Private Empire: ExxonMobil and American Power (66 page)

The conference unfolded as a series of hours-long meetings among staff in various congressional committee rooms; the group alternated among committee rooms in the House office buildings, along Independence Avenue; the Senate office buildings to the north of the Capitol; and inside the Capitol itself. “The way we got started was literally putting the two bills—the House bill and the Senate bill—side by side on the table and trying to marry the two together, paragraph by paragraph, section number by section number,” a participant recalled. On the phthalates paragraphs, however, “Barton’s orders to his staff were clearly not to budge.”
¹⁹

The consumer groups hauled out their big duck. “We actually stood outside on the steps, lobbying the old-fashioned way,” flanked by the twenty-five-foot inflatable, Liz Hitchcock recalled. “Our strategy was to keep saying, ‘Will Congress listen to Exxon or America’s kids?’. . . The more we could say that, the more we could keep talking about Exxon, the better.”
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Some of the consumer advocates criticized Joe Barton publicly for having accepted ExxonMobil campaign contributions in the past. That angered Dingell. “He didn’t like the conduct from some of the consumer groups,” a staffer involved said, particularly the “effort to demonize the other side—that was unhelpful.” Dingell had been on the receiving end of similar attacks in the past and hadn’t appreciated them. Barton and his staff dug in deeper.

The conference convened a “stakeholders meeting” on phthalates in a congressional hearing room—a semiformal session where consumer advocates and representatives from ExxonMobil, the American Chemistry Council, and the Consumer Product Safety Commission could all make their arguments in front of the key staffers negotiating the final bill.

The ExxonMobil scientists who specialized in phthalate lobbying turned up to represent the corporation. The congressional staff sat in committee member chairs, like judges. The industry scientists and the consumer group scientists and advocates took their places in the audience—on opposite sides. The setting felt “like one of those
Saturday Night Live
point-counterpoint debates,” Janet Nudelman of the Breast Cancer Fund recalled.

“Pretty much every developed nation in the world has banned phthalates from kids’ toys,” Nudelman told the meeting. “But Congress is still debating.” It was time to act, she said.
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Somebody presented a Gumby doll as an exhibit. Shannon Weinberg, Joe Barton’s lead staffer on the issue, remarked, according to a participant, “If I were a mother, I’d never let my kids play with a Gumby.” It was not obvious what the legislative implications of her comment were. Vinyl ducks made with DINP and ducks made without DINP were placed side by side and fondled; some staffers felt they could not tell much difference between the two kinds, despite being told by ExxonMobil lobbyists that DINP-less toys might be so hard and inflexible that they could pose a choking hazard.

ExxonMobil’s scientists argued again that the amount of DINP in children’s toys was so negligible as to pose no realistic hazard. “Any time there was a discussion,” the conference participant remembered, “it always went back to, ‘You’d have to eat five hundred thousand rubber ducks to have an impact’” (an exaggeration of the 3,400 ducks in the written materials). “It just reverted back to the . . . ducks. That’s when the chaos started.”
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In the end, the stakeholders meeting allowed all sides to be heard, but it did not precipitate a compromise. The stalemate dragged into July. The overall toy bill was popular among members and senators in both parties—it would set new standards for testing toys, and it would improve the quality of imported toys, defending America’s toddlers from unscrupulous Chinese factory managers. It would be frustrating, conference staff felt, if the broader law failed to pass only because of the phthalates lobbying stalemate.

Later, several competing versions arose about how the final compromise originated. In any event, it was Solomonic: Three of the more obviously dangerous phthalates, out of the six outlawed in the Senate version, would be banned outright. DINP would be banned from children’s toys and teethers in the United States—at least for now. To salve ExxonMobil’s wounds, however, the bill would order the Consumer Product Safety Commission to convene another Chronic Hazard Advisory Panel to examine health effects from the full range of products and consider the “cumulative effect of total exposure to all phthalates in children’s products.” If the C.H.A.P. reached conclusions about DINP similar to those of a decade earlier, ExxonMobil’s position might ultimately prevail and the temporary ban on DINP use in toys would be lifted. For the time being, however, newly manufactured vinyl ducks and other toys that might be mouthed by American children would be free of DINP. What mattered most about this compromise proposal was that Dingell was enthusiastic. He and his staff pressed it upon Barton; after some hesitation, Barton accepted.

