Environment

Exxon Fraud Probe Is Shaping Up to Be the Biggest Bipartisan Climate Battle Ever

As GOP lawmakers try to shield Exxon from a state attorneys general probe into alleged climate fraud, the DNC calls for a separate Justice Department investigation.

LISBON, PORTUGAL - January 4, 2015: Photo of Exxon Mobil homepage on a monitor screen through a magnifying glass.
Photo Credit: Gil C/Shutterstock

On June 24, the DNC platform committee unanimously agreed to call on the Department of Justice to launch a fraud investigation into ExxonMobil and other fossil fuel companies, which would add to the ongoing Exxon fraud probe by several state attorneys general, first launched by New York Attorney General Eric Schneiderman in November.

The DNC request follows a forum titled Oil Is the New Tobacco, convened June 22 by members of the Congressional Progressive Caucus and the Sustainable Energy and Environment Coalition. The forum highlighted the worrisome inconsistency between ExxonMobil's internal process and business decisions regarding its early knowledge of the impact of fossil fuel combustion on the climate and its public campaign to promote doubt, deception and denial of climate science.

These recent moves by Democrats come on the heels of a second round of letters sent on June 17 by 17 Republican members of Congress on the House Committee on Science, Space, and Technology to several nonprofit organizations, including 350.org and Greenpeace USA, demanding documents and information related to their work advocating for climate action and holding Exxon accountable for fraud. The Committee also made similar requests to the state attorneys general working on the Exxon probe.

This most recent House request was not initially made public; however, 350.org and Greenpeace USA responded by the June 24 deadline, reiterating yet again in a letter that they have no intention of complying with the request. All nonprofit groups had rejected the Committee’s first request, which was made on May 18.

In their letter, the GOP legislators again repeated the claim that ExxonMobil’s alleged fraud is protected by the First Amendment:

The Committee intends to continue its vigorous oversight of the coordinated attempt to deprive companies, nonprofit organizations, and scientists of their First Amendment rights and ability to fund and conduct scientific research free from intimidation and threats of prosecution.

However, that claim has already been refuted. In United States vs Philip Morris Inc, the federal government explicitly told the tobacco industry: “False, misleading, or deceptive speech in furtherance of a scheme to defraud receives no First Amendment protection.”

In a June 24 Washington Post op-ed, Robert Post, the dean of Yale Law School, argued that ExxonMobil was abusing the First Amendment:

Despite the efforts of tobacco companies to invoke First Amendment protections for their contributions to public debate, the U.S. Court of Appeals for the D.C. Circuit found: “Of course it is well settled that the First Amendment does not protect fraud.” The point is a simple one. If large corporations were free to mislead deliberately the consuming public, we would live in a jungle rather than in an orderly and stable market.

ExxonMobil and its supporters are now eliding the essential difference between fraud and public debate. Raising the revered flag of the First Amendment, they loudly object to investigations recently announced by attorneys general of several states into whether ExxonMobil has publicly misrepresented what it knew about global warming.

Republicans funded by Big Oil

All 13 GOP Congress members who signed the first letter have collectively received more than $70,000 in contributions from ExxonMobil in the last decade alone. In particular, Committee Chairman Lamar Smith (R-TX), has a long history of attacking climate scientists and maintains strong financial ties with ExxonMobil and other oil and gas companies. Since 1998, Smith has taken more than $22,000 in campaign contributions from Exxon, according to Oil Change International's Dirty Energy Money database.

Steve Horn, research fellow at DeSmogBlog, reported that “$19,500 of the Exxon money has flowed to Smith's campaign since 2008 alone,” based on data from OpenSecrets.org.

“This latest bid by Exxon and their bought-and-paid-for allies in Congress proves that the House Committee on Science is more committed to sowing misinformation and deception about climate change than to actually acting on science,” said May Boeve, 350 Action executive director, in a statement to press. She addded:

At least half a century ago, Exxon’s executives were warned about the very devastation communities around the world are experiencing today, yet chose to pour resources into sowing doubt and funding an extensive climate denial machine. We know that this is an industry-wide problem, and we will keep spreading the word about all Exxon knew, and keep working to see these climate miscreants held accountable for their role in wrecking our planet and robbing us of a generation’s worth of climate action.

Schneiderman probe

In November 2015, New York Attorney General Schneiderman issued a subpoena to ExxonMobil, demanding a wide range of documents in order to determine if the world's largest publicly traded international oil and gas company lied to the public or investors about the risks of climate change to its future business, based on the firm’s own internal studies. The case is building that the oil giant has been pushing climate denial since the 1980s, when it joined with other energy firms to form the Global Climate Coalition, intended to lobby support from Congress and lawmakers while also working to cover up early evidence that global warming is caused by human activity; specifically, the combustion of fossil fuels.

By March of this year, Schneiderman's probe grew to a historic coalition of state attorneys general who have joined forces to investigate Exxon and defend President Obama’s Clean Power Plan against attacks from Big Oil. ExxonMobil has strenuously challenged investigations of the state AGs of Massachusetts and the U.S. Virgin Islands. But while Texas U.S. District Judge Ed Kinkeade rejected the company’s attempt to block the USVI investigation, it was announced Wednesday that USVI Attorney General Claude Earl Walker agreed to withdraw his subpoena requesting four decades of Exxon's internal documents in exchange for the oil giant dropping a retaliatory suit.

