Illustration by Robert Fresson

A century of influence

The unlikely partnership between Big Oil and the White House

How the industry stalled action on climate change from the inside and sold America on fossil fuels

Illustration by Robert Fresson
A version of this article was co-published with Guardian US.

When Rick Perry was interrupted by climate-change protesters during his address to the National Petroleum Council in late September, the energy secretary was ready with a retort.

Energy Secretary Rick Perry
AP/Pablo Martinez Monsivais

“You want to talk about something that saves lives? It’s the access to energy around the globe,” Perry said, countering a woman worried about deadly hurricanes and a man whose hometown is being submerged by the rising Philippine Sea. “I am proud to be a part of this industry. I am proud to be an American."

It was an opportunity for the former Texas governor to champion an industry he’d long embraced by showing fealty to the petroleum council, an arcane federal advisory committee dominated by energy executives. Picking up on Perry’s message was Interior Secretary Ryan Zinke, who has pledged to fast-track drilling and open more areas to fossil-fuel development.

The two took turns reassuring the council’s nearly 200 members during a meeting at the opulent Hay-Adams hotel in Washington, D.C., that the White House would be a friend, not foe, to Big Oil. “We’re now in the business of being partners, rather than adversaries,” Zinke said. “If I were in the industry, I’d be pretty happy.”

It wasn’t the first time that global warming had been cast aside by the Energy Department’s petroleum council, successor to a wartime body created by President Harry Truman. In 1972, the council buried the industry’s own climate research with the help of top executives at the American Petroleum Institute (API), a longtime ally that once shared a building with the council.

API has gone far beyond the lobbying typical of trade associations, helping spawn permanent substructures within the executive branch that ensure its voice is heard. These government entities, which include the petroleum council and an obscure but powerful White House office, have for decades worked in tandem with API to fortify the oil and gas industry, its critics say, often at the public’s expense.

Excerpt from a transcript of API’s 1959 “Energy and Man” symposium at Columbia University in New York.  The Hagley Museum

API’s history on climate issues goes back farther than most realize. As early as 1959, it grappled with global warming, hosting a conference where the looming, manmade catastrophe was discussed. As the environmental movement was blossoming, API — with the government’s support — was working behind the scenes to undermine it by distorting projections of regulatory costs. An enduring false narrative was constructed: the economy or the environment.

For nearly a century, API has enjoyed special access to the executive branch, furtively shaping policy from the inside. Now, under Donald Trump, the industry smells victory on multiple fronts with a White House that openly detests regulation as much as it does. Days before Trump’s inauguration, API President Jack Gerard heralded the “once-in-a-generation opportunity” to reshape energy policy.

Fifty-two environmental rules have since been overturned or are in the process of being rolled back. API has publicly supported at least 23 of these actions. In May, the institute also sent a 25-page wish list to the U.S. Environmental Protection Agency. Among the items it wants reconsidered: tougher standards for ozone — the main ingredient in smog — and regulation of methane, a greenhouse gas that is far more potent than carbon dioxide.

API officials did not respond to interview requests from the Center for Public Integrity. On its website, the institute says, "We negotiate with regulatory agencies, represent the industry in legal proceedings, participate in coalitions and work in partnership with other associations to achieve our members’ public policy goals."

Neomi Rao at a congressional hearing for her 2017 appointment to the Office of Information and Regulatory Affairs, a division of the White House Office of Management and Budget.
U.S. Senate

‘Regulate the regulators’

“I asked my staff for a joke, but it’s still going through cost-benefit analysis,” Neomi Rao said from a podium in October, drawing hearty laughs from a mostly male crowd of lobbyists, lawyers and policy analysts at the Heritage Foundation — a libertarian think tank based in Washington.

It was a tongue-in-cheek nod to the little-known agency Rao has led since July — the Office of Information and Regulatory Affairs, which she called a “small but mighty” division of the White House Office of Management and Budget. Her staff of roughly 50 reviews the costs and benefits of all major federal rules, providing the stamp of approval needed to turn proposals into regulations — or spiking them.

“If you are a very pro-regulatory administration, then you are not going to appreciate the work that OIRA does,” Rao warned the audience, likening her office to a “roadblock” against burdensome policies that hurt the economy. “The pace and scope of deregulation that’s occurred is truly unprecedented, and we’re just getting started.”

“The pace and scope of deregulation that’s occurred is truly unprecedented, and we’re just getting started.”

Rao — a constitutional scholar who clerked for conservative Supreme Court Justice Clarence Thomas and often shared pizza with the late Antonin Scalia —  has embraced her role as “regulatory czar,” pledging to surpass a Trump executive order to eliminate two existing regulations for each one created. Though she is an ardent supporter of leaner and more restrained government, she plans to staff up OIRA and broaden its powers.

How, exactly, she’ll do this is a mystery — much like the inner workings of OIRA itself. The agency has routinely come up short of basic transparency guidelines recommended by the Government Accountability Office, garnering a reputation on Capitol Hill as a black box that heavily edits or kills regulations with little explanation in Republican and Democratic administrations alike. Cass Sunstein, who led the office during the Obama administration, has since defended the practice of derailing particular rules by putting them on a “shit list.”

