The politics of energy: Coal, the Bush administration’s fuel of choice

Introduction

When George W. Bush was inaugurated on the Capitol steps in January 2001, the coal industry, which had contributed more than $250,000 to his presidential campaign, was battling a series of regulatory efforts that, taken together, threatened to make the dirtiest fossil fuel—and those who mined and burned it—economically unviable. Less than three years later, coal is once again king. Bush, an oil man whose biggest campaign contributor was natural gas giant Enron Corp., has done more to advance the interests of coal than for any other sector of the energy industry.

Prior to his election, coal was the primary target of a “four-pollutant approach” for federal regulation of old power plants. Environmentalists and some members of Congress during the Clinton administration favored ordering electric utilities to reduce air pollutants nitrogen oxides, sulfur dioxide, mercury and carbon dioxide, which would be limited for the first time under U.S. law.

Coal, which is used to generate about half the nation’s electricity, is responsible for most of the emissions of the four pollutants. Environmentalists hoped a multi-pollutant regulatory regime, once enshrined in law, would make coal less viable as a fuel. Industry officials, of course, feared that stricter versions of a multi-pollutant mandate could end up doing just what many environmentalists wanted – and reduce the market for coal.

To fight the regulatory efforts, coal producers and users reported spending more than $107 million lobbying the federal government. In addition, they contributed more than $30 million to political campaigns from 1997-2002, and found allies on Capitol Hill like Representative John Dingell, D-Mich., who received more than $280,000 in donations from the industry during that time—more than any other politician over the same period—and fought attempts by the EPA to issue a study that would support lower emission standards for mercury. Despite such largesse and the industry’s paid allies among Washington’s lobbyists, the trend toward greater regulation of coal—and reducing the nation’s dependence on it—was well established when Bush took office.

In the 2000 election campaign, the stakes for the coal industry could not have been higher. Democratic candidate Al Gore had a long record of environmental pronouncements and seemed unlikely to support the industry. Bush, his Republican opponent, had signaled some support for both limiting carbon dioxide emissions and the multi-pollutant approach to environmental law. Nevertheless, the coal industry were early backers of Bush.

They had good reason. Thomas R. Kuhn, the head of the Edison Electric Institute, the primary trade group for electrical utilities, was a Bush Pioneer, one of the elite fundraisers who promised to raise at least $100,000 for the Texas governor. Kuhn wrote a May 27, 1999, letter to other fundraisers, informing them of the importance of letting the Bush campaign know exactly which industries were raising money for him. “As you know . . . a very important part of the campaign’s outreach to the business community is the use of tracking numbers for contributions,” Kuhn wrote. “Listing your industry’s code does not prevent you, any of your individual solicitors or your state from receiving credit for soliciting a contribution. It does ensure that our industry is credited, and that your progress is listed among the other business/industry sectors.” Bush and his administration made sure that the coal industry could cash in its credits.

As Congress considers the massive, thousand-plus-page Energy Policy Act of 2003, a bill that provides billions of dollars in tax credits and spending for the energy industry—Senator John McCain dubbed it the “Leave no Lobbyist Behind Bill”—the Center for Public Integrity is releasing the Politics of Energy, a series of reports looking at the influence that sectors of the energy industry—coal, nuclear, oil and natural gas—wield on Capitol Hill and in the White House. The first four reports, to be released over the next two weeks, focus on the resurgence of coal.

The emergence of a coal-friendly strategy

Within months of taking office, the Bush administration changed course and announced that it would not cap carbon dioxide emissions after all. About 40 percent of American CO2 emissions come from the production of electricity, with coal-fired plants contributing about three-fourths of that. With no commercially available technology to remove the odorless gas from smokestacks, the only means to reduce the pollutant—widely believed by scientists to be one of the primary greenhouse gases that contribute to global warming—would be to switch from coal to other energy sources, like natural gas, nuclear or renewable energy. Two weeks later, the administration withdrew from the Kyoto treaty (in 1997, the U.S. Senate had resolved 95-0 not to ratify it), an accord that requires industrial nations to reduce the amount of carbon dioxide they emit.

