INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 SUPREME COURT COUNTY In the RECEIVED NYSCEF: 06/19/2018 STATE NEW YORK OF NEW YORK OF Matter OF THE of the Application of the Index PEOPLE OF THE BARBARA Attorney D. General NEW OF STATE YORK, No. 451962/2016 by UNDERWOOD, of the of New State York, 61 Part IAS Hon. Barry R. Ostrager Petitioner, - against PRICEWATERHOUSECOOPERS EXXON MOBIL - Motion LLP Sequence No. 7 and CORPORATION, Respondents. OFFICE OF THE IN ATTORNEY SUPPORT COMPLIANCE WITH GENERAL'S OF MOTION INVESTIGATORY 1 of 30 MEMORANDUM TO COMPEL SUBPOENAS OF LAW INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 TABLEOFCONTENTS TABLE OF AUTHORITIES PRELIMINARY STATEMENT PROCEDURAL ~~ ii .......................................................................................................... 1 .................................................................................................... HISTORY............................................................................................................ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 7 ARGUMENT.................................................................................................................................. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 9 A. OAG's Investigation Factual a Solid Basis........................................................ 1. Exxon's Public Representations About Proxy 2. Exxon's Public Representations About Resources, 3. OAG's Investigation Conformed B. on Rests The Requested 1. Cash 2. Exxon's Flow to Its Has Public Documents Revealed That Costs Exxon's ................................................ Reserves Internal and Practices Are Related Reasonably to OAG's to the May Investigation................. SEC................................................................................. 10 Impairment......... Representations.................................................................. Spreadsheets............................................................................................ ............................................................................................ Production 10 Not 13 Have 15 18 18 23 CONCLUSION............................................................................................................................. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 25 . 1 2 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 TABLE OF AUTHORITIES Cases Am. Dental v. A.O. Ave. Browning City Smith Cuomo Ct. Endicott Ct. Indus. N.Y. Mobil Corp. Exxon v. Schneiderman, Worth FTC v. Texaco, Gelb v. Kuriansky, Hirschorn Hogan Horn 118 v. Attorney v. Cuomo, Constr. Co. v. Am. Oncor Commc'ns Med. v. Applied v. J.P. 862 F.2d Misc. 2d 263 State (1st Comm'n 3d .................. 1987).................. 9, 20 9 Dep't on 1994).......................... Gov't Integrity, 144 Misc. 6 n.3, 24 6 n.3, 24 342 2d 2009 1107(A), N.Y. 20 Slip. Op. 50062(U) Response, Inc., 636 Sys., Ct. 2d (3d Dep't (S.D.N.Y. & Co., Kings 275 Apr. 13, 2018)........................... ........................... Mar. 29, ............... 2018)............... 297 F.R.D. 99 (S.D.N.Y. (1st 438 188 (2d 176 Ct. 6, 7, 24 n.15 2013)...... 1983).............................................. N.Y. Cnty. 6 n.4 ............................. 1978)............................. 10 20 20 10 2009).................................................................... 377 F.3d Cnty. (Sup. N.Y.S.2d 11 N.Y.3d 24 .................................................................... 1977).................................................................... Cir. (Sup. N.Y.S.2d Inc., Op. (Mass. Chase (D.C. 25 n.17 (1943)............................................................. SJC-12376 Morgan 665 309 501 U.S. 93 Misc. N.Y.S.2d v. State, Misc. Slip 960 v. Fraiman, Card Dep't (1988)................................................................ A.D.2d 22 General, General, 888 317 17-02301, Fund 555 Inc., 207 (1st ........................................................ 2006)........................................................ Cir. Inc., v. Perkins, No. Ret. (2d 228 .................................................................................... 6, 2009).................................................................................... v. Attorney Emps. NLRB People Jan. Corp. 327 v. N.Y. Agency N.Y.S.2d 1989)................................................................................................... ................................................................................................... Amusements, Exxon Fort 66 v. Rubin, Dev. Cnty. Cnty. Johnson F.3d Corp. v. Dreamland (Sup. 451 Corp., Albany 71 N.Y.2d v. Abrams, Realty of Albany (Sup. 514 v. Attorney-General, Inc. Anheuser-Busch, Ball Inc. Coop., Dep't Cir. ............................................... 1970)............................................... 2006)................................................. ................................................. (3d Dep't 105 (2008).................................................... .................................................... .. 11 3 of 30 9 1996).................................................... 9 20 24 25 n.17 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 INDEX NO. 451962/2016 RECEIVED NYSCEF: 06/19/2018 Statutes .Y. N.Y. Exec. N.Y. .Y. Gen. Law Bus. 12 $ 63 Law .......................................................................................................... 9 n.7 $ 352........................................................................................................ 9 n.7 Regulations 17 C.F.R. $ 210.4-10............................................................................................................. 25 n.16 17 C.F.R. ............................................................................................................ $ 229.1202............................................................................................................ 25 n.16 Instruction to 17 C.F.R. $ 229.1202 Item 1202 .................................................................. ... 111 4 of 30 25 n.16 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 The law and the in with comply flow spreadsheets") and estimates, of to impairment and their provided Exxon to the motion investigation. collect That documents company's due to Exxon's has that a proxy include purposes ¶ 6.) of Exxon cost investment According only the has for risk of to Exxon, these the Exxon's last (ii) gas reserves the producing ("SEC") change. is due of the the it is taking active steps is that it "requires long-term expense planning, some 1 5 of 30 that and of which refusal this OAG's obstinacy, poses to this to Exxon's it knows where merits central are before regulation costs, that were change business proxy folders we that in the decision-making, climate already litigating since touted greenhouse Commission documents OAG despite investors emissions specific to on But climate of company and projects; Exchange and electronic strengthened frequently GHG for insistence that & flow cost reviews, cash the STATEMENT produced number assured repeatedly from been and calculations, requests is complete. has value safeguard Aff. a limited investigation Exxon not from investigation OAG's OAG's OAG's have they It is also is stored. before concerns assets to producing ("cash a proxy planning Securities PRELIMINARY This used corporate 26 reserves