Massachusetts' Lawsuit Against ExxonMobil Brings New Meaning to Silly
Attorneys General are supposed to enforce the rule of law. They are not supposed to use lawsuits to achieve policy outcomes not enacted by the legislature. They are not supposed to pick targets that are politically unpopular and then try to find some hammer with which to attack them. They are not supposed to transform perfectly sensible business practices into “fraud.” They are not supposed to use lawsuits as a vehicle for political advancement.
It is obvious that Massachusetts Attorney General Maura Healey has forgotten these basics, as evidenced by her recent lawsuit filed against ExxonMobil. She makes four allegations.
First: EM misled investors by misrepresenting and/or failing to disclose the “systematic risks” created by anthropogenic climate change for the U.S., the global economy, and EM’s business. EM supposedly had known for decades the serious future adverse effects of increasing GHG concentrations, but, so as to preserve the value of its assets, hid that fact from investors. Virtually everyone, including EM, agrees that increasing concentrations of greenhouse gases have had effects that are measurable. The issue is over the severity of future effects, and notwithstanding loud assertions that “the science is settled,” the most recent assessment report from the Intergovernmental Panel on Climate Change discusses in endless detail the massive uncertainties about those future effects. But EM supposedly “knew” decades ago things that are not known today? Please.
On the policy side, the related allegation is that EM knew that anthropogenic climate change is serious and that governments inevitably would adopt strong policies to deal with it, thus reducing sharply the value of EM’s assets, a prospective reality that EM hid from investors. Well, no: Strong policies have not been adopted. As the U.S. and Europe respectively end or water down their international commitments, China promises only that its emissions will “peak around 2030,” and India promises that its per capita emissions will not exceed those of the developed economies.
Second: Healey argues that EM has misled investors by using two different estimates of the costs of climate policies: (1) a general “proxy cost of carbon,” designed to estimate how government climate policies as a global aggregate might affect the demand for EM’s products averaged over the firm’s entire worldwide operations; and (2) a series of measures of “greenhouse gas (GHG) costs,” designed to estimate the prospective impacts of climate policies in specific nations on the costs of investments and energy production operations in those particular locales, that is, on a project-by-project basis.
Healey’s argument is preposterous. Is a delivery company engaged in misrepresentation if it uses a global average fuel cost for evaluation of its worldwide operations but a specific fuel price for evaluation of its costs in a specific nation with, say, high taxes on motor fuels?
Third: EM misled consumers by misrepresenting the environmental benefits of its Synergy gasoline and its “green” Mobil 1 engine lubricant, while failing to disclose the contribution of its fossil fuel products to climate change. One need only peruse the EM websites for Synergy and green Mobil 1 to see that the claims about improved fuel economy and reduced emissions are stated carefully, documented, and caveated appropriately. Precisely who has been misled? Since the contribution of fossil fuels to climate change is known to be real, but as noted above not known in terms of its future magnitudes, it is not clear precisely what EM was supposed to have “disclosed.” And what about the consumers of fossil fuels, including the Commonwealth of Massachusetts? Should they have made such disclosures?
Fourth: EM misled consumers through the use of “greenwashing” advertising campaigns that misrepresented EM’s environmental leadership while obscuring the climate impacts caused by the production and normal use of its products. Amazingly, Healey in her lawsuit conflates paid newspaper advertisements on climate placed by ExxonMobil and by Exxon and Mobil independently before they merged in 1999. This fundamental error was introduced into the public discussion in a deeply-flawed paper by Professors Geoffrey Supran and Naomi Oreskes, which examined 36 “advertorials,” of which 11 were arranged by EM and the other 25 by Mobil before the merger. A review of that paper by Kimberly A. Neuendorf debunks it thoroughly, finding severe methodological errors, biases, disclosure failures, non sequiturs, and an orientation toward “consensus” that is inconsistent with the basics of scientific methodology. Nonetheless, Healey simply copied the Supran/Oreskes narrative as “evidence.”
Could there be a sillier approach to climate policy formulation than the Healey lawsuit? Maybe, but it is hard to imagine.
