Politico.com

For their second act, Keystone killers tackle Exxon

2015-11-28

The same rowdy band of green activists who toppled the Keystone XL pipeline are aiming their sights at ExxonMobil.Environmental groups are waging an escalating public relations campaign against the giant oil and gas company, diving deep into Exxon’s history to accuse it of knowingly — perhaps illegally — misleading the public about its decades of research on the dangers of climate change. Their allegations, backed by recent news reports from <a href="http://insideclimatenews.org/content/Exxon-The-Road-Not-Taken" target="_blank">Inside Climate News</a> and the <a href="http://graphics.latimes.com/exxon-arctic/" target="_blank">Los Angeles Times</a>, led New York state Attorney General Eric Schneiderman to launch an open-ended investigation this month into Exxon's actions. All three Democratic presidential candidates followed up by urging the Justice Department to open a racketeering probe.Green groups and their allies are also appealing to foreign governments to put Exxon under the microscope. And they’ve taken their message to social media, branding it with the hashtag “<a href="https://twitter.com/search?q=%23exxonknew" target="_blank">#ExxonKnew</a>.”Their aim is to make Exxon face the same kinds of consequences for allegedly obscuring the risks of climate change as Big Tobacco did for lying about cancer. It is the next phase in a multifront campaign against fossil fuels in which greens have defeated the Keystone pipeline, successfully pushed to shut down hundreds of coal plants and helped persuade President Barack Obama to cancel plans for Arctic offshore drilling. But Exxon will be a tougher opponent for the greens than Keystone developer TransCanada, which was essentially a nonentity in Washington influence circles until two years into the seven-year-long pipeline fight. Exxon, in contrast, is one of the world's largest and most politically active companies, and it has already mounted a vocal, well-organized defense that seeks to discredit its critics — while maintaining that it has always been upfront about its climate research.Still, the greens say they’ve won underdog battles before. “Coal is finally on the ropes — who would have guessed that five years ago?” said Bruce Nilles, leader of the Sierra Club's Beyond Coal campaign, which has helped to shutter more than one-third of the nation’s highest-polluting power plants. “We need a similar focus on the oil sector.” Critics of the anti-Exxon campaign say greens are trying to turn political disagreements into criminal cases. “It’s very disturbing, and the fact that these presidential candidates are running with this stuff is kind of scary,” said Thomas Pyle, president of the industry-backed American Energy Alliance."People can be thoughtful about climate change and come up with a conclusion that’s not what the left wants, and that should be OK,” Pyle said.Exxon spokesman Alan Jeffers said activists are trying to “focus attention on their goals” by attacking the company, “and that would be fair if they wouldn't lie about us and distort what we say, what we’ve done, our history. We’re very proud of the climate research we’ve done and been leaders of it for decades.”The company also notes that it’s been on record as supporting a revenue-neutral carbon tax, a measure that would put an economic price on greenhouse gas pollution. Schneiderman's subpoena includes demands for information on the company’s activities as members of trade groups that wield their lobbying clout against emissions-cutting bills and regulations. If the emerging grass-roots green movement can wound or even nick the heavily armed Exxon, it could come away as an even more powerful political force — but a loss would find the nation's climate upstarts unable to build on their recent victories. And it will push the limits of grass-roots advocacy's ability to win the Washington influence game, where Exxon's $100 million in spending on lobbying is more than 30 times as much as its primary antagonists put out. The activists’ overarching goal is to further damage the reputations of the oil, gas and coal industries to diminish their political influence, making it easier for environmentalists to defend and build on climate regulations. Schneiderman is using a New York statute called the Martin Act that gives him uniquely wide latitude to investigate alleged corporate wrongdoing. New York attorneys general have used the Martin Act to pursue charges of corporate corruption for more than 80 years, and both Schneiderman and his predecessor, Eliot Spitzer, successfully sued Wall Street's biggest financial players under the law.The state investigation may be the best that activists can hope for in the near future. Calls for a federal investigation from Hillary Clinton and other Democratic White House hopefuls could make DOJ wary of wading into election-year jockeying.“If it’s a political issue or perceived as a political issue, it’s harder to see the Justice Department getting involved,” warned one former DOJ official, insisting on anonymity to discuss the sensitive issue.Nevertheless, other fossil fuel companies, investors and industry-allied advocates are taking notice. The Exxon flap is “real, legit, expensive, and I don’t think it’s going to be constrained to Big Oil,” the leader of one industry-backed group acknowledged, speaking candidly on condition of anonymity. Greens are “going to go after anyone who’s aligned. We could be on their list as well, down the line.”Industry allies are attempting to turn the tables. Two conservative groups, Cause of Action and the Competitive Enterprise Institute, this week filed an Internal Revenue Service <a href="https://cei.org/sites/default/files/IGES%20Complaint--Final.pdf" target="_blank">complaint</a> against the Institute of Global Environment and Society, a nonprofit group whose founder was among the early voices calling for a federal racketeering investigation. The complaint accuses Jagadish Shukla of illicitly deriving personal gain from the work of his institute, which is being investigated by House Science, Space, and Technology Committee Chairman Lamar Smith (R-Texas) in a separate congressional probe of federally supported climate research.Still, the New York inquiry of Exxon will “immediately induce more careful disclosures by companies of climate risks,” predicted