In March 2003, when the world’s attention was focused on U.S. soldiers heading to Baghdad, twelve senior officials in the Bush administration gathered around a long oak conference table in the Eisenhower Executive Office Building, part of the White House complex. They were meeting to put the final touches on a proposed legislative package that would address what was perhaps the most dangerous vulnerability the country faced after 9/11: unprotected chemical plants close to densely populated areas.
The package was the product of nearly a year’s worth of work led by Tom Ridge, head of the Department of Homeland Security (previously head of the White House Office of Homeland Security), and Christine Todd Whitman, administrator of the Environmental Protection Agency. Both had been governors of northeastern states (Ridge of Pennsylvania and Whitman of New Jersey) with a large number of chemical plants, and this only increased their concern about leaving such facilities unprotected. EPA staff felt such fears even more acutely: agency data showed that at least 700 sites across the country could potentially kill or injure 100,000 or more people if attacked.
The basic elements of the legislation were simple: the EPA would get authority to regulate the security of chemical sites, and, as a first step, plants would submit plans for lowering their risks. One man present at the meeting, Bob Bostock, who was homeland security adviser to the Environmental Protection Agency, was relieved to see that something was finally being done. “We knew that these facilities had large enough quantities of dangerous chemicals to do significant harm to populations in these areas,” he says.
No one present was prepared for what came next: the late arrival of an unexpected visitor, Philip Perry, general counsel of the Office of Management and Budget (OMB). Perry, a tall, balding man who bears a slight resemblance to Ari Fleischer without the glasses, was brusque and to the point. The Bush administration was not going to support granting regulatory authority over chemical security to the EPA. “If you send up this legislation,” he told the gathering, “it will be dead on arrival on the Hill.”
No one doubted the finality of Perry’s message. The OMB, which sets the course for nearly every proposal coming out of the White House, is a much-feared department that raises or lowers its thumb on policy priorities, a sort of mini-Caesar at the interagency coliseum. But Philip Perry could boast one more source
of authority: he was, and is, the husband of Elizabeth Cheney, and son-in-law of Vice President Dick Cheney. After Perry spoke, only Bostock dared to protest, though to little effect. “He was obnoxious,” Bostock recalls.
For the chemical industry, which has always had a chilly relationship with the EPA, Perry has been a consistent, quiet friend. “Phil Perry was never the EPA’s biggest fan,” says Whitman, recounting the relationship. “I think there was a predisposition on his part
that we were trying to overreach.” Indeed, like many Republican hardliners, for whom the EPA represents all that is wrong with government regulation, Perry has sought to limit the role of the EPA, not expand it. He’s been successful.
To understand the workings of Philip Perry is to get a sense of the true lines of power in the executive branch. “Perry is an éminence grise,” says one congressional staffer. “He’s been pretty good at getting his fingerprints off of anything, but everyone in this field knows he’s the one directing it. He is very good at the stealth move.” And, as it turns out, Perry’s stealth moves have often benefited opponents of chemical regulation. One of his final pieces of handiwork included coming up with what critics have called an “industry wish list” on chemical security that ultimately became law last fall. “Every time the industry has gotten in trouble,” says the staffer, “they’ve gone running to Phil Perry.”
The result has been that our chemical sites remain, even five years after 9/11, stubbornly vulnerable to attack. Philip Perry has hardly been alone in tolerating this. Others in the White House and Congress have been equally solicitous toward the chemical industry. But as part of a network of Cheney loyalists in the executive branch, Perry has been a key player in the struggle to prevent the federal government from assuming any serious regulatory role in business, no matter what the cost. And a successful attack on a chemical facility could make such a cost high indeed.
A flippant critic might say the father-in-law has been prosecuting a war that creates more terrorists abroad, while the son-in-law has been working to ensure they’ll have easy targets at home. But it’s more precise to say that White House officials really, really don’t want to alienate the chemical industry, and Perry has been really, really willing to help them not do it.
Safe as milk plants
After 9/11, counterterrorism experts disagreed on many issues, but on one point they were united: industrial sites with high concentrations of chemicals presented a unique combination of lethality and vulnerability (see "The Next Attack"). Some companies immediately took steps on their own to reduce the risk of attack, by replacing dangerous chemicals used in processes with safer ones, or maintaining smaller stockpiles.
Such conversions involve a shift to what are known as “inherently safer technologies,” or IST. Environmental groups have for years been advocating the use of IST in the interests of reducing pollution and preventing fatalities resulting from accidents. After 9/11, they would gain an even stronger selling point: IST could also help protect against terrorism by making chemical plants in populated areas safer, hence less attractive as targets. Rick Hind of Greenpeace argues, with a rhetorical flourish, “These facilities can be made as safe as milk plants.” Not surprisingly, IST gained new supporters after 9/11, and some in Congress moved to incorporate it into security legislation. Already by October 31, 2001, Sen. Jon Corzine (D-N.J.) had introduced legislation requiring high-risk companies to use available IST.
