Rudy's Dirty Money | The Nation


Rudy's Dirty Money

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In March 2001, as Dick Cheney assembled his secret energy task force, Haley Barbour, one of the most powerful Republican lobbyists in Washington and a former chair of the Republican National Committee, fired off a memo to the Vice President. "A moment of truth is arriving," Barbour wrote, "in the form of a decision whether this Administration's policy will be to regulate and/or tax CO2 as a pollutant." Barbour pointedly asked, "Do environmental initiatives, which would greatly exacerbate the energy problems, trump good energy policy, which the country has lacked for eight years?"

Research support was provided by the Puffin Foundation Investigative Fund of The Nation Institute.

About the Author

Ari Berman
Ari Berman
Ari Bermanm is a contributing writer for The Nation magazine and an Investigative Journalism Fellow at The Nation...

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The memo bore the imprimatur of Barbour's lobbying firm, but the real work was being done by Bracewell & Patterson, a midsize Texas law firm with a client list as long as the plume from a smokestack. Bracewell would go on to become one of the key lobbying outfits on energy policy in the Bush II era. Its clients have included massive coal-burning power plants like the Atlanta-based Southern Company; more than 450 oil companies represented by the National Petrochemical and Refiners Association; and Texas heavy hitters like Enron, ChevronTexaco and Valero Energy. All these interests had a major stake in persuading George W. Bush to abandon his campaign pledge to regulate carbon dioxide, the leading source of greenhouse-gas emissions. Two weeks after receiving Barbour's memo, Bush reversed his position and decided against naming CO2 as a pollutant, leading to more than six years of inaction in combating global warming.

It was the first of many victories for Bracewell & Patterson. In the coming years the firm would persuade the Administration to exempt coal-burning power plants from new pollution controls, forestall plans to reduce mercury emissions and shield the makers of MTBE, a toxic gasoline additive that contaminates drinking water, from costly lawsuits.

In March 2005 Bracewell got its biggest boost yet. At a press conference at the Waldorf-Astoria in New York City, the firm unveiled a new partner: former New York Mayor Rudolph Giuliani. It also unveiled a new name: Bracewell & Giuliani. It was a huge coup for the firm. "He's going to help expand Bracewell's reputation nationally and internationally," Bracewell lobbyist Scott Segal said at the time.

It was also a shrewd move for "America's mayor." Giuliani had already enjoyed a string of business successes following his term as mayor. He had launched the consulting firm Giuliani Partners shortly after 9/11, and he'd partnered with Ernst & Young to launch an investment bank, Giuliani Capital Advisors, which was sold in March to an Australian company for an undisclosed sum. Giuliani jet-setted around the globe in a Gulfstream, giving speeches at $100,000 a pop. His 2002 book Leadership sold more than a million copies.

A law firm would solidify Rudy's financial empire--but not just any firm would do. Partner Giuliani wanted to become President Giuliani. He needed money and, more important, political connections. Bracewell offered a gateway into the lavish world of Texas Republican fundraising and easy access to the same titans of industry who had helped make the Bush family rich and propelled W. into the White House. The former mayor of one of the bluest cities in the country had just inked a whole lot of red.

Strike Force for Industry

The arrival of the second Bush Administration and the ascent of Bracewell went hand in hand. After persuading the Administration to abandon its CO2 pledge, Bracewell launched a full-court press on behalf of another industry priority: relaxing restrictions on coal-fired power plants. In 1999 the Clinton Administration had sued nine companies for failing to add new pollution controls when updating or expanding more than fifty of their plants. The companies wanted the EPA rule, known as "new source review," changed and the lawsuits dismissed. Enlisted in the cause were key GOP lobbyists, including Barbour; C. Boyden Gray, White House counsel for Bush Sr.; and Marc Racicot, former governor of Montana, a Bracewell partner who was a top lobbyist for Enron and head of the Republican National Committee.

In May 2001, two weeks before the Administration unveiled its energy plan, Barbour and Racicot met with Cheney and urged him to abandon the Clinton-era rules. Over the intense objections of career EPA attorneys, the Administration decided to torpedo the Clinton lawsuits and granted the power plants the huge loopholes they sought. Senior EPA officials resigned in protest, and fourteen states sued to block the rules changes. Eliot Spitzer, New York Attorney General at the time, accused the Administration of "gutting" the Clean Air Act and "putting the financial interests of the oil, gas and coal companies above the public's right to breathe clean air."

Days after the changes were announced, Ed Krenik, the EPA's chief liaison to Capitol Hill, took a job in Bracewell's Washington office. It was the beginning of an EPA exodus--especially to Bracewell. The EPA's acting general counsel, Lisa Jaeger, joined Bracewell in March 2004, and the agency's top political appointee for clean air, Jeffrey Holmstead, was hired last October. These hires solidified Bracewell's reputation as a "strike force for industry," says Frank O'Donnell, president of Clean Air Watch.

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