One of the Bush administration’s first initiatives was the establishment of an energy task force, chaired by Vice President Dick Cheney, which laid out a coal-friendly strategy for meeting the nation’s energy needs. In May 2001, the group released the National Energy Policy plan, which called for federal agencies to “provide greater regulatory certainty relating to coal electricity generation through clear policies that are easily applied to business decisions.”

In February 2002, Bush announced the “Clear Skies Initiative,” which he characterized as a “market oriented” approach to environmental regulation. Clear Skies would undo many of the targets for pollution reduction required under provisions of the Clean Air Act, and would substantially weaken the requirement that coal-fired power plants reduce emissions of mercury—a toxin that may cause as many as 60,000 cases of preventable brain defects among newborns each year. Coal is one of the main sources of man-made emissions of mercury.

Top Recipients of Coal Industry Contributions

1997 to 2002

Recipient

Party, State

Oversight Roles

Amount

Representative John Dingell

D-Mich.

Energy & Commerce

$287,500

President George W. Bush

R

251,763

Representative Joe Barton

R-Texas

Energy & Commerce

203,750

Representative Rick Boucher

D-Va.

Energy & Commerce

145,500

Representative Ralph Hall

D-Texas

Energy & Commerce

143,450

Representative John Shimkus

R-Ill.

Energy & Commerce

132,970

Senator George Voinovich

R-Ohio

Environment & Public Works

127,735

Representative W. J. “Billy” Tauzin

R-La.

Energy & Commerce, Resources

126,050

Senator Mary Landrieu

D-La.

Energy & Natural Resources, Appropriations

124,250

Representative Dennis Hastert

R-Ill.

Speaker

123,000

Representative Joseph Knollenberg

R-Mich.

Appropriations

121,850

Representative Tom Sawyer

D-Ohio

Energy & Commerce

115,400

Senator Chuck Hagel

R-Neb.

106,846

Senator Frank Murkowski

R-Alaska

Energy & Natural Resources

103,590

Senator Craig Thomas

R-Wyo.

Energy & Natural Resources, Environment & Public Works

103,400

Senator Jim Inhofe

R-Okla.

Environment & Public Works

102,000

Representative Robert Aderholt

R-Ala.

Appropriations

100,387

Representative Charles W. “Chip” Pickering

R-Miss.

Energy & Commerce

98,850

Senator Spencer Abraham

R-Mich.

Currently Secretary of Energy

97,189

Senator Rick Santorum

R-Pa.

Republican Conference Chairman

95,039

Incumbents in Bold

On New Year’s Eve in 2002 and again in August 2003, the Bush administration announced “reforms” of New Source Review, a Clean Air Act regulation that requires power plants, refineries, and other industrial operations that emit pollutants to use the best available (and often most costly) technology when upgrading or expanding their old facilities. In 1999, the Environmental Protection Agency had launched lawsuits against a number of electric utilities, mostly in the Southeast and Midwest, that, the agency alleged, had ignored New Source Review requirements when refurbishing their old generating plants. Thanks to the Bush administration’s new posture on New Source Review, companies which had considered settling with the EPA—and complying with NSR requirements—have chosen to continue fighting in court.

They’ve also taken the fight to Capitol Hill. Since 1995 the industry has spent more than $107 million attempting to influence the course of everything from appropriations to tax policy and emissions regulations.

Like many other major industries, coal companies have over the years spared little expense in recruiting a roster of legislative and regulatory talents, with the hope that these former trusted government advisers would be able to sway their old colleagues toward their new employers’ points of view. The Edison Electric Institute retained the services of former Representative Bill Brewster, D-Okla., to work on general energy issues including the National Energy Policy Act. Allete, which owns utility Minnesota Power, retained the law and lobbying firm Troutman Sanders LLP to represent its interests; former Senate Energy and Natural Resources Committee minority counsel Clifford Sikora was one of the Troutman Sanders partners who lobbied for the firm.