evaluations, Exxon extent (i) of Zweig (" Exxon" ("Exxon") by: materials backup Jonathan and Corporation subpoenas memorandum this Aff.") Mobil 5, 2015 decisions, for ("Oleske Exxon and to what evaluations previously Oleske November spreadsheets investment impairment John submits respectfully to compel and whether in its Exxon documents relating form reflecting emissions ("GHG") motion its 8, 2017 May in the projections of ("OAG") of affirmations support OAG's General Attorney accompanying Aff.") ("Zweig of the Office key evidence potential claims factual [of Court. to protect its] the A business that projections financial appear for basis to its business. all to reporting. in the key units" Exxon uses (Oleske company's for INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 annual RECEIVED NYSCEF: 06/19/2018 for Outlook "reflect[] period," Outlook dollars, period." Exxon (Id.) particular or will The to believe that to OAG's previous Plan (" ("Outlook Reports between the Cost Proxy gas demand, while (ii) Exxon's (Id. That public company were maintained which Costs" Costs"). on of none the of Outlook in and practices, hydrocarbon [its] time on use throughout management the over rise constraints increase risk its that reserves in the a second, use lower than outside and gas Cost not been proxy internal with several those counsel its disclosed set of proxy costs 6 of 30 Plan policy, for and, concept, that (i) public and were Outlook the of projecting that in oil lower, oil applies and gas thus to only projects. those that to disclose and and projections, representations; failed Outlook disconnect revenue cost" to the (" ("Corporate is no because ultimately, investments maintained public there purposes "GHG response costs that reason Appendices set of proxy asserted only 9, 2017 company in Exxon's in Exxon's as a single the set forth internal capital June Corporate a separate its its years, a second projections is actually costs of is used price in connection described the In company's substantial provides misleading. for that, directed and Proxy had and representations oil Plan false representations influences investigation OAG's admitted Exxon's in its public distinction of significantly expenses representations . . . [will] documented public Corporate projecting ¶ 35.) that company's the first policy, Proxy which emissions were Exxon Plan" Plan"), described that based which "[g]overnments' projection over regulations costs, proxy publications, company GHG potential These ¶ 8.) it is "confident course representations motion, Costs" Costs") (Id. that, costs, in the obtained corporate Proxy investors with associated as other (Id.) (" ("Corporate Dataguide its as well 'stranded.'" Exxon's an undisclosed on limits of proxy become evidence costs Exxon's and assured application the now sources energy Reports" Reports"), or longer. 2040 reflect purportedly carbon-based of assessment through i.e., in real are best [Exxon's] (" ("Outlook reports Energy took the into INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 account this RECEIVED NYSCEF: 06/19/2018 risk less documents - Costs There directed the in its investment employees Costs.1 observed that Exxon's Cost statements Third, ¶¶ 29-32.) those Exxon legislated where the provincial those costs would 1 "OECD" recognizing refers and emerging for at least costs the Outlook flat Proxy Costs Exxon belatedly for would of proxy imposes for "massive the decades GHG for Economic for certain a carbon into costs" the still future. and Co-operation as members. 7 of 30 GHG (Id. "large of the for from base lower even to use after in Alberta, assets and In that which (Id. than costs For much Canada, to assume so doing, its Exxon's 2014. existing, years, economic despite incorporated ¶¶ 45-60.) and Development, several countries. emissions, write-downs" Corporate same Plan and decisions, to company countries, management on investment altogether than company's protection in those projects tax for Plan countries the Second, Corporate by Corporate ¶¶ 24-28.) apparently directed Exxon's some to projects revised reporting. conformed in non-OECD Outlook financial that used less costs proxy Exxon were costs (Id. projects projects, were provided Costs. be applied and Costs noted OAG costs, - the in OECD employee Proxy to omit First, decisions an Exxon Proxy apparently to the Organisation countries GHGs, Reports government the Plan not. of purposes contemporaneous publicly and the its proxy to its public, planning, investment Outlook the some Outlook remain after spreadsheets in lieu for of purpose it described it did for Accepting, adhered costs to believe employees costs employees lower avoided proxy in the contained example, that Exxon proxy costs proxy emitted flow the that directed in cash projections regarding bases that with Plan only 23-43.) business Corporate that figures Corporate public lower in projects Proxy the In mid-2014, implied the whether (Id. decision-making, lower to use falsely distinction applied independent Proxy investments cost four publicly. to reveal likely it in fact representations Plan are described explained that are Outlook and figures newly that representations Proxy the Exxon's motion, seeks than that Exxon employees includes 35 developed INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 believed the RECEIVED NYSCEF: 06/19/2018 would have Outlook company's evidence indicates purposes of influenced its estimates, and sought provided Exxon of proxy reserves Since and proxy GHG set forth in the (Id. ¶¶ 47, 50.) Fourth, costs in its cost projections are - the cash of cash for investment impairment evaluations. that corporate Aff. (Zweig the documents Exxon's spreadsheets witnesses would reflect reviews, planning 33, ¶¶ has in those and inquiry. decisions, reserves OAG costs proxy ways planning, spreadsheets to this flow independent investigation, used flow relevant highly Exxon's of this Exxon four business decisions, extent seeks in these costs beginning collections into and estimates, the to what - SEC maintains costs include as investment presently to the not Plan. costs proxy ¶¶ 61-62.) evaluations. OAG did such whether escalating Corporate of projected functions, documents incorporation company business that (Id. of schedule revised Exxon to 2016, reflecting clear made in the and undercounting impairment previously have any core the applying evaluations. apparent The Exxon prior that documents functions. Reports impairment Exxon's from resulted 39, 41, 49-51, 54, 56-57.) there Indeed, Exxon form, has for planners produced a few (Id. employees expected investments. in the cash oil for decisions. flow - of spreadsheets flow future ¶ 55.) analysis for economics In the these although attachments conditions words projects and would of and spreadsheets Proxy have Exxon's generated 8 of 30 other how Costs major employees, forecasts they that individual affect investment out bears what in the impacts that or draft from files (reflected financial given documents in incomplete most assessing of those Outlook of these relevance spreadsheets, long-term the as to the as email projects, preliminary projects' Aff. dispute cash modeling applying to these (Oleske credible sands OAG's ¶ 63.) Plan) be no a number Alberta responsible Corporate can Exxon's revised on those applying those would "shorten proxy asset costs life INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 and reduce RECEIVED NYSCEF: 06/19/2018 years." out appears