An energy analyst says a late decision by the New York Attorney General to drop two of four fraud allegations against ExxonMobil in a lawsuit over climate change bodes ill for the Massachusetts Attorney General’s case against the oil giant.
On Thursday, November 7, a lawyer for the New York Attorney General’s office told a judge before closing arguments in a trial that the state would drop two fraud counts alleging actual harm done by ExxonMobil and keep two remaining counts under an expansive New York state law that outlaws misrepresentation even if no damage occurred.
David Blackmon, an energy analyst who has worked for oil companies, called the New York case against ExxonMobil “flimsy” in an article Monday, November 11 in Forbes Magazine and said recent criticism of the New York Attorney General’s maneuvers “does not portend good things” for comparable cases in other states, including one in Massachusetts.
On October 24, Massachusetts Attorney General Maura Healey sued ExxonMobil Corporation in Suffolk Superior Court in Boston alleging that the company violated the Massachusetts Consumer Protection Act (known as Chapter 93A) by misleading consumers and investors about what company officials knew years ago about the purported connection between carbon dioxide emissions from oil-based products like gasoline and climate change. The state statute outlaws “unfair or deceptive practices.”
The Massachusetts case closely tracks the New York case, although each depends upon its own state’s laws, which are comparable but differ in some respects.
According to Blackmon, New York’s Martin Act makes the two remaining counts of fraud in the New York case conceivable in a way that they wouldn’t be in other states, since the New York law doesn’t require actual fraud to have taken place in order for the state to win at trial.
“The problem for AG Healey and those other attorneys general is that none of their states have an expansive law like the Martin Act on which to fall back when they find they haven’t been able to prove up that any actual fraud or damages have occurred,” Blackmon wrote, referring to the Massachusetts attorney general.
A spokesman for the Massachusetts Attorney General’s office, contacted by New Boston Post on Monday, declined comment, citing the continuing litigation.
In the Massachusetts lawsuit, the Attorney General’s office argues that an Exxon scientist in 1982 predicted “catastrophic” climate change caused by carbon dioxide emissions from engines that burn oil-based products such as gasoline and that the oil company failed to act accordingly, and instead deceived investors about the effect future climate change regulations from the government might have on company stock.
The Massachusetts Attorney General’s complaint also argues that ExxonMobil assured investors that the company was factoring costs of complying with future climate-change regulations into its projections for the future but that it didn’t do so or didn’t use a high enough cost estimate.
The complaint contemplates a time in the future when oil and natural gas will be worthless because the government won’t allow them to be used, describing that situation as a “risk” the company should have planned for:
Chief among those risks for ExxonMobil and its shareholders is the risk that the Company’s most important assets – its oil and natural gas reserves – will become “stranded,” i.e., rendered economically incapable of being developed because of governmental limits on emissions and other measures that increase the cost of developing fossil fuel reserves and shift demand away from fossil fuels. When those reserves cease to have future value, other things being equal, ExxonMobil securities are likely to decline in value as well, perhaps dramatically, much as the market value of coal companies has collapsed in recent years as the deployment of cleaner, more efficient fuel sources has reduced expected future coal demand.
The Massachusetts Attorney General also claims the company duped consumers through advertising implying that a particular blend of gasoline is part of the solution to climate change when gasoline is actually causing climate change, according to the complaint. The complaint accuses ExxonMobil of “relentless ‘greenwashing’ marketing campaigns.”
ExxonMobil has denied claims that the company is at fault for causing climate change. A company spokesman has described the Massachusetts Attorney General’s case as “a baseless complaint filed three years after announcing its politically motivated investigation.”
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