If environmentalists love IST regulations, however, industry executives hate them. The chemical industry is one of high costs and fairly low profit margins; from its perspective, stringent IST requirements throw off what is already a delicate cost-profit balance. Also, years of unhappy experiences with Washington have convinced many industry executives that regulations will be clumsily introduced. Worst of all, they feel, IST could give environmentalists and their allies in the EPA another pretext to expand their regulatory reach. Corzine’s bill quickly encountered industry opposition and stalled in the Senate.
Then as now, certain industry-affiliated experts questioned how necessary IST would be in reducing vulnerability to terrorism. Some suggested other means, such as heightened security measures (even though the security measures that industry has put in place and touts as effective are often comically easy to breach [see “You Too Can Break Into a Chemical Plant”]). What everyone had to admit was that chemical storage tanks and rail cars remained dangerously easy to strike.
Something had to be done. In July 2002, the Senate Environment and Public Works Committee unanimously adopted a compromise version of Corzine’s bill. To the chagrin of those who lobbied against it, the compromise still included a requirement that some plants consider using IST. “Industry freaked out,” recalls one Democratic staffer.
It needn’t have. Industry allies such as Sen. James Inhofe (R-Okla.) provided enough resistance to keep the bill from moving to the floor. Any further progress would have required a push from the White House, which declined to provide it. According to Frank Cilluffo, a former special assistant to President Bush for homeland security, the White House felt that the private sector understood the dangers best and was therefore “in a better position to implement solutions.” (Cilluffo no longer shares that view.)
As long as chemical-security bills kept expiring in the face of industry opposition on Capitol Hill, the White House had little cause to weigh in. Indeed, some observers say it was so worried about IST, it was happy to see legislation derailed. IST was “the one thing that the administration simply would not accept,” says Jim Carafano, a senior fellow at the Heritage Foundation who followed the legislative process. “They wouldn’t push a bill because they were afraid it would get hijacked” by supporters of IST. For months after 9/11, no progress was made on the Hill.
Al-Qaeda doesn’t file lawsuits
Philip Perry, who was born in 1964 in San Diego, first met Elizabeth Cheney at a Washington, D.C., alumni mixer for graduates of Colorado College. They hit it off. In 1993, they married, and Perry took a job at the law firm of Latham & Watkins. Perry’s first job in government began in 1997 and had a decidedly partisan flavor: it was as counsel to the U.S. Senate investigation of alleged campaign finance abuses by Clinton and Gore in their 1996 campaign. The investigations failed to produce sensational results, but Perry did at least learn about the ways of the Senate and form friendships that would be useful later. As Sen. John Warner (R-Va.) would say of Perry at a confirmation hearing years later, “He is a member of the Senate family, and that is very important.”
After his stint in the Senate, Perry returned to Latham, where he formed other helpful connections. (A colleague, Michael Chertoff, would later head the Department of Homeland Security.) In 2000, when Cheney became George W. Bush’s running mate, Perry found himself in the inner circle of advisers surrounding his father-in-law. Friends describe him as intellectually brilliant and extremely discreet. Fittingly, in the vice president’s debate-prep sessions, Perry played the role of moderator. The Republican political consultant Mary Matalin, who worked with him in the mock debates, described Perry to Legal Times as “very, very, very strategic.”
When the election of 2000 was resolved, Perry took on the title of “policy coordinator” for the Bush-Cheney presidential transition. By early 2001, he had been appointed as the acting associate attorney general at the Department of Justice, the department’s third-ranking official. It was a dramatic promotion.
While Perry mostly stayed out of the news, the summer brought some unwelcome attention. The Department of Justice, it was reported, would stop pursuing a breakup of Microsoft. Since Perry oversaw the antitrust division, and Cheney had previously met with Microsoft’s CEO, some critics smelled a fix. “I am concerned,” said Rep. John Conyers Jr. (D-Mich.), “that there may have been unneeded or inappropriate contact ... between the White House, ... and decision makers at the department.” In November 2001, the government offered Microsoft generous terms in a settlement deal that even many Republicans denounced.
Having proved his ability to get the federal government off the back of big industry, Perry received another promotion, moving over to the Office of Management and Budget in 2002 to serve as general counsel under then OMB Director Mitch Daniels, also a Cheney loyalist. At the time, the most critical issue facing the chemical industry was that of implementing post-9/11 security measures. In late 2001 and in 2002, Whitman and Ridge worked to come up with a plan to put some preliminary regulations in place. Using a clause in the Clean Air Act, the EPA would claim authority to oversee security measures for the chemical industry. “We were looking for facilities to do a vulnerability study,” says Whitman, “to try to take that first step.” However, as they prepared to announce their plans in the summer of 2002, the White House changed its mind.
