Sludge Funds

By Frank O'Donnell, AlterNet
June 10, 2004

In mid-May, the propaganda machine at the Bush administration's 
Environmental Protection Agency was like a diesel engine in 
overdrive, breaking with its nonpartisan past to help re-elect the 
president. After cutting deals with oil and diesel engine companies 
on new standards for diesel heavy equipment, the EPA was proclaiming, 
hyperbolically, that President Bush was taking bold steps that would 
usher in a veritable Age of Aquarius for clean air.

While spin-doctors were plying their craft, White House political 
surgeons were quietly carving up an EPA plan to clean up lethal 
emissions of electric power plants. By the time they were through, 
the plan resembled the hapless Trojans slashed apart by Brad Pitt's 

Progressive staffers at the EPA had been promoting a plan to create 
incentives for power companies to use energy more efficiently - an 
idea that could reduce not only greenhouse gas emissions, but harmful 
pollutants as well. Behind closed doors, however, the White House 
axed the idea. What emerged was a plan that favored the oldest and 
dirtiest coal-fired electric plants.

Though the matter dealt with a seemingly esoteric and technical 
issue, the stakes were enormous. The White House gambit not only 
constituted a huge financial windfall for some of the biggest Bush 
campaign contributors, it also rewarded companies in a number of 
battleground states important in the November election, including 
Ohio, Michigan, West Virginia, Pennsylvania and Iowa.

This sorry episode is just the latest in a series of heavy-handed 
White House moves to tamper with EPA activities in order to help 
politically wired supporters from the coal fields.

The President had barely taken his oath of office when the pro-coal 
promotional effort began. In early 2001, President Bush cut the legs 
out from under then-EPA Administrator Christine Todd Whitman and 
disavowed the Kyoto Climate Accord.

Whitman was still reeling from that blow when Vice President Cheney's 
energy plan - carved out in secret with the help of coal and power 
industry lobbyists - ordered the EPA to rethink its enforcement 
strategy for dealing with existing coal-burning power plants. Despite 
Whitman's warning that Bush might pay a "terrible political price" 
for such a blatant sellout, the result was a slowdown in enforcing 
the Clean Air Act and new industry-friendly rules that would permit 
the dirtiest coal plants to continue polluting.

More recently (after Whitman fled the agency, declaring, like 
departing CIA Director George Tenet, that she needed to "spend more 
time with my family"), the White House ordered the EPA to pretend 
that poisonous mercury is not a toxic pollutant - even while the Food 
and Drug Administration was warning pregnant women of the risks 
associated with eating mercury-contaminated fish. A proposed EPA rule 
was politically doctored by the White House to include language 
supplied by lawyers from coal-fired power companies.

These ham-fisted White House maneuvers all have one thing in common: 
they all distort administration policies to favor big coal and 
coal-burning electric companies - the source of millions of dollars 
in campaign contributions to the Republican Party and to the 
Bush-Cheney re-election effort in particular.

This most recent gambit involves a Bush administration proposal to 
reduce smog- and soot-forming emissions from power plants during the 
next two decades. As the Commission for Environmental Cooperation (a 
quasi-independent watchdog group set up under NAFTA) recently noted, 
power plants are the biggest source of toxic air contaminants in 
America. Those emissions - chiefly from coal-burning plants - have 
been linked to tens of thousands of premature deaths every year.

The Bush plan is a dud in many respects. It sets weak targets and 
would permit the biggest polluters to continue spewing poisons well 
into the next two decades. It would also illegally attempt to 
substitute this weaker approach for a tougher Clean Air Act 
requirement to clean up the haze that ruins the views at national 

Not surprisingly, the plan also favors the biggest polluters in a 
seemingly technical respect, and that was the subject of this latest 
bit of White House interference.

The controversy involved the details of the cleanup strategy, known 
as the "cap-and-trade" approach. Under this method, the government 
sets an overall bulk pollution target, and then dishes out pollution 
"allowances" - essentially the right to pollute up to a certain 
amount - to power companies. If a company pollutes less than its 
"allowance," it can sell the extra pollution - a "credit" - to 
another company, which could then pollute more than its allowance.

This complicated bookkeeping procedure hinges in part on a key 
decision: How does the government decide who gets how many allowances?

In the past, the government has distributed allowances based on how 
much fuel a power company used. It's a system that rewards the 
biggest and dirtiest coal-burning polluters by giving them the right 
to continue polluting at higher levels. Think of it as a parent who 
rewards a delinquent child by giving it a bigger allowance than a 
better-behaved sibling.

In the recent proposal, EPA staffers drafted a plan that would take 
public comment on an alternative idea: a system that would dish out 
the credits based on how much energy is generated. [In the jargon of 
the bureaucracy, this is called the "output-based" approach, as 
opposed to the "input-based" strategy.]

The output-based alternative would encourage energy efficiency by 
rewarding plants with low energy use, including more efficient 
natural gas, oil or coal. This isn't exactly a radical concept: 
Automobile tailpipe pollution standards have been set on a similar 
basis for more than three decades.

This method would promote reductions in greenhouse gas emissions but 
could involve hundreds of millions of dollars in costs for the 
polluters. A spokesman for Ohio-based American Electric Power (AEP) 
conceded to the Wall Street Journal that such an approach could force 
them to actually buy pollution control equipment - a shocking thought.

The idea set off alarms at a White House ever eager to defend 
campaign contributors like AEP board member Dick Brooks, a Bush 
fundraising "Pioneer" - or those who "bundle" contributions of at 
least $100,000. The White House quietly deep-sixed the 
environmentally preferable alternative.

Of course, AEP wasn't the only company to benefit, and Ohio wasn't 
the only presidential battleground state with companies that got a 
break. Others include West Virginia, Michigan, Iowa, Tennessee, North 
Carolina, Pennsylvania, Wisconsin and Missouri.

But the money from coal companies pales in comparison to the cash 
coming in from coal-burning power companies and their lobbyists. The 
electric power industry has contributed more than $30 million in the 
last two election cycles, with about two-thirds of the money going to 

Southern Company, the leading coal-burning polluter in the Southeast, 
has at least half a dozen Pioneers or Rangers ($200,000 contributors) 
among the ranks of its employees and lobbyists, including Executive 
Vice President Dwight Evans. (And, yes, Southern would be a big 
winner under the Bush "input" strategy.)

Are those companies getting their money's worth? Clearly they think 
so. The coal mining industry has contributed more than $5 million in 
the 2002 and 2004 election cycles, with about 90 percent of the money 
going to Republicans. One noteworthy contributor: Bush Pioneer Irl 
Englehardt, CEO of the nation's biggest coal company, Missouri-based 
Peabody Energy. Another is West Virginia coal magnate James "Buck" 
Harless, who played a key role in tipping West Virginia to Bush in 

At least 17 coal-burning power company lobbyists double as Bush 
Pioneers or Rangers, according to recent report by Public Citizen and 
the Environmental Integrity Project. This rapidly expanding list 
recalls the old adage that "money talks." And, as this latest EPA 
episode shows, Bush is listening.

Frank O'Donnell is the Executive Director of Clean Air Trust.

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