President Bush signed the Consumer Product Safety Improvement Act into law on August 14, 2008. Its final provisions on phthalates could not be described as a triumph for ExxonMobil—the consumer lobbyists had gotten more of what they wanted than the corporation. Yet Joe Barton had hung in there and had won significant concessions. ExxonMobil had a long record of persuading the Consumer Product Safety Commission to see phthalate regulation its way, and now the future of DINP manufacturing would be back before the commission, with ExxonMobil’s lobbyists once again involved in a detailed review of phthalate science and risk management.

The corporation apparently decided that Joe Barton deserved to be rewarded for his summer of stubbornness. In the world of political campaign contributions, there is a technique referred to as “bundling,” by which employees of the same company, law firm, or other organized group simultaneously make contributions to the same political candidate, to create a booster effect with their money injection. The tactic is legal if the employees act voluntarily, without coercion. Within two weeks after Bush signed the final toy bill, nineteen high-ranking ExxonMobil executives began to make campaign contributions to the Congressman Joe Barton Committee, according to the dates recorded for public filing by Barton’s committee.

On August 25, 2008, Mark Albers, of the upstream division, donated $350; Walter Buchholtz, the longtime lobbyist for ExxonMobil Chemical, donated $350; William Colton, the leader of Irving’s Strategic Planning exercises, gave $350; Michael Dolan, another vice president, gave $350; Donald Humphreys gave $750; Richard Kruger gave $350; Stephen Simon, the leader of ExxonMobil’s downstream businesses, gave $350; Sherri Stuewer, ExxonMobil’s leading executive on climate change and environmental issues, gave $350; Andrew Swiger gave $500; and Theodore Wojnar, a general manager at ExxonMobil Chemical, gave $350.

About a week later, on September 2, 2008, ExxonMobil chairman and chief executive Rex Tillerson led a second wave of giving to the Barton committee, with a donation of $1,500; Sara Tays, a public affairs executive, gave $350; Stephen Pryor, the president of ExxonMobil Chemical, gave $350; Henry Hubble, in charge of the corporation’s Wall Street relations, gave $350; and Ken Cohen gave $500. Jeanne Mitchell, ExxonMobil’s lobbyist in the House of Representatives, soon gave another $1,000. When the recorded contributions stopped on October 2, about six weeks after the toy safety bill’s passage, Barton had received $10,150.
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The sum might not be grandiose, but it did suggest a message:
We take care of our friends.

“ExxonMobil does not collect, report, monitor, or track individual employees’ personal political contributions,” Alan Jeffers, a spokesman for the corporation, said in a statement prepared in response to inquiries about these donations. “ExxonMobil does not bundle contributions or in any way illegally facilitate the making of federal campaign contributions. . . . At the time you reference, Rep. Barton had been chairman of the U.S. House Energy and Commerce Committee and later minority ranking member of the committee, which placed him at the center of many policy issues affecting U.S. business and industry. It is incorrect and misleading to allege that legal donations by individual ExxonMobil employees were in any way tied to a single vote on a single issue among the many that Rep. Barton would have been involved with at the time.”

Public records collated by the Center for Responsive Politics suggest that ExxonMobil took an especially strong interest in Barton during 2008, however. Barton attracted donations during each two-year campaign cycle from many corporations, but in 2008 ExxonMobil was one of the congressman’s top three campaign donors for the only time in a decade. Combining corporate, ExxonMobil Political Action Committee, and individual employee contributions, ExxonMobil gave Barton $38,298 that year, more than 40 percent more money than in any other cycle since 2000.

In a telephone interview, Jeffers said he believed a fund-raising event had been held for Barton around the time the 2008 donations by ExxonMobil employees were recorded in public filings, but the spokesman later declined to respond to questions about the event’s date, organizers, or the timing of invitations, in relation to the consumer bill’s passage. Barton’s office did not respond to requests for comment.