The problem, according to Richard Falkenrath, who at the time was a special assistant to the president and policy director of the Office of Homeland Security, was a legal one. Administration lawyers—primarily Perry at the OMB—were arguing that granting regulatory authority to the EPA based on a clause in the Clean Air Act would be overreach. “The thinking was that if you’re going to do something this big, you need to have Congress specifically authorize it, not argue that this huge regulatory action was justified by a single clause in an old law,” says Falkenrath. “There was an absolute unanimity around the table that we’d be sued and that we’d lose those suits.” If this seems like an implausible argument in an administration that has expanded executive authority on far flimsier grounds, Falkenrath notes a distinction. “Al-Qaeda doesn’t file suit in court to block federal regulatory action,” he explains. “There’s a difference between intercepting phone calls and regulating an enormous industry.” The plan to claim regulatory authority for the EPA was retired.
For Whitman and Ridge, the obvious solution seemed to be to ask Congress for the authority necessary to enact the plan already envisioned. After all, official White House strategy papers called for placing the EPA in the lead role for overseeing the chemical sector. In the months that followed, Bostock at the EPA and officials from the DHS and the White House worked to craft a package to submit to Congress. By the time it was almost complete, however, Perry again came forward to shut down the plan, in the March 2003 meeting. Perhaps the White House had experienced a change of heart. More likely, its most influential players, such as Dick Cheney, had never supported the bill to begin with and hadn’t been paying much attention. “They woke up and heard from industry: ‘Watch out, the EPA’s coming,’” Whitman recalls. And the invasion of Iraq, which was dominating the news, allowed them to pull the plug on the effort.
Whitman eventually became frustrated enough to request formally that the EPA’s purported lead role on chemical security be ceded to the DHS. “I did not believe the agency should be asked to assume responsibility for performing this important mission if it would not also be given even the basic authority it needed to meet it,” she later wrote in her book, It’s My Party Too. Meanwhile, the new Department of Homeland Security struggled to find a role for itself. The DHS had not been granted authority to regulate chemical security, nor would the White House allow Ridge to delegate work to the EPA. “Even though we made clear that the EPA would only have a specific role,” Whitman says, “it was viewed as the camel’s nose under the tent.” That June, Whitman resigned her post.
While Ridge stayed on at the DHS, Washington mostly turned its attention away from chemical security during the next few years. Perry, for his part, returned to Latham & Watkins in September 2003. Over the next year and a half, he lobbied the DHS for liability protections for clients such as Lockheed Martin and General Electric, and his earnings exceeded $700,000. For Latham, which represented clients like the American Chemistry Council, the chemical industry’s trade group, Perry was a valuable addition.
In January 2007, Perry spoke to a group of lawyers at an American Bar Association security seminar at the L’Enfant Plaza Hotel in Washington, D.C. Dressed in a dark suit, Perry stood before the crowd of 200 or so in attendance and swiftly ran through efforts backed by the DHS. Of particular pride was a new package of chemical-security regulations released by the DHS only weeks earlier. “For a few years now, the [Bush] administration has supported chemical-security legislation,” Perry told the gathering, “but Congress has deadlocked.” Those who’d been watching a bit more closely might have been surprised by such a description of events. After all, only with deadlock on the Hill could Perry have crafted the legislation of a chemical-industry lobbyist’s dreams.
During the years in which Washington had been neglecting chemical security, numerous actors had become increasingly uneasy about the problem. In January 2005, Sen. Susan Collins (R-Maine) began a series of hearings looking at the subject before the Senate Homeland Security Committee, during which one grim highlight had been the testimony of Falkenrath, the former homeland security adviser, who called chemical security the nation’s top domestic
vulnerability and admitted that since 9/11, “we have essentially done nothing.” By June 2005, even the DHS’s public spokesperson on the issue, Bob Stephan, was conceding that voluntary efforts were proving insufficient.
In November 2005, acting New Jersey Governor Richard Codey got tired of waiting and issued an executive order mandating that the forty-three riskiest chemical plants in his state come up with chemical-security plans and conduct a review of potential IST measures. This was unwelcome news to the chemical industry, which rallied to seek Washington’s help in shutting down New Jersey’s efforts. If the federal government would play the card of “preemption,” by which less-stringent federal laws would supersede more-stringent state laws, the threat of New Jersey’s regulations could be combated. In other words, while arguing that it just wanted to oppose a burdensome “patchwork”
of state laws, the chemical industry hoped that Washington would forbid states from setting tougher standards.
