When Congress severely limited the Environmental Protection Agency's ability to regulate hydraulic fracturing in 2005, it was a victory for a quasi-governmental organization that has been quietly working for decades to restrict federal oversight of oil and gas.
The group, the 80-year-old Interstate Oil and Gas Compact Commission, began fighting for a fracking exemption as early as 1999. Congressionally sanctioned as an interstate compact, the IOGCC characterizes itself as a government entity, which allows it to call its lobbying of lawmakers "education." But in reality, it is led by regulators from industry-friendly oil and gas producing states, and a full third of its members come from the industry itself. The group has worked behind the scenes for decades to prevent federal regulation so stridently that in 1978, the Justice Department argued it should be disbanded because it had evolved into an advocacy organization.
That seemed particularly true when the group pushed to exempt fracking from the Safe Drinking Water Act. The IOGCC passed a resolution in 1999 advocating a bill introduced by Sen. James Inhofe (R-Okla.) and six years later, claimed credit when a similar measure finally became law at the start of George W. Bush's second term.
"Congress passes IOGCC's legislative fix for hydraulic fracturing," bringing "several years of hard work by the Commission to fruition," the IOGCC said in a 2005 newsletter. The provision—known as the Halliburton loophole after the oilfield services giant—was part of the 2005 Energy Policy Act. Along with advances in drilling and fracking technology, it helped enable the modern fracking boom that has created vast economic benefits, but also has been implicated in cases of drinking water contamination, air pollution and rising emissions of climate-changing methane.
The IOGCC was "pretty instrumental" in getting the measure passed, said Kevin Bliss, who was the IOGCC's Washington, D.C. representative until 2010.
The loophole is just one example of the IOGCC's influence on U.S. energy policy, according to interviews with more than two dozen energy policy experts, scientists, current and former congressional staffers, environmentalists and IOGCC members, as well as a review of hundreds of pages of documents shared by Greenpeace and DeSmogBlog.
The IOGCC's efforts have helped keep regulation of oil and gas development mostly in the hands of states, resulting in a patchwork of laws that allows companies to pollute more in some states than in others. The dearth of federal energy regulation and inconsistent state practices have played a role in infrastructure disasters such as water contamination and most recently the Aliso Canyon natural gas leak, according to environmental and health groups.
While little known and working with a relatively modest budget of $1 million, the IOGCC has tallied an impressive winning streak of helping to keep federal oversight at bay. When members of Congress tried to close the Halliburton loophole in 2009, several states adopted resolutions to preserve it—using language directly from an IOGCC resolution. Top state regulators have testified on the IOGCC's behalf before Congress to defend fracking's safety. The group also resisted federal rules on underground natural gas storage, and worked with former Rep. John Boehner's office to gather support for a bill to block fracking regulations on public lands.
What sets the IOGCC apart from trade groups, think tanks and political advocacy organizations is the IOGCC's position as an interstate compact. Authorized by an act of Congress, it can use a loophole in the Lobbying Disclosure Act to lobby without disclosing it to the public. But it's not enough of a government organization to be required to comply with open records laws.
"To what degree is this entity having its cake and eating it too?" said Meredith McGehee, policy director for the Campaign Legal Center, a nonpartisan nonprofit that works to reduce the impact of big money on the political system. McGehee reviewed the IOGCC at the request of ICN. "It's treated for lobbying purposes as a governmental entity, but claiming it's not a governmental entity for other purposes like FOI [Freedom of Information]. Then to whom is it accountable, and to what degree is there transparency?"
The IOGCC represents 30 oil-and-gas producing states (and eight others that currently don't produce oil and gas). A third of its 495 members come from state regulatory authorities, according to the group's 2015 member directory. Officials from Texas and Oklahoma, where regulators have historically cozy ties with industry, occupy the top three positions. Oklahoma Gov. Mary Fallin is the current IOGCC chairman. David Porter, chairman of the Texas Railroad Commission (which regulates oil and gas), is the IOGCC's vice chairman. The second vice chairman is Michael Teague, Oklahoma's secretary of energy and environment.
Since 2010, the Railroad Commission's top three officials, including Porter, have collectively accepted more than $2 million in campaign contributions from the industry that they oversee. Oklahoma regulators have spent years downplaying the risk of earthquakes induced by oil and gas activity.
Another third of the IOGCC's members work in the oil and gas industry, including Continental Resources chief executive Harold Hamm and members of the American Petroleum Institute. The remainder come primarily from law firms and consulting companies. Only three come from environmental groups.
Unlike industry or environmental groups, the IOGCC can describe its lobbying as the "sharing of information," said Craig Holman, a governmental affairs lobbyist at Public Citizen, a nonprofit group that supports citizen interests in government.