Twenty-three

“We Must End the Age of Oil”

T
he ExxonMobil Corporation Political Action Committee invested $722,000 in candidates for federal political office during the 2008 election cycle. Despite obvious signs of a strong Democratic electoral wave building across the United States at the end of the Bush administration, the corporation’s political spending remained staunchly Republican. Only 28 of the 207 recipients of ExxonMobil P.A.C. contributions during the 2008 cycle were Democrats; in dollar terms, ExxonMobil gave just 11 percent of its money to Democrats. The corporate P.A.C. gave more heavily to Republicans than did the company’s employees, when they made donations as individuals. Political contributions between 2000 and 2008 by individuals who declared an affiliation with ExxonMobil on disclosure forms—including Tillerson, Cohen, and other senior executives—totaled $1.22 million. Most employee contributions went to Republicans, but as a whole, employees gave more than twice as much to Democrats, as a percentage of their total, than the corporate P.A.C. did.
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“We are a business-oriented P.A.C.,” an executive involved in the political spending decisions said. “So we are looking for candidates . . . who are pro-business. . . . Now when you apply that litmus, our P.A.C. is rightly criticized that we tend to give more money to Republicans than to Democrats, but it is a result of the [key vote system] approach we take and not a desired result.”
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Joe Barton received more contributions from ExxonMobil than any member of Congress after 2000. Anne Northup, a Republican member of the House of Representatives from Kentucky, received the second most. Each of ExxonMobil’s top ten recipients was a House Republican. “Whoever’s in power in the House has almost dictatorial power,” a Washington consultant who worked on oil industry issues said. “If you control what’s going on in the House, you have huge influence over the final product; power is more diffuse in the Senate.”
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Moreover, low-tax, free-market ideology was ExxonMobil’s “North Star,” as a former executive involved put it, and the House Republican caucus increasingly offered the staunchest philosophical allies.
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In the Senate, Ken Cohen told his colleagues in the K Street office, “it’s all about the sixtieth vote,” that is, making sure that ExxonMobil could block unfavorable proposed legislation by encouraging loyalists to invoke the peculiar Senate institution of the filibuster.

