The following piece appeared this morning on RealClearEnergy. To read it there, go to this link (and support them by looking at their ads). Or read it here, and go there to read all their other stuff:
Law enforcement is serious business. We give prosecutors tremendous powers over the citizenry, including the powers to put people in jail and to impose enormous fines on businesses; and then we trust them to act with the highest levels of honesty and integrity and discretion to protect us from the bad guys while also upholding our civil rights. Or at least, that is how you might think it ought to work.
Then there is the New York Attorney General’s office. Twenty years ago, that office began a long and accelerating downward spiral when Eliot Spitzer won the head job. With Spitzer, bona fide law enforcement promptly took a back seat to pursuit of a new headline every day, preferably to be obtained by shaking down some disfavored financial institution under New York’s notorious Martin Act, which under vague language can be argued to authorize prosecution of every financial unfairness as criminal “fraud.” After achieving multiple hundreds of millions of dollars in settlements from major institutions, Spitzer went on to become Governor, before resigning in disgrace in a prostitution scandal. His success in the Martin Act shakedown game was not lost on his successors.
In 2011 the Attorney General job was won by Eric Schneiderman, another wealthy Manhattanite and a darling of the progressive left. Schneiderman promptly upped the Martin Act shakedown game to become the primary focus of his office, devoting dozens of staffers to investigations of essentially every financial institution doing business in New York. Most of these investigations were for alleged misrepresentations to investors relating to the financial crisis that was already three years in the rearview mirror when Schneiderman assumed office, and involved wrongdoing, if any, that had already been thoroughly investigated and prosecuted (or not) by federal authorities. So why waste precious law enforcement resources on such an effort? Clearly, Schneiderman had other goals in mind, notably including not only headlines, but also protection money (“settlement”) payments from his targets, aggregating in the billions, that went not to the supposed investor victims of the alleged wrongdoing, but rather into slush funds controlled by Schneiderman himself that could be passed out to his progressive colleagues and supporters.
And now, why limit the Martin Act shakedown game to just financial institutions? In 2015, Schneiderman’s sights landed on the next obvious and perfect corporate target, Exxon Mobil -- home of tens of billions of dollars in annual cash flow ripe to be plundered, besides being vulnerable to having the catchphrase “climate change” attached to its name by reason of involvement in the oil business.
But what exactly does “climate change,” or the role of an oil company in selling fossil fuels to the consuming public, have to do with the law enforcement mission of the New York Attorney General? That kind of question was never the sort of thing to slow down Schneiderman. In November 2015 it emerged that Schneiderman’s office had issued a broad subpoena to Exxon Mobil, seeking extensive financial records, emails and other documents. A New York Times article of November 5, 2015stated that the focus of the investigation was whether “the company lied to the public about the risks of climate change or to investors about how such risks might hurt the oil business.” In March 2016 Schneiderman then held a big press conference, bringing with him some sixteen other attorneys general from other jurisdictions, and announcing that they were all now investigating Exxon Mobil. For what, exactly? At the press conference, Massachusetts Attorney General Maura Healey said that fossil fuel companies “have deceived investors about the risks climate change poses to the planet and to their bottom lines [and] ‘must be held accountable.’”
And then – nothing for two and a half years. Was there anything serious about this investigation? Meanwhile, in May 2018, Schneiderman joined Spitzer in the resigned-in-disgrace club. In Schneiderman’s case, the allegations involved beating and choking women that he had been dating. The time elapsedfrom emergence of the allegations (in a Ronan Farrow piece in the New Yorker on May 7) to Schneiderman’s resignation was about three hours. Also meanwhile, various cities and counties around the country brought a series of lawsuits, sounding in “public nuisance,” seeking massive damages from various oil companies, one of them being Exxon Mobil, for allegedly causing “climate change” by selling their products. In June 2018, in one of the decisions dismissing some of these cases, Judge William Alsup of the Northern District of California pointed to the extensive “alarm bells” about climate that have been ringing ever since the UN’s Intergovernmental Panel on Climate Change began its work in 1988. Could anybody really have missed the flood of public information on that subject because of being misdirected by a statement buried in an Exxon 10-K?
But never underestimate the desire of dozens of committed lawyers to avoid having years of their hard work of reading turgid corporate documents just thrown away as useless. On October 24, with little fanfare, the New York AG’s office, now headed by interim caretaker Barbara Underwood, filed a 97 page Complaintagainst Exxon, signed by some nine lawyers in the office – undoubted the tip of the iceberg of many times that who have been assigned to toil away for the past few years on the task of finding something, anything to pin on the pre-selected target.
What is the gist of all this verbiage? You’ll be hard-pressed to try to figure that out from the interminable Complaint. The best short statement appears in the AG’s press releaseof the same date as the Complaint: “Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business when, in fact, it was intentionally and systematically underestimating or ignoring them, contrary to its public representations.” It’s 97 pages, all claiming that Exxon somehow underplayed the “risks” of “climate change regulation” – none of which have yet emerged and none of which may ever emerge. Are world governments really going to force an end to the use of oil and natural gas sometime soon, and require valuable oil reserves to be kept in the ground? You may believe that, but would you rely on anything that Exxon may say on that subject, rather than forming your own view based on the enormous amounts of information in the public domain?
Oh, and there is this in Exxon’s annual SEC filing (and similar versions of same in other such filings going back decades): “RISK FACTORS. . . Climate change and greenhouse gas restrictions. Due to concern over the risks of climate change, a number of countries have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions. These include adoption of cap and trade regimes, carbon taxes, restrictive permitting, increased efficiency standards, and incentives or mandates for renewable energy. These requirements could make our products more expensive, lengthen project implementation times, and reduce demand for hydrocarbons, as well as shift hydrocarbon demand toward relatively lower-carbon sources such as natural gas. Current and pending greenhouse gas regulations or policies may also increase our compliance costs, such as for monitoring or sequestering emissions.”
Meanwhile, unsurprisingly, the sixteen other AG’s who showed up at the big March 2016 press conference have all fled the scene. It’s only the New York AG on this Complaint. And the Complaint is filed in the friendly home forum of New York County Supreme Court – a state court in one-party territory which hasn’t seen a Republican judge in human memory.
You might think that the New York Attorney General’s office would be too embarrassed to file such a patently weak claim. But here in progressive New York, it is highly likely that the new Attorney General following the pending election – likely to be Democrat Letitia James – will continue this lawsuit. And probably, Exxon will pay multi hundreds of millions to settle, little or none of which will then be distributed to the investors who supposedly have been harmed. Instead, the settlement money will be picked out of those very investors’ pockets, and will represent a far greater harm to them than any theoretical harm from which they are supposedly being “protected.” The effect on the climate will be exactly nothing.