SEC Drops ExxonMobil Climate Investigation Under Trump Administration

On August 2, 2018, the Trump administration’s Securities and Exchange Commission (SEC) dropped its two-year investigation into how ExxonMobil factors climate change regulations into its calculations of asset values. The SEC informed the energy giant in a letter dated Thursday that it would “not recommend an enforcement action against the company at this time.” The decision came during the Trump presidency, when former ExxonMobil CEO Rex Tillerson had served as Secretary of State, and represented a major accountability failure for corporate climate fraud.

Investigation Background and Scope

The SEC investigation examined whether ExxonMobil misled investors about how it accounted for climate change risks and future regulations in valuing its fossil fuel assets. The inquiry focused on whether Exxon used one set of assumptions about carbon regulation costs internally while presenting different projections to shareholders—potentially constituting securities fraud. The investigation overlapped with state-level probes in New York and Massachusetts, both examining whether Exxon deceived investors and the public about climate change risks while possessing internal research confirming the science.

Standard Non-Exoneration Language

The SEC letter included standard language stating that the decision “should not be construed as an exoneration” and left open the possibility of future action. However, the practical effect was to close the federal investigation without consequences for ExxonMobil, despite documentary evidence from #ExxonKnew investigations showing the company’s scientists had accurately predicted climate change in the 1970s while the company subsequently funded decades of denial campaigns. The decision demonstrated how federal regulatory agencies under Trump abandoned climate accountability efforts.

Context of Trump Administration Fossil Fuel Favoritism

The SEC’s decision to drop the investigation occurred during an administration openly hostile to climate regulation and sympathetic to fossil fuel interests. Former ExxonMobil CEO Rex Tillerson had served as Trump’s Secretary of State from February 2017 to March 2018, creating potential conflicts of interest around Exxon investigations. Scott Pruitt was simultaneously dismantling EPA climate regulations, and the administration had withdrawn from the Paris Climate Agreement. The timing suggested political pressure to protect fossil fuel companies from accountability, with federal regulatory agencies captured by the industries they were supposed to regulate.

State Investigations Continue Despite Federal Retreat

While the SEC dropped its investigation, state-level probes continued. New York Attorney General Barbara Underwood’s spokeswoman stated “Our investigation remains ongoing,” and in October 2018 New York sued ExxonMobil for defrauding shareholders by downplaying climate change risks. Massachusetts also continued its investigation, eventually filing suit in 2019. The divergence between federal retreat and state persistence revealed how Trump administration regulatory capture created a two-tier accountability system—states pursuing fossil fuel fraud cases abandoned by captured federal agencies.

Significance

The SEC’s 2018 decision to drop the ExxonMobil climate investigation represents a textbook case of regulatory capture under the Trump administration—federal agencies abandoning accountability efforts against industries with political connections to the president. The decision came despite documentary evidence of ExxonMobil’s decades of climate knowledge and subsequent denial funding, revealed through #ExxonKnew investigations. The contrast between federal retreat and continued state investigations highlighted how Trump transformed regulatory agencies from potential accountability mechanisms into shields protecting corporate malfeasance. The SEC closure signaled to fossil fuel companies that federal climate fraud investigations would face no consequences during the Trump presidency, emboldening corporate resistance to state-level probes and demonstrating how executive branch capture could effectively grant immunity to industries contributing to existential environmental threats.