A pipeline of influence

Introduction

The National Petroleum Council, a little-known federally chartered but privately funded advisory committee, has been an underground pipeline of political influence for the oil and gas industry in Washington for years.

The NPC’s membership roster reads like a who’s who of the oil industry and the Bush political fundraising machine, particularly during the late 1990s. It included current Commerce Secretary Don Evans, once the chief executive officer of oil company Tom Brown Inc., recently indicted former Enron chief executive officer Ken Lay, and various Bush “pioneers”—individuals who pledged to raise more than $100,000 in hard-money donations for the Bush-Cheney 2000 campaign, according to an investigation by the Center for Public Integrity.

NPC members, including current members of the Bush White House and several Republican fundraisers, have often stood to benefit from their advice to the Energy Secretary, particularly when it comes to opening drilling concessions for their oil and gas companies.

As the CEO of Halliburton throughout the late 1990s, Vice President Richard Cheney attended meetings as an NPC member with his fellow oil and gas industry executives to draft reports and recommendations for the Department of Energy—plans that would ultimately be rolled into the Bush Administration’s energy policy.

Transcripts acquired by the Center reveal that Cheney and many of the Bush Administration’s largest political fundraisers were extremely active members of the NPC throughout the late 1990s. One of the major initiatives the group got the Energy Department to consider during Cheney’s tenure there was a wide-ranging exemption for the energy industry from public disclosure laws. Another helped open up federal lands for oil and gas use in the Rocky Mountains, including Cheney’s home state of Wyoming.

The NPC, designed to provide the government with the industry’s expertise, was created by President Harry Truman after World War II. The council has 175 members that are asked to serve by the Energy Secretary for two-year terms. Membership includes academics, environmentalists, as well as oil and gas company representatives. Yet according to records analyzed by the Center, an average of about 45 people attended select committee meetings from 1999 to the present. The vast majority of attendees were oil and gas executives; none was from an environmentalist organization.

NPC members have given generously to political campaigns. Those who have been council members since 1999 are responsible for more than $14 million in contributions. About four-fifths of that money has been funneled to Republican candidates. John Kaneb, chairman of Gulf Oil, tops the list of donors at $1.3 million.

“Proprietary information”

In 1998, Cheney was asked by the Clinton Administration’s Energy Secretary Bill Richardson to head an NPC committee that examined potential vulnerabilities of the oil industry to computer hackers and terrorists. Richardson, spurred by a Clinton White House initiative, directed the NPC to study computer-based threats such as e-mail viruses and the Y2K scare, as well as physical threats such as bombs.

As head of the committee, Cheney pushed hard to convince the federal government to exempt information it collected from energy companies from the Freedom of Information Act. “We want to make certain that there’s no infringement with respect to proprietary information,” Cheney said during an NPC meeting at Washington’s Madison Hotel on December 15, 1999. “We’re not interested in collecting individual company data and publishing anything like that.”

Cheney would later resign from Halliburton and from the committee to hit the campaign trail with Republican presidential nominee George W. Bush in August 2000.

Halliburton representatives quickly took up his cause, however.

“Clearly, [the] Freedom of Information issues have got to be addressed, and there’s got to be absolute protection for the private sector as we go forward with this,” said Chuck Dominy, a retired three-star general from the Army Corp of Engineers, at a May 8, 2001 NPC meeting in Dallas, Texas. Since December 2000 the vice-president for government affairs at the oil services company, Dominy is Halliburton’s chief lobbyist on Capitol Hill.

The proposal was made formally in a June 2001 NPC report, Securing Oil and Gas Infrastructures in the New Economy, which concluded that to “facilitate information sharing by industry with government, legislative action is needed to provide relief from liability and the Freedom of Information Act.” The proposal was made in a report that aimed at removing government obstacles that might inhibit oil and gas companies from sharing private information to help better prepare for terrorist attacks.

“The concern was the publication of vulnerabilities—of a cookbook for bad guys to do bad things,” said Marshall Nichols, the executive director of the National Petroleum Council.

The changes to the Freedom of Information Act recommended by the NPC have not been adopted, though Cheney appears to have taken his earlier penchant for nondisclosure to the administration. He has, for example, withheld records about his closed door meetings with energy lobbyists and executives from environmental groups, government watchdogs, and even Congress’s investigative arm, the Government Accountability Office. The Supreme Court has ordered a lower federal appeals court to review a lawsuit that accuses the vice president of violating the law by refusing to disclose many of the records of his infamous energy task force, which drafted the administration’s controversial energy plan.

Home is where the oil is

Another initiative championed by Cheney, Evans and others during their time on the council was relaxation of federal rules for drilling for oil and gas on federal lands.

Looking for untapped sources to help supplement offshore oil and gas production in the Gulf of Mexico and elsewhere, petroleum company executives had begun to look onshore within the United States for new supplies. According to industry representatives, western states had remained largely untapped until then due to federal land restrictions. A December 1999 NPC report lamented that 137 trillion cubic feet of gas—or 40 percent of the reserves on federal lands in the Rocky Mountains—enough to cover America’s energy needs for seven years—were restricted or off limits.

