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THE NATION | SUNDAY REPORT

Bush's Energy Plan Bares Industry Clout

Cheney-led task force consulted extensively with corporate executives. Its findings boosted their interests. Environmental groups had little voice.

August 26, 2001|JUDY PASTERNAK | TIMES STAFF WRITER

In 1996, the Dallas Morning News reported that she represented clients with interests in pending Texas state deregulation of telecommunications and utilities markets, while her husband served as then-Gov. Bush's chief of staff. At the time, Bush said he was troubled "if it creates a public perception that something unfair is taking place."

At the time, she wrote the governor's counsel that she was withdrawing from her contracts. And Bush instituted a policy that division heads and senior aides could not be married to registered lobbyists, according to Texas newspapers.

FOR THE RECORD
Los Angeles Times Friday September 7, 2001 Home Edition Part A Part A Page 2 A2 Desk 3 inches; 99 words Type of Material: Correction
Energy policy: In an Aug. 26 story about industry influence on the White House energy plan, the first reference to a March 1 meeting attended by Peabody Energy executives wrongly stated that Vice President Dick Cheney was present. The second reference to the meeting accurately identified administration representatives as Cheney's energy director, the secretary of Energy and the national economic advisor. In addition, the story erroneously reported that Peabody's chief executive officer made a personal contribution of $100,000 to the presidential inaugural committee. The $100,000 was a corporate donation from Peabody. The source of the money was incorrectly listed in contribution records.

As president, Bush has no special guidelines beyond those of the Office of Government Ethics, said White House spokeswoman Claire Buchan. These regulations appear less stringent, prohibiting participation only if a particular matter applying to a specific company is addressed.

TXU Chief Executive Erle Nye--a client then and now--said Diane Allbaugh has been a consultant on deregulation issues. She registered as a lobbyist, he said, just in case she happened to talk about a pertinent issue to a politician. "To my knowledge, we would not have let her lobby," he explained, "because she is the wife of Joe."

Natural Gas

Natural gas was connected in high places too.

When the Energy Department drafted a chapter for the report about how to increase domestic energy production, the text mentioned the importance of hydraulic fracturing, a method of accelerating production of natural gas wells. It so happens that Halliburton is a major provider of the service.

Chemicals and sand are injected under high pressure into gas-bearing geological formations, causing underground cracks. The gas rises into the cracks and moves closer to the well, making recovery easier.

The process has its foes. Neighbors of natural gas wells in Alabama complained of oily goop and sulfur smells streaming out of faucets just after a company conducted fracturing. An Alabama federal appeals court ordered the state to regulate the process--and EPA to step in if needed. Natural gas drillers, and hydraulic fracturing purveyors, expect similar lawsuits to be filed in the Rocky Mountain states, according to material submitted to the task force by the Domestic Petroleum Council.

The EPA is studying whether hydraulic fracturing is linked to water well contamination but doesn't expect to finish its preliminary inquiry until at least February. The agency will decide then if further research is warranted, officials said.

Halliburton complained in federal court, during Cheney's last year at the company, that new federal restrictions on the process would "have a significant adverse effect" on its business.

The Energy Department chapter mentioned the environmental controversy as well as the potential of hydraulic fracturing. With the Energy Department chapter in hand, a Cheney assistant informed an EPA official in late March that hydraulic fracturing would go on the April 3 agenda for the Cabinet-level gathering. The agency was advised to prepare a recommendation.

EPA officials balked at suggesting any actions for the task force before the study was completed. The subject disappeared from the agenda by the day of the meeting.

But it didn't disappear from the final report. The document emphasized the technique's importance as "one of the fastest-growing sources of gas production" and noted that "each year nearly 25,000 oil and gas wells are hydraulically fractured." The information about potential water well contamination, the appeals court decision and the possibility of EPA controls had all been dropped.

A few paragraphs after the hydraulic fracturing discussion comes the task force recommendation that the nation "promote enhanced oil and gas recovery from existing wells through new technology."

Halliburton spokeswoman Wendy Hall said company executives did not discuss the energy report with Cheney. "Of course, we talk to him; you don't work with someone for that long and then not talk to him. But not about the plan, and not about hydraulic fracturing."

Coal

Perhaps the biggest winner in the task force report was coal.

Though coal produces more than half of the country's electricity, natural gas dominates the next generation of power plants. The reason: clean air rules. Burning coal produces a significant amount of carbon dioxide, which has been linked to global warming, and other elements tied to acid rain and smog.

Under President Clinton, " 'coal' was a dirty word," said John Feddock, an industry analyst based in Bluefield, Va.

Not so under Bush, whose U-turn on carbon dioxide was the coal industry's biggest victory in Washington in years.

"If rising electricity demand is to be met, then coal must play a significant part," the task force report stated. The plan recommended spending $2 billion in federal money for research into making coal-fired electricity cleaner. And the task force recommended directing federal agencies "to provide greater regulatory certainty relating to coal electricity generation."

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