HOUSTON -- William Reilly has learned a lot about the American Petroleum Institute in the 10 months since President Obama appointed him co-chair of the commission studying the BP oil spill.
For instance, Reilly said, the trade group for the oil and natural gas industry also does equipment certification and carries great weight on the regulation side of the industry. That was news to him.
“I honestly didn’t know it. I didn’t know it, and I’ve been around the town for a long time,” said Reilly, who was President George H.W. Bush’s Environmental Protection Agency administrator, in an interview with National Journal Daily. “And one of the points I’ve made is if it’s true for me, it’s probably true for the country.
“What people know is that it’s the advocate for Big Oil, a very effective advocate.”
While its advocacy resonates inside the Beltway, its power is worldwide.
“I am told that people in other countries in the oil industry look for the API certification, and that’s the gold standard,” Reilly said. “It’s the gold standard, and they don’t trust equipment that doesn’t have it.... To a substantial degree, the regulators have depended on them. That’s a way they’ve gotten a lot of their information. I just have to admit that back last June, I had no idea.”
API announced late last month that it is creating a political action committee, which will allow it to support political candidates this year. In the past, it had paid for advertising on policy issues and legislation. “Do they need one?” Reilly laughed. “Honestly, I’m surprised they didn’t already have one.”
Reilly used a speech Tuesday at the Cambridge Energy Research Associates conference to urge thousands of oil and gas executives to support an independent safety institute akin to the Institute of Nuclear Power Operations. That was a key recommendation the oil spill commission included in its final report issued in January.
Top oil and gas executives will meet on March 18, and a decision on the matter is expected, Reilly and an oil industry official told National Journal Daily. Reilly said the institute, which does not require congressional approval, is essential for not just the government and public, but the industry too.
“We know firsthand that several of them [oil executives] did have very serious concerns about BP’s behavior,” Reilly said.
One big decision that has not been made is whether the institute would be housed inside API. Reilly and the rest of the commissioners recommend having the institute be separate from API.
“That is certainly the preference of [API President] Jack Gerard, and it may be the preference of some of the CEOs,” Reilly said. “If it is, it has every chance of working effectively if they construct a wall of separation between advocacy and technical evaluation and audit.”
The “optics,” though, “would not be reassuring,” Reilly added. “One major objective of this new institution is to win public credibility and trust, and I don’t think it would be easy to do that if they’re confused with the trade publication.”
A top executive at API said where the institute is housed should not matter. “You’re creating an issue where there isn’t, regarding whether you house it in API or not,” said Erik Milito, upstream director at API. “The strength of any type of program will stand on its face on how it’s structured, how it’s organized, and how it’s performed.”
He stressed that the “ultimate goal is getting it up so that safety is the focus and that improvements are made no matter how it’s structured.”
This article appears in the March 9, 2011, edition of National Journal Daily PM Update.