Minnesota Sues ExxonMobil, Koch Industries, and Top Oil and Gas Trade Association for Climate-Related Consumer Fraud

June 24, 2020 | 3:12 pm
Tony Webster/Flickr CC by 2.0
Elliott Negin
Former Contributor

On Wednesday, Minnesota Attorney General Keith Ellison filed a consumer fraud lawsuit against ExxonMobil, Koch Industries and the American Petroleum Institute (API), the leading US oil and gas industry trade association.

The suit alleges that the two companies and the trade association violated state consumer protection laws by misleading Minnesotans about the role fossil fuels play in causing the climate crisis.

“When corporations and trade associations break the law and hurt Minnesotans, it’s my job and my duty to hold them accountable,” Ellison said in a statement. “The fraud, deceptive advertising, and other violations of Minnesota state law and common law that the lawsuit shows they perpetrated have harmed Minnesotans’ health and our state’s environment, infrastructure and economy.

“Impacts from climate change hurt our low-income residents and communities of color first and worst,” he added. “The impacts on farmers in our agricultural state are widespread as well.”

Minnesota’s lawsuit is the first of its kind to name API and Koch Industries—a coal, oil and gas conglomerate that owns Minnesota’s largest oil refinery—as defendants. Since the late 1990s, ExxonMobil and Koch Industries’ owners, the billionaire brothers Charles and the late David Koch, have been the biggest sponsors of a network of self-styled “free market” think tanks and advocacy groups that dispute climate science and downplay the threat posed by fossil fuels. Through 2018, the Koch brothers spent more than $127 million on climate denier groups and ExxonMobil spent some $37 million.

The primary state law Ellison sued under, the Prevention of Consumer Fraud Act, holds a defendant liable for “misrepresentation, misleading statement or deceptive practice,” regardless of whether state residents suffered any harm as a result. The defendants also may have violated three other Minnesota statutes: the Unlawful Trade Practices Act, the False Statement in Advertising Act, and the Uniform Deceptive Trade Practices Act.

Fossil fuel companies under legal assault

Minnesota was one of the first states to file suit against the tobacco industry, and its case in the 1990s—the only one that made it to trial—resulted in a groundbreaking settlement of $6 billion over the first 25 years and $200 million annually thereafter. The case also pried 35 million pages of documents from tobacco company files revealing details of the industry’s campaign to sow doubt about the links between smoking and disease. Documents obtained just a few years ago show that the tobacco and fossil fuel industries used many of the same strategies and tactics.

Minnesota’s lawsuit against API, ExxonMobil and Koch Industries is similar to consumer fraud cases brought by attorneys general in New York and Massachusetts against ExxonMobil under their respective state laws. New York state prosecutors argued that the oil company had defrauded investors by downplaying the financial risks it faces from possible climate regulation. In December, the New York Supreme Court ruled in favor of ExxonMobil on the narrow charge before it.

“Nothing in this opinion is intended to absolve Exxon from responsibility for contributing to climate change,” the judge wrote, but “this is a securities fraud case, not a climate change case.”

Massachusetts’ lawsuit, filed in October, claims that ExxonMobil deceived consumers about the threat its products pose to the climate. It has not yet gone to trial.

The Minnesota lawsuit also follows other legal actions across the country to hold fossil fuel companies accountable for climate change-related property damage, alleging that the companies have known for decades that their products are the main cause of global warming. At least 10 counties and cities, including Baltimore, Boulder, Honolulu, New York City and San Francisco, are seeking compensation for damages caused by rising sea levels, wildfires and extreme weather events linked to climate change. Thus far, Rhode Island is the only state that has filed a similar “cost recovery” lawsuit.

Koch Industries and ExxonMobil have outsized influence on Capitol Hill. Since the 2014 election cycle, Koch Industries has contributed nearly twice as much to candidates and parties as any other oil and gas company, while Koch Industries and ExxonMobil have consistently been the top two in lobbying expenditures. Since the 2000 election cycle, Koch Industries contributed $59.5 million to campaigns and spent $157 million on lobbying. Over the same time frame, ExxonMobil spent $19 million on campaigns and $255.3 million on lobbying.

API, which represents more than 600 oil and gas companies, donated $3.6 million directly to political campaigns since 2000, but also spent $114.6 million on lobbying over that time period. It also has played a key role in drafting the Trump administration’s anti-regulatory agenda. At the end of last year, the administration had either completed or was in the process of rolling back 95 environmental rules and regulations. Twenty-seven of the 58 completed rollbacks—nearly half—and 13 of the 37 still in process directly benefit the oil and gas industry. Many were explicitly requested by API.