Chair of FERC


audacity inside the Bush administration never ceases to amaze. The
latest example from Bush and Company is the announcement that Joseph
Kelliher, a former policy adviser with the Department of Energy
who currently serves as a commissioner on the Federal Energy Regulatory
Commission (FERC)—the agency that controls the country’s
natural gas industry, hydroelectric projects, electric utilities,
and oil pipelines and has played a critical role in the deregulation
of those industries—is to chair FERC. 

Bush had previously picked Rebecca Klein, the former Republican
head of the Texas Public Utilities Commission and a close friend
of the president, to chair FERC, but red flags were raised during
a routine FBI background check on Klein, which forced the president
to choose a new chair at the last minute. 

of Kelliher’s July appointment came as a welcome news to many
industry lobbyists and energy executives who viewed him as a staunch
supporter of deregulation and an advocate for eliminating regulatory
restrictions, despite the fact that rules are in place to protect
consumers from the energy price gouging and market manipulation
that took place prior to the Enron scandal four years ago and, to
some extent, is still somewhat routine in various parts of the country. 

most troubling about Kelliher’s appointment to head FERC, a
role in which his main priority will be to protect consumers from
the manipulative tactics of the very industry he enjoys a cozy relationship
with, is his part in the relentless lobbying for the energy industry
in early 2001. As a member of Vice President Dick Chen- ey’s
energy task force, he helped write President Bush’s National
Energy Policy to financially benefit energy corporations at the
expense of consumers. 

extent to which Kelliher went to solicit key players in the energy
industry to help write the National Energy Policy became apparent
in 2003 when Judicial Watch, a bipartisan watchdog group that sued
Vice President Dick Cheney for access to his list of industry insiders
who participated in secret meetings with Cheney’s energy task
force, won a legal battle that forced the White House to release
several hundred pages of task force related documents. One such
document, a March 10, 2001 email to energy lobbyist Dana Contratto,
was damning in that Kelliher asked Contratto if he was “King,”
what he would include in a national energy policy, especially with
respect to natural gas issues. Contratto responded with three pages
of ideas, many of which were included in the final version of the
energy policy. 

inappropriate relationship and communications with corporate lobbyists
not only tainted the administration’s National Energy Policy,
but raise questions about the ability of Mr. Kelliher to be an impartial
voice at FERC,” Public Citizen Director Joan Claybrook said
in a February 11, 2003 letter sent to the Senate Committee on Energy
and Natural Resources, in response to Bush’s announcement that
Kelliher would fill one of the vacant seats on the FERC commision. 

is weathering a storm of criticism for its deficient handling of
the west coast energy crisis, the Commission’s failure to maintain
any effective enforcement of dozens of corrupt energy corporations,
the deteriorating relations between FERC and nearly half of the
state utility regulators who continue to be mistrustful of the Commission’s
jurisdictional intentions and the Commission’s poor track record
protecting consumers,” Claybrook said. 

another occasion, Kelliher sought out Stephen Craig Sayle, an Enron
lobbyist, to make similar recommendations. Sayle, former counsel
for the House Commerce Committee, sent Kelliher Enron’s “dream
list,” including a recommendation that the Administration commit
to market-based emissions trading, which was also used in its National
Energy Policy. 

wrote Kelliher that, “A multi-pollutant regulatory strategy
should be estimated for the power generation sector including: 

  • Gradually phased
    in [mercury, nitrogen oxide, and sulfur dioxide emissions] reductions 

  • Reform/replacement
    of NSR 

  • Use of market-based/emission
    trading programs 

  • Inclusion of
    both existing and new plants and equal treatment for both  

last bullet is the critical one to ensure that: (a) we encourage
the new generation that is required; (b) we ensure that the new
technologies developed through DOE programs can come into the market.” 

also provided Kelliher with a PowerPoint presentation on behalf
of his other energy clients in the so-called Clean Power Group —a
consortium of a handful of the country’s biggest energy companies,
including NiSource Inc., Calpine Corp., Trigen Energy Corp., and
El Paso Corp—whose mission, according to the group’s website,
is to “streamline requirements under the Clean Air Act for
electric generating facilities while at the same time making major
reductions in air emissions.” 

PowerPoint presentation, “A Comprehensive Multi-Pollutant Emission
Control Strategy for Power Generation,” summarized the Clean
Power Group’s support of a “cap and trade” method
in addressing emissions of mercury, nitrogen oxide, and sulfur dioxide
from power plants, and included a proposal for a voluntary cap on
carbon dioxide. The Clean Power Group stood to benefit from the
initiative it urged Kelliher to get the White House to adopt in
that the companies could release more emissions under its proposed
plan than under the more restrictive rules the Clinton administration
had put in place. 

receiving Sayle’s email and supporting material, Kelliher recommended
that President Bush “direct the Administrator of the Environmental
Protection Agency (EPA) to propose multi-pollutant legislation that
would establish a flexible, market-based program to significantly
reduce and cap emissions; provide regulatory certainty to allow
utilities to make modifications to their plants without fear of
new litigation; provide market based incentives, such as emissions-trading
credits to help achieve the required reductions.”All of which
the president approved and which was eventually incorporated into
the National Energy Policy. 

fact, President Bush’s “Clear Skies” initiative consists
of many of the points laid out months earlier in Sayle’s email
to Kelliher. In addition to Kelliher’s correspondence with
Sayle, he also met with oil and gas industry lobbyists who helped
write executive orders that Kelliher passed on directly to the White
House. Two months later, the president issued executive orders nearly
identical to those Kelliher received from the lobbyists months earlier.

Jason Leopold
 is a freelance journalist and author of the memoir,


, due in 2006.