Dodging the Bullet: An Inside Washington Look at High-Stakes Lobbying Against an Oil Giant

Table of Contents

ACKNOWLEDGEMENTS

FOREWORD

CHAPTER ONE

A Key Issue for Us

CHAPTER TWO

A Sweet Deal

CHAPTER THREE

A Major Rainmaker

CHAPTER FOUR

The More the Merrier

CHAPTER FIVE

It’s Your Game

CHAPTER SIX

Our Committee Works Collegially

CHAPTER SEVEN

A Hell of a Lot of Territory

CHAPTER EIGHT

A Valuable Asset

CHAPTER NINE

A Cap on Our Commitment

CHAPTER TEN

A Far Wider Playing Field

CHAPTER ELEVEN

Score-carding

CHAPTER TWELVE

Having an Impact

CHAPTER THIRTEEN

Contract Carriage

CHAPTER FOURTEEN

$3.4 Billion

CHAPTER FIFTEEN

The Voice of Doom

CHAPTER SIXTEEN

Remember, They Work for Us

CHAPTER SEVENTEEN

Let’s Put This One in the Bank

CHAPTER EIGHTEEN

Working the House

CHAPTER NINETEEN

Swinging for the Fences

CHAPTER TWENTY

Shifting into High Gear

CHAPTER TWENTY-ONE

I Could Nose About Quietly

CHAPTER TWENTY-TWO

That’s Not Gonna Happen

CHAPTER TWENTY-THREE

Philosophically Opposed

CHAPTER TWENTY-FOUR

Don’t Let the Perfect Be the Enemy of the Good

CHAPTER TWENTY-FIVE

"Tell Me Why DOE

Shouldn’t Oppose You"

CHAPTER TWENTY-SIX

He May Be Playing Us

CHAPTER TWENTY-SEVEN

It Doesn’t Get Any Better Than That

CHAPTER TWENTY-EIGHT

The Chairman May Want His Wording

CHAPTER TWENTY-NINE

Leaving the fight to Texaco

CHAPTER THIRTY

Counting Noses

CHAPTER THIRTY-ONE

A Tie’s as Good as a Win

CHAPTER THIRTY-TWO

What the Hell Happened?

CHAPTER THIRTY-THREE

A Couple of Lines…

CHAPTER THIRTY-FOUR

Once You’ve Won, Stop

CHAPTER THIRTY-FIVE

Eighteen Hours to Complete our Blitzkrieg

CHAPTER THIRTY-SIX

Where is Ralph Hall …?

CHAPTER THIRTY-SEVEN

A Pretty Good Feeling

CHAPTER THIRTY-EIGHT

The Deal Was Cut

CHAPTER THIRTY-NINE

Constituent Service

CHAPTER FORTY

A Wake-up Call

CHAPTER FORTY-ONE

Today’s Wall Street Journal

CHAPTER FORTY-TWO

Liberals, Conservatives … and Others

CHAPTER FORTY-THREE

Creating a Colloquy

CHAPTER FORTY-FOUR

Your Job and Mine

CHAPTER FORTY-FIVE

A Senate Surprise

CHAPTER FORTY-SIX

Why Didn’t We Know?

CHAPTER FORTY-SEVEN

Keep That Thought to Ourselves

CHAPTER FORTY-EIGHT

Texaco Reaches Out to Stockholders

CHAPTER FORTY-NINE

He’ll Just Insert the Language

CHAPTER FIFTY

The Tough Part is Not Knowing the Impact

CHAPTER FIFTY-ONE

Don’t Hold Your Breath

CHAPTER FIFTY-TWO

We Can Sit Down Together

CHAPTER FIFTY-THREE

The Heavy Lifting…

CHAPTER FIFTY-FOUR

You Guys Firm …?

CHAPTER FIFTY-FIVE

Do You Think Texaco Will Try Again?