reserves" gross (Id. ¶¶ 47, to have them. (Id. employed at that By have undercounted (Id. ¶ 55.) Depending of the positive and As negative subpoenas would be if the "obviously and oil and for largest most and there these witnesses, Exxon maintains shared locations within its easily identifiable its could demonstrated, compliance within readily once obligations. to whether for spreadsheets due major and files, retrieve that them. only Accordingly, cash its to ensure subsidiaries, those of a handful Court's OAG flow ready access. OAG's compulsion requests 9 of 30 that will the Court (Id. ¶ 56.) inquiry" proper has cited are among witnesses have spreadsheets. The the made to in centralized, spreadsheets tailored order burden According are in Exxon's prompt the what Exxon that or or futile, cost, supervisors carefully between proxy spreadsheets of planning In rejecting the flow costs authorized assets Exxon's cash these producing versions but change, as 93%. legislated irrelevant any and Exxon difference to any cost. of as much project. being such ton lower to OAG's applied 26 projects by the Alberta from it applied the to climate with final Exxon of time made to avoid escalation, sands irrelevant far Here, per price these resistance "utterly at 9.) have major one for were infra period associated again, at least oil to apply may grounds relevant at risk clear is little burden flow for materials what decision Exxon methodology" future Alberta in the costs consequences, the (i.e., without in the to investors flows (See highly company's has the cognizable only are cash subsidiaries assumptions, cash costs regime) regulatory financial an "alternate legislated existing GHG to "massive negative called costs futile." to produce supervisor represented due these GHG-related requested in refusing accept Alberta's inevitably it applied, than only price the spreadsheets cost a planning projected below, specific what Exxon costs set out requested Rather projected on proxy 57.) under write-downs," in "large result applying moment may in lieu 50, ¶¶ 47-48.) emissions and major request, the company Exxon Exxon to meet to produce INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 the cash RECEIVED NYSCEF: 06/19/2018 flow spreadsheets although Separately, in the costs proxy continues There declined legal Exxon the for derail arguing it has provided It is unfortunate that this law Massachusetts.4 Massachusetts. claims authorized No. The seeking the federal "extraordinary" investigations into Court for inquiry Op. at 47-48 to compel Exxon has investigation enforcement and was the order. regarding its estimates, Exxon federal Exxon ordered confer the on the Southern preempted Court this Mar. grounds. Court to identify document requests of New District by 29, regulations. SEC Exxon 2018). Exxon to direct of use preemption Indeed, (S.D.N.Y. asks proposed is to produce SEC. a motion But instead to meet thus reserves investigation. OAG's OAG SEC on purported and District Slip otherwise.3 otherwise. to the and U.S. that to the and OAG's basis, reserves 17-02301, documents. of on that claim accompanying documents documents aspect the to the evaluations those any addition, from relevant plainly for motion Exxon's provided impairment estimating In v. Schneiderman, documents asset prior Exxon's rejected precluded has to preempt Subpoena.2 Subpoena. recently now request responsible 2017 York OAG's basis to grant employees in the of to resist is no Exxon context A in Exhibit identified district relief to extraordinary a similar in Exxon court potential gone and of to obtain is necessary stopping fraud," Slip lengths investigation Op. from held that disrupt dismissed conducting and General Attorney Exxon's of categories to delay, recently officials at 1, and two the by v. Schneiderman "state these of Exxon's duly- claims were 2 Exxon in its May 19, 2017 Motion raised this argument to Quash the 2017 Subpoena. See Exxon Mobil previously Brief in Support of its Motion Corporation's to Quash and for a Protective No. 130, Order, May 19, 2017, NYSCEF at 19-23. 3 See Ball 451 F.3d 66, 69 (2d Cir. 2006); Browning v. A.O. Smith Corp., ,451 Ave. Realty Corp. v. Rubin, 207.A.D.2d A.D.2d 263, 266 (1st Dep't 1994). 4 order denying Exxon's motion a Superior Court's The Supreme Judicial Court of Massachusetts affirmed recently - the Massachusetts of an a civil investigative OAG investigative demand ("CID") to set aside or modify analog cross-motion subpoena - and granting the Attorney General's to compel Exxon to comply with the CID. Exxon Mobil Corp. v. Attorney SJC-12376 (Mass. Apr. 13, 2018). General, 10 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 based on claim that RECEIVED NYSCEF: 06/19/2018 thin "extremely the documents the investigation, Exxon's court had legal raised subpoenas in this relevance Subpoenas jiu-jitsu serious are of federal a huge waste and of OAG Exxon core first sought, applied the business documents that in the its in every November costs proxy functions. (Zweig how showing asserting carbon but a irrelevant meddling in different your cake Exxon's to this York and would strategy state eat at time and least Supreme too" it be impressive investigations judges, AGs' of the New in the not "have this PROCEDURAL its In rejecting at 2. and three led to lawsuits, money. n.31.5 n.31. at 43 how id. purportedly to pursue four involving motions Court smacks necessary risks litigation sprawling innumerable inferences," speculative OAG's by to argue the The it not and observed: reviewing approach. Id. sought attempt Court a allegations the Corporate Plans jurisdiction 2015 that, according Aff. ¶ 3.) company HISTORY "specify to its through worldwide year the costs to avoided specific ExxonMobil how precisely to investors, repeatedly proxy 2040." whether showing representations counsel Exxon's applied actually documents subpoena, (Oleske producing by its proxy Aff. in it applied projects applies and cost of (Emphasis ¶ 42.) added.) in the Then, cash Exxon's Aff. ¶ 14.) cross-moved articulated Corporate 5 Exxon flow refused to compel Plans has now subpoena, and spreadsheets, Exxon a new 2017 May and filed flatly contain a notice reiterated for production called to quash. with compliance position do not moved OAG OAG's its contradicting costs," but "proxy of appeal of the district its of the OAG opposed 2015 and former rather court's 2017 position, "GHG dismissal. 11 of 30 for request key motion In subpoenas. now costs," data documents. underlying Exxon's cost proxy asserting with (Zweig to quash response, that the costs" "proxy from and Exxon INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 incorporated At compel, the June subpoena. were categories clear that Court did to produce not grant requests for offering to limit and cash gas flow its Exxon and rejected that OAG further not include cash (ii) any restrict flow downstream its (e.g., assets for potential resource base; (v) any ExxonMobil ExxonMobil ("XTO")6; equity. 