NYT: Energy Firms in Secretive Alliance With Attorneys General

Related:

7 December 2014, NYT: A Window Into a Secret Alliance: Attorneys General and the Energy Industry

7 December 2014, NYT: A Letter From Oklahoma's Attorney General, Written Almost Entirely by Energy Company Officials

http://www.nytimes.com/2014/12/07/us/politics/energy-firms-in-secretive-alliance-with-attorneys-general.html

DEC. 6, 2014

Energy Firms in Secretive Alliance With Attorneys General

By ERIC LIPTON

The letter to the Environmental Protection Agency from Attorney General Scott Pruitt of Oklahoma carried a blunt accusation: Federal regulators were grossly overestimating the amount of air pollution caused by energy companies drilling new natural gas wells in his state.

But Mr. Pruitt left out one critical point. The three-page letter was written by lawyers for Devon Energy, one of Oklahoma's biggest oil and gas companies, and was delivered to him by Devon's chief of lobbying.

"Outstanding!" William F. Whitsitt, who at the time directed government relations at the company, said in a note to Mr. Pruitt's office. [1] The attorney general's staff had taken Devon's draft, copied it onto state government stationery with only a few word changes, and sent it to Washington with the attorney general's signature. "The timing of the letter is great, given our meeting this Friday with both E.P.A. and the White House."

Mr. Whitsitt then added, "Please pass along Devon's thanks to Attorney General Pruitt."

The email exchange from October 2011, obtained through an open-records request, offers a hint of the unprecedented, secretive alliance that Mr. Pruitt and other Republican attorneys general have formed with some of the nation's top energy producers to push back against the Obama regulatory agenda, an investigation by The New York Times has found.

Attorneys general in at least a dozen states are working with energy companies and other corporate interests, which in turn are providing them with record amounts of money for their political campaigns, including at least $16 million this year.

They share a common philosophy about the reach of the federal government, but the companies also have billions of dollars at stake. And the collaboration is likely to grow: For the first time in modern American history, Republicans in January will control a majority -- 27 [2] -- of attorneys general's offices.

The Times reported previously [3] how individual attorneys general have shut down investigations, changed policies or agreed to more corporate-friendly settlement terms after intervention by lobbyists and lawyers, many of whom are also campaign benefactors.

But the attorneys general are also working collectively. Democrats for more than a decade have teamed up with environmental groups such as the Sierra Club to use the court system to impose stricter regulation. But never before have attorneys general joined on this scale with corporate interests to challenge Washington and file lawsuits in federal court.

Out of public view, corporate representatives and attorneys general are coordinating legal strategy and other efforts to fight federal regulations, according to a review of thousands of emails and court documents and dozens of interviews.

"When you use a public office, pretty shamelessly, to vouch for a private party with substantial financial interest without the disclosure of the true authorship, that is a dangerous practice," said David B. Frohnmayer, a Republican who served a decade as attorney general in Oregon. "The puppeteer behind the stage is pulling strings, and you can't see. I don't like that. And when it is exposed, it makes you feel used."

For Mr. Pruitt, the benefits have been clear. Lobbyists and company officials have been notably solicitous, helping him raise his profile as president for two years of the Republican Attorneys General Association, a post he used to help start what he and allies called the Rule of Law [4] campaign, which was intended to push back against Washington.

That campaign, in which attorneys general band together to operate like a large national law firm, has been used to back lawsuits and other challenges against the Obama administration on environmental issues, the Affordable Care Act and securities regulation. The most recent target is the president's executive action on immigration.

"We are living in the midst of a constitutional crisis," Mr. Pruitt told energy industry lobbyists and conservative state legislators at a conference in Dallas in July, [5] after being welcomed with a standing ovation. "The trajectory of our nation is at risk and at stake as we respond to what is going on."

Mr. Pruitt has responded aggressively, and with a lot of helping hands. Energy industry lobbyists drafted letters [6] for him to send to the E.P.A., the Interior Department, the Office of Management and Budget and even President Obama, The Times found.

Industries that he regulates have also joined him as plaintiffs [7] in court challenges, a departure from the usual role of the state attorney general, who traditionally sues companies to force compliance with state law.

Energy industry lobbyists have also distributed draft legislation to attorneys general and asked them to help push it through state legislatures to give the attorneys general clearer authority to challenge the Obama regulatory agenda, the documents show.

"It is quite new," said Paul Nolette, a political-science professor at Marquette University and the author of the forthcoming book "Federalism on Trial: State Attorneys General and National Policy Making in Contemporary America." "The scope, size and tenor of these collaborations is, without question, unprecedented."

