14 to force them to comply with the subpoena issued to the auditor in August.
The attorney general is looking for audits of Exxon, and he’s paying particular interest to how the oil giant has valued its assets, potential write-downs, energy market outlooks and estimates of carbon-pricing costs, court paper show.
In the wake of the oil price crash, New York State Office of the Attorney General attorney Katherine Milgram said in court filings, "Exxon is the only major producer that has declined to take impairment charges or write-downs."
She said PwC has "refused" to fully comply with the subpoena.
Exxon’s legal team says meeting Schneiderman’s demands would violate Texas state law.
The company has said its oil and gas assets are among the best worldwide and will bear value in the long term. Oral arguments between the New York attorney general and PwC and Exxon are scheduled for this morning in Manhattan.