Private Empire: ExxonMobil and American Power

by Steve Coll

  The political climate in which they considered the dilemma Lee Raymond had bequeathed them was changing even faster than the weather. Early in 2006, An Inconvenient Truth debuted at the Sundance Film Festival. The documentary highlighted Al Gore’s lectures about the dangers of climate change; it would earn a record $50 million at the box office and eventually win an Academy Award. In ExxonMobil’s K Street office, the corporation’s lobbyists screened the film a half dozen times, scribbling notes and fashioning talking points about how to attack Gore’s arguments. They gamely went forth on Capitol Hill to do so, yet increasingly they felt like front-trench soldiers battling on in a losing war that required new eyesight from the generals at the top, in Irving. And as the Bush administration’s attitude toward climate policy wobbled and Gore’s advocacy swept through popular culture, and particularly through opinion-shaping elites on the two coasts, the sense among the planners and strategists at ExxonMobil’s Irving headquarters was “Uncle. We get it. We won’t capitulate, but we will reconsider.”10

  Cohen had dispatched a public affairs colleague named Lauren Kerr to Washington to work on climate issues. By the time of the ExxonMobil leadership transition, she had grown into a significant force on K Street, working from an office next to the Washington chief, Dan Nelson. Kerr spoke out publicly to defend ExxonMobil’s climate policies, but she also managed a plan to reposition the corporation as a patron of serious, credible scientific and technological research in the field. She shepherded the large, continuing ExxonMobil donations to M.I.T. and also to Stanford University, to support research into breakthrough alternative energy technologies—programs ExxonMobil thereafter cited as evidence that it was not anti-science. Kerr fed advice, policy research, and political analysis into Irving’s climate policy review process.11

  The committee was restrained not only by the questions about legal liability, but also by a desire among Tillerson and other senior executives to remain loyal to Lee Raymond’s legacy. Tillerson had served as Raymond’s executive assistant early in his career; he and Raymond had worked closely on the Management Committee in the midst of the most intense climate policy controversies; and it was Raymond, after all, who had chosen Tillerson as his successor. Raymond had tried, as he departed, to deliver to his successor an ExxonMobil board of directors that was as united in its support for Tillerson as possible, despite the fact that at least a handful of directors had favored Ed Galante for the top job. Initially, at least, a smooth leadership transition and mutual loyalty between Tillerson and his new aides, and Raymond and his old-school loyalists, seemed possible.

  Even a Boy Scout–loyal protégé will distance himself from a mentor once in power—the story is at least as old as Shakespeare—and in doing so he may generate resentments, even conflict. The more Tillerson made clear that he intended to change the tone of ExxonMobil’s communications, the more he implicitly criticized Raymond’s approach to climate lobbying and to leadership, in particular. Tillerson also relentlessly spoke of his desire to perpetuate the management culture of discipline and exactitude that Raymond had built, even if he sounded at times as if he was overcompensating. “In terms of showing my predecessor respect . . . he doesn’t need anybody’s endorsement,” Tillerson said later. “He has my great respect. His accomplishments will never be equaled again.”

  And yet the uncomfortable truth was that Tillerson and Raymond disagreed: The former believed that ExxonMobil had a communications problem on climate, whereas Raymond, now under contract to consult for the corporation and moving toward full retirement, did not. In Raymond’s view, as he made clear through his residual loyalists inside the corporation, the question was whether ExxonMobil had the courage of its convictions. The history of Standard Oil, in Raymond’s reading, was one of standing firm and taking the heat when necessary.12

  Tillerson’s own views about climate science were not greatly different from Lee Raymond’s. Tillerson held a bachelor’s degree in civil engineering; Raymond held a doctorate in chemical sciences. Tillerson did not claim or wish to project the same sort of independent scientific expertise that Raymond had offered about climate science. Tillerson remained relatively quiet on scientific questions. “During Lee’s reign, Rex never expressed any concern whatsoever” about ExxonMobil’s policy positions, recalled an executive on the board of directors. “He was fully on board. . . . Lee would say, ‘The scientists on the other side are wrong.’ Rex would say, ‘It’s more complicated than most people understand.’”

