State Attorneys General Conspire To Shake Down Big Oil
New York Attorney General Eric Schneiderman, former Vice President Al Gore, and attorneys general from Massachusetts, Virginia, Connecticut, Maryland, Vermont, and the U. S. Virgin Islands held a press conference in New York City on 30th March to announce “an unprecedented coalition of top law enforcement officials committed to aggressively protecting and building upon the recent progress the United States has made in combatting climate change.” Schneiderman also spoke about his ongoing investigation of Exxon Mobil for fraudulently concealing from investors and the public the harmful effects of their products on the global climate.
Massachusetts AG Maura Healey and Virgin Islands AG Claude Walker announced that they have also launched investigations of Exxon. Other state AGs at the podium indicated that they support and will co-operate in the investigation of Exxon. California AG Kamala Harris is also investigating Exxon.
Schneiderman launched his investigation under the state’s Martin Act last fall. A broad subpoena of Exxon documents was issued in November. Schneiderman made it clear that they have already decided that Exxon committed fraud and are now investigating the nature and extent of the fraud. Other oil, gas, and coal companies “and their allies” are also likely to become targets of investigation in the near future.
Schneiderman said: “The First Amendment, ladies and gentlemen, does not give you the right to commit fraud. Every attorney general does work on fraud cases, and we are pursuing this as we would any other fraud matter. You have to tell the truth, you can’t make misrepresentations of the kinds we’ve seen here. The scope of the problem we are facing, the size of the corporate entities and their alliances, the trade associations and other groups, is massive and it requires a multistate effort.”
Gore for the umpteenth time compared the conduct of the big oil companies to the big tobacco companies in the 1990s. “I do think the analogy may hold up rather precisely,” he said. Suits filed by a coalition of 46 state attorneys general forced the largest tobacco companies to agree in 1998 to pay $10 billion per year to the states indefinitely.
Gore is right on one major point. It is unlikely that Schneiderman’s investigation will result in filing a case, let alone getting a conviction. But it could very possibly turn into a massive shakedown of Exxon and other big fossil fuel companies along the same lines as the tobacco settlement. But Big Oil is much bigger than big tobacco, so I expect that Schneiderman and his fellow AGs are setting their sights at much more than $10 billion a year.
The press conference was part of a one-day conference of 18 Democratic state attorneys general who have formed a coalition to support President Obama’s climate agenda, especially the EPA’s greenhouse gas rules for power plants. Other AGs at the conference were from California, Illinois, Maine, Rhode Island, Washington, the District of Columbia, New Mexico, Minnesota, Delaware, Oregon, and Iowa.
For critical commentary on Schneiderman’s shakedown, see this editorial in Investor’s Business Daily and my CEI colleague Marlo Lewis’s article in Public Utilities Fortnightly on Schneiderman’s earlier investigation and settlement with Peabody Energy.