Stealth Lobby Drives Fuel Additive War

In a high-stakes market war between the ethanol and petroleum industries, Bob O’Rourke is playing a role that makes sense only in the shadowy world of influence peddling: He is an undercover publicist.

While most promoters try to maintain as high a profile as possible, O’Rourke admits only when pressed that he is a “public affairs consultant” for the ethanol industry. He also acknowledges that he sometimes gives advice to a controversial citizens group called Oxybusters, which is campaigning to ban a petroleum-based additive that competes with ethanol to make gasoline burn cleaner.

But O’Rourke refuses to disclose the name of his employer. And he blames covert consultants in the opposing camp for trying to create the impression that he is quietly working on behalf of the nation’s most controversial ethanol producer, Archer-Daniels-Midland Co.

O’Rourke’s struggle to preserve his anonymity offers a rare glimpse into the little-known but widely practiced art of undercover lobbying, a trade pursued by public relations specialists hired by big corporations to secretly influence the news media, sponsor grass-roots activities and generate favorable scientific reports.

It also serves as a cautionary tale for California consumers, who are being bombarded through radio talk shows and news outlets with information challenging the safety of the petroleum additive, which is called MTBE. Insiders say some of the controversy is being generated by industry-paid operatives, such as O’Rourke, whose allegiances are not always clear.

Stakes High for Both Industries

Although the byplay in this drama is sometimes confusing, O’Rourke observed: “It’s pretty clear that what is going on here is a fierce battle for market share. On one side is MTBE and the petroleum industry; on the other side is the ethanol industry.”

The stakes in this cloak-and-dagger influence war are extremely high.

In California and other states where MTBE is added to gasoline to reduce air pollution, opponents are campaigning to ban the additive on grounds that it merely transfers the environmental degradation to the ground, where it threatens the safety of drinking water. MTBE makers believe this campaign is designed to destroy their $3-billion-a-year industry.

At the same time, makers of the ethanol industry’s competing gas additive, ETBE, which is not as widely used as MTBE, are struggling to salvage a federal tax subsidy that is under assault in Congress. Since 1979, it is estimated, the subsidy has meant $7 billion to American agribusiness.

Technically, subsidies for ethanol production and the safety of MTBE are not directly linked by any single legislative proposal. But industry analysts see the attack on MTBE as an effort by the ethanol makers to preserve their tax advantages and expand their market.

As Joe Piernock, spokesman for Arco Chemical Co., which produces about 14% of the world’s MTBE supply, observed: “If the unthinkable happens and that bill in California gets passed and MTBE is banned, what other oxygenate is there? Ethanol.”

While combatants on these issues are heavily involved in traditional lobbying efforts--meeting regularly with members of Congress and state legislators--they have also adopted more roundabout tactics, in large part to counter what they see as their lack of popularity among consumers.

For executives in the petroleum industry, which has long been portrayed by critics as a profit-hungry enemy of the consumer, adverse publicity is nothing new. But as insiders see it, the ethanol industry’s public relations problems are of more recent origin--aggravated by recent allegations of price-fixing leveled against the industry’s giant, Archer-Daniels-Midland.

Essentially, the petroleum industry has set out to ally itself with the clean-air lobby while the ethanol side appears to be working with so-called chemical-sensitivity activists, concerned about adverse effects of MTBE on public health, and conservative radio talk-show listeners, who tend to distrust their government.

Experts say the decision by the oil and ethanol industries to adopt stealth tactics and ally themselves with more sympathetic causes also reflects a dramatic change in the business of corporate lobbying. It is now standard for unpopular special interests to recruit popular organizations to help fight their causes or to create front groups with positive-sounding names.

Piernock observes that these tactics are what corporate America must do to defend itself in the current political climate.

By all accounts, each industry has corralled an army of professional publicists, scientists, activist groups, radio talk-show hosts and legislators to argue its case. And while they seem to engage in similar activities, those on the MTBE side seem more forthcoming about their industry ties.

Eric Dezenhall, a partner in Nichols-Dezenhall Communications Management Group of Washington, which is engaged in pro-MTBE public relations, says he is proud to admit he is working under contract for Arco Chemical Co. “It matters who pays you; we feel we have got to disclose who our clients are,” Dezenhall said.

But like O’Rourke, ethanol industry promoters seem reluctant to reveal the source of their income. “I really can’t talk about any relationships with clients,” O’Rourke said.

Dean Reed, another Washington publicist who regularly churns out pro-ethanol-subsidy press releases for a group called Fuels for the Future, also refuses to identify his employer. He admits, however, Fuels for the Future is not a citizens group but the title of what he calls his ethanol project.

Among scientists, the situation is similar. By and large, scientists who promote MTBE by testifying at legislative hearings admit being paid by the oil industry while those who criticize the additive insist that they are independent of the ethanol industry.

The most prominent scientists opposing MTBE, Peter M. Joseph, professor of radiologic physics at the University of Pennsylvania, and Myron A. Mehlman, the ex-toxicologist for Mobil Corp. who is suing his former employer--staunchly deny receiving any financial support from the ethanol industry.

Joseph says he suffers from headaches and other adverse health effects of MTBE, and Mehlman seems to be motivated primarily by what an industry source describes as “a one-man vendetta against the oil industry.” But oil executives say the ethanol industry is footing the bill for some of the men’s travel expenses.

In addition, Mehlman frequently identifies himself as an adjunct professor at Robert Wood Johnson Medical School in New Jersey, even though school officials say he no longer teaches there.

Even on the oil industry side, disclosure is not always complete. John Mennear, retired professor of toxicology at the Campbell University School of Pharmacy in Cary, N.C., is paid by Arco for his advocacy work. Yet, Mennear has written several letters to newspapers in New Jersey identifying himself only as a retired toxicologist.