  As the 2006 midterm elections approached, an era of Republican hegemony in Washington faded. War, corruption cases, and episodes of sexual misconduct by several Republican officeholders set conditions for a Democratic surge in November. As Tillerson settled into authority and Raymond departed toward the end of the year into full retirement, Ken Cohen and his Washington colleagues refined their public policy strategies so they could respond not only to the proselytizing of Al Gore, but also to the larger challenge of inconvenient Democrats.

  Under Lee Raymond, ExxonMobil had aligned itself with the Republican Party to a greater extent than many other large oil and industrial corporations. Ken Cohen chaired the ExxonMobil Corporation Political Action Committee, reporting to the chairman’s office. Cohen made decisions about the P.A.C.’s political donations only after holding internal hearings with senior executives from Washington and the major business divisions in Houston and Fairfax. The P.A.C. distributed about $700,000 during each two-year election cycle; during the 2000 and 2004 cycles, only 5 percent of those contributions went to Democrats. That was the lowest percentage of any of the largest oil corporations active in American politics. The P.A.C.’s rate of contribution to Democrats crept up slightly as the party’s tide seemed to be lifting during the 2006 cycle, but it remained in single digits. (BP did not make political donations in the United States under John Browne; Chevron and Shell’s American subsidiary generally gave between a fifth and a quarter of their contributions to Democrats. Even Conoco, the most explicitly conservative oil company after ExxonMobil, gave about 15 percent of its P.A.C. money to Democrats.) Ken Cohen had dispatched Walt Buchholtz of the Washington office—the issues manager who advised anti-Kyoto groups such as The Heartland Institute—to work as a volunteer at the 2004 Republican Convention in New York, alongside other lobbyists. Raymond had also approved a six-figure donation to fund George W. Bush’s second inaugural festivities. The ExxonMobil chief maintained a few friendships with industry-friendly Democrats, such as John Dingell of Michigan, but the party knew where ExxonMobil stood as a corporation in partisan competition. “There is no question there is a new phase of scrutiny for Exxon. . . . They have a self-righteousness that sooner or later will catch up with them,” said New York senator Charles Schumer, a longtime nemesis of the K Street office. Wisconsin’s Democratic senator Herb Kohl, a career business executive whose family founded an eponymous retail chain, declared that ExxonMobil reminded him “of the tobacco industry.”13

  “We need a conversation with Democrats,” Dan Nelson told his colleagues in the ExxonMobil office on K Street as the 2006 midterms neared.

  That meant redirecting more ExxonMobil P.A.C. donations to Democratic candidates. The problem was that ExxonMobil made almost all of its decisions on the basis of mathematical analysis—and under the corporation’s internal, unpublicized political ranking system, the Key Vote System, Democrats looked hopeless. The system was linked to the issues management binder that Cohen kept—the key public policy issues on which ExxonMobil had formulated positions. Analysts identified legislative votes in Congress that were related to the issues list in Cohen’s binder. Congresspeople and senators were then each rated on the basis of the votes they cast on these issues—much as liberal and conservative advocacy groups publicly rated members on votes tied to ideological litmus tests. No Democrat in Congress scored above a 50 percent rating under the ExxonMobil Key Vote System; John Dingell, an industry-friendly committee chairman, did no better than 30 percent. Even rock-solid Rep
ublicans from midwestern farm states scored poorly because they supported subsidies for corn-based ethanol, which ExxonMobil opposed.

  Overall, in the view of its internal critics, the system failed to distinguish between truly key votes and routine ideological votes in Congress, when congresspeople and senators cast votes because, effectively, they had no political choice but to appease local voters or ride the party line. ExxonMobil’s rigid adherence to the Key Vote numbers had helped drive P.A.C. giving toward the very safest Republicans—a fact that had seemed to bother Lee Raymond not at all, but which had deprived ExxonMobil of ties to Democrats who might be sympathetic to at least some of its lobbying priorities. Cohen and Tillerson eventually agreed, after discussions within the P.A.C. committee during 2006, that they would have to take a wider view.