CHAPTER FIFTY-SIX

Heading Into the Ninth Inning

CHAPTER FIFTY-SEVEN

Time to Get Tommy Boggs in Harness

CHAPTER FIFTY-EIGHT

Infill Drilling

CHAPTER FIFTY-NINE

Chairman Dingell Calls for the Yeas and Nays

CHAPTER SIXTY

Adjournment Sine Die

EPILOGUE

Members of the Senate Energy and Natural Resources Committee

103rd Congress, 1983-84

Members of the House Energy and Commerce Committee

103rd Congress, 1983-84

ACKNOWLEDGEMENTS

The files that form the backbone of this book sat on the floor in my home office for some twenty-five years until my wife Sharon finally prevailed on me to put the story down on paper. So clearly, the book is dedicated to her.

Beyond that, however, I am indebted to Bill Stover for his invaluable critiques along the way, and especially to George Vercessi for his continued encouragement and helpful advice throughout the project. And my deep thanks to Sky Phillips of the Northern Virginia Writers’ Group for her constant early support, and to Fred Surls for his eagle-eyed proofreading.

And finally, the staff at the Library of Congress were both patient and kind in their assistance, as were a host of good friends who reviewed early chapters and offered helpful suggestions.

FOREWORD

This slim volume recounts the ups and downs of a major lobbying effort in 1983-‘84 that involved several Fortune 500 companies doing extended battle with an oil industry giant, Texaco. The book aims to provide an interesting and enjoyable read, while giving the reader an inside look at how this kind of lobbying is usually done. For while the public constantly hears about high-priced lobbyists buying their way to power with payoffs, that really is the rare exception.

The overwhelming majority of cases, big or small, involve the nitty-gritty of carefully preparing arguments, making phone calls, office visits and just knowing how to interact with others.

As for the story itself, it is a personal memoir –- in part, almost a diary -- based largely on files retained for some 27 years. The names in the book are real. In a few cases I simply refer to the staffer or legislative aide. The newspaper articles are verbatim, with some excisions to make for a smoother flow between article and story line.

The reader may find what seems to be a dizzying array of names to keep track of in the course of the story. They are included to provide an idea of the intricacies of day-to-day lobbying on Capitol Hill. That said, and in order to avoid constant, repeated references to the 42 members of the House Energy and Commerce Committee and the 22 on the Senate Energy and Natural Resources Committee in 1983-84, there is an appendix at the back of the book listing those members.

Just a quick reminder that at the time the events in this book took place, we were nowhere near as advanced as we are today in terms of communications. Fax machines were new, and there were no personal computers, cell phones, iPads or any of today’s other communications shortcuts.

And -- unlike today -- 1983-’84 was also a time when congressmen and senators were willing to reach across the aisle to work on legislation. You have to wonder how things might be today if that were still true.

I have tried to recount the events of the story as accurately as possible. That said, any mistakes are solely mine.

Edward L. Jaffee

Springfield, Virginia

December 2010

CHAPTER ONE

A Key Issue for Us

MARCH 7, 1983 -- IT WAS a meeting pretty much like any other in my typical day as a Washington government affairs representative with PPG Industries: this one held by the Energy Committee of the National Association of Manufacturers, located on Pennsylvania Avenue in Washington. The long table in the main conference room was nearly full, with some 40 corporate government affairs reps, lobbyists who focused, at least in part, on energy issues. Energy was a secondary issue for me, with environmental matters as my main concern. But this meeting was to cover natural gas decontrol legislation, a subject that figured to significantly affect my employer.

Jim Rubin of Allied Chemical chaired the group, and the meeting. The session dragged on for more than three hours, as Rubin and others plodded through the entire 488-page Reagan administration proposed natural gas decontrol bill, called the Natural Gas Policy Act Amendments of 1983 and given the bill number S. 615 in the Senate. Each attendee was handed a copy. Attorney Gordon Gooch held forth for part of the time, with lucid explanations of what various sections of the bill meant to industrial users of natural gas. Not surprisingly, most in the room were pleased with what they were hearing. After all, it meant less government intervention in the marketplace.

