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Halliburton's Interests Assisted by White House

A CHANGING LANDSCAPE

The administration has lent support to a lucrative drilling technique. Some in the EPA consider it an environmental concern.

October 14, 2004|Tom Hamburger and Alan C. Miller | Times Staff Writers

WASHINGTON — Over the last four years, the Bush administration and Vice President Dick Cheney's office have backed a series of measures favoring a drilling technique developed by Halliburton Co., Cheney's former employer.

The technology, known as hydraulic fracturing, boosts gas and oil production and generates $1.5 billion a year for the company, about one-fifth of its energy-related revenue. In recent years, Halliburton and other oil and gas firms have been fighting efforts to regulate the procedure under a statute that protects drinking water supplies.

The 2001 national energy policy report, written under the direction of the vice president's office, cited the value of hydraulic fracturing but didn't mention concerns raised by staff members at the Environmental Protection Agency.

Since then, the administration has taken steps to keep the practice from being regulated under the Safe Drinking Water Act, which Halliburton has said would hurt its business and add needless costs and bureaucratic delays.

An EPA study concluded in June that there was no evidence that hydraulic fracturing posed a threat to drinking water. However, some EPA employees complained about the study internally before its completion, and others have strongly criticized it publicly since its release.

One of them, an environmental engineer and 30-year EPA veteran in Denver, last week sought whistle-blower protection in an 18-page statement sent to the agency's inspector general and members of Congress. The statement alleges that the study's findings were premature, may endanger public health and were approved by an industry-dominated review panel that included a current Halliburton employee.

"EPA produced a final report ... that I believe is scientifically unsound and contrary to the purposes of the law," Weston Wilson wrote to lawmakers.

EPA spokeswoman Cynthia Bergman said Wednesday that the agency was reviewing Wilson's statement but did not "believe that any of the concerns raised by his analysis would lead us to a different conclusion."

Cheney declined to be interviewed or to answer specific questions for this story. His spokesman, Kevin Kellems, cited the vice president's commitment to keeping the 2001 energy policy deliberations confidential, a principle Cheney is defending in federal court.

"There is an important principle at stake in protecting the ability of the office of the president and vice president to receive the most candid and direct advice and counsel during the policymaking process," Kellems said.

Halliburton, where Cheney was chief executive from 1995 to 2000, is the leader among three large companies providing most fracturing services to oil and gas drilling operations around the world. Fracturing affords access to hard-to-reach energy deposits by forcing pressurized fluids deep into the earth, creating underground fissures that permit oil and gas to flow toward surface wells.

Halliburton and other energy companies have applauded the administration's support of fracturing, which they say has proved safe for decades.

Efforts to regulate hydraulic fracturing became a concern for the industry during Cheney's tenure at Halliburton. A group of Alabama residents went to court in 1995 seeking to force regulation of the practice under the federal drinking water law. Halliburton filed a brief in the case, arguing that environmental regulation of the practice "could have significant adverse effects" on its business.

The company subsequently played a leading role in lobbying against efforts to regulate fracturing under federal drinking water laws.

Cheney, who left Halliburton in August 2000 to run for vice president, has said he has severed all ties to the company.

Since he took office in January 2001, Cheney has received $398,548 in deferred compensation, and he will continue to receive annual payments through 2005. He also has 433,333 options to purchase Halliburton stock, according to financial disclosure records filed in May 2004.

But his staff has pointed to an insurance policy that guarantees that the vice president will receive the deferred compensation no matter how Halliburton does -- and to his commitment to donate any profits from the stock options to charity.

The administration's ties to Halliburton have become an issue in the presidential campaign. Democrats criticize the administration for awarding the company billions of dollars in contracts in Iraq. Cheney has said he played no role in the Iraq contracts.

Less attention has been paid to Halliburton's domestic operations. The company, like many in the oil and gas business, has benefited from an administration led by two former oil executives, both of whom have made clear their belief that too many regulatory hurdles hamper efforts to increase domestic energy production.

Energy Breakthrough

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