ExxonMobil: NY Attorney General’s “Reckless and False Allegations” Misstate Climate Policies
June 09 2017 - 1:57PM
Business Wire
New York Attorney General Eric Schneiderman made “inflammatory,
reckless and false allegations” when he misstated how ExxonMobil
assesses the potential impacts of climate policy on its business to
justify expanding a politically based investigation with
“ever-shifting and unravelling investigative theories.”
“From the outset of this investigation, it has been clear that
the attorney general is working backwards from an assumption of
ExxonMobil’s guilt, searching in vain for some theory to support
his prejudgment,” the company said in a brief to the New York
Supreme Court today. The brief was filed by ExxonMobil’s lead
lawyer, Ted Wells, Jr., of Paul, Weiss, Rifkind, Wharton &
Garrison LLP.
ExxonMobil’s brief explained how the company uses a proxy cost
of carbon to assist its assessment of potential impacts of
climate-change polices on global energy demand in its annual
forecast, the Outlook for Energy. In addition, where appropriate,
the company considers the impacts of current and potential future
greenhouse gas (GHG) regulations as one of many factors when
assessing the economics of individual projects.
The attorney general inaccurately alleged in a court filing on
June 2 that the company’s carbon pricing practice amounted to a
“sham” because the company used what he described as publicly
stated figures of the proxy cost of carbon and a “secret internal
version” in its analyses. Furthermore, he said he could find no
evidence in millions of pages of documents turned over by the
company of the consistent application of a proxy cost, but he
points to no instance where a cost of carbon was not applied but
should have been.
“For a prosecutor proceeding in good faith, the absence of any
evidence of wrongdoing is grounds for closing an investigation, not
expanding it,” said the ExxonMobil brief.
“Even more frivolous is the attorney general’s claim that it was
inappropriate to use the actual cost of carbon … when assessing
overall project economics, rather than hypothetical figures. There
is no basis in law or logic to find fault for relying on actual
costs when available.”
The attorney general suggested that accounting rules known as
Generally Accepted Accounting Principles (GAAP) and regulations of
the U.S. Securities and Exchange Commission require the company to
use a single estimate of carbon pricing when evaluating impairment
or estimating reserves. ExxonMobil’s brief makes clear there is no
such requirement in the GAAP rules, and SEC regulations governing
reserve estimates “expressly bar consideration of the hypothetical
impact of future policies, which is a key purpose of the proxy
cost.”
“ExxonMobil’s use of different metrics, in different
circumstances, to accomplish different goals evinces prudent
financial stewardship, applying appropriate assumptions in
appropriate cases. There is nothing untoward or surprising about
any of this.”
The attorney general’s latest claim – that ExxonMobil was
internally underestimating the impact of climate change on its
business – is in direct contradiction to the thesis that led to the
investigation in the first place. When he launched the
investigation at a press conference in 2015, Schneiderman accused
ExxonMobil of downplaying the risks of climate change, but secretly
taking the effects of climate change into account in its business
decisions.
“This is just another example of the ‘heads I win, tails you
lose’ approach to investigating employed by the attorney general,”
said ExxonMobil’s brief. “While it might be too much to expect
consistency from the attorney general, his failure to present a
coherent rationale for further investigation is fatal to his
current plea to this court.”
ExxonMobil’s brief was in support of an application to quash
additional subpoenas issued by the attorney general.
“The attorney general offers one justification for his new
document subpoena: rank speculation that ExxonMobil’s public
statements about a proxy cost of carbon were false or misleading.
Despite having 2.8 million pages of ExxonMobil’s documents and
eighteen months to review them, the attorney general has found no
valid basis for believing misrepresentations have taken place.”
ExxonMobil also called out the attorney general for distributing
the filing to media before submitting it to the court in a
transparent attempt at headlines.
“No further evidence is required to establish the political
motivation of the attorney general’s fruitless year-and-a-half long
investigation pursing his ever-shifting and unravelling
investigative theories. It is an abuse of the powers of his office
and the court system itself, furthering only the attorney general’s
transparent political ambitions and ultimately bound to taint a
prospective jury pool, thereby depriving ExxonMobil of a fair trial
in the event this political witch hunt were to reach that unlikely
stage.”
To view the court filing, click here.
About ExxonMobil
ExxonMobil, the largest publicly traded international oil and
gas company, uses technology and innovation to help meet the
world’s growing energy needs. ExxonMobil holds an industry-leading
inventory of resources, is the largest refiner and marketer of
petroleum products, and its chemical company is one of the largest
in the world. For more information, visit www.exxonmobil.com or
follow us on Twitter www.twitter.com/exxonmobil.
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