Exxon Mobil Corporation (ExxonMobil) has come under investigation for allegedly misleading investors regarding climate change risks and failing to disclose truthful information regarding climate science. On January 12, 2016, the Department of Justice referred to the Federal Bureau of Investigation a request from two California congressional representatives for an investigation of whether ExxonMobil may have violated the Racketeer Influenced and Corrupt Organizations Act and related laws based on its alleged actions and knowledge of climate science.
The Attorney General of the United States Virgin Islands (USVI) is currently investigating whether ExxonMobil violated its state version of RICO, alleging a suspected civil violation “by having engaged or engaging in conduct misrepresenting Your knowledge of the likelihood that Your products and activities have contributed and are continuing to contribute to Climate Change in order to defraud the Government of the United States Virgin Islands and consumers in the Virgin Islands.”
The USVI Attorney General subsequently obtained issuance of a subpoena to ExxonMobil seeking documents related to the existence, impact, and severity of climate change. The subpoena gave the company one month to respond. On April 13, 2016, ExxonMobil petitioned a Texas court, its principal state of business, for declaratory relief against the USVI Attorney General and a private law firm representing the Virgin Islands. The company alleged that the defendants’ actions in issuing the subpoena “violate ExxonMobil’s constitutionally protected rights of freedom of speech, freedom from unreasonable searches and seizures, and due process of law and constitute the common law tort of abuse of process.”
According to ExxonMobil, the subpoena gave one month to produce documentation, including: all communications on climate change over a 39-year period, including studies, research or other reviews regarding the certainty, uncertainty, causes or impacts of climate change; public opinions or reviews in that time period received from 88 named organizations, 54 named scientists, professors and other professionals, and covered an employee base of 73,500 people. ExxonMobil alleged that the subpoena is designed to improperly target political speech and is intended to deter it from participating in the public debate over climate change now and in the future and chill others from expressing an opinion on climate change that runs counter to the view held by a coalition of this and other state attorneys general.
Investigations based on climate change knowledge are not likely to go away amid growing calls from environmental groups to act and attention given to this issue in the United States Presidential race by Senator Bernie Sanders and Former Secretary of State Hillary Clinton.
Beyond ExxonMobil, other companies may begin to see increased government scrutiny relating to disclosure of risks associated with green house gas emissions. The environmental groups and attorneys general pushing for the ExxonMobil investigation have also expressed interest in expanding the investigation to other companies in the energy sector. Also, in 2010, the SEC issued interpretive guidance indicating that reporting entities should disclose risks related to climate change. SEC, Commission Guidance Regarding Disclosure Related to Climate Change (Feb. 2, 2010). SEC disclosures relating to climate change could be the “hook” that activist state governments use to pursue litigation as stockholders in publicly traded companies through their employee retirement funds and by other sources.