From an office in Arlington, Virginia, the ExxonMobil Citizen Action Team mobilized employees and retirees to reinforce ExxonMobil’s lobbying positions and favored candidates. The team maintained a toll-free information line, playing on the corporation’s stock exchange ticker symbol: 1-866-VOTE-XOM. It provided updates on the corporation’s legislative priorities on a Web site and sent out glossy newsletters about pending legislation and upcoming campaigns to employees, retirees, and sympathizers. “Electing people who will pursue policies that are good for our industry and make sense for our families is an important responsibility,” one of the mailings enjoined.
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As the 2008 presidential campaign began, however, the greatest risk that American politics posed to ExxonMobil arose from something the Citizen Action Team had trouble addressing: the corporation’s general unpopularity and its attractiveness as a piñata for populists, left and right. ExxonMobil had never really broken free from the reputation for ruthlessness and self-interest Standard Oil had forged during the Gilded Age. As the Bush presidency entered its final year, retail gasoline prices rose toward four dollars a gallon. Quarter after quarter, higher global prices caused by Nigerian unrest and runaway Asian economic growth delivered jaw-dropping record profits to ExxonMobil. Its executives could hardly turn this cash flow off, but they had difficulty justifying it publicly in commonsense language. The problem was structural: Popular anger as pump prices spiked reflected a form of economic powerlessness among commuters and small business owners. Gasoline had become a necessity in the United States, like electricity, but its fluctuating price remained unregulated, in comparison with electric rates, which could be managed up and down more gradually, when underlying commodity prices changed. Moreover, when gasoline prices shot up very suddenly and without forewarning, the largest private corporation in the country made even more money, to add to its historically high profits. An American commuter or truck owner did not require socialist leanings to find this aggravating. “And how about this?” Jay Leno asked on
The Tonight Show
. “ExxonMobil today reported a profit last quarter—not last year, last quarter, one quarter—of $12 billion! . . . But in their defense, that money didn’t come from the gas. That’s just from the mini marts.”
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O
f all the candidates for president during the 2008 campaign, Barack Obama spoke most often and most pointedly about ExxonMobil. In debates and stump speeches, he offered none of the nuanced support for the sanctity of international oil contracts that he had voiced in private to Chad’s dictator Idriss Déby while visiting N’djamena two years before. Obama and his speechwriters exploited ExxonMobil’s unpopularity. They called out its profits and contrasted its wealth with the struggles of American working and middle-class families coping with long commutes and soaring gas prices. Obama’s spin specialists sought to link their Republican opponent, Senator John McCain, to the pro-oil policies of Dick Cheney. Politically, this was an attractive target of opportunity: In the summer of 2008, 72 percent of Americans surveyed had a negative view of Cheney, and only 18 percent saw the vice president positively. “President Bush, he has an energy policy,” Obama declared. “He turned to Dick Cheney and he said, ‘Cheney, go take care of this.’. . . McCain has taken a page out of the Cheney playbook.”
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That was campaign rhetoric; off the trail, Obama’s evolving views about energy and climate policy were subtler. He had only begun to immerse himself as a senator. It took time to grasp the nuances of automobile mileage standards, international oil supply, clean coal technologies, balance-of-payments issues, and the myriad ways in which different forms of energy contributed to global warming and how the existing patterns might be altered by policy intervention or technological innovation. Obama’s primary campaign involved a make-or-break commitment to Iowa, where ethanol subsidies were politically untouchable, so he embraced those with a particular emphasis on local ownership and populism. He embraced “energy independence” even though he knew that it was not achievable in a literal sense and perhaps not desirable, either. But the idea sold as nationalism, especially with independent voters in swing states. “There hasn’t been a campaign in thirty years where the policy wonks don’t cringe when ‘energy independence’ comes up, but the speechwriters get the last word,” said Jason Grumet, one of Obama’s energy policy advisers. Obama embraced “the smart version,” Grumet said, “in a more metaphorical than a physical sense. . . . He knows the last barrel we use will be from Qatar or wherever it’s cheapest . . . [but] he painted a bigger arc around the issue, that America can be great again, that it can renew itself.”
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In June, as McCain emerged as the presumptive Republican nominee and Obama’s grinding campaign against Senator Hillary Clinton neared a finish, McCain proposed a gas tax holiday to provide temporary relief to commuters burdened by soaring pump prices. The holiday would, in fact, help middle-class households hurting from unexpected gasoline expenses over which they had no control, but it had a chicken-in-every-pot opportunism about it and did nothing to address the glaring gaps in American energy and climate policies. Clinton embraced McCain’s idea, but Obama announced, in effect, “This is stupid; the American people are smarter than this.” Against the advice of his campaign pollsters, he used the issue to differentiate himself from McCain and Clinton, painting them as pandering politicians, and he came out fine.

