Republican Energy Bill Gives Away Billions to Bush Investors

By Thomas B. Edsall
First published in The Washington Post, November 22, 2003

More than three dozen of President Bush’s major fundraisers are affiliated with companies that stand to benefit from the passage of two central pieces of the administration’s legislative agenda: the energy and Medicare bills.

The energy bill provides billions of dollars in benefits to companies run by at least 22 executives and their spouses who have qualified as either “Pioneers” or “Rangers,” as well as to the clients of at least 15 lobbyists and their spouses who have achieved similar status as fundraisers. At least 24 Rangers and Pioneers could benefit from the Medicare bill as executives of companies or lobbyists working for them, including eight who have clients affected by both bills.

By its latest count, Bush’s reelection campaign has designated more than 300 supporters as Pioneers or Rangers. The Pioneers were created by the Bush campaign in 2000 to reward supporters who brought in at least $100,000 in contributions. For his reelection campaign, Bush has set a goal of raising as much as $200 million, almost twice what he raised three years ago, and established the designation of Ranger for those who raise at least $200,000.

With the size of donations limited as a result of the campaign finance law enacted last year, fundraisers who can collect $100,000 or more in contributions of $2,000 or less have become key players this election cycle. The law barred the political parties from collecting large — sometimes reaching $5 million to $10 million — “soft money” contributions from businesses, unions, trade associations and individuals. This has put a premium on those who can solicit dozens, and sometimes hundreds, of smaller contributions from employees, clients and associates.

The energy and Medicare bills were drafted with the cooperation of representatives from dozens of industries. Power and energy company officials; railroad CEOs; pharmaceutical, hospital association and insurance company executives; and the lobbyists who represent them are among those who have supported the bills and whose companies would benefit from their passage.

The Medicare bill was scheduled to be acted upon by the House late last night. If passed, it will go to the Senate. The first comprehensive revision of energy policy in more than a decade passed the House this week, but in the Senate, the measure ran into a roadblock yesterday when opponents stopped it from coming to a vote. Sponsors promised to make further efforts to get the 60 votes to break the filibuster.

The energy bill provides industry tax breaks worth $23.5 billion over 10 years aimed at increasing domestic oil and gas production, and $5.4 billion in subsidies and loan guarantees. The bill also grants legal protections to gas producers using the additive methyl tertiary-butyl ether (MTBE), whose manufacturers face a wave of lawsuits, and it repeals the Public Utility Holding Company Act (PUHCA), a mainstay of consumer protection that limits mergers of utilities.

The bill has been the focus of a bitter ideological and partisan fight for three years. A leading sponsor, Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House Energy and Commerce Committee, praised the legislation, saying, “All Americans can look forward to cleaner and more affordable energy, reliable electricity and reduced dependence on foreign oil for generations to come.”

Public Citizen, which has tracked the legislation and correlated patterns of contributions to members of Congress and to Bush, denounced the bill as “a national energy policy developed in secret by corporate executives and a few members of Congress who are showered in special interest money.”

Perhaps the single biggest winner in the energy bill, according to lobbyists and critics, is the Southern Co. One of the nation’s largest electricity producers, it serves 120,000 square miles through subsidiaries Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric, along with a natural gas and nuclear plant subsidiary.

The repeal of PUHCA, for example, would create new opportunities to buy or sell facilities; “participation” rules determining how utilities share the costs of new transmission lines that are particularly favorable to Southern; two changes in depreciation schedules for gas pipelines and electricity transmission lines with a 10-year revenue loss to the Treasury of $2.8 billion; and changes in the tax consequences of decommissioning nuclear plants, at a 10-year revenue loss of $1.5 billion, according to the Joint Committee on Taxation.

At least five Bush Pioneers serve as a Southern Co. executive or as its lobbyists: Southern Executive Vice President Dwight H. Evans; Roger Windham Wallace of the lobbying firm Public Strategies; Rob Leebern of the firm Troutman Sanders; Lanny Griffith of the firm Barbour Griffith and Rogers; and Ray Cole, of the firm Van Scoyoc Associates.

The railroad industry also has a vital interest in the energy bill. For years, it has been fighting for the elimination of a 4.3 cent-a-gallon tax on diesel fuel, and, at a cost to the Treasury of $1.7 billion over 10 years, the measure repeals the tax. Richard Davidson, chairman and CEO of Union Pacific, is a Ranger, and Matthew K. Rose, CEO of Burlington Northern, is a Pioneer.

Among the major lobbying firms in Washington, Akin Gump Strauss Hauer & Feldhas been one of the most successful collecting fees for work on the energy and Medicare bills. In the first six months of this year, Akin Gump, which has two partners who are Pioneers — Bill Paxon and James C. Langdon Jr. — received $1.6 million in fees from medical and energy interests.

Barbour Griffith & Rogers received $1.1 million from similar clients.

On energy issues, Akin Gump represented Amerada Hess Corp., Waste Management Inc. and FirstEnergy Corp., Pacific Gas and Electric Co., BP Exploration and Phillips Petroleum Co. Two of those corporations have, in turn, executives who are major Bush fundraisers, Pioneer A. Maurice Myers, CEO of Waste Management; and Anthony J. Alexander, president of FirstEnergy, a Pioneer in 2000 and again in the current campaign.

On Medicare issues, Aikin Gump represents the Pharmaceutical Research & Manufacturers of America, Johnson & Johnson, Abbott Laboratories and Pfizer Inc.. All would benefit from the expanded markets resulting from a key provision of the bill — the first federal subsidies to help Medicare patients pay for prescriptions.

Hank McKinnell, chairman and CEO of Pfizer, has pledged to raise at least $200,000 for Bush’s reelection, although he is not yet listed as a Pioneer or Ranger. Pioneer Munr Kazmir, who runs a direct-mail drug company called Direct Meds Inc., estimates that he has about 100,000 customers on Medicare who will have more money to buy drugs from his company. “We know the patients, we know how important this bill is,” he said.

In addition to the prescription drugs provision, the Medicare bill is intended to encourage recipients to join preferred-provider organizations (PPOs) and other kinds of private health care, instead of receiving care through the traditional fee-for-service system in which they pick their doctors and generally get whatever care they request. The health industry has provided substantial support to the Bush campaign, and a number of officials whose companies and associations actively support the Medicare bill are Pioneers and Rangers .

Pioneer Charles N. Kahn, president of the Federation of American Hospitals, said that the Medicare bill will make “important strides in ensuring that all hospitals have sufficient funding to meet the medical needs of this nation’s seniors.” A federation spokesman noted that the bill provides more money for rural hospitals and for hospitals serving disproportionate numbers of the uninsured, and that it prevents doctors from setting up new competing specialty, or “boutique,” hospitals.

M. Keith Weikel, chief operating officer at HCR Manor Care, a chain of more than 500 nursing homes and other facilities serving the elderly, is another Pioneer. Weikel and Manor Care did not respond to requests for comment on the Medicare bill, but the major nursing home trade group, the American Health Care Association, strongly endorsed the bill, which, among other things, would continue to bar Medicare from capping the amount it covers for various therapies offered by health care providers such as nursing homes.

Staff writer Peter Behr and researcher Lucy Shackelford contributed to this story.

© 2003 Washington Post