Southern Company, an Atlanta, Ga.-based utility, retained C2 Group LLC, which boasts Jefferies Murray, former chief of staff of Representative Bud Cramer, D-Ala., who sits on the House Appropriations Committee, and Michael Hanson, who served as chief of staff to Representative Sam Johnson, R-Texas. Southern hired Balch & Bingham, which has a roster of talent that includes former House Commerce Committee counsel Fred Eames. Southern also hired the Alexander Strategy Group to represent its interests; the group’s lineup includes Brian Darling, former general counsel for former Senator Bob Smith, R-N.H., once chairman of the Senate Environment and Public Works Committee.

Revolving door spins both ways

With the arrival of the Bush administration in Washington, the traditional movement from government service to private sector lobbying was reversed. Consider Interior Department Deputy Secretary J. Steven Griles, a former coal-industry executive and lobbyist. His lengthy client list included the American Petroleum Institute, the National Mining Association, oil giant Sunoco, and the Edison Electric Institute, which is the electric-utility trade association. Or Thomas Sansonetti, who became assistant attorney general for environment and natural resources after he had lobbied for Peabody Coal and other mining interests. The Department of Labor’s assistant secretary for mine safety and health, David Lauriski, joined the department after three decades in the coal mining industry, including stints as a board member of the Utah Mining Association and general manager of Energy West Mining Company, one of the nation’s largest underground coal producers. And a Latham & Watkins lobbyist, Jeffrey Holmstead, was chosen by the Bush White House as the EPA assistant administrator on air and radiation. As the nation’s top official on air quality, Holmstead has promoted the Clear Skies Initiative during Senate testimony while rolling back regulations that restrict power plant pollution.

Former Montana Gov. Marc Racicot, who was chosen as chairman of the Republican National Committee with the backing of President Bush in December 2001, created a firestorm of controversy when he said he would continue lobbying while serving as the top fundraiser and titular head of the Republican party. In 2001, Racicot represented something called the National Electric Reliability Coordinating Council out of his Washington office in the Houston-based firm of Bracewell & Patterson. Now known as the Electric Reliability Coordinating Council, the association was also represented by another former RNC chairman (and current Mississippi governor-elect), Haley Barbour of Barbour, Griffith & Rogers. In its lobbying registration form, the group is described only as an “unincorporated association of electric utilities,” designated to lobby on “New Source Review administrative proceedings and policy.”

The ERCC is far from the only such coalition concerned with pollution standards and other issues affecting the coal industry. Another major player is Energy for a Clean Air Future, which lists Cinergy, PPL, Reliant Energy, Wisconsin Electric and Canadian company TransAlta as its affiliated organizations, and cites “air quality and related energy issues involving power plant emissions” as its chief legislative concern, according to the lobbying registration filed by the organization’s former attorneys at Latham & Watkins.

But few topics have seized the coal industry’s attention within the last decade as much as the Clean Air Act, a sweeping regulatory measure amended in 1990 and signed into law by President George H.W. Bush. Strenuously enforced by the Clinton administration’s Environmental Protection Agency, the CAA was a federal effort, working jointly with state departments of environmental quality, to control and eventually reduce emissions spewed into the air from automobiles, factories and other air polluters. Despite use of market-driven incentives for polluters to clean up their operations, the EPA’s administration of the act also created several layers of additional bureaucracy – so much so that companies sell software designed solely to help users comply with the ever-changing provisions of this one piece of legislation.

While many associated with the coal industry decry the Clean Air Act and its restrictive effect on coal operations, which by their very nature produce voluminous amounts of smoky emissions as a byproduct of mining, they received an unexpected if short-lived boost starting in late 2001 – not from the government, but from shortcomings within the private sector. When natural gas trader Enron and supplier Dynegy both collapsed under the weight of accounting irregularities, the viability of natural gas as a competitor to coal was somewhat called into question.