  The Washington office was a generally congenial place to work. Anniversaries marking longevity as an ExxonMobil employee—ten years, fifteen, twenty, twenty-five—were celebrated with cakes and huzzahs, as were birthdays. There was some ideological diversity in the office—Susan Carter, a Democrat, lobbied the Bush administration on ExxonMobil’s behalf, and Lorie Jackson worked to make global health and women’s issues a priority, influenced by the multiple Hillary Clinton connections at the office. On the whole, however, this was a lobbying shop constructed by and for Republicans. Nelson’s congeniality went only so far; to insist that his lobbyists become good time managers, he would lock them out of meetings if they turned up late. Inside the Washington offices of Chevron and British Petroleum, there was an explicitly international atmosphere; Chevron’s Nigeria lobbying specialist was a Nigerian, for example. At ExxonMobil’s office on K Street, there was less diversity and more of a military flavor.

  The ExxonMobil lifers who lobbied Capitol Hill—Jeanne Mitchell in the House of Representatives and Buford Lewis in the Senate—worked alongside “issue” managers with subject specialties such as tax policy or chemical industry regulation. The largest contingent of lobbyists remained the foreign policy specialists working with Robert Haines, who spent most of their time maintaining relations at foreign embassies and at Foggy Bottom. The only Democrats the K Street team knew well on Capitol Hill tended to be those from southern or western states who voted like moderate Republicans on energy and tax issues. What a House of Representatives ruled by Nancy Pelosi would mean for ExxonMobil was not a question the corporation’s Washington office could answer with great sophistication.14

  Ken Cohen worked closely in Irving with ExxonMobil’s chief in-house Democrat, Theresa Fariello. She had joined the corporation from the Clinton administration’s Department of Energy in 2001 and managed worldwide public policy issues at headquarters, reporting to Cohen and acting as a liaison with the K Street office. Fariello was a single woman, traditional in some of her views, liberal in others, and she worked comfortably in ExxonMobil’s corporate culture. She, too, was a committed supporter of Hillary Clinton’s and worked actively to aid her candidacies when Clinton ran for the United States Senate and later plotted a presidential bid. Fariello had attended George Washington University as an undergraduate and then earned law degrees at Georgetown and George Mason. For more than a decade, she worked in the Washington office of Occidental Petroleum during a period of controversies that arose from the corporation’s work in war-torn Colombia. Fariello arranged a few consultancies and retainer contracts with lobbyists in Washington closely connected to Democrats—she chose outside lobbyists she knew and trusted, such as David Leiter, who had worked as chief of staff to Senator John Kerry during the 1990s and then worked on alternative energy technologies at the Energy Department during the second Clinton term. Intelligence from Fariello’s Democratic network fed into the climate policy review and the preparations for a Democratic-controlled House after November.15 Dan Nelson also brought on Louis Finkel, who had worked for years for a moderate Democrat representative from Tennessee, Bart Gordon, then the ranking member on the House Committee on Science and Technology.16

  On November 7, 2006, Democratic candidates swept to victory nationwide, and the party took control of the House with a thirty-one-seat gain. A few weeks later, Ken Cohen flew to Washington to deepen his scrutiny of what this might mean for ExxonMobil.

  He drove west on Interstate 66 on a chilly, dry afternoon in early December to Warrenton, Virginia, in the foothills of the Blue Ridge Mountains. A few miles along Country Road 605 he turned through split-rail fencing into the secluded grounds of the Airlie Center, a large farm that had been converted into a self-styled “island of thought” a half century earlier, and which served as a retreat for government and business leaders. Cohen had scheduled a three-day Opinion Leader Dialogue with environmental and human rights activists. The program would be an opportunity to test out ExxonMobil’s emerging climate policy and to engage more deeply with nonprofit activists. Checking in, too, at the elegant reception desk were Sherri Stuewer, who had succeeded Frank Sprow as ExxonMobil’s vice president in charge of climate and environmental policy; Jamie Spellings, a vice president for corporate planning; David Kingston, a vice president for the downstream, or refining, side of the corporation’s business; and Mark Sikkel, a vice president on the upstream side with responsibility for Asia and the Middle East.

