New York Attorney General Turns up the Heat on Exxon Mobil

Published December 16, 2015

New York State Attorney General Eric Schneiderman (D) is investigating ExxonMobil over allegations the company lied to the public about the risks of climate change and to investors about how such risks might hurt the oil business.

The state’s 1921 Martin Act gives New York’s attorney general (AG) sweeping power to subpoena any document from anyone doing business in the state. The law grants the authority to New York’s AG to keep investigations secret and to file civil or criminal charges, and people called in for questioning during Martin Act investigations do not have the right to legal counsel or a right against self-incrimination according to LegalAffairs and other legal sources.

Under the Martin Act, Schneiderman does not have to prove ExxonMobil intended to defraud anyone, a transaction took place, or anyone was actually defrauded, and when the investigation is over, the AG can share his work product with outside attorneys, public or private, for use as the basis for their own investigations or lawsuits.

Created to Help Prosecute Mob Figures

David W. Schnare, a 33-year veteran of the U.S. Environmental Protection Agency and current general counsel of the Energy & Environment Legal Institute, says the Martin Act gives New York’s attorney general almost unlimited power.

“[The Martin Act] was originally used against organized-crime figures, but now, politically active AGs use it to identify odd bits of conversations or correspondence from a company to use for political purposes,” Schnare said. “They use it to mirror the federal process in SEC cases, and in this case it is being used to continue the environmentalists’ war on hydrocarbons.

“The AG gets this authority to look into what Exxon did,” Schnare said. “He did the same thing to Peabody coal, and because the state has nearly unlimited resources to hire attorneys, the companies tend to settle.”

‘Anything Is Possible’

“I predict [New York officials are] not going to find anything that will harm ExxonMobil,” Schnare said. “Instead, they will cherry-pick some quote from a memo and find something of use with a little PR value, then use it out of context, and people might remember the headline later that said Exxon did something bad.

“All this [began as] a public relations run-up to the COP-21—the United Nations Intergovernmental Panel on Climate Change’s 21st Conference of the Parties—in Paris beginning [November 30],” Schnare said.

Dan Kish, senior vice president for policy at the Institute for Energy Research, also says the New York investigation is nothing more than a political stunt.

“Of course, this is all to give publicity to COP-21,” Kish said. “In the past couple of weeks we’ve seen a steady drumbeat of stories and reports released by a well-run publicity machine.”

Kish says prosecutors often hope to garner political benefits through such prosecutions.

“I’m not sure Americans know that even though they elect their AGs, it is a political position, because so many use their position as a stepping stone to a political career,” Kish said. “They gain headlines and name recognition by prosecuting big cases, then it becomes a typical jumping off point for them to seek national office.

“I don’t think most of these politicians are true believers,” Kish said. “Instead, they see global warming as a great opportunity to expand government power and increase its control over people’s lives.”

‘Behaving Like Cornered Rats’

Marita Noon, executive director of Energy Makes America Great, says the case represents a wholesale attack on free speech.

“It’s indicative of the desperation of environmentalists; they’re behaving like cornered rats,” Noon said. “They are desperate to keep this issue in the news, so it’s no coincidence this attack on Exxon coincides with President Obama’s veto of the Keystone Pipeline deal on the eve of COP-21, especially when he wanted to veto it months ago. The timing is part of their strategy.”

The case might drag on for a while, Kish says.

“We have plenty of people who stand to benefit by keeping this going,” Kish said. “However, in this case, Exxon is big enough to fund their own team of lawyers, and they generally fight back. Perhaps the New York AG may have started something he cannot finish.”

Kenneth Artz ([email protected]) writes from Dallas, Texas.