And it is an emerging practice that several former attorneys general say threatens the integrity of the office.

"It is a magnificent and noble institution, the office of attorney general, as it is truly the lawyer for the people," said Terry Goddard, a Democrat who served two terms as Arizona's attorney general and who, like Mr. Frohnmayer, reviewed copies of the documents collected by The Times. "That independence is clearly at risk here. What is happening diminishes the reputation of individual attorneys general and the community as a group."

Mr. Pruitt, who has emerged as a hero to conservative activists, dismissed this criticism as misinformed.

"Those kinds of questions arise from the environment we are in -- a very dysfunctional, distrustful political environment," Mr. Pruitt said in an interview. "I can say to you that is not who we are or have ever been, and despite those criticisms we sit around and make decisions about what is right, and what represents adherence to the rule of law, and we seek to advance that and try to do the best we can to educate people about our viewpoint."

In a state dominated by the energy industry, Mr. Pruitt's stands have been widely popular. "Attorney General Pruitt has been a champion for our state," said State Senator Mike Schulz, a Republican who is the majority floor leader. "The State of Oklahoma is in a better position than the E.P.A. to regulate drilling."

But Mr. Pruitt's ties with industry are clear. One of his closest partners has been Harold G. Hamm, the billionaire chief executive of Continental Resources, which is among the biggest oil and gas drilling companies in both Oklahoma and North Dakota.

This year, Mr. Pruitt joined with a group aligned with Mr. Hamm to sue the Interior Department over its plan to consider adding animals such as the lesser prairie chicken to the endangered species list, a move that Mr. Hamm has said could knock out "some of the most promising land for oil and gas leases in the country." The suit was filed [8] after Mr. Hamm announced [9] that he would serve as the chairman of Mr. Pruitt's re-election campaign.

"Time and time again, General Pruitt has stood up and bravely fought for the rights of Oklahomans in those instances when the federal government has overextended its hand," Mr. Hamm said as his role in Mr. Pruitt's re-election effort was announced.

A Potent Ally

Energy industry executives and lobbyists from across the United States saw great potential in Mr. Pruitt, a gifted politician who had been a state legislator and a minor-league baseball team co-owner and executive before running for attorney general.

Among them was Andrew P. Miller, a patrician 81-year-old former Virginia attorney general. Mr. Miller is a regular at gatherings of state attorneys general at resort destinations, and his client list includes TransCanada, the backer of the Keystone XL pipeline; the Southern Company, the Georgia-based electric utility, which has a large number of coal-burning power plants; and the investor group behind the proposed Pebble Mine in Alaska.

For the energy industry, Mr. Pruitt was an easy choice.

"There's a mentality emanating from Washington today that says, 'We know best,' " Mr. Pruitt said during his 2010 campaign. "It's a one-size-fits-all strategy, a command-and-control kind of approach, and we've got to make sure we know how to respond to that."

Among Mr. Pruitt's first acts was to create a "federalism office," which challenged the Obama administration's plan [10] to reduce haze in southwestern Oklahoma by requiring coal-burning electricity plants in the state to install new pollution control equipment.

His interaction with the industry, Mr. Pruitt said during an interview at his Oklahoma City office, has been motivated by a desire to gather information from experts, while defending his state's longstanding tradition of self-determination.

That ethos, he said, is depicted in a large oil painting in his office that shows local authorities with rifles at the ready confronting outsiders during the land rush era. "The founders recognized that power concentrated in a few is a bad thing," Mr. Pruitt said.

Mr. Miller made it his job to promote Mr. Pruitt nationally, both as a spokesman for the Rule of Law campaign and as the president of the Republican Attorneys General Association. [11]

"I regard the general as the A.G. best suited to take this lead on this question of federalism," Mr. Miller wrote to Mr. Pruitt's chief of staff [12] in April 2012. "The touchstone of this initiative would be to organize the states to resist federal 'overreach' whenever it occurs."

To Mr. Miller, having Mr. Pruitt as an advocate fit a broader strategy. He wanted state attorneys general to band together the way they did when they challenged the health care law [13] in 2010. In that effort, they hired a major national corporate law firm, Baker Hostetler, to argue the case, with much of the bill being paid through donations from executives [14] at corporations that oppose the law.

In his initial appeal to Mr. Pruitt, Mr. Miller insisted that his approach was not "client driven." But he soon began to name individual clients -- TransCanada and Pebble Mine in Alaska -- that he wanted to include in the effort. The E.P.A. has held up the Pebble Mine project, which could potentially yield 80 billion pounds of copper, [15] after concluding [16] it would "threaten one of the world's most productive salmon fisheries."