The easiest case to make was to pound on Big Oil. To many independent voters and disillusioned Republicans, Obama’s strategists knew, the symbolic ExxonMobil-Cheney complex pointed toward all that had gone wrong in the Bush years—the Iraq War, the rise in American economic inequality and economic insecurity at home, an economy that seemed grotesquely based on greed and was beginning to teeter, and a corrupt culture in Washington that reinforced these failings by favoring special interests. Obama therefore salted his campaign speeches with ExxonMobil references even when they were gratuitous—the very word “ExxonMobil” resonated in his favor. “It’s not going to be easy to have a sensible energy policy in this country. ExxonMobil made $11 billion last quarter. They’re not going to give up those profits easily,” Obama said at an early primary debate. As the Democratic race narrowed to a campaign of attrition between Obama and Hillary Clinton, the two candidates competed in public about who opposed ExxonMobil more ardently. Then, after Obama’s nomination became secure, he turned the same line of attack on McCain. When McCain announced a plan to reform corporate taxes, Obama’s researchers figured out how much of the benefit would flow to ExxonMobil and immediately made that the focus of their criticism: “Think about that,” Obama said at a rally in North Carolina. “At a time when we’re fighting two wars, when millions of Americans can’t afford their medical bills or their tuition bills, when we’re paying more than four dollars a gallon for gas, the man who rails against government spending wants to spend $1.2 billion on a tax break for ExxonMobil. That isn’t just irresponsible. It’s outrageous!”
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The Bush administration and the McCain campaign studied polls that showed many Americans favored new offshore oil drilling as a strategy to reduce high gasoline prices. They announced coordinated plans to promote more domestic exploration in ocean waters: “Drill, Baby, Drill!” became a tongue-in-cheek-sounding chant at Republican rallies that summer. Obama promptly linked McCain’s offshore plan to ExxonMobil’s $11.68 billion in quarterly profits and denounced it as merely an “oil-company wish list.” The Democratic nominee also embraced a plan to impose windfall taxes on oil corporations when global oil prices were about $80 per barrel, as they had been throughout 2008. Obama also declared again and again that if he were elected, he would push with new vigor, working with Democratic majorities in both houses of Congress to cap greenhouse gas emissions and to invest heavily in solar, wind, and biofuels. Privately, he recognized that the American oil industry “is of economic significance, and that greater domestic drilling reduces imports and the balance of payments problem,” an adviser on energy issues said. But Obama wanted a comprehensive package that combined increased oil and gas production with progress on carbon pricing: “The idea was an ‘all of the above’ strategy that advanced both energy security and environmental goals.” More than his profit bashing, Obama’s climate and alternative energy policies—the ones he might actually be able to push through Congress as president—galvanized the attention of ExxonMobil’s public affairs executives and K Street lobbyists. “We must end the age of oil in our time,” Obama declared.
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“We felt like a candidate,” one of the corporation’s executives recalled. “Both parties were mentioning us by name. . . . So we were a candidate and we clearly knew that we were not electable.” A Democratic congressman, Maurice Hinchey, even ventured that ExxonMobil’s profits had “crossed the moral threshold of what is acceptable.”
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That sort of language—and the fervor and excitement that seemed to be coalescing around Obama’s candidacy—suggested something more threatening to ExxonMobil than the usual cycle of congressional hearings and antitrust inquiries whenever gasoline prices spiked and American drivers howled. Trustbusters had broken up Standard Oil on moral as much as economic grounds.

ExxonMobil had no cause to fear anything so drastic. Yet the costs and taxes Democrats in Washington might impose on a corporation as unpopular as ExxonMobil in an emotional period of high gasoline prices and huge corporate profits could not be easily forecasted. In American history, a number of industries had been regulated and taxed during periods of popular revolt against corporate power on the grounds that the targeted businesses were “public callings” and served a public interest function: banking, telecommunications, transportation, electric energy, and natural gas transport, among them.

In mid-July, global oil prices crossed above $140 a barrel. If such prices persisted, Democrats were almost certain to seek relief for disadvantaged households trapped by long commutes to work and stagnant incomes. Tillerson and his corporate planning group could not figure out what was causing the 2008 price spike. The detailed internal analysis of global supply and demand produced by ExxonMobil economists during early 2008 suggested that global prices were moving much higher than market fundamentals would predict. Was hot speculative money pouring into commodity funds a factor? Were traders assessing political risk in West Africa or the Middle East as a more profound forward-looking bottleneck on supply than ExxonMobil did? Tillerson felt genuinely befuddled. On the one hand, the corporation’s typical “one right answer” analysis suggested that some sort of bubble had inflated and that oil prices would eventually fall, relieving some of the reputational pressure faced by Big Oil that summer. On the other hand, ExxonMobil had forsworn price forecasts precisely because the corporation had learned over many years that oil prices could not be accurately predicted on the basis of the empirical methods employed by ExxonMobil’s economists and planners. The truth about future prices was anybody’s guess—in the meantime, the corporation’s reputation was being pounded.