There have been major international governmental and public actions to tackle climate change, such as last year’s Paris climate agreement, the EPA's Clean Power Plan and the growing global divestment movement (which recently included a divestment of ExxonMobil shares by the Rockefeller Family Fund, which called the oil giant “morally reprehensible”). Yet the company appears dead set on ignoring calls to address the climate threat: ExxonMobil CEO Rex Tillerson and Exxon’s board recommended the rejection of every single climate resolution brought to the company’s annual shareholder meeting in May.

Activists, environmentalists and corporate accountability advocates had used that meeting, held in Dallas on May 25, as an arena to call on ExxonMobil to reject climate disinformation, adapt its business to the realities of climate change and take regulation seriously. A similar effort was taken up at Chevron’s shareholders meeting, held in San Ramon, Calif., on the same day. While ExxonMobil is the primary focus of official investigations, the entire oil and gas industry has come under greater scrutiny.

“These multibillion dollar global organizations have potentially bilked the American people out of financial stability, national security, and the health and safety of our future generations by creating a false debate designed to protect their profits,” said Annie Leonard, Greenpeace USA executive director.

Party politics

While the state attorneys general maintain their ongoing fraud investigation into ExxonMobil, pressure is mounting across the nation for elected officials and candidates to support these and similar investigations. More than half a million people have signed the #ExxonKnew coalition's petition supporting the fraud investigation, which has been expanding in scope—the Department of Justice recently referred the case to the criminal branch of the FBI. The case is also shaping up to be a pitched partisan conflict on Capitol Hill and beyond.

The National Review accused the attorneys general of “trampling the First Amendment.” Characterizing the Exxon probe as an example of the “authoritarianism” he argues is ingrained in progressivism, Post columnist George F. Will called Schneidermann and Senator Sheldon Whitehouse (D-RI)—who supports using the Racketeer Influenced and Corrupt Organizations (RICO) Act to criminalize Big Oil's climate denial apparatus—"garden-variety authoritarians ... eager to regulate us into conformity.”

However, the investigations are receiving strong support from leading environmental groups and Democrats.

“These attorneys general are doing their jobs to investigate whether or not this massive fraud has occurred, and we stand with them,” said Greenpeace’s Leonard, in a statement to press. “If Exxon, its allies, enablers, and congressional yes-men are afraid of an open inquiry into allegations of fraud, then the American people should be even more suspicious of what they’ve been up to in the decades they’ve been peddling climate denial. It was fraud when Big Tobacco did it; it’s time to find out if this Exxon scheme was fraud, too.”

Evidence that Exxon knew

The evidence suggests that, for many years, Exxon attempted to cast doubt on the scientific findings regarding climate change in the public mindset by purchasing newspaper advertisements questioning the science and funding climate deniers through an intricate network of conservative think-tanks, including the American Legislative Exchange Council. The allegations of fraud also stem from a massive trove of internal corporate documents revealing Exxon was fully aware of the dangers to climate posed by the extraction and use of its primary product: fossil fuel.

One damning piece of evidence is an email—written as a response to an inquiry regarding business ethics from the Institute for Applied and Professional Ethics at Ohio University—unearthed last year from Lenny Bernstein, a climate expert working for Exxon. He wrote, “Exxon first got interested in climate change in 1981 because it was seeking to develop the Natuna gas field off Indonesia. ... This is an immense reserve of natural gas, but it is 70% CO2." According to Bernstein, that awareness was seven years ahead of not just other oil companies, but the general public.

“What it shows is that Exxon knew years earlier than James Hansen’s testimony to Congress that climate change was a reality; that it accepted the reality, instead of denying the reality as they have done publicly, and to such an extent that it took it into account in their decision making, in making their economic calculation,” the director of the institute, Alyssa Bernstein (no relation), told the Guardian.

But Exxon’s knowledge of the impact its business had on the global climate dates much earlier, to a report two pollution experts prepared for the American Petroleum Institute in 1968. The authors, Elmer Robinson and R.C. Robbins of the Stanford Research Institute, contended that carbon dioxide emissions produced by the combustion of fossil fuels was as critical an issue as the soot and smog that was the primary pollution concern at the time.

"If the earth's temperature increases significantly, a number of events might be expected to occur including the melting of the Antarctic ice cap, a rise in sea levels, warming of the oceans, and an increase in photosynthesis," they wrote.

They regarded the focus on local-based pollution concerns as a case of missing the forest for the trees:

It seems ironic that in our view of air pollution technology we take such a serious concern with small-scale events such as the photochemical reactions of trace concentrations of hydrocarbons, the effect on vegetation of a fraction of a part per million of sulfur dioxide, when the abundant pollutants which we generally ignore because they have little local effect, carbon dioxide, and submicron particles, may be the cause of serious worldwide environmental changes.