"This strike force ought to take the form of a national state litigation team to challenge the E.P.A.'s overreach," Mr. Miller said in an email to Mr. Pruitt's office. "Like the Dalmatian at the proverbial firehouse, it could move out smartly when the alarm sounded."

A Call to Arms

Mr. Miller's pitch to Mr. Pruitt became a reality early last year at the historic Skirvin Hilton Hotel in Oklahoma City, where he brought together an extraordinary assembly of energy industry power brokers and attorneys general from nine states for what he called the Summit on Federalism and the Future of Fossil Fuels. [17]

The meeting took place in the shadow of office towers that dominate Oklahoma City's skyline and are home to Continental Resources, a leader in the nation's fastest-growing oil field, the Bakken formation of North Dakota, as well as Devon Energy, which drilled 1,275 new wells last year. [18]

More liberal attorneys general, such as Douglas F. Gansler, Democrat of Maryland, did not participate.

"Indeed, General Gansler would in all likelihood try to hijack your summit," Mr. Miller wrote to Mr. Pruitt in an email. "At best you would be left to preside over a debate, rather than a call to arms."

Oklahoma energy companies were there, according to an agenda, joined by executives from Peabody Energy of Missouri, the world's largest private-sector coal producer, as well as the Southern Company, which has aggressively challenged federal air pollution mandates.

The nation's top corporate energy regulatory lawyers were there, too, including F. William Brownell, a senior partner at the law firm Hunton & Williams, which has spent more than 25 years fighting the enforcement of the Clean Air Act.

The event was organized by an energy-industry-funded law and economics center at George Mason University of Virginia. The center is part of the brain trust of conservative, pro-industry groups that have worked from the sidelines to help Mr. Pruitt and other attorneys general.

And there was nothing ambiguous about the agenda.

"Suggested Responses to Assaults on Federalism" was the topic of one breakfast meeting, moderated by Attorney General Wayne K. Stenehjem of North Dakota, that showcased Mr. Brownell and three other top corporate regulatory lawyers. Mr. Hamm was the featured dinner speaker.

"We need to ensure the robust role of the states," said Paul M. Seby, another coal industry lawyer who attended. "And as the chief law enforcement officers, it is not surprising this is becoming a cornerstone of attorney generals' attention."

Attorneys general said they had no choice but to team up with corporate America. "When the federal government oversteps its legal authority and takes actions that hurt our businesses and residents, it's entirely appropriate for us to partner with the adversely affected private entities in fighting back," said Attorney General Pam Bondi of Florida, whose top deputy attended the meeting.

A 'Strike Force'

The impact of the gathering was immediate. A week later, a new Federalism in Environmental Policy task force was established by lawyers in the offices of 19 state attorneys general, according to email records obtained from the office of Attorney General Timothy C. Fox of Montana, who had participated in the Oklahoma meeting.

"This message is in follow-up to the excellent environmental conference put on last week by George Mason University and hosted by the Oklahoma attorney general's office," said one email sent by Katie Spohn, the deputy attorney general in Nebraska. "In order to continue our coordination of efforts regarding Federalism in Environmental Policy, I am seeking input from each state who participated in the conference."

Mr. Miller was pleased. "Just the kind of strike force I was talking about," he said in an interview.

And the input poured forth. The states worked to detail major federal environmental action, like efforts to curb fish kills, reduce ozone pollution, slow climate change and tighten regulation of coal ash. Then they identified which attorney general's office was best positioned to try to monitor it and, if necessary, attempt to block it.

Follow-up by Mr. Pruitt's federalism office often came after coordination with industry representatives, especially from Devon Energy. The company, one of the most important financial supporters for the Republican Attorneys General Association, is guarded about its public profile. But it readily turned to Mr. Pruitt and his staff for help, setting up meetings for the attorney general with its chief executive, its chief lobbyist and other important players.

"We have a clear obligation to our shareholders and others to be involved in these discussions," John Porretto, a Devon spokesman, said in a statement.

While some of the exchanges were general in character, others were quite explicit, especially the communication about the E.P.A.'s methane regulations that had prompted Mr. Whitsitt, the Devon official, to propose that Mr. Pruitt send a letter to the agency.

"Just a note to pass along the electronic version of the draft letter to Lisa Jackson at E.P.A.," said one September 2011 letter to Mr. Pruitt's chief of staff from Mr. Whitsitt. "We have no pride of authorship, so whatever you do on this is fine."