6 XTO Production and (Zweig (vii) Aff. any Company); (vi) assessment of ¶ 22.) iS an EXXOn subsidiary or the Each of these that focuses in the areas 2010 flow to meet and its projects, most recently Exxon's hundreds many Exxon (i.e., those purchase of XTO oil and gas resources that (i.e., of reserves those XTO for over assets with and operates by Energy, $40 and supervised supervised by did countries; evaluation company phase and of projects any Exxon's exploration insisted in non-OECD (iii) supervised 12 of 30 The to limit subset or assets America. made offered spreadsheets, or assets; projects and ¶ 18.) OAG and or assets of there ¶¶ 67-68.) smaller phase involves on unconventional of Aff. projects any production Exxon's 26 only to an even projects any for assessment or assets Company) major Oleske projects any Aff. Exxon Exxon's to the produced, repeatedly to cash As request (iv) projects of ¶¶ 21-42; chemical and OAG Limited whether previously directed Oil responsive reveal would have were (Zweig group (i) that documents." instead requests. impairment; Exploration and concerning: refining) should spreadsheets limited already upstream Exxon Aff. narrowed in 2016 to Imperial Exxon's testimony Thereafter, flow (Zweig spreadsheets existing by cash assets. OAG's such cross-motion OAG's from created to a narrow to the in part granted additional (Id.) spreadsheets projects for ¶¶ 35-44.) testimony that to quash, requests. request for that to ask motion remaining Court predicted authority Aff. documents documents Exxon's OAG's the a witness rightly of responsive "the (Oleske to produce Court has Reports. conference, and The OAG on oil 2017 16, subsidiary, 2015 confer Outlook Exxon ordering (" Imperial" ("Imperial") of in the only billion Inc. in ongoing primarily in North INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 investments substantial and documents it provided GHG emissions. SEC. (Oleske to the Exxon Aff. also refused to produce the available readily ¶ 74.) ARGUMENT The Court to; relationship basis. Am. (OAG need items reviews show only or not unfounded Dep't State anti-fraud This investigation. (even Exxon Id.; standard relationship" of no Constr. extensive examination between subsequent an ongoing faith Dental to follow-up Co. v. Fraiman, of Hogan "the relevance of OAG's its N.Y.S.2d State requests need and Attorney-General from legitimate inquiry." inquiry. proper In particular, competent N.Y.S.2d factual the of the it evidence, 667 665, bases (3d and Legislature to enforce at 232. than requests 888 1987) anything added). asserted mandate Dep't to any by N.Y.S.2d 309 irrelevant v. Cuomo, that witnesses," document and irrelevance" or "utter 514 Coop., (1st (emphasis (1988) factual 232 to uncover process is utterly 332 execution less "[t]he inquiry, 327, a presumption good Am. applies See Horn "after context laws.7 laws. the sought argument. overcome reflect of the futility reasonable (1) 228, investigation" futility" "obvious N.Y.S.2d [the] information or attorney must "the their in an articulable is grounded 514 for 71 N.Y.2d such show basis that v. Abrams, to requests show . . . the allegations 2009). particular or Inc. burden is Exxon's must obvious Anheuser-Busch, factual for subpoenas that (3) v. Attorney-General, "some Exxon sought"). OAG's investigation; Inc. Coop., of enforceability an authorized (2) Dental is inevitable the those made at the 377, 379-80 (1st only show objective is not required of of outset Dep't an 1970) a "reasonable Even investigation). to disclose the in the probable information (" it shall appear to [OAG], . . . that any . . . corporation . . . shall have § 352 ("Whenever such other data and . . . require . . . a statement . . . any deception . . . [it] may in [its] discretion [and] of any books or papers as [it] may deem relevant . . . subpoena witnesses . . . and require the production which deems relevant 7 see N.Y. employed [it] authorized Gen. Bus. Law to take proof or material and make to the inquiry.") (emphasis of the relevant a determination 13 of 30 added); N.Y. Exec. Law § 63(12) facts and to issue subpoenas"). (OAG "is INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 cause the and RECEIVED NYSCEF: 06/19/2018 of course Hirschorn v. Attorney application of specific F.R.D. Here, spreadsheets 109-14 99, the the documents in making cost estimating and documents and In response regulations could prior Fort e.g., ,.F.ort Worth specific to growing motion 277 275, supplement of document Emps. (Sup. Ct. N.Y. Fund or Cnty. 1978). from resulting with custodians v. J.P. in issued amplification productions Ret. to the production the Morgan & Chase asset The to the cash flow core issues to which extent impairment Factual basis. corporate to an relationship relevant directly conducting planning Exxon applied a reviews, evaluations. Basis affirmation in this motion rest About Proxy on of a solid John OAG's Oleske, factual supported basis, by date.8 Representations investor factual accompanying requests to are SEC a reasonable representations-the a Solid in the to its business, bear an articulable conducting collected Public pose in decisions, on and further without to unquestionably public and 2d subpoena 2013). Exxon's below testimony Exxon's See, Rests the 1. files is grounded reserves, described investigation electronic investment Investigation As 8 OAG's of its company OAG's to the produced accuracy 93 Misc. A a subpoena. adequate appropriate, documents that of issuance facie General, (S.D.N.Y. requested the is prima entirely documents. and concerning A. terms investigation authorized proxy and search relevant 297 Co., to justify investigation it is commonplace, Further, the investigation an ongoing justification." of of his scope about concerns Exxon repeatedly the Costs risks pointed that potential investors to compel, see NYSCEF Doc. 169, set forth the basis for OAG's factual representations to OAG and to this Court and OAG's and was based on Exxon's That motion climate to its use investigation then-current change of a "proxy at that time, of the review should not be understood as representing the current status of OAG's and is investigation, motion motion current current not the to compel. The reflects facts and evidence available to OAG at by factual the time of the earlier motion, as well as Exxon's representations to the OAG and to this Court. shifting OAG also continues to investigate potential misrepresentations by Exxon that are not the focus of the present evidence. superseded motion, and which are not detailed in the accompanying affirmation. 1 14 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 cost" that reflects its long-lived affect of oil March to efforts governments specific "require[ment]" capital business that (Id. Exxon (Id.) the expenditures that planning, company's The of proxy Proxy Costs, described its proxy projected emissions cost Proxy which as a single costs (Id. of its use company's ¶ 6.) what disclose Outlook Plan basis." not did on plans," a proxy reserves reserves Exxon now are also not in our company's to investment planning." [its] investment decisions and "stranded," become exposed "in Reports "specific making or will now anticipate as a factor Outlook is integral in its cost are in new and cost proxy the Exxon that we them in the featured regulatory decisions touted as resolutions claimed incorporate such planning shareholder reports policy cost business GHG ¶ 6.) of risks to increased These specifically proxy Aff. may to the and risk of two different ¶ 8.) - costs Corporate planning (Id. reports of the the "this investments ongoing stranded. that in part none use reports business resilience therefore the and to proposed ¶ 5.) regulations it addressed (Oleske climate-related and developing asserted based The ¶ 8.) and Exxon ¶ 6.) period units" business concluded, becoming sets "all that the (Id. climate decisions company's change. reflect (Id. that in response of the Outlook