The "IOGCC does not lobby," IOGCC spokeswoman Carol Booth said in an email replying to questions about the organization's transparency and advocacy work. "It does inform and educate state regulators, federal officials, policymakers and the public at large. It needs to be stated: The IOGCC has no regulatory authority."
In its own materials, the IOGCC encourages its members to press legislators. "We're your voice in Congress. Be ours in your state," says a fact sheet for new members titled "Tips for Effective Activism."
"It is absolutely vital to tell elected officials where we stand on issues," says a separate IOGCC publication. "Our input shapes the way our representatives create and implement environmental and social policy."
Bliss, the former IOGCC member who left in 2010, said that during his 10 years with the organization he regularly presented the IOGCC's positions to members of Congress and the administration, but he did not consider it lobbying.
"States don't lobby," Bliss said. "We were just communicating, state government to federal government."
The IOGCC is "often working hand-in-glove with the elected leadership of the state, so it's a very powerful position they sit in," said Bruce Baizel, energy program director at the environmental group Earthworks. The group "can claim to speak for states and for very strong economic players in the states," he said. "That opens doors in Congress." Baizel has worked alongside many IOGCC members on commissions and policy panels.
Jesse Coleman, a Greenpeace USA researcher who has been looking into the IOGCC's activities since 2014, called the combination of regulators and industry representatives "a mechanism for really subtle corruption."
Coleman and Steve Horn, a reporter at DeSmogBlog (a website dedicated to debunking climate denial efforts), provided ICN with dozens of documents about the IOGCC, which they obtained through archival research and public records requests with state regulatory agencies.
The IOGCC "represents the oil industry, but a lot of the people they're talking to don't know that," making it a stealth lobbyist, Coleman said.
The group has a "nonpartisan, nonbiased view," according to spokeswoman Booth. "We're for states' rights and states collaboration," she said. "Oil and gas has always been regulated by the states, so it's about keeping what they have."
The IOGCC's message resonates particularly well in Texas.
"Infringement by the federal government is, in my opinion, the biggest issue facing the oil and gas industry and I'm glad to have the opportunity to work with other state regulators who share my concern," Porter said when the Railroad Commission hosted an annual IOGCC meeting in 2012.
JUSTICE DEPT RAISES A RED FLAG IN 1978
When Congress created the interstate compact in 1935, the oil industry was struggling. Supply far outstripped demand and unregulated overproduction sent the price of oil plunging to a few cents a barrel.
The IOGCC was created "to forestall federal intervention in the oil and gas industry," according to Dan Tarlock, an Illinois Institute of Technology law professor who specializes in environmental law. The group helped the states set limits on production to maintain oil prices and worked to minimize wasteful, inefficient oil extraction. The compact's authority had to be renewed periodically by Congress.
In 1978, the Justice Department told Congress that the IOGCC no longer deserved congressional backing because of its advocacy. Donald Flexner, chief of the energy section of the Justice Department's Antitrust Division, told a congressional subcommittee there was little need for the group, based on its original role. Oil demand now exceeded domestic supply, and many states had passed regulations to prevent waste, he said. The organization had shifted its focus to writing resolutions and working to convince elected officials to support them.
"If so much of its activity should continue to be taken up with what is essentially lobbying work, it would seem inappropriate for it to have the special cachet of congressional approval," Flexner said.
Nonetheless, the Justice Department and congressional staffers concluded the group could continue to function without further congressional approval. The IOGCC has done so since 1978.
Many interstate compacts operate without congressional oversight, said Tarlock, but the IOGCC is one of the few with a national presence. There are more than 200 active interstate compacts focused on issues such as professional licensing standards, emergency management and river basins, according to the National Center for Interstate Compacts.
Most deal with regional matters that rarely require advocacy on a federal level, according to Tarlock. But the IOGCC stands out because the oil and gas industry is "always knee-deep in politics compared to a lot of the other commissions," he said.
McGehee, the Campaign Legal Center policy director, said the political aspect of the IOGCC's work magnifies the need for transparency.
Despite its status as a government entity, the IOGCC is "closely linked to private businesses that are affected by governmental decisions," McGehee said, so there's a high potential for conflicts of interest, particularly when policymakers and fossil fuel industry representatives are "hobnobbing together" at IOGCC events. Twice a year, the IOGCC hosts meetings where members can interact in person. These conferences are open to the public, for a price. (The next meeting, in Denver, has a $345 registration fee.)
"It doesn't mean it's wrong," McGehee said. "It does mean that because the potential is so high, there should be a higher standard of transparency and accountability to ensure that it's not a captive agency or an entity representing those interests."
WHAT THE IOGCC DOES
The IOGCC gets most of its funding from participating state agencies, which pay fees based on production. In 2015, the Texas oil and gas agency paid $50,000 while New Mexico paid $42,500 and Ohio $5,000. The group has a $1 million annual budget, according to spokeswoman Booth.