Mr. Pruitt took the letter and, after changing just 37 words in the 1,016-word draft, copied it onto his state government letterhead and sent it to Ms. Jackson, the E.P.A. administrator.

That was just one of his challenges to Washington. Devon officials also turned to Mr. Pruitt to enlist other Republican attorneys general and Republican governors to oppose a rule proposed by the Bureau of Land Management that would regulate hydraulic fracturing, or fracking, on federal land.

"As promised, we are sending you the attached draft of the R.G.A./RAGA follow-up letter to President Obama opposing B.L.M.'s proposed rule," Brent Rockwood, Devon's director of government affairs, wrote to Mr. Pruitt's staff in late 2012, in an email marked "confidential."

Weeks later, that letter was sent to Mr. Obama without only a few word changes, signed by Mr. Pruitt and Gov. Bobby Jindal of Louisiana, who was the head of the Republican Governors Association at the time.

Company officials again expressed their pleasure to Mr. Pruitt.

"I've learned that we're having an effect -- and may be able to have more, perhaps even to having the rule withdrawn or shifted to almost a reporting-only one," Mr. Whitsitt wrote, in another email marked "confidential."

The rule -- which the industry claims would cost $346 million [19] a year to comply with -- has still not been issued.

Coordination between the corporations and teams of attorneys general involved in the Rule of Law effort also involves actual litigation to try to clear roadblocks to energy projects, documents show.

Energy producers, for instance, wanted to sue the Interior Department as it considered adding animals such as the sage grouse -- which nests near sites of oil and gas drilling -- to a list of endangered species, a move that could put tens of thousands of acres off limits to new drilling.

The energy companies could have sued on their own, but their executives believed that the case would be more potent by bringing in Mr. Pruitt and the weight of the State of Oklahoma.

"We just came to the conclusion he would be the best person to be the lead attorney on this," said Mike McDonald, an owner of Triad Energy, a small oil and gas exploration company, and the president of a group that calls itself the Domestic Energy Producers Alliance. [20] "He has exceeded our expectations."

For the industry, the state is an extremely valued partner because states are granted "special solicitude" [21] from the federal courts, a critical advantage to private companies that helps confer legal standing and means that a matter is less likely to be dismissed.

Mr. Pruitt's office, in a statement to The Times, rejected any suggestion that the attorney general has been wrong to send to Washington comment letters written by industry lobbyists, or to take up their side in litigation.

"The A.G.'s office seeks input from the energy industry to determine real-life harm stemming from proposed federal regulations or actions," the statement said. "It is the content of the request not the source of the request that is relevant."

Persuading lawmakers to offer legislation has been another effective lobbying tool. In West Virginia, Mr. Miller handed Attorney General Patrick Morrisey a draft of legislation that he argued would put West Virginia in a better position to sue the Obama administration over proposed regulations to tighten pollution controls on power plants, emails show.

"I trust you will find the legislation acceptable in its present form," Mr. Miller wrote to Mr. Morrisey in February, referring to a private meeting the two had had in the law library of Mr. Morrisey's office in Charleston. "If so, I would appreciate your having it introduced by your friends in both the Senate and the House."

A version of the bill was introduced and passed by the West Virginia Legislature in March. Delegate Rupert Phillips Jr., the chief sponsor of a second bill that also contained language identical to what Mr. Miller had requested, said in an interview that he had acted with Mr. Morrisey's support, an account supported by William B. Raney, the president of the West Virginia Coal Association.

"It is nice to have everybody singing from the same sheet of music," Mr. Raney said.

A spokesman for Mr. Morrisey disputed this account, saying that while he supported the effort to challenge the rule, he did not play a role in promoting the legislation.

Blurred Lines

The work in Mr. Pruitt's office has sometimes seemed to blur the distinction between his official duties and the advancement of his political career.

Mr. Pruitt's chief of staff, Crystal Drwenski, served as gatekeeper to his office, arranging meetings and helping companies get Mr. Pruitt and his staff to intervene with the federal authorities. But Ms. Drwenski also played an important supplemental role for the attorney general: fund-raising aide.

"A.G. Pruitt is working with the Republican Attorneys General Association on their national meeting in Washington," Ms. Drwenski wrote to Mr. Whitsitt. "The benefit of membership and participation is having 25 Republican A.G.s in a room to discuss policy issues."

Ms. Drwenski wanted Devon Energy's help in enlisting the American Petroleum Institute, and Mr. Whitsitt agreed.

"I've put in a plug to A.P.I.," Mr. Whitsitt wrote back to Ms. Drwenski, a few hours after her request, having reached out to the organization's senior lobbyist, Marty Durbin. "He is expecting a call."