decisions." investment reports climate the during claimed basis." two proposals by future planning analyses to combat investment investment decisions." issued imposed further in its cost corporate Exxon making evaluating a proxy costs Exxon assets. financial relating that gas using 2014, detailed "require[d] GHG-related "consistent requested costs and by a purportedly In that potential how action government part RECEIVED NYSCEF: 06/19/2018 in each Costs, Exxon concept, jurisdiction, Notwithstanding which now Exxon refers intended and Exxon's that asserts: now to as current 11 15 of 30 refers fact costs, best position, a "consistent the terms and Exxon Rather, company's of had "proxy" costs. the as part in to as "GHG" to reflect applied Exxon of estimate corporate "proxy" and INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 "GHG" RECEIVED NYSCEF: 06/19/2018 in no Exxon's explanation different purposes, even conflated we the that countries like period. (Id. purpose of testing risk-management would costs from Costs the like for Costs Proxy GHG of carbon for used Exxon above. reports, cost proxy are emissions. as described in those that, not (Id. "[w]e have when evaluating the - "[to] but lower, (Id. similarly and the as - [GHG] specified and GHG on on limits way," costs escalating costs shareholders Exxon ¶ 8.) to lead continu[e] cost concerned sources energy period." Outlook its proxy of the those legislated existing, described with carbon-based that assuming explicitly consistent of Canada impose reports, and to tout potential identified Outlook were from quoted safeguard disclosures - on use was Exxon Rather, throughout - repeatedly these Exxon that assumption nations" continued company cost," accepting that that it non-OECD over emissions ¶ 7.) annual statements, Proxy indefinitely. increase China Exxon clear make company's . . . [will] "OECD of costs proxy basis Outlook] Plan Corporate observed even representations; future "GHG later Energy constraints expected that also "[g]overnments' emissions and projected term Manager public ¶ 25.) in place incorporating for the using [i.e., Costs Proxy a proxy GHG EO the reports remain by Exxon's (Id. These are in Exxon's costs Outlook both concepts use investments." these the they the that would that Indeed, ¶¶ 35-43.) implied distinguished way its substantially Corporate use of that was lower investors against "integral anticipated to of the than the and climate that, Outlook 1 16 of 30 for Proxy a period Proxy Costs. In reports so doing, "model[s]" change planning." Plan 2014 ¶ 10.) [Exxon's] Corporate or revealed (Id. "planning" in its cost March to its Reports. Citizenship existence Costs, referred a proxy investments the Proxy and (Id. regulations, ¶¶ 6-10.) distinguished Costs, of time, for the Corporate in proxy the the as a and of None those Plan INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 Exxon Moreover, For 2007. example, ExxonMobil and carbon in carbon on various Exxon's a December 2, 2015 carbon specified business [its] of CEO Rex in Exxon's costs investment We have, of unlike carbon know choose to future, and (Id. ¶ 13.) "as a current Mr. cost," in it everything Tillerson's rather position than that "to and shareholder 2007 Plan the meeting, of the been on investors that risk-managed using Costs. Proxy then-Chairman company's general on price a price assured had Corporate investors of impact since entitled a proxy statements since Outlook the in use website, included analyze These expenditures been had corporate "ha[d] ¶ 12.) company's And we So we assertion that Exxon's affecting Costs policy have against application years many carbon gets as impacts your of proxy put well. a price into of It's might all be. that our We a proxy. But or your revenues accommodated included whatever cost. So we in uncertainty the it. Outlook only Proxy is directly revenues, relate for decisions to either tested Proxy of future back gets as a factor Outlook what a cost. price have investment come they as we that make to model else ultimately put in order competitors, outlook. when how are, the Exxon's company (Id. annual of our many models policies 2007," Cost Proxy decisions: our in economic don't reassured on the between 2016 May Tillerson publication in capital dollars Outlook its opportunities." distinguishing at Exxon's Then, that that since investment billions many tax, planning costs-without proxy and the claimed publicly to Exxon's Costs contrary demand are incorporated to Exxon's and revenue projections.9 projections. 2. Exxon's Exxon has Public also About Representations represented that the Resources, company's financial Reserves prospects and are Impairment strong due in between Exxon's Corporate June 2017 motion to compel revealed the discrepancy 2018, after OAG's 9InFebruary Plan Proxy Costs and the Outlook issued a new report on energy and carbon that Proxy Costs, the company on proxy costs. In that report, Exxon attempted-for a new disclosure contained the first time, apart from its court costs" between the scope and use of its external Outlook and papers in this matter-to describe a distinction "proxy costs," from Plan "GHG court last that tracks its papers June. (Oleske language its internal Corporate closely using Aff. ¶ 44.) 1 17 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 significant RECEIVED NYSCEF: 06/19/2018 part reserves" to the process. which is far (Id. larger 14.) Exxon SEC has with" of future conditions. utilizes reserves extract and costs result Exxon accepted generally assumptions" "consistent that with were criteria investment evaluations decision-making certain from Exxon's management may in the manner and annual business asset and it used, not set of on the developed." (Id. are forecast 17-18.) Applying view purportedly a proxy cost uneconomical ¶ 19.) "aligned own Exxon ¶ conditions, company's that to investors investment did as proved estimates emissions (Id. base classified be base resource financial yet ultimately "company Failing to to to include misleading. report to evaluate not resources them planning if Exxon that ¶¶ base. its are its in its consistent high-emissions annual of that based (Id. ("GAAP"), be misleading "a resource size resource GHG of render in its uses and calculations, cost accordingly in the that will to apply of reported gas cost[]." future render "developed and as part the reserves reserves proxy principles disclosed believe[s] to all represented is estimated oil [Exxon] The may accounting representations impairment removal has of prices" and may estimates proved company an "assumed in their the a company 16-17.) ¶¶ estimates in those Likewise, These (Id. its require costs is quintessentially company proxy future that that that publicly "quantities but investors has from distinct which base, Exxon definitions, told assumed resource comprises guidelines industry including and which under reserves its ¶ 14-19.) than statements-and of size impairment evaluations process," opportunities." to use, with consistent budgeting incorporate or purported that, used and (Id. "cost were ¶ 20.) proxy costs in its those costs in its planning.10 M Documents and testimony also indicate that Exxon's company reserves estimates are an input into its impairment so failing to include proxy costs in those estimates would also call into question the accuracy of evaluations, Exxon's impairment-related representations. Oleske Aff. ¶¶ 21-22. 