Cheney, Evans, and Lay were all members of the Natural Gas committee within the NPC that developed and submitted the report on federal land restrictions to the Clinton Energy Department. Two other high-powered Bush “pioneers,” Archie Dunham, CEO of Conoco, and William Wise, then CEO of El Paso Corporation, were also committee members.

“And the first thing that jumps out at you—at least, when we looked at it, anyway—was this big—this big area here in the Rockies which represents a significant part of the resource base that’s subject to these federal restrictions,” said Travis Stice, an executive of oil company Burlington Resources, at a November 1999 NPC meeting. Stice was referring to estimates that access to up to 40 percent of the Rocky Mountain region’s natural gas was restricted due to leasing agreements and regulations. Cheney and Dunham were both present at the meeting.

The December 1999 report said “[a]ccess to some portion of the federal gas resource base currently closed or significantly restricted to appraisal or development, as well as acquisition of rights-of-way, is essential to meeting the projected demand with cost-competitive gas supply.” According to Jim Lucier, a regulatory policy analyst at the Prudential Equity Group, the Rocky Mountain region was the only place left to search for oil and gas. “It is not from Canada, it is not from Alaska, it is not from the Gulf, it has to be from somewhere.”

Cheney’s home state Wyoming has since become the epicenter of new oil and gas exploration in the Rocky Mountains region. The industry has targeted two enclaves for drilling, the Green River and Powder River Basins. With offices dotted all over Wyoming, Cheney’s former employer, Halliburton, is well-positioned to extend its operations in the area.

The Energy Department selected Green River to be the primary focus of a 2001 study of lease regulations in the Rocky Mountains. The study concluded that more land was closed to drilling and exploration than the NPC had estimated, and recommended removing restrictions for drilling there.

The Green River Basin is of particular interest to members of the current administration. Evans’ former company, Tom Brown Inc., “significantly increased its position” (in the company’s words) in the area by acquiring Presidio Oil Company in 1996.

Opening up the area, however, could be a boon for the industry as a whole. “Basically, it will benefit any company that operates in those areas,” Lucier said.

Doing the energy task force’s homework

The White House’s energy policy would soon take shape as well – and it would use NPC’s work as a blueprint for the nation’s new energy policy, according to records obtained by the Center.

“We provided copies of the [1999 natural gas report] through the chain in the Department of Energy and also to the Vice President’s office, and it’s clear that a lot of these recommendations were rolled right into the national energy policy,” said Acting Assistant Secretary of Fossil Energy Bob Kripowicz at the June 2001 NPC meeting. Cheney and other members of his energy task force, including Evans, were already familiar with the NPC’s work.

Consistent with the task force’s advice, the Bureau of Land Management, an agency within the Interior Department, announced in August 2003 that it was reducing or eliminating certain leasing restrictions on federal lands. Tens of thousands of wells—including more than 50,000 in the Powder River Basin alone—are being surveyed in the Rocky Mountains; meanwhile, some states are selling off publicly held lands to oil and gas companies.

Not surprisingly, environmentalists are deeply concerned. Much of the gas in the Powder River Basin would be removed by a method called coalbed methane development, a technique environmental groups say is highly hazardous. Drilling down to as much as 10,000 feet, engineers pump out water at 12 gallons per minute from underground aquifers. Drillers can then remove the valuable methane gas. Waste water is then dumped onto the surface where it can wash away vegetation and poison the soil, environmentalists argue.

Environmentalists are also worried about pipelines. Although modern wells only occupy about ten acres of land, they require pipelines to transport the fuel and roads to access the well. Environmentalists fear that the rural landscape might soon become an industrial wasteland. In addition, many oil and gas companies might leave once the fossil fuel is sucked dry.

“What we as landowners are concerned about is these companies are going to come in, get the gas, and leave,” said Jill Morrison of the Powder River Basin Resource Council, a local environmental group. “Then there will be a huge mess we as taxpayers will have to pay for.”

According to Morrison, some of Wyoming’s residents—especially its farmers and ranchers—feel their property is threatened by oil and gas companies. Although 80 percent of the land’s surface in the Powder River Basin is privately held, 60 percent of its minerals are controlled by federal authorities, Morrison said.

“You will need an attorney to represent you in your negotiations with the oil and gas companies,” advises her group’s Web site. “You cannot legally stop development of minerals below your surface if you do not own the minerals. If you fight the developers, they can take you to court and have your property condemned and then develop the methane gas.”

Wyoming citizens such as Morrison will not find a sympathetic ear in their lone U.S. House representative, Republican Barbara Cubin. As a vice-chair to the House Speaker’s Task Force on Affordable Natural Gas, Cubin recommended cutting red tape regarding federal leases and environmental regulations to develop oil and gas resources in the Rocky Mountains in September 2003. Cubin is no stranger to the power companies’ political largesse. Since 1994, the oil and gas industry has contributed nearly $350,000 to Cubin, while the energy sector overall has given her over $600,000, according to the Center for Responsive Politics.