Within the IOGCC, most of the voting power rests with regulators. The only members eligible to vote on resolutions are governors or people the governors have appointed to represent the state's interests —almost always high-ranking state energy officials. The officials then appoint hundreds of other members, including those from industry, law firms and consulting companies. They can serve on technical committees and propose resolutions, but can't vote on the resolutions.
"As far as I was ever concerned, the only people I ever paid attention to were the state oil and gas regulators," Bliss said. "Those were the ones that carried the punch."
In addition to its advocacy efforts, the IOGCC coordinates technical training, publishes scientific reports and convenes industry experts to exchange ideas.
The organization's activities in recent years have included:
• When the group asked members in 2002 whether they had documented any instance of contaminated groundwater from hydraulic fracturing, all the states said no. That finding for years helped bolster the claim that fracking had never contaminated drinking water. Last year, the EPA formally debunked the assertion by publishing a report documenting specific cases of water contamination.
• The IOGCC passed a resolution reaffirming its support for the Halliburton loophole in 2009. The American Legislative Exchange Council—a pro-business group—later adopted a resolution with similar wording. At least six states that are IOGCC members passed resolutions with IOGCC language. Four others introduced resolutions that didn't get approved.
• The IOGCC co-founded FracFocus in 2011 with the Ground Water Protection Council, a separate but related group that spun out of the IOGCC in the 1980s. More than 20 states require oil and gas companies to use it to report the chemicals used during fracking. The industry often touts FracFocus as a model of transparency precluding the need for EPA oversight, but the database contains errors, missing information and a trend toward secrecy as companies increasingly cite proprietary reasons for withholding names of chemicals.
• The IOGCC passed a resolution in June 2011 that oversight of underground natural gas storage should be left to the states, which generally have inadequate regulation of such facilities or none at all. The issue gained national attention in recent months when a catastrophic methane leak from California's Aliso Canyon natural gas storage facility sickened residents and left an enormous greenhouse gas footprint. The lack of federal supervision helped enable the months-long leak, which was finally sealed in February. After the incident, the IOGCC created a working group to address underground storage concerns but reiterated its opposition to federal rules.
• The IOGCC and Ground Water Protection Council created the StatesFirst Initiative in 2013. It promotes collaboration among state regulators and runs a field inspector certification program that provides training for oil and gas inspectors.
• The IOGCC worked with then-House Speaker John Boehner's office in 2013 to help gather support for a bill to bar the Bureau of Land Management from regulating fracking on public lands. Although the proposal ultimately failed, U.S. District Judge Scott Skavdahl blocked the pending BLM regulations last year. Skavdahl's decision cited the Halliburton loophole.
• StatesFirst issued a report acknowledging the earthquake risk posed by underground injection of oil and gas waste in 2015. InsideClimate News sent the report to two U.S. Geological Survey geologists, who praised its scope and scientific accuracy.
'Lonely Being the Only Environmental Advocate'
Of the three environmental group representatives on the IOGCC's 2015 roster, the most active is Scott Anderson, a scientist at the Environmental Defense Fund. The two others are Michael Freeman of Earthjustice, an environmental law organization, and Suzanne O'Neill of the Colorado Wildlife Federation. Freeman said he hasn't participated in any IOGCC activities, and O'Neill did not respond to requests for comment.
"It's pretty lonely being the only environmental advocate in these meetings," Anderson said. "If you look at the organization through its history and its current makeup, there's certainly a lot of industry influence."
Nonetheless, Anderson said engaging with the IOGCC helps EDF's work around reducing air and water pollution. He said he thinks the group recognizes the value of having an environmental voice in the room. When Wyoming became the first state to pass a fracking chemical disclosure law in 2010, Anderson said, a state regulator told him the law was inspired by a talk Anderson gave at an IOGCC event. "So that's an example of a greener perspective," he said.
When it comes to climate change, Booth said the IOGCC has no position. "We're not scientists," she said, echoing a common talking point from Republican politicians asked about global warming, "and we cannot comment on things we don't know."
Nor does the IOGCC have a stance on other environmental issues such as local fracking bans, water and air pollution, and proposed federal methane regulations, according to Booth.
When InsideClimate News pointed out that the IOGCC's stance on federal regulations aligns with industry interests, Bliss said there "was often an agreement between what IOGCC would advocate and what industry advocates, but it was never 100 percent."
Holman, the Public Citizen lobbyist, said the IOGCC "sounds just like a private trade association, but they've gotten a charter from Congress, and they're using it to evade" the Lobbying Disclosure Act.
When government entities talk to each other, they tend not to view it as lobbying, so it's not reported as such, Holman said, but he believes it should be based on a strict interpretation of the law.
"We don't have an enforcement mechanism to make sure those who should register [as lobbyists] are registered," he said. "We rely on the trustworthiness of lobbyists" to do it themselves.
"This [IOGCC] is an agency that merits further scrutiny."