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Exxon Inquiry Both Mirrors and Contrasts With Tobacco Industry Case

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By JOHN SCHWARTZNOV. 6, 2015

The New York attorney general’s decision to investigate Exxon Mobil over whether the company lied to the public and investors about the risks of climate change has raised questions about possible similarities to the Justice Department’s successful suit against the tobacco industry in 1997.

The new case has reprised the famous question from Watergate — What did they know, and when did they know it? — which also was an important element of that tobacco lawsuit.

But there are important differences in the two cases, legal experts note. The tobacco industry largely hid its evidence of the addictiveness and harm of tobacco, while Exxon published peer-reviewed climate change research even as it supported groups that criticized policies to deal with climate change and raised doubts on the underlying science.

That basic difference presents a hurdle — but by no means an insurmountable one — for efforts to prosecute the company, the legal experts said.

“The added challenge for both criminal prosecution but also for a civil case against Exxon is that the company talked out of both sides of its mouth,” said David M. Uhlmann, a professor at the University of Michigan who served as chief of the Justice Department’s environmental crimes section from 2000 to 2007. The mixed message, he said, could create a “murky evidentiary record.”

Professor Uhlmann said that while he considered what he has learned so far about Exxon’s actions to be “morally reprehensible,” prosecutors might have difficulty finding an underlying crime to present in a courtroom.

“Ever since this story broke, I’ve been struggling to figure out what the underlying crime is,” he said. “Lying to the public isn’t, without more, a crime.” If it were, he said, “You’d have to prosecute many politicians, as well.” Besides, he noted, “Exxon is not the sole source of carbon pollution — nor is the company alone in engaging in reprehensible climate denial.”

As attorney general, Eric T. Schneiderman has many legal tools at hand. Along with laws like the Racketeer Influenced and Corrupt Organizations Act, or RICO, there are statutes specific to New York that have proved powerful in past suits, including sweeping powers under state law to take action against “persistent fraud or illegality,” and the state’s deceptive business and trade practices act.

Most importantly, there is the Martin Act, which Michael B. Gerrard, an environmental law professor at Columbia, called “one of the most powerful tools available to any government entity in the United States to investigate corporations before actually filing suit.”

Eliot Spitzer, the former New York attorney general, used the law in his attacks on Wall Street, and Mr. Schneiderman employed it in a case that led to a settlement with a task force of state and federal law enforcement officials of more than $16 billion with Bank of America over mortgage-backed securities.

Under the act, “If the company is found to have knowingly misled investors or regulators, that could have serious legal consequences beyond the reputational injury,” Mr. Gerrard said.

In a conference call with reporters on Thursday, Ken Cohen, Exxon Mobil’s vice president of public and government affairs, said that the company recognized the reality of human-induced climate change and the need for action, and supported a carbon tax.

When asked about statements by executives like former Exxon chairman Lee R. Raymond that questioned climate change and policies to deal with it, Mr. Cohen once again discussed the company’s commitment to research and suggested that the research efforts were more “consistent” than the policy statements.

Phil Barnett, a lawyer and former congressional aide who worked on Representative Henry A. Waxman’s investigation of the tobacco industry, said the trove of archived Exxon documents that had come to light recently — based on reporting by Inside Climate News and The Los Angeles Times — was only the beginning.

“That’s not what you get when you issue a subpoena and get all the internal records,” he said.

Those records alone will provide the map for any possible next steps of the investigation, said James E. Tierney, a former Maine attorney general who directs the national state attorneys general program at Columbia University.

Mr. Tierney was deeply involved with the state lawsuits against the tobacco industry that led to a multibillion-dollar settlement. That settlement started with two states, Mississippi and Minnesota.

The tobacco documents proved to be devastating to the companies, including such statements as, “We are, then, in the business of selling nicotine, an addictive drug…,” from a corporate officer.

“The issue with Exxon, just as it was with tobacco, is what did they know and when did they know it,” Mr. Tierney said. “If internal documents at Exxon show that they deliberately misled consumers and investors, then Exxon has potential liability.” But, he added, “If the documents do not exist, then Exxon has nothing to worry about.”

Naomi Oreskes, a Harvard historian who has co-written a book, “Merchants of Doubt,” that draws comparisons between the two industries and their messages over the years, acknowledged in an emailed response to questions that “no two historical (or legal) situations are ever exactly alike, so I don’t think we should expect that.”

She added that Exxon stands out from other energy companies because its size would have allowed it to do more productive early research into renewable energy and capturing carbon.

Other reasons, she added, included that “they were the most vocal company in publicly expressing doubt about the climate science” and funded organizations that “promoted disinformation or misleading information about the state of climate science” and the impact of warming.

She also pointed out that “the tobacco industry also conducted useful research, much of which was published. And that useful research played a large role in their legal defense strategy.”

A version of this article appears in print on November 7, 2015, on page B3 of the New York edition with the headline: Exxon Inquiry Both Mirrors and Contrasts With Tobacco Industry Case.

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