While OIRA has resisted public scrutiny, it has held its doors open for industry. Since April 2014, 35 of OIRA’s 712 meetings on proposed EPA regulations have been with API representatives — including a 2015 conference call with institute President Gerard over ozone. The institute, along with the American Chemistry Council and ExxonMobil, ranked among the top 10 groups that met with OIRA from 2001 to 2011. Such encounters carry weight: A 2015 study by University of Wisconsin-Madison researchers found the agency was more likely to edit rules when lobbied by industry than by public-interest groups. Rao’s office did not respond to requests for comment, but OIRA notes on its website that it will meet with “any party interested in discussing issues on a rule under review.”

The office’s bias toward industry can be traced to its founding. Though OIRA was created in 1980, its roots date to the EPA’s formation in 1970. As a counterweight, President Richard Nixon established the National Industrial Pollution Control Council, an advisory committee within the Commerce Department made up entirely of industry executives.

Frank N. Ikard, former API president
Illustration by Robert Fresson

“Virtually no major move is made in environmental policy without drawing on your advice and criticism,” Secretary of Commerce (and, later, Nixon campaign adviser and Watergate figure) Maurice Stans told the committee in 1971. Members regularly reviewed and commented on draft regulations before they were released to the public, weighing in on matters such as leaded gasoline and the Clean Air Act.

Stans took special interest in the pollution committee’s oil and gas subgroup led by Standard Oil Chairman J.K. Jamieson, who regularly invited API President Frank Ikard and API public-affairs executive P.M. Gammelgard to its meetings. Staff from the National Petroleum Council were also on hand. Together the men coordinated a public-relations effort emphasizing the enormous costs the oil industry claimed it was absorbing to improve the environment.

Excerpt from the National Petroleum Council’s 1971 summary report to the White House  National Archives and Records Administration

In February 1971, the pollution committee advised Nixon aides to prioritize costs. The White House budget office obliged that October by creating a new program called “Quality of Life Review,” which would assess major environmental, health and safety regulations. Tapped to lead the agency was bureaucrat Jim Tozzi, who had shown a passion for deregulation at the U.S. Army Corps of Engineers.

Jim Tozzi describes himself as the father of the Office of Information and Regulatory Affairs
Administrative Conference of the United States

“Quality of Life” became all about reining in the EPA, Tozzi explained during an interview with the Center for Public Integrity. Occupying a floor of the Executive Office Building next to the White House, his office quickly went to work on the EPA’s proposed Clean Air Act guidelines. “I was like a little despot,” Tozzi said. “Somebody needed to regulate the regulators.”

Under Jimmy Carter, the “Quality of Life” program became OIRA in 1980, with Tozzi as deputy administrator. In 1983, Tozzi left the agency to join a law firm headed by William Ruckelshaus — the EPA’s first administrator, a Nixon appointee and an early champion of cost-benefit analysis. Tozzi now runs the Center for Regulatory Effectiveness, a think tank he founded and staffed with former OIRA employees that assesses regulations.

Tozzi said his plan for policing the EPA — and every other federal agency — has survived nine consecutive administrations and looks bright under Rao. “The Trump administration,” he said admiringly, “has gotten the number of regulations going out to a trickle.”

‘Virtually indistinguishable’

As Nixon’s pollution control committee quietly lobbied on industry’s behalf, the National Petroleum Council was doing its part to paint Big Oil as a linchpin of the U.S. economy.

Council members had grudgingly agreed to an Interior Department request to assess the industry’s environmental track record and plans following a 1969 oil spill off Santa Barbara, California. The disaster sent an estimated three million gallons of crude gushing into the Pacific Ocean; television broadcasts showed shorelines littered with tarred birds and dolphins.

The 1969 Santa Barbara oil spill in California became a pivotal point in the environmental movement.
AP/Wally Fong

But the petroleum council’s ensuing two-volume report in 1972 was anything but apologetic. Totaling more than 500 pages, it defiantly cast the Santa Barbara spill as an anomaly and urged the government to continue fostering oil and gas development. Echoing economic arguments made by Nixon’s pollution committee, the council’s report cautioned against regulation that would dampen industry’s bottom line.

Among the report’s authors were Union Oil President Fred Hartley, whose company was responsible for the spill, and Standard Oil Chairman Jamieson of Nixon’s cost-obsessed pollution committee.

Citing research by API, the report also played down climate change. “Carbon dioxide concentrations do appear to be increasing for reasons not well understood,” the council wrote, adding that scientists would have to wait until the year 2000 to determine “whether or not a serious problem exists.” Even if the gas were having an effect, controlling such a ubiquitous pollutant could “impose impossible administrative and enforcement burdens,” the report said.

But things weren’t as ambiguous as the council made them sound. API papers on atmospheric pollutants in 1968 and 1969 made it clear that rising carbon dioxide levels came from the burning of fossil fuels and that warming was inevitable. The 1968 paper warned that there could be “melting of the Antarctic ice cap, a rise in sea levels [and] warming of the oceans,” while the 1969 paper noted that carbon dioxide levels would rise “as our combustion economy continues to consume increasing amounts of fossil fuel.” Several authors of the petroleum council’s report likely knew this, given that they were top API officials – including President Ikard and public-affairs executive Gammelgard.