Robinson and Robbins also noted the view of Roger Revelle, one of the first scientists to warn that the growing amount of atmospheric carbon dioxide created by fossil fuel combustion may cause global warming over time. “In summary,” they wrote, “Revelle makes the point that man is now engaged in a vast geophysical experiment with his environment, the earth. Significant temperature changes are almost certain to occur by the year 2000 and these could bring about climactic changes.”

Adapt or die

Kathy Mulvey, who manages the climate accountability campaigns at the Union of Concerned Scientists, was one of the many environmentalists, activists and scientists who attended the ExxonMobil shareholders meeting in May. Part of the grassroots activist effort is to get the fossil fuel industry to recognize the choice it now faces: Adapt or die.

"Major fossil fuel companies must also begin to align their business models with a carbon-constrained world, acknowledging the political reality and moral imperative of the agreement made by world leaders in Paris last December,” she said.

The writing is on the wall about the downfall of dirty energy. Nafeez Ahmed recently wrote on AlterNet that signs indicate we are in the midst of the death of the fossil fuel industry:

Although the world remains heavily dependent on oil, coal and natural gas—which today supply around 80 percent of our primary energy needs—the industry is rapidly crumbling. This is not merely a temporary blip, but a symptom of a deeper, long-term process related to global capitalism’s escalating overconsumption of planetary resources and raw materials. ... In February, the financial services firm Deloitte predicted that over 35 percent of independent oil companies worldwide are likely to declare bankruptcy, potentially followed by a further 30 percent next year—a total of 65 percent of oil firms around the world. Since early last year, already 50 North American oil and gas producers have filed bankruptcy.

And in April, Bloomberg’s Joe Carroll and Asjylyn Loder reported on ExxonMobil's historic credit downgrade:

The worst oil crash in a generation has cost Exxon Mobil Corp. the gold-plated credit rating it had held since the Great Depression. … The downgrade will not only raise Exxon’s cost to borrow money but may also erode its status among oil-rich governments as a premier partner with which to do business. As Exxon Vice President of Investor Relations Jeffrey Woodbury said in February, the company’s AAA rating was a key selling point when competing for drilling licenses.

When ExxonMobil had advance knowledge of global warming, it attempted to hide the details from the public and its shareholders to protect its future business. Since then, it has made hundreds of billions of dollars year after year. It appears now there is strong evidence that the company has committed fraud, and even as its profit outlook is grim, it is still trying to dodge reality.

"Half a century ago, Exxon discovered climate change and quickly learned all there was to know well before the rest of us,” said 350.org’s Boeve. “Instead of urging action and becoming a part of the solution, the company's executives poured their resources into sowing doubt and disinformation among the public. The last twelve months have set record-busting temperatures, yet Exxon is still attempting to distract us from the fight for climate justice.”

Big Oil: Worse than Big Tobacco?

The unfolding drama has been compared to the Department of Justice's successful lawsuit, almost two decades ago, against Big Tobacco over fraud regarding the health risks of smoking and marketing its harmful products to the public. In 1999, the U.S. Department of Justice filed a racketeering lawsuit against several major tobacco companies for "fraudulent and unlawful conduct and reimbursement of tobacco-related medical expenses."

Federal district court Judge Gladys Kessler found the tobacco companies liable for violating RICO by intentionally committing fraud through an elaborate coverup of the health risks associated with smoking, writing in her opinion that the defendants “crafted and implemented a broad strategy to undermine and distort the evidence indicting passive smoke as a health hazard. … [and] attempted to deceive the public, distort the scientific record [and] avoid adverse findings by government agencies."

ExxonMobil is accused of using the same tactics Judge Kessler deemed fraudulent in the tobacco industry coverup. If the Exxon probe is as similar to the DoJ's tobacco suit as it appears to be, then Exxon and its Big Oil peers should be prepared to be found guilty. However, the impact of Big Tobacco's fraud is quite different from that of Big Oil. Neva Rockefeller Goodwin, the great-granddaughter of John D. Rockefeller Sr., founder of the American oil giant Standard Oil Company, from which ExxonMobil was born, recently announced she was divesting her shares in the company. She told AlterNet:

In the large picture, however, tobacco and fossil fuel emissions are quite different. Tobacco kills people one by one. Climate change will increasingly cause events like hurricanes that will destroy large swathes of property, kill numbers of people, make many homeless.

While it can be argued that smoking tobacco is a matter of individual choice, the production and use of fossil fuels is more obviously a social issue. In the long run, producers of fossil fuels will have to lose. The only question is how much the people and ecologies of the world will lose before our economies cease to make the situation worse.

“One thing that occurs to me," said Bernstein of the Institute for Applied and Professional Ethics, "is the behavior of the tobacco companies denying the connection between smoking and lung cancer for the sake of profits, but this is an order of magnitude greater moral offense, in my opinion, because what is at stake is the fate of the planet, humanity and the future of civilization.”

Stay Ahead of the Rest
Sign Up for AlterNet's Daily Newsletter
+ sign up for additional lists
[x]
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Rights & Liberties
Education
Drugs
Economy
Environment
Labor
Food
World
Politics
Investigation
Personal Health
Water
Media