1 18 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 3. RECEIVED NYSCEF: 06/19/2018 Investigation OAG's Have Conformed a. For separate implied that cost for from through Exxon (Id. Cost 2040. (Id.) still that the Manager also Proxy for emissions. the for as his noted, Costs projects (Id.) were that One figures March 2014 cost proxy the than the of carbon predecessor Outlook reports when had to shareholders (i.e., month GHG later, Exxon "implied as early in comparison riskier) aligned the 1 19 of 30 as 2011, to investments long-term Corporate only $40/ton Proxy Cost even not Plan extend to to Exxon Corporate investments." as opposed emissions, and evaluating recognized did of Corporate in a presentation Reports $60/ton Outlook its and in 2010, was Exxon's countries, recommended in the Cost 2010 in OECD projects was Proxy that at least example, countries Plan Costs Proxy for For Costs. in making from First, and Reports, used Plan figures Internally, (Id.) OECD for cost represented "non-conservative" created of Corporate in 2040. Outlook as those ways. OECD for publicly 2030 in two Proxy Cost annual same set of proxy a second Corporate use Outlook Proxy Manager cost proxy directed by GHG Exxon's company's basis [Outlook] Costs that $40/ton only Plan Exxon the undisclosed Costs $80/ton and Not May Costs it maintained in its public Proxy 2013, Practices Proxy that were its undisclosed internally, and Exxon's Outlook its public Reports Outlook lower that the Plan to the Outlook Corporate as before, 2014, from decisions. 2012 reached May management noting In in 2030, Proxy in the Internal Exxon's Corporate of it disclosed disclosed while, ¶ 24.) $60/ton In set forth significantly in 2030, in 2030. that represented publicly emissions figures That Representations Use concealed Exxon's were Public Exxon its publicly that Its Revealed Apparent investment mid-2014, countries Plan the costs projections deviated was from the to Exxon's years, many costs, Has that Plans be use the we (Id. ¶ 25.) that the to the in projects Plan The lower Outlook Proxy aligned, GHG Corporate Proxy to reduce Costs with INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 the RECEIVED NYSCEF: 06/19/2018 in the costs proxy between Second, use any and in the representations countries. for (Id. for financial adverse the applying generated and 57.) the result in Rather that accept the a planning its after they tried in their own due negative in the words, These flow "shorten GHG to "massive called cash in the in Lieu 2014, Proxy Costs of Proxy Costs and out Plan Exxon's of Alberta methodology" an "alternate in those Corporate planners encountered observed that for projects reduce years." Exxon projections, for ¶ 32.) planners life to public Plan spreadsheets asset costs of these fields not used to projects long-term in June sands spreadsheets Corporate the costs. in the implications supervisor oil planners despite Costs Costs those directed flow (Id. aligned ¶ 27.) applied being Costs. Proxy costs proxy cash Legislated Exxon to apply also long-term the Proxy Outlook investments write-downs," "large than would, align (Id. countries,11 were of Existing vast long-term now-aligned what employed when results forecasts with Plan in the costs Outlook even that only. Corporate in non-OECD proxy Use countries projections Exxon did Apparent company's the that relevant countries 2016, projects 2016 the OECD cost for indicate OECD for responsible until with also and Reports Exxon's Documents Costs economic Outlook countries b. Proxy base Not ¶ 29.) non-OECD 2012 purposes planning for but Reports, at least in the costs proxy investment Outlook these (Id. ¶¶ 47, appears to avoid reserves" gross 50, to have them. (Id. ¶ 47.) Under Corporate 11 this Plan Proxy Costs methodology," in its cost it appears that in the projections only to an exception by which in certain non-OECD countries. This was subject for projects "alternate planners could 1 20 of 30 Exxon cash include flow did not use spreadsheets the Outlook for and these such costs as part of a sensitivity analysis INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 projects. RECEIVED NYSCEF: 06/19/2018 then emissions that decades) of the the those assets' for been have and on OAG's Plan Corporate calculations may on depending flows from and oil the cost costs, calling beyond that its its proved reserves these allowed in Exxon's company's Exxon's over to increase Exxon expects of many to not abided estimates and Exxon's (i) reserves reported the base company's under estimates cost Proxy by Costs in Aff. Outlook the applying Exxon's projections, as much reserves. projects (Zweig as 93%, of negative projections flow and, cash future (Oleske Aff. ¶ 55.) Plan with Reserves Company Evaluations have with Use not cash sands planners. by and it actually of oil Alberta expenses resources that number project company's to avoid company Failure spreadsheets spreadsheets, in the Exxon or Impairment question resource of the GHG-related associated Apparent reserves and emissions to the relating projects assumptions, associated into for price to company multiple contradicts a limited purposes, of those projected may (often years which flow versions) a few analysis Costs reductions projections of custody Estimates respect draft undercounted Exxon GHG over cash the reporting have c. Finally, to produce and/or preliminary Proxy potential and Reports, financial and incomplete produced Based ¶ 63.) refusal planning, (mostly future directly with associated Outlook all apparently ¶ 8.) Exxon's investment, costs for GHG for costs Exxon Further, assumption This legislated existing, ¶¶ 45-59.) constant (Id.) the in the (Id. remain would the only government. it expected (Id. reflecting operations. described to operate. spreadsheets Alberta costs that Notwithstanding used figures projected period its projects the by regulatory representations long-term substituted imposed assumed public Exxon Instead, by its public impairment public SEC evaluations. reserves company regulations, 1 21 of 30 industry Documents do not estimates of estimates followed or Corporate representations (ii) indicate incorporate a substantial the resource company's guidelines, and that proxy base representations (iii) the the well INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 impairment assessments documents also produced indicate that impairment the evaluations The Requested The representations Cash a. The flow and assets, and, extent to the best Exxon's reviews, Cash any, Exxon flow they flow used, evaluations business to what to core (Id. ("PwC"), to relating representations with consistent planning. extent in its costs LLP Exxon's are and Testimony projections question into reasonably to by that those ¶¶ 20-22.) Investigation OAG's related to its Exxon adhered but investigation, investment oil are to its public financial and decisions. at Exxon. estimate new and company spreadsheets as the (Id. ongoing and reserves, likely financial investments, provide the evaluate most of impact any 1 22 of 30 direct failure central assets to abide represent decision-making, used routinely for of what the cash corporate impairment. by example, generally materials evidence and expenditures, to core for for that operating employees submit documents its projects include, projections Exxon ¶ 63.) of expenditures, are are models, factors Cash investigation. profitability These and conditions, to OAG's These capital costs. proxy and profits. prices, Relevant Highly as economic revenues