Before that could happen, however, Washington needed to produce chemical legislation of any sort. This, of course, had been a problem for four years already. Bills had come and gone, most left to languish in various back alleys of the House and Senate. One of the few with any hope of advancing was a joint middle-of-the-road effort by Collins and Sen. Joe Lieberman (D-Conn.). To the relief of the chemical lobby, the bill contained no IST provisions (Lieberman had unsuccessfully attempted to add them). On the downside for industry, though, it also failed to grant preemption powers to the federal government.
This was workable. In an effort to defang Collins-Lieberman, the chemical lobby attempted, via Senate allies, to add some amendments. Among these were a ban on any consideration of amendments mandating IST and, more importantly, a reassertion of preemption over state law. Even in a Republican-controlled Senate, however, this effort failed. The chemical lobby, disappointed, started to work to undermine the bill.
Having seen how easily chemical-security legislation could stall, it wasn’t willing to settle. One congressional staffer puts it bluntly: “Industry got greedy.”
It didn’t hurt that the DHS was in its corner. In February 2006, when the Government Accountability Office called on the DHS to at least study IST, DHS officials rejected the proposal. In March 2006, when DHS Secretary Michael Chertoff reluctantly accepted the notion that the DHS should regulate the chemical sector, he also denounced IST as an “interference with business” and warned that allowing states to pass tougher laws would expose businesses to “ruinous liability.”
Still, in June 2006, despite the efforts of industry lobbyists, Collins-Lieberman was unanimously voted out of the Senate Homeland Security and Governmental Affairs Committee. That left it up to Senator Inhofe, who was chairman of the Environment and Public Works Committee, to put a hold on the bill, complaining that it could open the door to an IST mandate. Inhofe might have relented had the White House requested it, but the White House had little affection for Collins-Lieberman. So it stayed silent.
By stopping Collins-Lieberman, the chemical lobby had gotten, in the short term, what it wanted. But it had also gotten itself in a bind: if any regular bill were to pass, industry could face new regulations it didn’t want. But if nothing were to pass, there would be no way to shut down the regulatory efforts of states like New Jersey. The only acceptable outcome, then, would be for Washington to pass legislation giving the industry exactly what it wanted: a fig leaf of regulations to satisfy public opinion and a hidden gun that would take aim at New Jersey’s tough new regulations.
Enter Philip Perry. When Michael Chertoff was nominated to head the DHS in 2005, he had asked Perry to join him as the department’s general counsel. The two were not only colleagues at Latham & Watkins but also members of the conservative Federalist Society, and they were of like minds in their general distrust of government regulation of business. By the summer of 2006, as various bills competed for attention, Perry’s services were in great demand. “Industry went back to the well,” says one DHS official.
Perry came through in a characteristically concealed manner. When it became clear that Collins-Lieberman was going nowhere, Perry went searching for a new vehicle to get more industry-friendly results. He would find it in a DHS appropriations bill in the Senate, to which had been attached an obscure amendment giving the DHS short-term regulatory authority over chemical security. Perry reworked the language and helped to get it added to the spending bill in a conference committee.
Under the new amendment, the DHS would have nominal authority to regulate the chemical industry but also have its hands tied where required. For example, the DHS would be barred from requiring any specific security measures, and citizens would be prohibited from suing to enforce the law. Best of all for industry, while the bill didn’t mention giving the DHS preemption authority, it didn’t bar it, either, leaving a modicum of wiggle room on the subject. In other words, if Perry was sufficiently brazen, he could claim for the DHS the power to nullify the chemical regulations in New Jersey.
He was sufficiently brazen. When the DHS finally unveiled its proposed regulations in late December of last year, Hill staffers noticed that the department had effectively granted itself the power to set aside state laws, even though the new federal law didn’t expressly grant such authority. Lawmakers on both sides of the aisle were livid. “In order to please their cronies in the chemical industry, the Bush administration is willing to put the health and safety of millions of people at risk,” said Sen. Frank Lautenberg (D-N.J.). Senator Collins, for her part, released a statement accusing the DHS of attempting to create regulatory powers “out of whole cloth.” It was indeed curious that Perry, who had been so cautious about allowing the EPA to claim regulatory authority in the Clean Air Act, should now be so bold in interpreting the language in an appropriations rider. Or perhaps it wasn’t so curious at all.
In January 2007, Perry announced his intention to step down as general counsel of the Department of Homeland Security and was rumored to be returning to Latham & Watkins. Elizabeth Cheney, Perry’s wife, had given birth to the couple’s fifth child in July 2006, and Chertoff spoke of fully supporting Perry’s “decision to put his family first.” But there were other reasons for Philip Perry to leave government, too. After all, he’d done what he came to do.
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Art Levine is a contributing editor of the Washington Monthly. Research assistance for this article was provided by the Investigative Fund of the Nation Institute. Additional reporting was done by Shaun Waterman, homeland and national security editor for United Press International.