Months before Enron and Dynegy imploded, the Bush administration had made its priorities clear. “If rising U.S. electricity demand is to be met,” the National Energy Policy plan stated, “then coal must play a significant role.” To that end, the task force suggested that the Department of Energy invest $2 billion over ten years to fund research in clean coal technologies, that current research-and-development tax credits be made permanent, and that environmental regulations be made with an eye toward facilitating “business decisions” by the coal industry.

Among those who stand to benefit from the migration back to coal is James “Buck” Harless, a West Virginia coal and timber baron who served as a Bush Pioneer. Harless also donated $100,000 to the presidential inaugural, and was one of more than thirty energy-industry officials who served on the Bush Transition Energy Advisory Team. According to the Charleston Gazette, Harless played a role in the appointment of Michael Castle to a position created specially for him in the Philadelphia office of the EPA—the regional office whose territory includes West Virginia. Castle, formerly West Virginia’s top environmental official, worked as a consultant to the coal industry following his departure from state government and was an owner in several small coal companies.

Lobbying against widows

Coal companies have aggressively attempted to control some of the more specialized costs they face. Coal miners, simply by virtue of their occupation, are exposed to steady amounts of ash, silt and other hazardous airborne particles throughout the mines. The effect upon the lungs is so prevalent that the condition, pneumoconiosis, commonly known as Black Lung disease, became an issue for the federal government, which in 1978 authorized the Labor Department to set up the Black Lung Disability Trust Fund. Today the fund is one of the department’s largest mandatory costs, second only to the overall federal unemployment trust fund.

“Congress finds and declares that there are a significant number of coal miners living today who are totally disabled due to pneumoconiosis arising out of employment in one or more of the Nation’s coal mines; that there are a number of survivors of coal miners whose deaths were due to this disease; and that few States provide benefits for death or disability due to this disease to coal miners or their surviving dependents,” the Black Lung Benefits Act, which enhanced the trust fund originally set up in 1969, read in part.

Representative John Murtha, a Democrat who represents a district in southwestern Pennsylvania where coal mining has been a way of life for several generations, came into Congress in 1974 and was a vigorous proponent of expanding the Black Lung trusts, an effort that succeeded seven years later. Nearly twenty-five years after its passage, that effort still resonates with his electorate.

“There’s a lot of retired coal miners in his district,” Ed Mitchell, a media consultant working for Murtha, said. “In his recent primary, he was endorsed by United Mine Workers and their retirees – I think there are 65,000 mine workers in the district … and they all vote.” The United Mine Workers of America, the largest national mine workers union whose president lost both his grandfathers to mining accidents, also helped produce an ad endorsing Murtha, who sailed through his primary in part because of union support for his stance on miner health care issues. “He’s concerned about his constituents, who are mine workers and former mine workers,” Mitchell added. Murtha is originally from West Virginia, another state whose economy relies heavily upon coal mining.

There have been great improvements in the conditions in which miners toil: the days of child labor in the mines are long gone, and overall conditions are vastly improved from the turn of the 19th century, when coal was a driving force in national economic policy.

Grave problems persist, of course. Clouds of dust still swirl about the mines, and the government’s efforts to provide for the health of the miners who work in the midst of that noxious atmosphere have been met, on many occasions, with virulent opposition from the coal industry and its most influential trade group, the National Mining Association.

NMA representing, at last count, more than 300 companies is zealous in its efforts to reduce its members’ costs, thereby fattening their bottom lines. Three days before Christmas in 2000, for example, NMA challenged new Black Lung benefits regulations in federal District Court, insisting that the revised rules strip miners of their due process rights. “While touted as streamlining and simplifying the [existing] regulations, the re-proposal does neither,” the association said in a statement. “It is critically flawed in both concept and substance.”