and gas economic processes to evaluate as well and Are relevant highly planners to the incorporated, future are revenues production, of Spreadsheets company respect influence were Flow spreadsheets with that reporting spreadsheets planning gas and cost Related only Cash referred estimates and planning, flow and not of proxy Requested cash factors calls Reasonably are use projections the oil projected The also Exxon's Are the in Exxon's and 61-62.) ¶¶ Spreadsheets requested spreadsheets, set forth decisions (Id. PricewaterhouseCoopers auditor, impairment of whether issue estimates. This (Id.) company's investment Flow included to 2016. regarding 1. not prior documents to the external were Documents requested relevant highly in its used those by its and costs in the used purportedly B. Exxon by proxy assumptions affected directly (Id. proxy company's ¶ 64.) costs, if public INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 representations. (Id. in a summary specific cost proxy cash The serious above. spreadsheets to oil projects and of and assets. final despite flow Exxon happen custodians. (Id. incomplete Other and produced For ¶ 63.) this for to emails for cash supported by any or located of cash Exxon produced about or petrochemical from its as described by computer Exxon's projects centralized Exxon spreadsheets of files files Exxon's has appear spreadsheets as flow has information example, raise representations, spreadsheets in personal produced assets production spreadsheets flow and cost-related decision-making, only presented including projects downstream flow of the most reason, a few flow or Exxon's the are are information, Exxon's cash cash summaries its proxy include, company Rather, to be attached all do not not used for with Nearly spreadsheets 69-70.) relevance, world, ¶ 48-65.) ¶¶ specific produced indisputable of the has spreadsheets Aff. has limited. parts (Id. flow such that more compliance in Alberta in other (Zweig that company's their testified applied. cash some contain Exxon extremely projects assets cash those and/or Yet, Moreover, witnesses. are sands Exxon spreadsheets the have that files, that about been has witnesses as input figures flow questions described relate such materials, backup Exxon's format, While ¶ 65.) produced certain to be draft versions.12 (Id.) sources of evidence cannot replicate the key information contained in cash flow spreadsheets. (Oleske 12 The cash flow meaning spreadsheets that spreadsheets Exxon reflecting Aff. has produced Exxon's failure ¶ 66.) are also limited to include to those that include proxy 1 23 of 30 costs would GHG-related generally search terms, not be included. INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 (Id.) The (Id.) final spreadsheets b. Exxon Dental cannot Comm'n on through 514 Gov't reliable of what evidence if any, costs, proxy Exxon Kings was Cnty. extensive not subpoena own FTC attributable business." NLRB OAG that Aff. are has limited among ¶ 67.) of Med. This (Sup. Ct. F.2d when fields producers' for flow and important F.3d 188, spreadsheets areas 24 of 30 of of Exxon n.4 (2d to 26 of Cir. Ct. . . . of the investigative is in large cannot normal investigation, (Sup. lawful otherwise complained hinder "well complain (enforcing vulnerable potentially 962 960, State ("searching involving with 1977) 193 already "cannot operations"). or seriously 438 Inc., ,438 cash Cir. breadth business 2d businesses (D.C. "the disrupt largest targets 882 862, 1989) was Misc. compliance resisting v. N.Y. Cnty. that burden. See Am. Agency to investigations "extensive" for subpoena." Albany 118 is "inherent a of undue grounds Dev. an investigation operating Response, selection Indus. v. Kuriansky, volume" to unduly company's in of validity of Albany 344-45 342, Gelb gas requests City on documents "the documents," 555 Inc., of the its the 2d as a basis "threatens v. Am. also of operation magnitude compliance See parties hundreds to the that problem v. Texaco, concerning determines burdensome); operations"; of their subpoenas"); of requested that Misc. thousands' ("[t]he business magnitude 144 unduly 1983) Burden of the at 234. Integrity, of Undue quantity," not N.Y.S.2d 'hundreds underway" (Oleske most production refuse and Coop., Is No There It is "[r]elevancy, assets the used. actually argue contain likely part plausibly operations of [its] 2006). Exxon's projects and to climate change risk. including (1) INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 upstream, RECEIVED NYSCEF: 06/19/2018 OECD and jurisdictions; completed and projects, for spreadsheets even Exxon's manner GHG (i) and chemical (iv) any or the offer to produce only out recently cash to produce of the non- and evaluation, refused assets, OECD in assets to ongoing has and of projects or assets for $40 (i.e., supervised billion flow of hundreds many serious questions these areas. Exxon's upstream and supervised XTO; and (see about id. resource base; (v) any ExxonMobil assessment of ¶ 22). The documents and and to what about its applied of proxy 2010 projects Company) (vi) proxy costs has any of XTO purchase OAG obtained costs in were not investigation OAG's countries; refining) upstream Company); testimony application in OECD in development Exxon's Exxon extent, spreadsheets Exploration Production in housed impairment; potential any the (e.g., for by show downstream assets ExxonMobil by any flow existing supervised representations projects (ii) to projects cash exclude (vii) whether, public reserves sufficient of upstream would countries; of those (i.e., subset" ¶ 32) evaluation those in equity raise any "documents a "small Aff. Zweig company phase phase for in non-OECD (iii) Exxon's exploration production applied" (see or assets; projects to non-XTO Exxon of projects or assets projects any in the over and subject subset were Company assessment or assets be costs Development concerning limited inadequate grossly in which Exxon's assets in development. projects projects (2) long-established (3) this operations; portfolio.13 in Exxon's assets chemical and downstream, all of limited cannot so limited. argument Exxon's undermined completely assertions, 13 Exxon produced Exxon has produced from Exxon's that by employees cash flow centralized the producing these spreadsheets testimony of its own that the have testified spreadsheets files of final associated cash flow with witnesses. company would be unduly Contrary in fact 1 25 of 30 to Exxon's maintains two of these 26 projects spreadsheets. burdensome final, is repeated complete and assets, but they were not INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 cash flow in a limited spreadsheets accessible readily documents and that subsidiary 26 projects flow RECEIVED NYSCEF: 06/19/2018 and manner. (Id. (Id. ¶¶ 33, asked are to do of existence OAG (Id. so. that able (Id. ¶¶ 37, 41, 39, 48-60, responsive reason "no 53, major maintains example, Exxon the upstream to according ("EMDC"), Company company's motion), For 55-56.) and projects a well-organized 14 of the (and of archive final cash 49-56.) cash the in an organized locations, 48-50, of the 50-51.) to retrieve additional it had ¶¶ 41, "centralized" Development many 39, of 39, on this requested (Id. employees for is responsible spreadsheets. ¶¶ 33, ExxonMobil testimony, assets number Because of the flow spreadsheets Yet 62.) documents to believe [the organization when OAG in the EMDC SharePoint] of these associated with pressed Exxon