Rob Odle, head of the Department of Energy’s lobbying office, was also on hand, and emphasized the Reagan administration’s strong support of the bill.

I was struck by the number of outside attorneys at the table, many of them sitting next to the Washington rep from their corporate clients. One of the best-known lawyers in the room, John Camp, was seated beside Don Annett, the vice president in charge of Texaco’s Washington office.

After two hours, I was finding it increasingly difficult to keep my attention locked on the arcane discussion, and took a break to stretch in the anteroom just outside the conference room. I used the time to grab one of the three phones there and call Bob Steder, the go-to guy on energy within PPG’s Supply Department. I had told him that morning that the meeting was on for today, and that I would get back to him if I saw anything that might be important to the company.

So far, it’s boring as hell, I offered. But we’ll see if anything develops.

Well, get back in there and stay alert, Ed. This could be a key issue for us.

***

It was now past noon. The meeting had gone on since 9:30, and matters were winding down. Rubin was nearing the end of the proposed legislation, in Section 316, on page 414. As he read the section title: First Sale, Direct Sale, Not-for-Resale Intrastate Gas, the light bulb came on in my head. Direct sale, not-for-resale. I knew, from spending several days at PPG’s largest facility, at Lake Charles, Louisiana, that it purchased natural gas from Texaco, for use both as a fuel source and to break into its component parts, including ethane and ethylene. We used those components in making compounds called chemical intermediates to sell to other companies for use in manufacturing end-use products.

Given that PPG Lake Charles was the third largest industrial plant in the state, with well over 2,000 employees, I paid close attention as Rubin went through the brief section. Then, for the second time that morning, I slipped out to the anteroom, and found a phone in the corner. Steder had not yet gone to lunch.

I think we may have something here, I told him. Something that could be big.

Shoot, was the reply. Bob Steder, a roly-poly outgoing type, was all business when it mattered.

I read the entire section over the phone, including the actuating words: Any two parties to a first-sale, direct-sale, not-for-resale contract for intrastate natural gas will have until January 1, 1985, to renegotiate said contract to their mutual agreement. In the instance of failure to reach such an accord, either party may market out. I added that in checking the glossary of terms at the back of the bill, it turned out that "market out" meant to use the price for natural gas as of January 1, 1985.

Silence, for several seconds, and then, "Shit, man! This could kill us at Lake Charles!"

CHAPTER TWO

A Sweet Deal

MARCH 7 -- BEFORE I could ask for specifics, Steder continued: Our sole supplier of natural gas at Lake Charles is Texaco. There’s a feeder line that goes directly from one of their main pipelines into our facility. That’s why we’re in a first-sale, direct sale situation. And since we use the gas right there, it’s not for resale.

Right, I interjected. We use the gas as feedstock and as heating fuel.

"Yes, but it’s the amount we use that’s the key. Lake Charles chews up more than a hundred million cubic feet of gas every single day. That’s enough to heat the whole city of Lake Charles twice over."

I exhaled, Damn!

"Now, from what you’ve just told me, Ed, this bill would cost us dearly. Back in 1967, when natural gas was so cheap that Texaco and other companies were actually flaring it off into the air, we signed a twenty-year contract with them to buy the stuff at 18 cents per mcf (thousand cubic feet). The deal expires on March 1, 1987, and includes a one-penny escalator every four years, so that as of today, we’re paying them 22 cents per mcf."

I added the obvious: Sounds like a sweet deal to me.

It’s what the contract calls for. But Texaco’s ticked off because natural gas is now at about $2.80 cents per mcf. Remember what the Arab oil embargo did to the price of gasoline back in ’73? Well, sometimes when you drill for oil, you first hit natural gas. Texaco did, and they were smart enough to tap into the gas as a huge cash cow. Hell, they were bragging, back in 1967, that they’d been able to entice major industry to locate in South Louisiana because of the available long-term supply of cheap natural gas. They said that in one of their annual reports.