In addition to the American Petroleum Institute, major energy companies -- ConocoPhillips, the oil and gas company; Alpha Natural Resources, a coal mining giant; and American Electric Power, the nation's biggest coal consumer -- have recently joined the Republican Attorneys General Association, bringing in hundreds of thousands of additional dollars to the group, internal documents show.

By last year, the association was starting to pull in so much money under Mr. Pruitt's leadership that it decided to break free from its partnership with the Republican State Leadership Committee, a group that represents state elected officials. Within months, the association also set up the Rule of Law Defense Fund, yet another legal entity that allows companies benefiting from the actions of Mr. Pruitt and other Republican attorneys general to make anonymous donations, in unlimited amounts. Fund-raising skyrocketed.

The $16 million that the association has collected this year is nearly four times the amount it collected in 2010, money it used mostly to buy millions of dollars' worth of television advertisements in states like Arizona, Arkansas, Colorado and Nevada, all places where Republican candidates for attorney general won election.

The fund-raising has taken place on the state level as well. Oklahoma Gas & Electric -- a for-profit utility that Mr. Pruitt joined with in federal court to fight the E.P.A. -- invited its employees to the Petroleum Club in downtown Oklahoma City late last year for a fund-raising event for Mr. Pruitt, drawing donations from about 45 company employees, including the chief executive. Four days later, Mr. Pruitt filed a new appeal in the case -- timing that the utility said was a coincidence.

While Mr. Pruitt's efforts to raise money for the Republican Attorneys General Association have been an unqualified success, the lawsuits and regulatory appeals he has filed have yielded mixed results.

In May, the Supreme Court declined to take up the appeal [22] on the Oklahoma Gas & Electric matter, meaning the company is now moving ahead on retrofitting [23] its coal-burning plants. But other lawsuits are pending, including Mr. Pruitt's challenge of the Dodd-Frank law, [24] which rewrote the nation's financial regulations, and, perhaps most important, his challenge of the tax subsidies [25] that are a critical part of the Obama administration's health care law.

Mr. Pruitt's staff has juggled various duties -- helping major corporations push their challenges against Washington, and then turning to these same executives, at times, to ask them for financial support.

For example, Ms. Drwenski, who is no longer Mr. Pruitt's chief of staff, asked Devon Energy in 2012, on a workday afternoon, for help in signing up the American Petroleum Institute as a member of the Republican Attorneys General Association.

She used her personal email account to send out the initial request. But the subsequent exchange took place on her work email account, even though Oklahoma state law prohibits state officials from using state property or time to solicit political contributions. A spokesman for Mr. Pruitt said, "It is entirely possible she could have been taking a late lunch."

Mr. Pruitt, who ran unopposed to win a second term, has not needed much of the money himself, but his fund-raising efforts have greatly benefited other Republicans running for the job.

That explains the partylike atmosphere late last month in South Florida, where members of the Republican Attorneys General Association held their fall meeting at the chic Fontainebleau Miami Beach, along with hundreds of lobbyists, lawyers and corporate executives, whose companies had paid as much as $125,000 for the privilege to celebrate with them.

During the opening reception, on a giant terrace overlooking the Atlantic Ocean, with red, white and blue lights beaming onto the walls and rock music blasting, the Republican attorneys general strode to the stage to trumpet their new majority in the states.

Mr. Pruitt was there for the weekend's festivities, an event at which Devon Energy served as a corporate host, with banners hung in the hotel hallways featuring the corporate logo.

The Oklahoma attorney general's stay was brief. The Rule of Law campaign had a new and urgent target.

"Our president sees himself as above the law," Mr. Pruitt said from Oklahoma City as he announced several days later yet another front in the campaign, a lawsuit he planned to file to challenge the Obama administration's new immigration policies. "We will take action to hold him accountable."

More of Nation's Attorneys General Are Republican

Aided by record fund-raising by the Republican Attorneys General Association, Republicans, for the first time in modern history, will control a majority of state attorney general posts in 2015.

Sources: Republican and Democratic Attorneys General Associations (fund-raising numbers); Paul Nolette, department of political science, Marquette University (attorneys general by party and state)

By Alicia Parlapiano

Top Individual Recipients of Energy Industry Money Since 2004

Many attorneys general collect contributions directly from energy industry donors, in addition to money passed on from party associations. Attorney General Scott Pruitt of Oklahoma, for example, has received at least $215,574 from companies and industry employees since 2010, even though he ran unopposed in his most recent election.

Attorney generals highlighted in gray will be in office in 2015