  As part of ExxonMobil’s broader campaign to engage and persuade Informed Influentials, Cohen’s department had developed the dialogues as a hybrid institution—part private retreat, part focus group, and part lobbying briefing where ExxonMobil could roll out its 2030 PowerPoint slides for environmental leaders, human rights researchers, journalists, and think tank analysts, as well as test some of its advocacy positions. The dialogues were designed and managed in such a way as to suggest that ExxonMobil considered its Irving and Houston executives on the one hand, and influential Democratic-leaning nonprofit leaders in Washington on the other, to be members of slightly different species who would require a safe, controlled setting in which to assess each other peaceably.

  That evening the ExxonMobil executives mingled awkwardly with their fourteen invited guests—two senior energy-policy analysts from the Brookings Institution, a human rights activist at Freedom House, climate specialists, business ethics professors, socially responsible investors, and religious activists. Most of the guests were very liberal, but the group included at least one conservative Christian leader. They shared concerns about ExxonMobil’s record of corporate citizenship. During the cocktail hour, one of the guests, who worked at an environmental nonprofit, chatted casually with Cohen about her most recent project, and she mentioned the brutal hours she was putting in to get it finished. “He was shocked,” she recalled. “He said that he thought people who worked in environmental groups in Washington had a cushy life.”17

  Another participant recalled thinking of his corporate hosts: “These were clearly thoughtful, smart, articulate people—they just lived in a totally different world than we live in.” The New York Times had just published a story about Lee Raymond’s $398 million retirement package; in response to the incredulous asides of their guests, the ExxonMobil executives labored to explain the difference between pensions and stock options and restricted stock, in an effort to suggest that the package was not as rich as it might appear. “You know you can’t win on that message, right?” the participant thought as he listened. “You’re talking to people who can’t even take the Acela to New York.” The Acela was a fast, expensive intercity train between Boston and Washington; to conserve funds, some nonprofit groups ordered their employees to take slower, cheaper trains—or the bus.

  The next morning they assembled in a conference room around a table arranged as a hollow square. The agenda included two “dialogue sessions” on climate change and a third on corporate transparency and human rights. As ever, the ExxonMobil team ran through the PowerPoint slides laying out the corporation’s forecasts of oil-and-gas-dominated energy demand and sources until 2030.

  Cohen shared some of his internal polling about the corporation’s reputation. In o
ne survey ExxonMobil had received 47 percent approval for overall corporate citizenship and 24 percent for environmental stewardship. Environmental issues remained a challenge. In countries such as China, the ExxonMobil executives acknowledged, environmental regulation was being taken more and more seriously. As middle classes grew around the world, so would environmental concerns, they knew.

  On climate change, Cohen and Stuewer flashed PowerPoint slides outlining draft language of a new formulation of ExxonMobil’s position. “They were really dancing around the question of certainty” about the risks of global warming and the evidence that man-made activity contributed, recalled Leslie Lowe, one of the participants.18

  Lowe introduced the metaphor of having insurance against fire: Why not work against man-made contributions to climate change, even if there remained uncertainty about every last detail of cause and effect?

  Yes, the ExxonMobil side responded, but you don’t spend all of your money in life on insurance. You calculate how large and valuable an asset you are trying to insure, and how big a risk you face. Climate was like everything else ExxonMobil did: It was a matter of risk management, Cohen emphasized.

  The participants talked about imposing a price on carbon, through gasoline taxes or other formulas. “If you tax gasoline, people will be hurt,” Cohen said. Even if you tax gasoline and then rebate the money to middle-class and working households, commuters would just be forced to take the rebates and “go out and buy gas with it,” the ExxonMobil executives argued.

  The nonprofit leaders asked Cohen about the funding he had provided to groups such as the Competitive Enterprise Institute and The Heartland Institute that had so stridently attacked the validity of mainstream climate science. Cohen told them that as part of ExxonMobil’s review of its options on climate policy, the corporation had decided to pull funding from the most controversial groups. The disclosure was the beginning of a quiet campaign to clarify that ExxonMobil had altered some of its public policy funding—without quite admitting that what it had done earlier was wrong or misguided. The more strident groups were a distraction, Cohen indicated; they were focused heavily on the validity of climate science, whereas ExxonMobil now wanted to leave that subject to focus the debate on research and policy choices.