Although the December 1999 NPC report, drafted by Cheney, Evans, and Bush pioneers before the administration took office, has become a cornerstone of today’s energy policy, its estimates for gas reserves beneath the Rocky Mountains have been fundamentally challenged by the RAND Corporation, a non-profit research institute. According to a 2002 RAND report, the difficulty in extracting the fuel, the expense of building necessary roads and pipelines to and from the new wells, and dangerous environmental impacts greatly reduce the amount that can viably be extracted, even if access restrictions are lifted.

Even some members of the NPC itself had doubts. On November 11, 1999, in New Orleans, an unidentified speaker at the NPC meeting was uncomfortable with the council’s numbers.

“There are so many parts of this report that we just don’t have the data that you would need to say categorically this is going to happen . . . and to the extent that they early on don’t happen it really has some very serious implications to ten years from now because there are so many areas we just don’t have the data yet to really pin [down with] any sort of accuracy you would like.”

“When you are doing projections, you are making assumptions and a lot of things can change,” Nichols, the NPC executive director, told the Center. He also noted the group has updated its estimates. “I think [the 2003 NPC Natural Gas report] effectively supersedes whatever the RAND Corporation and the ’99 report said.”

“Usual trade association activities”

Although highly influential in government circles, the NPC is not designated as an advocacy or lobbying group for the oil and gas industry. According to its Web site, “the NPC does not concern itself with trade practices, nor does it engage in any of the usual trade association activities.”

Members even extol their own “objectivity.” In his farewell speech in December 1999, NPC chairman and head of the Houston-based oil company Newfield Exploration Joe Foster said, “It really is true that when we get involved in a joint study with the DOE or government representatives, that most of us in the industry sort of check our company hats at the door.”

A few NPC members are registered lobbyists. Many are high-ranking officials in powerful industry trade groups headquartered in Washington. NPC member Ray Hunt, the CEO of Hunt Oil and 2000 Bush pioneer, also serves on the board of directors for the American Petroleum Institute. Another NPC member and the CEO of oil and gas company Bretagne G.P., Virginia Lazenby, is the chairwoman of the Wildcatters Fund—the political action committee of the Independent Petroleum Association of America. Lazenby’s husband, Fred Lazenby, is a Bush ranger—a fundraiser who’s agreed to raise at least $200,000 for the President’s reelection campaign.

“It is difficult to avoid people who are the heads of major trade associations,” said Nichols. “The reality is if you are an industry leader, you will be singled out by your peers as well as the secretary for advice.”

According to its staff, the NPC does not require financial disclosure statements from its members.

Stuart Gilman, a former special assistant to the Director of the Office of Government Ethics during the mid-1990s, thought some scrutiny may be justified. “I don’t doubt that they are good people and they think what they are doing it is right but they have vested interests,” Gilman said.

Among those regular attendees was indicted former Enron CEO Ken Lay. In a twist of irony, Lay directed the NPC’s Finance Committee and was essentially the group’s treasurer. Two other Bush pioneers, Archie Dunham and William Wise, have held senior positions within the Council at various times, including chair and vice-chair, from 1999 on.

Richard Kinder, husband of Bush ranger Nancy Kinder, has joined the NPC as well. Kinder left Enron in 1996, married Nancy, who had been Ken Lay’s secretary, and formed Kinder Morgan, one of the nation’s largest oil pipeline conglomerates. Nancy Kinder is the southern Texas finance chairwoman for Bush’s re-election committee.

Dunham, the chairman of ConocoPhillips, once chaired the National Association of Manufacturers, America’s largest industrial trade association. In a March 2003 open letter to the House Resources Committee, NAM wrote, “Federal lands must continue to be leased for multi-purpose uses, including gas, oil and coal extraction and infrastructure construction. This has been a particular problem in the ever-increasing restrictions applied to federal lands in the Rockies.” As a well-placed advisor to the Energy Department, Dunham advanced NAM’s agenda through the vehicle of the NPC.

Bereft of their “company hats,” the NPC’s members might dress themselves in lobbyists’ suits instead. A quick search through lobbying disclosure forms shows a close link between what the NPC recommends and what its member companies’ in-house lobbying teams are asking for from Congress. As NPC members, oil and gas executives regularly meet members of Congress and White House officials. They have met with Mexican and Canadian authorities to present their studies. At his first meeting with the group, Abraham, Bush’s Secretary of Energy, even encouraged Council members to respond to editorials in their local newspapers in order to change public perception of the industry.

At a September 3, 2003, meeting in Denver, Colo., Wise talked about the potential fall-out from a recent, yet-to-be-released NPC report. “It seems to me the biggest criticism we’re going to get is: this is a self-serving document; that it has in it things that this industry has wanted in various segments of the industry for many, many years; you know, you’re attacking clean air; you’re attacking the offshore Outer Continental Shelf reserves; you’re attacking the Rockies reserve places; you’re attacking the Northwest Territories and the Mackenzie Delta and it’s just a small step from Alaskan gas to ANWR.”

Nonetheless, the NPC is still hard at work. On June 22, 2004, Abraham, concerned over rising gasoline prices, asked the Council for advice on the nation’s refining capacity. The NPC is drafting a report this summer.