California Attorney General Urged to Investigate Exxon Over Climate

A decade-old law in California grants the attorney general sweeping investigative and prosecutorial powers to pursue securities violations.

California's attorney general, Kamala Harris (pictured), is being urged to launch a probe into Exxon over its climate research, similar to what New York has done. The office in California has extraordinarily broad investigative authority under the state's powerful consumer and shareholder protection laws. Credit: Steve Rhodes

An influential California environmental activist is leading a campaign to urge the attorneys general in California and 15 other states to investigate whether ExxonMobil misrepresented the risks of climate change to investors and the public.

R. L. Miller, a co-founder of Climate Hawks Vote and the chairwoman of the California Democratic Party's environmental caucus, said top state prosecutors should probe the oil giant using consumer and shareholder protection statutes and business-fraud law. New York State Attorney General Eric Schneiderman opened such an investigation more than a year ago and this month demanded Exxon documents on climate science research and communications covering a span of almost four decades.

"There need to be efforts to hold Exxon accountable in our legal system," Miller said in an interview. "It's time for those with a mandate to protect the public to exercise their power to get answers and hold Exxon accountable."

California Attorney General Kamala Harris, a second-term Democrat who is running for the U.S. Senate, has extraordinarily broad investigative authority under the state's powerful consumer and shareholder protection laws. She and her predecessors have used the statutes to extract billions of dollars in settlements from the state's largest banks related to the subprime mortgage crisis.

Harris declined an interview through agency spokeswoman Kristin Ford and hasn't responded to Miller's public call for an Exxon investigation.

"We can't comment on any potential or ongoing investigations, or even confirm or deny an investigation, to protect the integrity of our investigations," Ford said in an email to InsideClimate News.

Miller's campaign is part of a widening push for legal action against Exxon. Environmental leaders delivered a petition Nov. 19 with more than 350,000 signatures calling on U.S. Attorney General Loretta Lynch to investigate whether the oil giant misled the American public on global warming.

Lawmakers, Democratic presidential candidates, climate scientists and environmental activists also have urged a federal probe under U.S. racketeering law. House Democrats led by Reps. Ted Lieu of California and Peter Welch of Vermont said they plan an inquiry into what six additional fossil fuel companies knew about climate change and when, and whether they funded or participated in sowing doubt about it.

An eight-month investigation by InsideClimate News documented how in the late 1970s and through the mid-1980s, Exxon conducted research into the greenhouse effect caused by carbon dioxide emissions from fossil fuels. Its ambitious research program drew applause from outside the company and fell in line with the general scientific consensus on the cause and potential effects of global warming.

Yet as Exxon recognized the risks of climate change, the company did little to communicate those risks to shareholders or the public and spent more than 20 years discrediting the research its own scientists had confirmed. New York's Schneiderman is looking into whether Exxon accurately relayed its understanding to shareholders and the public.

Miller and Climate Hawks Vote last month called on 16 state attorneys general—including those in California, Massachusetts, Illinois and Washington—to investigate whether Exxon "committed any wrongdoing in their states through its decades-long campaign of climate-change denial." Each of the states has strong enough consumer fraud laws for investigations of Exxon, especially in California and New York, Miller said.

"State attorneys general need to look at what laws Exxon and its ilk have violated with their ongoing campaign of climate deception," Climate Hawks Vote said in a news release. None of the attorneys general responded, Miller said.

In California, Miller said she intends to start a grassroots campaign to put pressure on the state attorney general. She plans to push each of the state's 58 county Democratic committees to adopt a resolution calling for action, she said. Harris should go so far as to make Exxon an issue in her race to fill the seat being vacated by Sen. Barbara Boxer, Miller said.

A decade-old law in California grants the attorney general sweeping investigative and prosecutorial powers to pursue securities violations. Some legal authorities say the statute gives the state attorney general more authority than New York's Martin Act confers on its top state prosecutor. The New York shareholder-protection law is part of the basis for the investigation of Exxon on climate change.

The California law allows the attorney general's office to demand documents, compel interviews and open other records relevant to an investigation in connection with possible financial fraud, including whether investors in a company were misled by false statements or omissions. It also grants the California attorney general authority to pursue both criminal and civil actions.

"It was intended to be a muscular investigative tool for the attorney general to use to protect California consumer investors," Bill Lockyer, a former California attorney general who championed the statute in 2003, told InsideClimate News. An Exxon probe would fall squarely under the law's provisions, he said.

Lockyer said he would expect any investigation to center on false statements and omission of facts.

"The question is: Are there violations of security laws or commodity trading statues that are actionable within California?" he said.

Lockyer, who was the California attorney general from 1999 to 2007, said he pressed the legislature for greater enforcement authority in the wake of the Enron scandal that cost shareholders billions of dollars in lost investments.

Nicholas Campins, a Columbia University law student who later joined the attorney general's staff, wrote one of the most thorough analyses of the law, Lockyer said.

"The Act allows the Attorney General naked discretion to make any investigation, inside  or outside of California, whenever he or she deems it necessary to determine if a person has or is about to violate securities or commodities law," Campins wrote in his 2003 analysis. Campins declined to elaborate in an interview.

California has statutes "powerful and broad enough" to support an investigation, said Richard Frank, professor of Environmental Practice and Director of the California Environmental Law and Policy Center at the University of California, Davis.

"The facts seem pretty obvious based on what's been put on the public record that there are serious questions or alarms to incentivize the attorney general to proceed in a more formal way," said Frank, who served for nearly 30 years as a deputy in the California attorney general's office.

"If the facts become as obvious here as they appear to be to the New York attorney general, then I think moving forward with a formal investigation would be something the attorney general would consider," Frank said.

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