In the world of energy, former Vice President Dick Cheney is best known for a policy he may not have created.
The “Halliburton loophole” — part of comprehensive energy legislation Cheney guided from concept to signing ceremony in 2005 — is the most famous part of the bill. It may also be the most exaggerated.
Since it exempted fracking from a top environmental law, it’s been both credited and blamed for unleashing the flood of oil and gas production that put the United States at the top of the world’s leaderboard. The exemption bears the name of the oilfield services firm Cheney led before landing in the West Wing, but his specific role in putting it in law remains unclear 20 years later. In all those years he didn’t boast about it, nor did he disavow it.
The provision took fracking out of the hands of EPA before the agency, dreaded by the oil industry, could begin to regulate it in earnest. Cheney and the administration of then-President George W. Bush could reasonably take credit or blame for setting in motion oil, gas and coal policies that President Donald Trump now seeks to put in hyperdrive. Cheney’s death was announced Tuesday by his family. He was 84.
“From leading Halliburton to serving as vice president, he exemplified steady leadership and helped shape America’s energy and security,” American Petroleum Institute CEO Mike Sommers said in a social media message.
The White House and Halliburton did not respond Tuesday to requests for comment. While both men were avid supporters of the oil and gas industry, President Trump clashed with Cheney and his daughter, former Rep. Liz Cheney (R-Wyo.), who helped lead a probe into Trump’s actions around the Capitol riot on Jan. 6, 2021.
In addition to a long and storied career in government, Cheney had served as chair and CEO of Halliburton before joining Bush in the White House. It was the first time two oilmen held the top two jobs in the country. Bush had founded an oil exploration company early in his business career.
Bush and Cheney made a hard turn from the Democratic administration of former President Bill Clinton, who sought to build an environmental legacy late in his second term by preserving Western public lands and putting them off-limits to oil and gas development.
Bush campaigned on drilling in Alaska’s Arctic National Wildlife Reserve and increasing production on other public lands. “Drill, baby, drill,” though, didn’t become a Republican slogan until 2008, when the two oilmen were on their way out the door.
Bush was only nine days into his presidency when he assigned Cheney to develop a new national energy policy. The task force Cheney created for the job became famous for closed-door huddles with energy companies and a refusal to release records.
The report his panel produced some 108 days later drew howls from environmentalists and predictable praise from fossil fuel interests. But as much as it was a strong push to the right, it pales in comparison to Trump’s drive for fossil fuel “energy dominance” and renewable energy submission.
At the time, the United States produced a fraction of the oil and gas it does today, but Cheney’s report declared no unilateral emergencies and also advocated for renewable energy sources like wind and solar. It embodied the Republican side of the “all-of-the-above” rhetoric employed by both parties until Trump’s first term.
The aging document from the National Energy Policy Development Group provides hints of the drilling boom to come. The report mentioned hydraulic fracturing, with a faint nod to how important advances in the technology known as fracking would become.
It discussed fracking to produce natural gas from coal seams, which are far shallower than the deep formations that would be tapped in Pennsylvania, North Dakota and Texas in the drilling boom. It predicted fracking into coalbeds would most likely face added controls and costs to ensure environmental protection.
The document did not explicitly call for any exemption for fracking to be written into law.
Instead, the National Energy Policy Development Group said the Energy and Interior departments should “promote enhanced oil and gas recovery from existing wells through new technology.”
Energy Policy Act
Much of the report’s discussion about fracking sounded pretty milquetoast. Far more attention was paid to increased leasing and drilling on federal lands, primarily for gas.
The report pointed to the federal public lands of the Rocky Mountain West, saying 40 percent and some 137 trillion cubic feet of natural gas was restricted. The report recommended that the Interior Department take another look at those restrictions, still using careful federal language: “consistent with the law, good environmental practice, and balanced use of other resources.”
Federal public lands, then and now, produce far less oil than needed to meet American consumption. And those lands alone don’t produce enough natural gas to supply a massive export industry. Overall, the United States becamea net petroleum exporter in 2020, the last full year of Trump’s first term.
Still, it’s impossible to say that Cheney had no idea what might lay ahead. Halliburton had lobbied for an exemption from environmental restrictions for hydraulic fracturing when he ran the company. The Halliburton Oil Well Cementing Co. performed the first “frack job” on March 17, 1949.
By then, fracking pioneer George Mitchell had developed the “slickwater” mixture of horizontal drilling and high-pressure underground injection in Texas that would later drive the boom. But the promise of the technology wasn’t widely known. Mitchell would sell his company to Devon Energy in 2002 for about $3.5 billion.
Publicly, Cheney courted controversy at times. Environmentalists howled when he dismissed energy conservation as a “personal virtue,” but “not a sufficient basis” for comprehensive energy policy. But unlike Trump, he didn’t shut down any active offshore wind energy projects. And much of the Bush-Cheney energy agenda waited on Congress, while Trump has put the pedal down and left Congress in the dust.
It took four years, two wars and one presidential election after Cheney’s report was issued for Congress to produce the Energy Policy Act of 2005. While it extended the length of daylight saving time, observers say the effect of the rest of the bill is hard to measure.
The 550-page bill was packed with incentives for nuclear, fossil and renewable energy. There were grid reliability regulations and siting provisions later pushed aside by court decisions.
But one paragraph exempted hydraulic fracturing from the Underground Injection Control (UIC) provisions of the Safe Drinking Water Act. The UIC regulations cover holes drilled to inject contaminants deep underground and wells used to force oil and gas to the surface.
Hydraulic fracturing was never widely regulated under the safe drinking water law. But in 1997, a federal appeals court had ruled that the UIC provisions of the law applied to fracturing in Alabama. The exemption in the 2005 law ended that and prevented the precedent from spreading to other states.
Opponents linked the exemption to Halliburton when the bill was debated in 2005. And Cheney’s former company became a target of critics during the Iraq war. In 2007, Halliburton unloaded its remaining interest in KBR, which was a major military contractor in Iraq.
The “Halliburton loophole” eventually stuck, though it doesn’t show up in the LexisNexis news archive in the context of oil and gas until May 2009.
As Mitchell’s slickwater shale drilling process revolutionized the American energy landscape and opposition grew, critics increasingly took to linking the exemption with Halliburton.
Some of those critics were quick to remember Tuesday how they viewed Cheney’s energy legacy.
“More than any other person Dick Cheney is responsible for the veil of secrecy and lies that surround fracking operations, and they are enshrined into law that he created,” Sandra Steingraber, senior scientist at the Science and Environmental Health Network, posted on social media.
The oil and gas industry has often said the fracking provision wasn’t even an exemption, much less a “loophole,” because EPA had not regulated fracturing under the Safe Drinking Water Act outside of Alabama.
“But tip your cap to the activists for constructing an entire mythology around it,” said Chris Tucker, who runs the energy practice in the strategic communications portion of FTI Consulting and helped develop the industry’s program for rapid response to fracking critics, known as Energy In Depth. “They had us on the defensive there for a while.”
Tucker is among those who say Cheney was not the driving force behind what the other side calls a loophole.
“The former vice president was just as surprised as anyone to have this thing, of all things, ascribed to him and his former company,” Tucker said. “It was one of those stories that was too good to check, I think.”
