HYDRAULIC FRACTURING:

White House huddled with industry before changes to BLM fracking rule

President Obama's top energy adviser repeatedly huddled with oil and gas lobbyists in the months before the administration changed new hydraulic fracturing rules to the industry's liking, records show.

Heather Zichal, deputy assistant to the president for energy and climate change, also met with environmental groups. But much more of her calendar was given over to producers who complained the Bureau of Land Management's proposal for fracking on public land was too burdensome.

Zichal met more than 20 times in 2012 with industry groups and company executives lobbying on the proposed rule, according to an EnergyWire review of White House visitor records. Among them were the American Petroleum Institute (API) and the Independent Petroleum Association of America (IPAA), along with BP America Inc., Devon Energy Corp. and Exxon Mobil Corp.

Zichal and Dan Utech, deputy director for energy and climate change, held four meetings with environmental groups on the proposal, commonly called the "BLM Fracking Rule."

A White House official stressed that Zichal and her team never turned down a meeting request from a green group and said the Interior Department, not the White House, is driving development of the rule.

But environmentalists involved in the meetings say Zichal's calendar helps explain the "slow degradation" of a proposal they considered too weak at the outset.

"The rule really reflects who has had the most access and who is being listened to," said Fran Hunt of the Sierra Club. "They've been following the road signs put up by industry."

Oil and gas groups are pleased with the access and happy that the White House is riding herd on the agencies dealing with the nation's drilling boom. But drilling companies are still wary of the administration's call to strip away their tax advantages and its interest in new regulations.

"Coming out of the meetings, our participants felt that the positive economic and employment impact of new, American natural gas and oil production is beginning to be recognized," said Jeff Eshelman, spokesman for IPAA, which represents independent producers. "But on the other hand, the administration's call for increased industry taxes and possible federal regulations creates a very difficult balancing act."

Ambassador to the oil lobby

The proposed fracking rule is intended to update rules for oil and gas drilling on federal land by requiring disclosure of the chemicals that companies inject underground, bolstering standards for ensuring wells do not leak and requiring that wastewater is properly managed.

The Interior Department has talked about such a rule for two years. In May 2012 the department released a draft for comment. But in January this year, it restarted the process, announcing it was drafting a new proposal

The new language, floated to interest groups in the weeks that followed, incorporated several industry requests. Administration officials had decided to exempt acidizing, a process similar to fracturing that is used in California's Monterey Shale, make it easier to withhold fracturing fluid ingredients as trade secrets and adopt the industry-backed FracFocus website for disclosure of chemicals (EnergyWire, Feb. 8).

Environmental groups were disappointed not to see any of their suggestions, such as a ban on diesel fuel in fracturing fluid, increased protections for special areas and a prohibition on wastewater pits.

Zichal, a former aide to then-Sen. John Kerry (D-Mass.), started in the White House as the assistant to energy and climate "czar" Carol Browner, who left in 2011. In the past year, Zichal has taken on an increasingly high-profile role as the White House's chief ambassador to oil and gas companies.

That role arose in part from industry lobbying. The president tapped her to head an "interagency working group" requested by API to coordinate policy on drilling. Her handling of that assignment has earned her some praise from people in a community deeply suspicious of Obama.

"I think a lot of folks in our industry hold Heather in pretty high regard," one industry insider said. "Everyone I know who's met with her says she's smart, fair, and, if she needs to, she stabs you in the chest, not in the back. And for this administration, that's about the best you can hope for."

Participants said some of the meetings seemed to be an opportunity for Zichal and the White House staff to get government officials in the same room with lobbyists and executives to challenge each other's views.

In a May 2012 meeting, for instance, Zichal hosted a pack of oil and gas lobbyists and brought in Bob Sussman, a top adviser to then-EPA Administrator Lisa Jackson.

In a November meeting with the heads of national environmental groups, an aide challenged them to respond to an industry report saying the rule would cost 25 times more than BLM had estimated.

Hunt, who was at the meeting, said she was bothered the most by what she didn't hear.

"There's no point where anyone has said, 'I get it. This is a problem,'" said Hunt, who serves as the lobbyist for the Sierra Club's "Beyond Natural Gas" campaign. "They're polite. They ask questions. They take your paper. But you never see the light bulb go off.

"Then you see the next iteration of the rule," she added, "and you realize who they've been listening to."

A question of influence

In August, Zichal met with state government officials advocating for FracFocus, the industry-backed website for fracturing chemical disclosure. The registry includes less information than what the Interior Department had originally proposed, and an administration study group criticized some of its barriers to information. Still, the latest draft makes FracFocus the method of disclosure.

Zichal met twice during the summer with Halliburton Co. Vice President for Government Affairs Robert Moran and others. A Halliburton spokeswoman said they met to discuss the company's "CleanSuite" fracturing technologies.

The most recent meeting listed in White House records was Zichal's Dec. 20 sit-down with ConocoPhillips Chairman and CEO Ryan Lance.

"The meeting was a valuable opportunity to engage in a discussion regarding a sound and stable energy policy that will address America's future energy needs and support economic growth," said ConocoPhillips spokesman Daren Beaudo.

The meeting was part of a busy December. Utech held a meeting with an 11-member environmental delegation that included Earthworks, the Natural Resources Defense Council and the Wilderness Society. Before her meeting with Lance, Zichal met with small groups from Exxon Mobil and IPAA.

Not all the industry executives who met with Zichal lobbied against the BLM proposal. Southwestern Energy Co. general counsel Mark Boling paid a visit to discuss the model drilling regulations he's developed with the Environmental Defense Fund and others. Boling praised the administration's efforts.

"I think BLM has done a very good job of reaching out to industry," said Boling, who is also president of Southwestern's V+ Development Solutions division, which the company created a year ago to help balance production goals with the environmental and social impacts of oil and gas development. "They're trying to do it right. I don't think they get enough credit. It's getting close to something that will work for industry."

White House visitor records do not list the subject of meetings or the affiliation of those entering White House gates.

The records are disclosed by the White House voluntarily as part of a settlement with a watchdog group. But the agreement allows the White House considerable discretion to withhold information.

There are no records of meetings with Interior Deputy Secretary David Hayes, the department's point man on the BLM fracking issue. Interior sources said he has visited the White House numerous times to discuss the issue.

Some participants confirmed the subject of the meetings to EnergyWire, and many of those who met with Zichal also met with other White House officials from the Office of Management and Budget in which the topic of the meeting was disclosed.

In his final appearance before Congress as Interior secretary yesterday, Ken Salazar said the release of the revised fracking rule is "imminent."

Salazar didn't provide details of the new draft or a specific timeline, but he noted it will still contain three main components: disclosure of chemicals injected underground, well-bore integrity and management of water that flows back to the surface (E&ENews PM, April 11).

An industry participant cautioned against the idea that there's a "one-to-one" correlation between the number of meetings and the amount of influence wielded by oil and gas companies.

But Zichal herself explained in a recent speech how one such meeting on a different topic took an industry group's idea and turned it into a top presidential initiative.

She recalled a Dec. 3 meeting when leaders from Securing America's Future Energy, or SAFE, "walked us through" their idea to use proceeds from oil drilling to pay for clean energy research. Now, SAFE's "Energy Security Trust Fund" is a top White House initiative that Obama rolled out in this year's State of the Union address.

"There are a lot of people in Washington that probably have their opinions of me," Zichal said, "but what I will say is I do know a good idea when I see one."