Email episode angers Exxon Mobil critics
tigation ultimately leads to a successful prosecution remains to be seen, legal experts say. But, nearly two years after Exxon Mobil disclosed that it was subpoenaed by the New York attorney general, the case has grown into a multistate investigation involving at least two state attorneys general and revealing, among other things, that the former CEO Rex Tillerson, now secretary of state, used a secondary Exxon Mobil email account under the pseudonym “Wayne Tracker” to communicate about sensitive matters, including climate change.
“We’re in the first act of a multiact play,” said David Vladeck, a law professor at Georgetown University. “I think the AG is going to be able to probe pretty deeply on this, so it’s not surprising to me Exxon is pulling out every argument and every resource it can tap.”
Scientists have reported a connection between greenhouse gas emissions from fossil fuels and climate change for decades. And for nearly as long, Exxon Mobil and other oil companies cast doubt on the research through public relations campaigns and supporting politicians who were also skeptical.
In 2015, the web publication Inside Climate News reported how Exxon Mobil had itself studied climate change in the 1980s, raising suspicions that the oil and gas industry, like the tobacco industry, knew about the dangers of its product, but hid them. Within two months of the story, Exxon Mobil was under subpoena by Schneiderman, followed in 2016 by the U.S. Virgin Islands and Massachusetts.
Led by attorney Ted Wells, who represented Phillip Morris in the landmark Big Tobacco settlement, Exxon Mobil chalked up some victories early on. After the company sued in federal court in Fort Worth last year to block multiple state subpoenas, U.S. Virgin Islands Attorney General Claude Walker and the law firm representing him agreed to drop out.
But hopes for a quick resolution within Exxon Mobil’s legal department were dashed in March when U.S. District Judge Ed Kinkeade, in Fort Worth, reversed an earlier order allowing the company’s attorneys to depose Massachusetts Attorney General Maura Healey and moved the lawsuit to New York.
Meanwhile, investigators at the New York Attorney General’s Office scoured Exxon Mobil documents. They noted emails between executives debating how to estimate the costs of future carbon rules in greenlighting oil and gas projects.
In one 2011 email made public this month, Tom Eizember, a former planning manager at Exxon Mobil headquarters, urged the company to reconcile its use of one carbon price in the annual economic forecast, called the Outlook for Energy, and another lower price for project planning.
“Rex has seemed happy with the difference previously — appeared to feel it provides a ‘conservative’ basis,” Eizember wrote, referring to Tillerson.
But Eizember went on to explain that it was “conservative” only in cases where Exxon Mobil claimed tax credits for emissions reductions, not on projects that “increase emissions,” where a low carbon price could make them seem more profitable than they were.
The latest disclosures follow a shareholder vote in Dallas last month in which more than 60 percent of Exxon Mobil’s investors urged executives to produce an annual report explaining how the company is managing climate change risk. Similar votes had been staged for years without success. But after the Paris climate agreement and worsening evidence of climate change, Exxon Mobil’s assurances that it was dealing with the situation are losing credibility with investors, said Andrew Logan, director of oil and gas at Ceres, a nonprofit representing over 130 institutional investors on sustainability issues.
“Their argument was we’re doing this already, let us be,” he said. “But as the AG’s filing makes clear, there’s a disconnect between what the company says it’s doing and what it actually seems to be doing.”
Investigators in New York got a surprise earlier this year while examining a trove of emails from Exxon Mobil executives. They noted emails from an unfamiliar address, “wayne.tracker@exxonmobil.com.” After inquiring, they learned it was a secondary account used by Tillerson, whose middle name is Wayne.
Only the account was technically assigned to another employee within Exxon Mobil’s email system. When the New York AG subpoenaed emails from executives in 2015, the company blocked the system that automatically deletes emails after a certain period from removing the executives’ messages. Since the Wayne Tracker account was not assigned to Tillerson, however, those emails were not protected, leading to “months of automatic destruction of relevant correspondence,” according to court filings.
Exxon Mobil’s lawyers explained the error as a simple mistake and argued many emails would turn up in other accounts. But at least one of those attorneys, Michele Hirshman, acknowledged in questioning last month that she had known about the secondary account in early 2016, a year before the attorney general’s office discovered it.
“I do not believe that Exxon Mobil was under any obligation to notify your office of that,” she testified. The incident has infuriated Exxon Mobil’s critics, who wonder what might have been contained in those emails and whether what the company calls an accident was an act of concealment, said Carroll Muffett, president of the Center for International Environmental Law, an advocacy group in Washington.
“As the result of the records not being produced when they should have, several months of what is likely highly relevant documentary evidence was destroyed,” he said.
The recent back and forth between Exxon Mobil and Schneiderman comes as the federal court in New York considers whether to force the company to comply with another subpoena filed last month by the New York attorney general demanding executives produce documents explaining how they calculated the cost of greenhouse gas emissions in every investment decision they made over the 12 years.
Getting that record could be critical to proving the New York attorney general’s claims that Exxon Mobil uses different carbon prices to suit its needs, and in many case does not appear to factor in carbon costs at all in deciding whether to proceed on oil and gas projects that can cost billions of dollars.
Exxon Mobil’s attorneys are fighting the subpoena, arguing creating such a record “will likely number in the millions of pages and dollars.” Meanwhile, some legal specialists question whether Schneiderman’s probe into the company is more crusade than legal case.
Last year Merritt Fox, a professor at Columbia University, published an op-ed in the National Law Journal calling the probe an “abuse” of “extraordinary powers,” which, if successful, “could be used to bully corporations into any kind of desired reform under the guise of a securities investigation.” But so far, Scheiderman shows no sign of backing down. In 2015, he won a settlement in a similar case against coal giant Peabody Energy, forcing the company to better disclose the financial risk of climate change in securities filings.
“The real question is, ‘Is Schneiderman in this for the long haul, or is it just political theatrics?’ ” Vladeck said. “I think it’s the former, not the latter, though there have been some political theatrics with news conferences.”