In an attempt to prove its point, the association and their phalanx of lawyers argued against nearly every word in the new regulations, including the definition of a year and also who qualified as a surviving spouse. In August 2001, Judge Emmet Sullivan summed up the Labor Department’s regulations on the issue of miner marriages and their eligibility for benefits in his 93-page opinion: “A surviving spouse is anyone who went through a marriage ceremony with a miner, even if that ceremony is invalid due to a legal impediment, so long as the parties did not know it was invalid, and were living together at the time of the miner’s death.” As it did in many of its challenges to the rules, NMA argued that the Labor Department did not have the authority to, in this case, define marriage for the purpose of benefits collection, and that the regulation was “impermissibly retroactive” in any event.

In his discussion on the NMA’s complaints – which consumes over two-thirds of the opinion – Sullivan was generally unsympathetic to the association’s stated case, disagreeing often with the groups’ belief that existing case law supported their position. For instance, when the Labor Department argued that its rules are not retroactive because some only apply to claims submitted after the new rules went into effect, it was clear that the National Mining Association’s legal team – composed of lawyers from Arter & Hadden, a Washington law firm which has also lobbied for Edison Electric Institute and United Utilities – had not impressed the judge with its case. Sullivan referred to some of the association’s claims as “meritless” altogether. He said of NMA’s overall belief that the new rules deprived miners, their employers and insurers of due process rights simply, “these regulations do not deprive mine operators of a meaningful opportunity to be heard.”

NMA appealed the decision, but in June 2002, a three judge panel of the U.S. Appeals Court for the District of Columbia upheld most of the new rules. NMA issued a statement calling the decision a mixed ruling overall on its challenge to the new regulations.

The industry also opposed congressional attempts to bolster survivors’ rights. Representative Nick Rahall, D-W. Va., introduced legislation in April 2002 to give survivors of deceased miners greater rights while trying to legally establish their claim to aid under the Black Lung Benefits Act.

“The surviving spouse must now file a new claim in order to try to continue receiving the benefits and must prove that the miner died as a result of black lung disease despite the fact that the miner was already deemed eligible to receive benefits prior to death,” Rahall said on the House floor, noting that survivors were only eligible if their loved ones died before the current law took effect on Jan. 1, 1982. “This is illogical, unfair and outlandish.”

The primary concern

While the industry has various labor, tax and other regulatory concerns, the primary concern of coal interests remains environmental regulation. The National Mining Association, unlike many others who file such forms, was quite specific in its lobbying disclosures as to what initiatives it supported and which it denounced. In 2001, for instance, when it spent roughly $3 million on its in-house lobbying staff alone, the trade group opposed limiting funding for hard rock mining operations and prohibiting exploration on national monuments, while supporting S. 223, a bill to terminate the effectiveness of certain drinking water regulations.

Introduced by Senator Pete Domenici, R-N.M., the bill would void EPA regulations made by the agency. Introduced on Jan. 31, 2001, the bill languished in committee and has yet to be reintroduced.

Perhaps not surprisingly, the NMA supported funding for clean coal initiatives and for development of an Office of Fossil Energy within the Energy Department. It opposed, however, a bill introduced by House Government Reform Committee ranking minority member Henry Waxman, D-Calif., the Clean Smokestacks Act of 2001, to amend the Clean Air Act in order to further restrict emissions from electric power plants, especially nitrogen oxides (NOx), carbon dioxide and mercury emissions. Despite attracting 134 cosponsors – or nearly one third of the entire House body – Waxman’s bill stalled after being referred to the House Energy and Commerce Committee’s subcommittee on energy and air quality. The association also opposed a similar measure proposed by then Senate Judiciary Committee chairman Patrick Leahy, D-Vt., which has experienced a fate similar to Waxman’s bill.