Columbia University environmental law professor Michael Gerrard. And while DOJ may not get involved right away, Schneiderman's inquiry will presumably unearth many documents that are relevant to whether” a federal investigation would be fruitful. A group of House Democrats is also <a href="https://assets.documentcloud.org/documents/2500779/2015-10-30-twl-sec.pdf" target="_blank">asking</a> the Securities and Exchange Commission to investigate whether Exxon violated securities laws “by failing to appropriately disclose material risks related to climate change” in its mandatory filings. Another House Democratic inquiry aims to broaden the Exxon campaign to various oil and coal giants, <a href="https://www.politicopro.com/energy/whiteboard/2015/11/house-dems-to-press-oil-coal-companies-on-climate-lobbying-064007" target="_blank">pressing</a> CEOs to explain whether their companies formed “fake grassroots organizations to spread uncertainty” about climate science.The anti-Exxon campaign has a global element, too. Greens are looking for avenues to heighten regulatory and legal scrutiny in the European Union, United Kingdom and other foreign jurisdictions that could follow up on New York's move by probing Exxon disclosures. Campaigners hope that companies forced to disclose additional climate risks would see their share prices fall or face lawsuits from shareholders that could result in hefty monetary penalties. Greenpeace led another potential line of attack in September by petitioning the Philippine Commission on Human Rights of the Philippines to look at whether Exxon and other fossil-fuel companies could be held responsible for the broader impacts of climate change. The commission is powerless outside of the Philippines, a low-lying island nation for which climate change is an existential threat, but Greenpeace hopes its investigation could set a precedent of opening the company to sanctions from more powerful international bodies.Bill McKibben, the author and activist who played a major role in making Keystone XL totemic for climate activists, acknowledged that Exxon is “in a sense” a more daunting foe than the Canadian company behind the pipeline.“[H]owever, we're four years further into the progress of global warming and climate chaos,” McKibben wrote in an email, “so it's easier to see the stakes.” And Exxon “is just one part of the larger fossil fuel industry — which has always been the adversary.”Exxon is fighting back with a huge arsenal at its disposal. The company has spent more than $100 million lobbying the federal government since the start of the Obama administration, according to federal lobbying disclosure records. And its political action committee and employees have contributed more than $17.5 million over the past quarter-century to politicians, almost exclusively Republicans, according to campaign finance records tracked by the Center for Responsive Politics.In contrast, the Sierra Club has spent nearly $3 million lobbying the Obama administration, and its PAC has given $8.3 million in political contributions since 1998, mostly to Democrats. The newcomer climate group 350.org spent about $50,000 on lobbying through its Action Fund since 2009, and its PAC has made no donations for the 2016 cycle after scant spending in 2014.Scrutiny of Exxon grew in the wake of a series of news reports detailing its history of scientific research and the company's stance on climate change. Even before 1980, company scientists were warning that rising carbon dioxide emissions from burning oil, gas and coal risked threatening populations in the planet's most sensitive regions, but by the mid-1990s Exxon shifted its support to organizations whose primary goal was to question the scientific consensus and highlight uncertainties around climate change, according to the press investigations.The company has hit back with a series of <a href="http://www.exxonmobilperspectives.com/2015/11/05/a-case-for-readers-to-read-for-themselves/" target="_blank">blog posts</a> defending its climate research and public policy positions. Jeffers labeled as “preposterous and disappointing” the subsequent activist efforts to turn Exxon into “some kind of James Bond villain” and “make oil and gas immoral.”Schneiderman this month announced a settlement following years-long probe into Peabody Energy that forced the coal company to better account for climate change risks in its financial statements. He <a href="https://www.politicopro.com/energy/story/2015/11/schneiderman-exxon-probe-is-broader-than-peabody-inquiry-076829" target="_blank">later said</a> he is casting a wider net to investigate Exxon.“This is a much broader case, it has much broader implications, because in addition to their shareholders, it may have been affecting the public — consumers who might have made a decision to use their products or not, regulators, and quite frankly, they exercised some influence in politics and public policy, too,” Schneiderman said in a recent televised interview. The New York inquiry is “likely to be the tip of the iceberg” of scrutiny directed at companies' pollution risk disclosures, predicted veteran federal prosecutor John Marti. Even if Exxon does not face specific civil charges as the tobacco companies did, behind-the-scenes negotiations following the New York subpoena could still force significant concessions from the company.“Energy companies and others that have made disclosures related to climate change would be well advised to carefully review their disclosures, knowing that government agencies and private entities may be scrutinizing disclosures for misstatements,” added Marti, said now a partner at the Washington firm of Dorsey and Whitney, in a statement.Another top Washington law firm, Crowell & Moring, warned in a <a href="https://www.crowell.com/NewsEvents/All/The-Widening-Circles-of-the-Exxon-Mobil-Climate-Disclosure-Investigation-and-Its-Implications-for-Energy-Companies" target="_blank">client bulletin</a> this month that the New York subpoena of Exxon "could prove even more complex, and the results more far-reaching," than the Peabody probe. The bulletin cited a 9th Circuit federal appeals court ruling last year that "took BP to task for what many would consider standard boilerplate disclosure in its Annual Report, the type of boilerplate that Exxon Mobil itself has used in the climate change context" in its own SEC filings.