Mennear, who also has written papers playing down the environmental risks of secondhand cigarette smoke, says he is motivated by science, not greed. “Oxybusters probably would say about me that ‘Mennear would do anything for a buck,’ but that’s not true,” he said.

In California, the powerful Western States Petroleum Assn., composed of the major oil companies, is leading the lobbying drive to defend MTBE. The association spent $1.8 million on lobbying last year and another $600,000 in the first quarter of 1997, including $230,000 for lobbying by Kahl/Pownall Advocates.

The oil industry group is working so closely with state officials that John Dunlap, chairman of the California Air Resources Board, convened a meeting of oil lobbyists and environmentalists last month at the offices of Kahl/Pownall to develop a common strategy.

“This is a unique situation,” said Janet Hathaway, an attorney for the Natural Resources Defense Council, which is part of the oil industry coalition. “This is the first time that the oil industry saw their interest as coinciding with the NRDC’s.”

Alliances Form With Oil Interests

Also allied with oil interests in Sacramento is the American Lung Assn., which supports reformulated gasoline because it has cut air pollution. Ethanol industry officials assert that oil lobbyists have even co-opted the federal Environmental Protection Agency, which supports continued use of MTBE even though it has been classified as a possible carcinogen.

Earlier this month, the Western States Petroleum Assn., the American Institute and the Oxygenated Fuels Assn. sponsored free seminars for local water officials throughout California, extolling the virtues of reformulated gasoline.

Oxybusters had its beginnings in New Jersey, but it has been springing up elsewhere. In California the group is led by Jodi Waters, a Lodi computer consultant who said she believes MTBE has damaged her memory and the health of her four children.

“I didn’t have four children so [the government] could poison them,” said Waters, who said she first learned about MTBE in November, when she heard an interview with Joseph on KSFO radio.

In virtually every state where Oxybusters is active, it depends heavily on conservative talk shows to spread its message. New Jersey radio talk-show host Jim Gerhardt has created an “Oxybusters” theme song he plays whenever the subject arises on his program.

Radio talk-show personalities see MTBE as a perfect issue for their listeners, most of whom dislike government regulation.

“My job is to build an audience; how I do it is my business,” said Geoff Metcalf, a KSFO talk-show host who often focuses on reformulated-gas issues. “They are ballistic over it. . . . The thing that hit their hot button was, ‘Don’t screw with my car.’ ”

These radio talk shows have a big impact on politicians, according to Fred Craft, who heads the Oxygenated Fuels Assn. For example, Craft says, Rep. Don Young (R-Alaska) once told him radio talk shows were entirely responsible for his interest in the MTBE issue.

In most states, Oxybusters depends on a single conservative legislator, such as California state Sen. Richard Mountjoy (R-Arcadia), to press the legislature to ban MTBE. Gary Patton, lobbyist for the Planning and Conservation League, contends Mountjoy is using the issue to widen his political base.

“He is running for lieutenant governor,” Patton says. “He is trying to make himself the champion of people who believe there is a conspiracy between government and big business. That is what talk radio is selling.”

Mountjoy says he became an anti-MTBE convert last year, when he was using gasoline to wash tar off of an automobile fender and his gloves began to dissolve. “I’ve been washing parts in gasoline for years, and I never had that happen,” he says. “That stuff is bad news.”

Oxybusters has been so successful at building opposition to MTBE in many states that the oil industry has quietly launched an investigation of the group to determine how it is funded.

The probe recently yielded evidence allegedly demonstrating that Oxybusters receives financial support from Archer-Daniels-Midland through O’Rourke.

Documents apparently taken from O’Rourke’s trash and made available to the news media by sources who demanded anonymity indicate that the ethanol public relations specialist has been billing Archer-Daniels-Midland $5,000 a month plus expenses for his work.

“I don’t think O’Rourke created Oxybusters, but I do think he is providing them with valuable professional help,” says Arco Chemical’s Piernock. “There’s no other explanation. Otherwise, you have to believe that all of a sudden, [Oxybusters President] Barry Grossman got a Ph.D. in English literature and started writing beautiful prose.”

Documents obtained by The Times indicate that O’Rourke, a former employee of the American Petroleum Institute, is also supplying Archer-Daniels-Midland Vice President Martin L. Andreas with intelligence gleaned from his sources in the petroleum industry.

In a memo dated Nov. 30, 1995, and addressed to Andreas, O’Rourke quoted a friend at the American Petroleum Industry reporting that the oil industry was “extremely concerned” about the growing public outcry against reformulated gas.

O’Rourke strongly denies ever being employed by the giant agribusiness firm. “I write memos to lots of people,” he says. “That’s my job.”

Both Archer-Daniels-Midland and the Alternative Fuels Assn., an ethanol industry group, deny assisting Oxybusters.

“We never gave Oxybusters a dime, nor do we have a relationship with them,” says Karla Miller, an Archer-Daniels-Midland spokeswoman.

Oxybusters founder Grossman, a salesman from Plainsboro, N.J., insists that the group is financed out of the pockets of its members. He acknowledges receiving advice from O’Rourke but describes it as minimal, adding: “We let anybody help.”

O’Rourke says he first got in touch with Grossman because Oxybusters was mistakenly condemning all reformulated gas, including the type using ethanol. He insists that ETBE is harmless. He says he now talks to Grossman no more than twice a month.

From O’Rourke’s perspective, the most surprising element of this intrigue is the indication that the oil industry may have spied on him and Oxybusters. He says he has reason to believe that oil industry officials even obtained records of Oxybusters’ bank account.

“That just blew my mind,” O’Rourke said. “There have been a lot of really wild charges being made here.”