Excerpt from a 1969 API scientific study on atmospheric pollutants.  API

The council and API occupied the same K Street building in Washington during the 1940s. Ikard — so close to Nixon that the president wrote thank-you notes to Ikard’s wife for homemade fruitcake and get-well messages — maintained an office there. In 1972, Ikard traveled to Sweden at the White House’s behest to represent the United States at the United Nations Conference on the Human Environment — the first international meeting of its kind. There Ikard would have been in a position to spread the word about global warming. There is no documentation to suggest he did.

API’s research during the 1960s makes the case “compellingly that the science is really sound,” said Carroll Muffett, president of the Center for International Environmental Law, an advocacy group that tracked down the climate studies. Muffett claims the petroleum council’s report is proof that high-level API executives were aware of the grave threats of warming and worked to hide the revelations.   Climate-change doubters followed suit, mischaracterizing API’s early research as evidence that warming was a hoax.

Digging through archives, Stanford University researcher Ben Franta found what he believes is API’s earliest public reckoning with climate change: a November 1959 conference it hosted at Columbia University where a renowned scientist posited the emerging threat before 300 “government officials, economists, historians, scientists and executives.”

Within years, API was feverishly commissioning air-pollution research that resulted in the 1968 and 1969 papers. “API had this long-running awareness of climate change and climate science, and in that history the message they were getting from scientists was that climate change was real,” said Franta, who is writing his dissertation on the trade group’s activities. “If they wanted to head off that threat, they were going to have to think about acting then."

API leaders have played key roles at the National Petroleum Council, a federal body chartered in 1946 whose reports claim to be nonpartisan and in the national interest. The council was founded during World War II as a quasi-government agency that aided the war effort. It later became an adviser to the Interior Department and is now attached to the Energy Department, which did not respond to requests for comment. Members of the privately funded council are prohibited from lobbying and self-dealing but a review of its secretive, 71-year history shows it has long carried water for industry, minimizing environmental concerns while promoting deeper and riskier drilling.

While the council insists it’s not a trade association, its structure is similar to API’s. Both are organized as nonprofit business leagues funded privately by annual member dues. Though the council has a spare staff of under a dozen, it took in more than $5 million in 2015 donations.

Executive Director Marshall Warfield Nichols, who began working for the council in 1971, received compensation topping $840,000 in 2015, records show. The same year, the council spent $325,000 on a contract with FTI Consulting, the same K Street firm retained by API to lobby for favorable trade policies and aggressively rebut negative press on the oil and gas industry.  

When a Center for Public Integrity reporter visited the council’s office in August, staff members refused to discuss a federal law that requires the council to make the bulk of its records publicly available. It  subsequently released transcripts of some of its annual public meetings but did so unevenly, with some transcripts incomplete or heavily edited in handwriting. Some were missing.

The council has refused to provide the Center with any of its subcommittee records, and declined to provide all documents prior to 1973 — including records underlying its 1972 environmental report. Executive director Nichols declined to be interviewed, writing in an email that “it is not our practice to comment in public on matters between the Secretary of Energy and the Council or its members.” Nichols, however, shared records denied the Center with three private researchers who authored a sponsored history of the council in 2004. One of the writers had been previously hired by API to author the trade group’s own history.

The council’s composition and views have been fodder for complaints from those outside of industry. Its leaders have been the biggest, loudest voices in oil; until February, former ExxonMobil CEO and current Secretary of State Rex Tillerson was council chairman. Halliburton CEO Dick Cheney led the group before he became vice president in 2001.

In 2000, Fred Krupp of the Environmental Defense Fund resigned from the council, taking issue with an oil-refining report that criticized an EPA plan to curb sulfur in diesel, citing high costs to industry. In a letter to then-Energy Secretary Bill Richardson, Krupp wrote that he disagreed with the council’s recommendation to “delay and weaken … programs that are necessary for cleaner, healthier air quality.”

Of the council’s 170 members at the time, only Krupp represented an environmental nonprofit. He encouraged Richardson to diversify the body’s membership to include public-health advocates and regulators. Otherwise, he wrote, its perspectives would continue to be “virtually indistinguishable from the views of the refining trade organizations.” 

Peter Lehner, then with the Natural Resources Defense Council, resigned from the council’s advisory committee about seven years ago after just a few months as a member, writing that his “goals were fundamentally distinct from the members of the petroleum industry whose perspectives continue to dominate the [council].”

Things haven’t changed much since Krupp and Lehner left. Of 192 members on the council’s roster, 144 come from the oil and gas industry. Over its lifetime, the council claims, almost a third of its 2,800 recommendations have been “fully implemented.”

These recommendations — to open more of the Arctic to drilling, for example — stand a good chance of being embraced by the Trump administration. At the petroleum council’s meeting in September, energy secretary Perry put his audience at ease. “The government’s not going to be in your way,” he said.