Notes From Underground: As With Climate Change, So With Fracking at ExxonMobil

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Notes from the underground exxonThe Exxon Mobil Corporation held its annual shareholders meeting on May 25, 2016. The company’s documentation of the meeting can be found here.

The final proposal offered at the meeting, the eleventh of eleven shareholder resolutions, relates to the company’s involvement in hydraulic fracturing (fracking). The authors of the proposal did not demand the immediate cessation of all hydraulic fracturing activities by the oil and gas giant, but rather requested that the corporation provide better disclosures regarding its fracking activities. The resolution – submitted each year over the past five years – stems from growing frustration that ExxonMobil has a problem with transparency, and that fracking is one key area where the company could choose to become more forthcoming.
The requirement that the oil and gas giant submit an annual report addressing how it is minimizing harmful impacts associated with fracking was rejected, with only 24.5% of shareholders voting in favor of better practices. The rest accepted CEO Rex Tillerson’s declaration that ExxonMobil is doing everything it is legally obliged to do, and that’s plenty.

This is the same Rex Tillerson who played the ultimate NIMBY card and encouraged use of the word “hypocrisy” by stop fracking near his Texas ranch, while backing the Texas Oil and Gas Association (of which ExxonMobil, headquartered in Irving, Texas, is a prominent member) as it defeated the will of the people of Denton, Texas, when they within city limits.

The fracking resolution cited a report that ranked various companies’ disclosure records regarding fracking practices (ExxonMobil didn’t rank very high), and noted that one ExxonMobil subsidiary (, a major fracking operation acquired by ExxonMobil in 2010) had over 100 violations between 2011 and 2014 in Pennsylvania alone. Based on such evidence, the proposal urges ExxonMobil to be more proactive and forthright regarding its fracking activities.

As noted, this proposal has been put forward each year since 2011. While ExxonMobil has attempted to provide more clarity by creating its own reports, these efforts have been deemed inadequate by the proposal’s authors, who withdrew the proposal in 2014 when ExxonMobil agreed to make the required disclosures, then revisited the proposal in 2015 when the disclosures came up short.

ExxonMobil’s 2016 response is consistent with this history, and with the company’s current position on climate change: to admit that science indicates that there are risks associated with climate change/fracking, but that the precise nature of these risks is unclear, and the need for plentiful fuel supersedes the need to protect the long-term health of the environment.

While describing the complexities of Exxon/ExxonMobil’s history regarding climate change (and its systematic denial thereof) is beyond the scope of this article, here is a quick overview: In the 1960s and ’70s, Exxon scientists were at the forefront of climate science, and disclosed to Exxon executives early on that massive-scale burning of fossil fuels would have impacts on the global climate. In the 1980s, Exxon began actively engaging in the anti-science climate-change denial movement, along with the American Petroleum Institute and other oil giants. It has carried on this engagement even to this day through its continuing association with ALEC – the American Legislative Exchange Counsel – an organization that writes model conservative legislation, and which continues to argue that anthropogenic climate change is scientifically uncertain at best.

This is ExxonMobil’s current view, which follows the sluggish trends of an industry locked in a war of attrition. The current refrain, heard frequently from Rex Tillerson’s lips during this year’s meeting, is that: (1) Climate change is real, and may be caused, at least in part, by human activity, such as the consumption of fossil fuels; but (2) the impacts are unclear and thus should not significantly impact ExxonMobil’s activities; and (3) to the extent that ExxonMobil and other fossil fuel companies ought to address climate change and its impacts, existing regulation plus internal company practices and processes are more than adequate to address the problem.

ExxonMobil’s position on climate change thus focuses on the uncertainty of specific impacts, rather than the big-picture certainty that there will be impacts, and that they could be catastrophic.

The company’s position on fracking is an offshoot of this reasoning. Despite clear evidence that the practice has negative impacts, such as increased seismic activity and air and groundwater pollution, certain to worsen as fracking becomes more widespread, the benefits of a ready flow of natural gas outweigh these “speculative” risks.

This attitude – like ExxonMobil’s attitude toward climate change – does its shareholders and the public a great disservice, and displays a flagrant misinterpretation of the Precautionary Principle (described previously in this series). Declaring that an activity should be continued because the risks are unclear is irrational, particularly when the risks in question are already occurring, are likely to continue, and are potentially disastrous.

The fracking disclosure proposal rejected at this year’s ExxonMobil shareholders meeting was only the latest demonstration that voting shareholders at ExxonMobil and people concerned about the environment share only a 25-30% overlap on a Venn diagram. This year, as noted, that overlap stands at around 25%.

Such numbers are generally considered good signs for those hoping to sway the activities of large corporations. Only the most incompetent of corporate executives ignore a quarter to a third of their shareholders’ desires. But the trend at ExxonMobil has been to acknowledge the request by continuing to deliver inadequate information.

Moreover, the slight decline in support for the proposal from its peak of a 30.2% vote in favor in 2013 highlights the downside of divestment. Although certain environmental groups maintain ExxonMobil shares in order to influence the corporation from within, it is understandable that institutions whose core purposes are essentially unrelated to environmental activism – such as universities, pension funds, and religious organizations – choose to sever ties with companies that do not share their world view. This leaves fewer environmentalists on the inside, fighting for change.

In the cases of fracking, climate change, and the fossil fuel industry in general, it seems that only outside forces – i.e. new laws and regulations – will push corporations to become more forthright about their practices and the risks they pose. History gives no cause for optimism on that front, as the “outside forces” are often insiders.

Denton, Texas, is the rule, not the exception. Fracking pioneer Halliburton notably influenced policy during the early 2000s (Vice President Cheney, of course, having been Halliburton’s CEO), to the extent that the make-up of fracking chemicals pumped into the ground is protected as proprietary and largely exempt from regulation under the Clean Water Act. ExxonMobil has Philip Cooney on staff, who, as CSPW readers well know, previously worked in the Bush-Cheney administration doctoring scientific climate data – until resigning after CSW Founder Rick Piltz blew the whistle and exposed his machinations on the front page of The New York Times. These days, ExxonMobil also provides financial support to members of Congress in order to try to avoid prosecution for misleading its shareholders and the public about its knowledge of climate change. The American Petroleum Institute, the US Chamber of Commerce, ALEC, and other influential organizations continue to push pro-corporate, anti-environmental agendas.

With corporations holding such sway over policy makers, the future looks grim, indeed.

 

Environmental Counsel Adam Arnold worked with GAP’s clinical program while earning his J.D. from the University of the District of Columbia’s David A. Clarke School of Law, is a member of the Maryland Bar, and has an LL.M. in International Environmental Law and International Organizations from American University’s Washington College of Law.

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