But just as quickly the lawyers at Justice–and their colleagues at the Environmental Protection Agency–got blindsided. A few days later the White House unveiled its National Energy Policy, a call for expanded drilling for oil and gas and new power-plant construction. Tucked away in the fine print was a blunt directive to Ashcroft to review “existing enforcement actions” under the Clean Air Act. White House aides said a study was needed to determine if Justice, under President Clinton, had “radically reinterpreted” the law. The government’s lawyers were furious. “We were astounded,” said one who insists “that ongoing law-enforcement activity was supposed to be out of bounds from politics.”
How did the directive make it into the president’s energy plan? White House aides have refused to discuss how many of the key conclusions were reached. But administration officials acknowledge an unusually fierce industry lobbying campaign, one backed with political muscle. A parade of industry groups–including the CEOs of major electric utilities–complained about the lawsuits with members of the White House energy task force, including Vice President Dick Cheney. One of those executives was Pete Burg, the CEO of Akron-based First Energy, which pumped more than $449,000 in soft money into GOP coffers last year. The firm is among those being sued by Justice. Another company targeted by Justice, Southern Co., hired former Republican National Committee chairman Haley Barbour, who, sources say, pressed the firm’s case with senior Bush aides. Barbour, who last week served as vice chairman of a black-tie RNC fund-raiser that raked in more than $23 million for the party, said: “It’s fair to say this is an issue in which I’m involved.”
The industry also had some clever Washington lawyering on its side. In early May a report from the National Coal Council, a federal advisory board within the Energy Department, concluded that the Justice-EPA lawsuits had a “direct and chilling effect” on the utility industry’s coal-fired power plants. A few days later, officials say, Energy Secretary Spencer Abraham invoked the coal council’s conclusions as a basis for taking a fresh look at the lawsuits. But it was hardly an unbiased study. Government documents reviewed by NEWSWEEK show that a principal author of the council report was William Brownell, a Washington utility lawyer who also defends two of the companies being sued by Justice, including FirstEnergy. Brownell told NEWSWEEK he “volunteered” to draft the sections on the impact of federal regulations. He also insisted there was nothing improper about it. “My views are well known,” he said.
At the heart of the dispute is what Brownell calls “probably the biggest environmental-regulation issue out there.” Under federal rules, any company that makes major modifications to its power plants must submit its plans to the EPA for a “New Source Review.” That means the agency gets to decide if the companies are putting in new scrubbers and other antipollution equipment. But under the law, “routine” plant maintenance is exempt. Starting in 1999, the EPA concluded that many utilities and oil refineries were circumventing the regulations by redefining major overhauls as routine. It began suing Midwestern and Southern utilities for threatening “the public health.”
Industry officials argue the rules are too onerous. “If you can’t replace a component that breaks without going through a two-year process, then it’s very difficult to operate,” said Brownell. Ralph DiNicola, spokesman for FirstEnergy, whose Sammis power plant outside Steubenville, Ohio, is the target of one Justice lawsuit, says his company has spent nearly $500 million to control sulfur-dioxide emissions–and that further costs could lead to “blackouts.”
Environmental lawyers dismiss such concerns. They note that one major utility, Tampa Electric, has already settled its lawsuit–and agreed to pay a $3.5 million fine to the government. Two others, Cinergy and Virginia Electric, agreed to tentative settlements. The lawyers fear that as a result of the administration’s broad review, some settlements already agreed upon–as well as several others in the works–are in doubt. Sources tell NEWSWEEK that the day after the Bush energy plan was released, lawyers for one utility abruptly canceled plans for talks with Justice. Said one dispirited government lawyer: “What incentive do any of these companies have to talk to us now?”