a specific about Exxon SharePoint, unique contain[s] Exxon files, when project the likely assured falsely documents." responsive 5 13.) documents Likewise, investment purposes reviews and The 60.) centralized flow other by spreadsheets locations, make testimony Exxon reserves company cash and business used for that and units, are estimates, clear cash those flow impairment for used in readily organized decisions spreadsheets corporate accessible are also planning files. located for used (Id. in ¶¶ 51, 56- a few including . (Id. ¶ 57.) system. Key (Id. The ¶¶ lack inputs and other backup documents are also included in the same organized 54-55.) of undue burden associated with collecting 26 of 30 cash flow spreadsheets is also filing INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 demonstrated documents by , which and assets flow collected, around the also requests. belies its (Id. argument The computer has spreadsheets are graded clear made produce relevant directly flow cash of likewise retrieved spreadsheets cash flow with that if Exxon is aware them. (Id. to key issues in this cash of days own its Exxon ¶ 55.) within for spreadsheets OAG's purposes subpoenas. of relevant despite Here, ¶ 18.) ~ to projects specific . (Id. flow so to comply for spreadsheets Exxon's by collection do called group cash Exxon's .~ ¶ 62.) requested Exxon's it cannot it must folder, and . (Id. were an Exxon concerning impairment-related ¶ 58.) that Court in they certain provided testimony evaluated, world when spreadsheets has and in a specific documents the fact that Exxon investigation, cash these continues flow to withhold them. 2. The has that because they documents including asset Exxon documents investigation the Production Exxon's impact of not OAG's reserves. argument responsible subpoena. request (Id. At the the In to the Exxon's SEC disclosures to the change on Exxon's company and demand projections. documents, but energy of these relevance is somehow preempted related analyses concerning Reports reserves SEC by reasonably and Outlook company's are and Aff. to produce governing change, assessments impairment (Oleske regulations climate internal its estimates, refuses to OAG's of evaluations, Exxon ¶¶ 72-74.) them on the ground of proved reporting ¶ 74.) June regarding for SEC produced concern analyses, contested has the relating climate recoverability to 16, reserves reserve addition, 2017 conference, when calculations the Court Court this Exxon it compelled and noted to meet that and rejected implicitly to identify confer arguments 27 of 30 on the on the merits Exxon's employees remaining of potential preemption who were requests claims in the or 2017 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 defenses also RECEIVED NYSCEF: 06/19/2018 are not Endicott accepted relevant Johnson Corp. as a defense against preemption defenses. ("[A]bsent a complaint 02301, Slip AGs Op. at 47 or quash enforce [] are Exxon preclusion. v. Rubin, court and regulations. The Smith 263, preemption the Corp., 266 base, SEC's Exxon's not the reporting (1st This principle equally in which argument in this 451 66, Dep't is also public proved rules (2d and 17- No. to . . . anticipatory argument of principles 2006); recent defense. preemption under Cir. issue."). in its a preemption Exxon's to an action interference action 69 preemption claim "be 1996) v. Schneiderman, to assert of Dep't Ordinarily, without dismissal F.3d better. See cannot applies (3d preemption Exxon no 178 of the Exxon's investigations court's same argument of accuracy resource While the asserting arguments consideration [fares] forum their district (merits 176, 14 subpoena. (1943) investigation. claim proper investigative N.Y.S.2d rejected to OAG's the 636 meaningful expressly to conduct A.D.2d v. State, preemption is not 509 501, subpoena"). be no challenge v. A.O. 207 the things, estimates 14 district latitude See Ball Exxon's other can a pre-complaint U.S. Commc'ns ("Exxon's from 317 investigative] . . . there challenges."). precludes Corp. [an a subpoena afforded jurisdictional v. Perkins, Exxon's dismissing of enforceability Oncor See federal the Additionally, decision to the issue Ave. Browning now Realty 1994). meritless.15 OAG's about representations reserves for disclosures proved reserves investigation its that concerns, reserves company are mandate the among of the subject the use of SEC fixed on the previous Exxon's merits arguments and similarly need not resolve motion, See June 21, 2017 Order Tr. 17:14-26 ("[OAG]: [T]his is not a merits dispute. The in a law enforcement investigation of we are in on subpoena compliance does not allow for the weighing The Court declined to resolve such issues on this motion. posture I completely disputes. [THE COURT]: and totally agree."). 15 See June NYSCEF 2017 OAG Opp. Br. at No. 169 ; see alsoExxon v. Schneiderman, 2, 19-21, (" of the SEC regulations that purports to prohibit Op. at 47-48 ("Exxon has pointed to no provision merits requesting reporting the science No. 17-02301, the AGs from Slip for reserves. . . . Moreover, internal documents to the accounting Exxon's regarding number of for whether Exxon understood relevant be to theories, including, example, may any of climate change in fundamentally different ways than it told its investors and the public."). documents that relate of reserves 28 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 for assumptions of estimates its price and resource base the manifest" reserves" SEC's intent proved to supplant purportedly on the rely about the that future of cost GHG in no reporting generated own company's regulations' reserves state process "company assumptions assumptions-including Moreover, the cost, price emissions way Exxon's and public cost (i.e., cost). proxy a "clear demonstrate and law.17 CONCLUSION For the reasons (i) the cash produce the flow Exxon documents and calculations, set forth climate above, for spreadsheets has produced OAG to the requests respectfully the 26 projects SEC and assets to impairment relating the Court to compel identified evaluations, by OAG; Exxon and to (ii) reserves change. 16see 17 C.F.R. 229.1202. state that companies Indeed, those regulations §§ 210.4-10, expressly may disclose of oil and gas resources other than the reserves calculations that they mandate, if such disclosure is estimates required by state law. Instruction to 17 C.F.R. § 229.1202 (Item 1202). manifest" 11 N.Y.3d clear and intent required to preempt Sys., Inc., ,11 105, 113 (2008) 22 ,22 at *3 (Sup. state law); Cuomo v. Dreamland Misc. 3d .2009 2009 N.Y. Slip. Op. 50062(U), Amusements, Inc., 1107(A), when federal law in question had not previously been subpoena not preempted Ct. N.Y. Cnty. Jan. 6, 2009) (OAG's 17 People "recognized v. Applied (" Card as completely preemptive"). 29 of 30 INDEX NO. 451962/2016 FILED: NEW YORK COUNTY CLERK 06/19/2018 12:55 PM NYSCEF DOC. NO. 335 RECEIVED NYSCEF: 06/19/2018 Dated: New York, June 19, 2018 New York submitted, Respectfully BARBARA UNDERWOOD D. Genpr Attorney of the State of New By. f6hn '~' ; Oleske Senior DeRoche Mandy Assistant Attorney Jonathan Zweig Assistant Attorney 28 Liberty New People New for of the State SHETH Executive Deputy LEMUEL M. Bureau Chief, Attorney General, Economic Justice SROLOVIC Environmental Protection York 10005 Petitioner Counsel: M. General 416-8660 Attorneys MANISHA General Street York, (212) Of Counsel Enforcement Bureau 26 30 of 30 Division of New York York