Oil giants sell thousands of California wells, raising worries about future liability
DULCAN, Calif. — At their most crowded, the three-story offices at one of San Francisco’s largest law firms, which make up the world headquarters for a major energy company, are packed floor to ceiling with the heads of regulatory departments, executives, and associates.
The firm’s name, Exelon, is emblazoned on the outside wall. Its employees are from across the United States and around the world, as are the customers these people serve: oil and gas producers — including the largest US companies. When you walk into the offices, there are more than 2,000 people in the building, many of whom work in other departments, including the one that does regulatory and transactional work.
Exelon is a privately-held oil and gas company, but its employees and customers are not. Instead, the company is organized by a series of interlocking, vertically-integrated legal entities, including two of the country’s largest legal firms based in California. The entire firm is held accountable for Exelon’s regulatory and compliance obligations — including liability — under California law, including a state-mandated disclosure regime that it says protects customers from hidden costs and hidden liabilities.
In a June 30 opinion, a San Francisco Superior Court judge dismissed an action by two Exelon whistleblowers, who had challenged Exelon’s refusal to disclose what it would do with the trillions of dollars that it holds outside California. Both whistleblowers, a lawyer for the whistleblowers and a lawyer for Exelon, told the judge the company’s disclosure regime had the potential to expose customers to hidden costs or hidden liabilities. Despite the disclosures coming from whistleblowers, the court dismissed the action.
“I don’t think companies should be able to hide things that would affect their customers,” one of the whistleblowers said in an interview with Bloomberg BNA. “I can appreciate that the company may be able to hide its costs. But by hiding its obligations, I think it raises concern about whether it’s disclosing all the facts or the whole truth or if it’s a total sham