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Sacrificing Public Health For Electric Utilities Industry Dollars
"Bush Appointees Gut Air Quality Rule and Give Congress
False Information About the Consequences"
Public Citizen
October 10, 2003

The Bush administration has gone to great lengths, even so far as giving false information to Congress, to gut a clean air regulation opposed by electric utilities - an industry that funneled $4.8 million into Bush's 2000 campaign, according to a Public Citizen Report released today.

Documents and discussions with former U.S. Environmental Protection Agency (EPA) officials reveal that Bush appointees made untrue statements to two Senate committees when asked if a weakened New Source Review (NSR) rule was expected to jeopardize lawsuits against electric utilities accused of modifying coal-fired plants in violation of NSR. Contrary to what senators were told, EPA staffers had concluded that the new rule would undercut enforcement cases that had the potential to reduce air pollution from U.S. electric utilities by 50 percent annually.

The states and companies facing these enforcement actions include: Alabama: Southern Co. (also has TVA plants); Florida: Tampa Electric Co. (Tampa); Georgia: Southern Co. (Atlanta); Indiana: Vectren/Southern Indiana (Evansville); Illinois: Dynegy (Houston) and Illinois Power (Decatur); Kentucky: TVA; New Jersey: PSEG (Newark); North Carolina: Duke Energy Corp. (Charlotte); Ohio: American Electric Power (Columbus), Cinergy (Cincinnati) and First Energy (Akron); South Carolina: Duke Power; Tennessee: TVA (Knoxville); Virginia: Dominion Virginia Power (Richmond); West Virginia: American Electric Power; and Wisconsin: Wisconsin Electric (Milwaukee).

"This is an example of big campaign donors getting huge paybacks," said Joan Claybrook, president of Public Citizen. "These electric utilities were rewarded with positions on the Department of Energy's transition team, with free access to Vice President Cheney's secret energy task force. Now, a crucial air quality rule has been watered down as Cheney's task force recommended."

As early as May 1999, the electric utility industry's trade association had urged members to make bundled donations to the Bush fundraising machine. That arm-twisting bore fruit in August 2003, when the EPA issued a new NSR rule that could shield electric utilities from billions of dollars in fines and compliance costs at their coal-fired plants.

Public Citizen's report, EPA's Smoke Screen: How Deception of Congress, Campaign Contributions and Political Connections Gutted a Key Clean Air Rule, available at www.WhiteHouseForSale.org, has found that:

In sworn testimony, Jeffrey Holmstead, assistant administrator for the EPA's Office of Air and Radiation, told two Senate committees that the EPA enforcement office had concluded that lawsuits against nine utilities for violating the Clean Air Act would not be undercut by changes to the NSR rule. In fact, two former senior EPA officials say, the consensus in the enforcement office was the opposite.

The new NSR rule impairs the ability of the government to obtain favorable settlements or judgments against companies that have violated the rules in the past. Already, the new rule has been cited by electric utilities defending themselves in lawsuits in Ohio and Indiana. And Acting EPA Administrator Marianne Horinko has said the government is unlikely to bring new compliance suits based on violations of the previous NSR rule.

In the 2000 campaign, executives, employees and PACs of the electric utility industry - virtually all of which is affected by NSR - gave $4.8 million to the Bush campaign, the Republican National Committee (RNC) and the inaugural committee. That total included $1.85 million from the four electric utilities facing the largest NSR lawsuits and the leading industry trade association. Another five utilities also facing NSR lawsuits gave an additional $424,700.

In 2001, Cheney's energy task force consulted with at least three large utilities facing NSR lawsuits and with lobbyists representing all nine companies facing NSR litigation. Documents reveal that the task force met with representatives of Southern Co. at least seven times and with the industry's trade association, the Edison Electric Institute (EEI), at least 14 times. In May 2001, the task force called for re-evaluations of NSR by the U.S. Department of Justice (DOJ) and the EPA.

The list of Bush campaign "Pioneers" - a designation given to fundraisers in the 2000 campaign who bundled $100,000 in contributions - included FirstEnergy President Anthony Alexander; Thomas Kuhn, president of EEI; and super-lobbyist and former RNC Chairman Haley Barbour, who represented Southern Co. and one of the groups set up by the companies to lobby and funnel campaign money, the Electric Reliability Coordinating Council (ERCC).

Bush's Energy Department transition team included Kuhn from EEI and officials from three companies facing NSR litigation: Alexander, president of FirstEnergy, Stephen Wakefield, a vice president for  Southern Co., and Thomas Farrell, a vice president of Dominion.

Numerous Bush EPA and DOJ appointees responsible for NSR policy and enforcement have industry backgrounds. Additionally, weeks after the new NSR rule was finalized, two EPA officials left for jobs working for or lobbying on behalf of electric utilities.

"The Bush administration's approach to environmental violations is to change the laws - in exchange for millions in contributions from the violators," said Frank Clemente, director of Public Citizen's Congress Watch. "This administration's willingness to sacrifice public health by exchanging environmental policy revisions for cash is so extreme that they are now changing the enforcement of those rules retroactively."

For a chart of "New Source Review" enforcement actions jeopardized by the new EPA rule, click here.

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