So, what happened when the ’73 Arab oil embargo shot up the price of natural gas as well as gasoline? I asked.

"Good question. Texaco immediately took us to court in Louisiana and tried to abrogate the contract. They claimed something called force majeure, an act of God. The court threw the case out, based on the doctrine of sanctity of contract, and added that an act of OPEC was not, in their mind, an act of God.

Then, Steder continued, Texaco tried and failed to break the contract by going to the state legislature. Their sponsor there at the time was a guy named Billy Tauzin, and I think you introduced me to him as a U.S. congressman last month in Washington.

Right, I replied, struck by the irony. What goes around, comes around.

Whaddya mean? Steder asked.

Well, I’d assume Texaco will want to get Billy Tauzin to push the House version of this bill for them. The House bill, which I hadn’t yet seen, was numbered HR-1517.

Don’t forget, Ed, that while Texaco is a bigger company than PPG, we’re the larger player in Louisiana. And thousands of jobs could be at stake there.

That may or may not matter, I countered. Look, do we know who else, if anybody down there, has contracts like ours with Texaco? We’re gonna need allies, Bob.

Okay, came the answer. Give me a few hours to run the traps and see, and also to try to figure out the dollar impact on PPG if this bill goes through.

So, I concluded, I assume that if this is as big as we think, I have your okay to do whatever is necessary to get that language out of the bill?

"You really need to ask?"

CHAPTER THREE

A Major Rainmaker

MARCH 8 -- IT WAS the next morning at 9:30 before Steder called back.

It’s every bit as bad as I feared, he began. The hit on PPG would be more than three hundred million dollars. (In today’s numbers, that would have amounted to more than half a billion.) That’s based on a $2.80 per mcf price from January 1, 1985, until March 1, 1987, when the contract expires, and it includes some down time at the plant.

Oy, I blurted.

Oy indeed. And we’re not alone in being at risk. I have no idea of the specifics, but Kaiser Aluminum and Chemical, plus Georgia Pacific and Air Products all have Louisiana facilities and they all have the same kind of contracts with Texaco, negotiated at varying times. And by the way, I checked Texaco’s earnings for last year. They made just over fourteen billion dollars, so you can see how big a deal this is for them.

Air Products Corporation was a lesser-known giant of a company, with the lion’s share of the market in purging chemicals and petrochemicals from the huge tanks industry uses for storing them, nationwide. I had no idea just how Air Products used natural gas, but I did know their Washington representative, Lewis Dale. The other two companies were major users of natural gas in Louisiana, as a key energy source and/or as a feedstock.

Well, I began, I know the Washington reps for all three of those companies. Give me a day or so to contact each of them and see if we can bring them on board with us.

Make it one day if you can, Ed, and get back to me as soon as you know. Now, what’re your plans for us to fight the Texaco language?

I had thought about that ever since the previous call to Steder. One thing I didn’t mention yesterday was that one of the people at that NAM meeting was John Camp, Texaco’s primary outside lawyer. My guess is that he had a hand in writing the direct sale language in the bill. He was sitting next to Don Annett, Texaco’s Washington vice president.

"You mean outside lawyers can do that?" Steder asked.

Hell yes. It happens all the time. They work with the staff of the members and the committees on the Hill, and with people in the president’s administration as well. Anyway, Camp’s firm is big in Louisiana. So I figure we should fight fire with fire, only with an even bigger fire. I’d like to see if we can get Patton, Boggs and Blow, Tommy Boggs’s law firm, to represent us.

There was a pause while Steder digested this suggestion. Then, Aren’t they really expensive?

Oh yeah, I answered. Tommy Boggs is a major rainmaker in this town. But if we want the best … (Tommy Boggs was the son of the late House majority leader Thomas Hale Boggs, Sr., Democrat