SEC Sidesteps Lamar Smith's Document Request, Declines to Confirm Exxon Probe

Federal regulatory agency says investigations are not public unless it files charges, so it will not provide documents demanded by the House Science committee chair.

SEC chair Mary Jo White said she will not comply with Rep. Lamar Smith subpoena

SEC Chair Mary Jo White would not confirm her agency is investigating Exxon, so she will not provide documents demanded by House Science committee chair Rep. Lamar Smith. Credit: Getty Images

The U.S. Securities and Exchange commission has declined to say whether it has opened an investigation into ExxonMobil, a position that appears to stymie a sweeping request by Rep. Lamar Smith for records related to a possible investigation of the oil giant by the federal regulatory agency.

SEC chair Mary Jo White wrote in a letter to Smith on Thursday that the commission "generally does not acknowledge the existence or non-existence of an investigation," and that investigations don't become public unless charges are filed.

"Accordingly, I cannot comment specially on the matter raised in your letter," White wrote.

Smith did not respond to a request for comment.

Reacting to news accounts of the SEC's intention to investigate Exxon last month, Smith, the chairman of the House Science committee, asked White to provide information about the purpose, scope and origin of the agency's probe.

In seeking a broad assortment of records, Smith said the committee was "troubled" by the SEC's involvement, adding the federal financial regulatory agency to a list of groups he says are "chilling" climate research with their investigations of Exxon.

Smith asked for documents that may link the White House, the U.S. Department of Justice, the two state attorneys generals and nine non-governmental agencies to the SEC probe.

"The Committee's jurisdiction over energy and environmental research includes an obligation to ensure that such research advances the American scientific enterprise to the fullest extent possible, free from threat of intimidation or prosecution," according to Smith's letter to White.

Smith's request came in the wake of a report by The Wall Street Journal that signaled the SEC's interest in whether Exxon fully disclosed the financial risk posed by climate change to investors.

"While I am aware of the press accounts referenced in your letter, the Securities and Exchange Commission conducts investigations on a confidential basis," White told Smith. "We do so in order to protect the integrity of our investigations, safeguard the privacy of witnesses, and avoid damaging the reputations of parties who may not be charged."

Smith, a Texas Republican who has served 29 years in the House, set his sights on the SEC while continuing his contentious investigation into the attorneys general of New York and Massachusetts over their probes of Exxon, although that stalemate shows signs of softening.

Representatives for Maura Healey of Massachusetts and Eric Schneiderman of New York have held meetings with bipartisan committee staff to discuss the subpoenas that their offices have refused to comply with and asked that they be withdrawn.

The meetings followed a largely partisan hearing last month in which Smith and the Republican majority of the science committee heard testimony from three witnesses who bolstered Smith's contention that the subpoenas were justified.

Following one meeting, attorneys from Healey's office followed up with a letter to Smith to explain the foundation of the state's investigation.

"Our present investigation is based on apparent inconsistencies between what Exxon scientists told Exxon management about the expected impact of fossil fuels on climate and what Exxon told (or failed to tell) investors and consumers," according to the letter.

Any such inconsistencies could constitute unfair and deceptive business practices under Massachusetts laws, Healey's staff explained. The laws are designed to protect investors and consumers from misrepresentations by businesses or failures to disclose material facts that may have led the investors and or consumers to make different purchasing choices.

"If the evidence from the Attorney General's investigation shows that Exxon was not forthcoming in its statements about what it knew about the impact of fossil fuels on climate and the impact of prospective climate change and efforts to deal with it on Exxon's future business and assets, then the Attorney General would evaluate civil claims for violations of the statute as to investors and consumers," the letter said.

Although Smith has not responded to the letter, the attorneys general have left open the door for further talks.

Meanwhile, a federal judge in Texas ruled Thursday that Healey will have to present evidence that she wasn't biased in launching her Exxon investigation if she wants to continue her probe.

Exxon had filed suit to stop Healey, saying it was fueled in part by preconceived notions that the company was guilty.

U.S. District Judge Ed Kinkeade said he was troubled by statements made by Healey during a news conference in April.

The company argued that Healey's remarks at the press conference called by Schneiderman to announce a coalition of prosecutors—AGs United for Clean Power—formed to pursue investigations of Exxon and fossil fuel companies over climate change matters showed her prejudice against the company.

"During Attorney General Healey's speech, she stated that 'fossil fuel companies that deceived investors and consumers about the dangers of climate change should be, must be, held accountable,'" according to a section of the order.

"Attorney General Healey then went on to state that, 'that's why I, too, have joined in investigating the practices of ExxonMobil.'"

Healey argued in court that she opened her investigation to determine whether Exxon had committed consumer and securities fraud.

Yet Kinkeade issued a discovery order that will allow Exxon to delve deeper into Healey's motivation by allowing the company to seek internal records detailing the foundation of the Massachusetts investigation.  

"The Court finds the allegations about Attorney General Healey and the anticipatory nature of Attorney General Healey's remarks about the outcome of the Exxon investigation to be concerning to this Court," according to Kinkeade's written order.  "The foregoing allegations about Attorney General Healey, if true, may constitute bad faith."

A spokeswoman for Healey said the attorney general will fight for the right to press ahead.

"Consumers and investors have a right to understand what Exxon knew about the impact of fossil fuels and when," said Jillian Fennimore, Healey's spokeswoman. "Despite its claims, Exxon is subject to the laws of our state and is accountable for any misrepresentations it may have made."

The judge postponed his ruling on Exxon's bid to derail Healey's investigation until he sees the additional documents he demanded in his order.

Smith's contention that the state investigations are politically motivated will not likely be as convincing in his pursuit of the SEC, a non-partisan agency that intentionally steers wide of politics.

The SEC requires companies like Exxon to disclose any potential decrease in demand for products that produce significant greenhouse gas emissions because it could pose a material risk to investors.

Democratic members of the House Oversight and Government Reform Committee asked the SEC in October to open an investigation to determine if Exxon violated securities laws by failing to disclose those risks.

The request signed by four committee members, including California Reps. Ted Lieu and Mark DeSaulnier, cited news reports in InsideClimate News and those later published by the Los Angeles Times that Exxon embarked on a campaign of denial and disinformation after company scientists connected the burning of fossil fuels with global warming.

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