The NMA also lobbied against a bill meant to reform Superfund liability laws, ostensibly an effort to curb frivolous lawsuits. Unlike many industry trade groups, which typically support tort reform for their given industries, the NMA simply stated in its lobbying report that S. 1105, the Superfund Litigation Reduction and Brownfield Cleanup Act of 1999, “does not represent mining industry’s need for comprehensive liability and natural resource damage reform and remedy reform.” Introduced by Senator Max Baucus, D-Mont., the bill died before the Senate Environment & Public Works Committee.

The trade group, of course, is not the only coal-related interest to get what it wants. Peabody Energy, AEI Resources and a host of other firms whose business is derived primarily from coal routinely fight in Washington not only for their industry’s economic survival and prosperity, but also to keep those same Washington entities out of their business. While tax breaks, economic incentives and government appropriations – often larded with various contracts for these same firms – are popular issues among coal lobbyists, none is more so than the role of the EPA, Interior Department, Energy Department and other agencies in regulating coal production and distribution.

Like many other energy producers, coal companies must deal with a sort of cross-regulation not experienced by, say, telecommunications companies, who typically only deal with the Federal Communications Commission, unless they run afoul of the law (in which case they, like other publicly traded companies, must face the wrath of the Justice Department and Securities and Exchange Commission.) Coal companies, by contrast, must negotiate their way through vast bureaucracies on the local, state, and federal levels, and must even deal with the federal bureaus of land management and Indian affairs if attempting to establish operations near an Indian reservation.

Among its most recent targets are the New Source Review regulations, established as part of the 1977 amendments to the Clean Air Act, and meant to improve air quality. In a June 2002 statement, and acting upon the recommendations of the National Energy Policy Development Task Force, chaired by Vice President Cheney, the EPA noted that “the NSR program has impeded or resulted in the cancellation of projects that would maintain or improve reliability, efficiency or safety of existing power plants and refineries. There is overwhelming support for reform from a diverse group of people and organizations.” That support extends to private sector interests; Linda G. Stuntz, deputy energy secretary in former President George H.W. Bush’s administration now runs her own law and lobbying practice, Stuntz Davis & Staffier. In 2001, PacifiCorp paid her roughly $80,000 to guide modifications to NSR rules, in addition to an economic stimulus package and multi-pollutant control legislation. Stuntz has also served on the board of the Columbus, Ohio-based utility American Electric Power since 1993.

“I know this is a complicated and politically charged issue, but I don’t see how any policy that relies on uncertainty and litigation can really be good,” Stuntz told the Center. “There is a better way.”

All this red tape, predictably, is something about which the industry is not terribly fond. Perhaps the most popular single issue for companies since 1996 is the environmental aspect of electric utility restructuring legislation, effectively deregulating various entities, but at a fairly steep environmental compliance cost (stricter adherence to the Clean Air and Clean Water Acts, for instance, or seeking to modify the New Source Review regulations).

While the economic health of the coal industry is certain to be a topic of debate as newer technologies continue to encroach upon its once certain domain as the nation’s premier energy source, the legislative battles being waged to maintain that prominence have not gone completely undetected. Some members of Congress are aware of the closeness between lawmakers, their aides, and the industries they are charged with overseeing. With an administration that has put forward the industry’s position at every turn, oversight has suffered. On the House floor April 23, 2002, Representative Frank Pallone (D-N.J.) summed up the perception of energy industry influence in a concise, if partisan, manner.

“A lot of this breakdown or effort to downgrade and change in a very dangerous way the clean air act is linked to energy policies of the utilities in the energy industry. And, of course, we know that the President is very close to the oil industry,” Pallone told his colleagues. “In fact, the top administration EPA official in charge of enforcing air pollution regulation for coal power plants, and coal power plants are a major source of air pollution, he [EPA Office of Regulatory Enforcement chief Eric V. Schaeffer] was so tired of fighting the White House that he decided to resign I guess just a few weeks ago or about a month ago. And in his letter of resignation he said he was tired of ‘fighting a White House that seems determined to weaken the rules we are trying to enforce.’”