The nation’s biggest coal-burning power companies paid a top lobbying firm millions of dollars to fight a wide range of Obama-era environmental rules, documents obtained by POLITICO reveal — shortly before one of the firm’s partners became President Donald Trump’s top air pollution regulator.
Now that ex-partner, Bill Wehrum, is aggressively working to undo many of those same regulations at the EPA, where he is an assistant administrator in charge of issues including climate change, smog and power plants’ mercury pollution.
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Wehrum’s past role as a utility lobbyist is well-known, but the documents reveal never-before-disclosed details of how extensively his old firm, formerly called Hunton & Williams, worked to coordinate the power industry’s strategy against the Obama administration’s regulations. Twenty-five power companies and six industry trade groups agreed to pay the firm a total of $8.2 million in 2017 alone, according to an internal summary prepared in June of that year — less than three months before Trump tapped Wehrum for his EPA post.
POLITICO obtained 26 pages of briefing materials distributed to members of an umbrella group of utilities Wehrum represented while at the firm. Known as the Utility Air Regulatory Group, the secretive organization included some of the largest coal-burning utilities in the country. The materials were marked “CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION” and outlined goals for a meeting of the group’s policy committee.
Topping the list of funders were Duke Energy, Southern Co. and AEP, which together contributed nearly one-third of the money.
Wehrum has said he won’t work on lawsuits former clients are involved in, but nothing in federal ethics rules prevents him from working on regulations that apply to a broad sweep of actors in the industry he once represented. To that extent, it does not appear Wehrum has violated any laws, but it does expose holes in the ethics system.
“The scandal here is what is legal,” said Kathleen Clark, a Washington University in St. Louis law professor and ethics expert. She said the documents show “industry group strategizing about how to change federal policy through the installation of friendly personnel as regulators — and then one of their own who was in the meeting, who was in the room where it happened, ended up being the key regulator.”
Wehrum said Wednesday that he has stayed on the right side of the ethical line.
“From the beginning and from well before I joined EPA I thought it was very important to understand the ethical obligations that would apply to me,” he said in an interview with POLITICO. He added, “The ethical rules do not prevent me from working on regulations of general applicability.”
Wehrum spent 10 years as a partner at the firm, now called Hunton Andrews Kurth. His EPA biography notes that he was also head of the firm’s “Administrative Law Group.”
Wehrum convened his power plant industry clients on June 22 and 23, 2017, at his law firm’s Washington, D.C., offices to lay out a road map for attacking the very policies he now oversees, the documents show. The roster of clients under the umbrella of the Utility Air Regulatory Group include some of the largest, most influential utility companies in the country. Wehrum told POLITICO he does not remember the two-day meeting, but a person familiar with the meeting and another who attended confirmed he was there.
Wehrum is certainly not the only person in Washington or the Trump administration to swing from lobbying to regulating. But the documents lay out an unusually clear picture of how Washington lobbyists steer a legal campaign for clients, keeping litigation churning while earning massive fees for their firms.
“I think the proximity of what he was doing in private sector advocacy then government work is a thing that distinguishes him from a lot of people and makes him vulnerable to criticism and questioning,” said a former government ethics official.
By the time Trump had nominated Wehrum, he’d already made millions for and from Hunton — his financial disclosure listed a $2.1 million partnership share in his last year at the firm. That form also lists the Utility Air Regulatory Group as one of 20 sources of his compensation surpassing $5,000, but only one UARG member — Salt River Project — is named individually.
The documents prepared for the group’s June 2017 policy committee meeting laid out how much money Hunton & Williams was seeking for its work on behalf of the companies. It estimated an $8.8 million budget for 2018.
Once “the new leadership team at EPA is in place, if that team shows that it has the ability to address expeditiously many of the initiatives of greatest importance to UARG members — and if UARG wants to participate meaningfully in such initiatives — then UARG will likely need an overall year-2018 budget that is higher than this year’s budget,” it read.
A month after the meeting, word began to circulate that Wehrum was headed to EPA, and by September, Trump made the nomination official.
It was unclear how far Wehrum was in his negotiations with the administration at the time of the meeting — he told POLITICO he was first approached in “early 2017” about the possibility — but he already had access to high-level EPA officials.
Mandy Gunasekara, then a top EPA air official, attended the UARG meeting at Wehrum’s request.
“We are interested in any Clean Air Act regulatory issue that you are willing and able to address,” Wehrum wrote in an email to Gunasekara, according to separate documents obtained by the Sierra Club under the Freedom of Information Act. “Topics of interest include the Clean Power Plan, the Mercury and Air Toxics Standard, regional transport, regional haze, and NAAQS/NAAQS implementation. We are not asking you to address pending litigation on any of these issues. We are interested in discussing only possible future regulatory action.”
A person who was at the meeting confirmed both Gunasekara and Wehrum were there.
Wehrum told POLITICO that while he continued to work for Hunton for most of 2017, he “billed typically just a few hours a year to UARG.” He said he’s stayed within ethical boundaries because rules don’t prohibit him from working on regulations that apply to a broad suite of players and he has not met with UARG since joining the EPA.
Wehrum has previously said he would recuse himself from litigation matters that he previously participated in, but not policymaking, such as regulation. He represented UARG in court as late as March 2017, when he filed a lawsuit over an Obama administration rule boosting chemical safety and reporting requirements at industrial facilities.
“UARG is an entity. It’s a legal entity,” he said, explaining that his clients were “not the individual members” of UARG.
Wehrum recused himself for two years from decisions related to a Dominion Energy subsidiary, Duke and Salt River Project, but not any of the other UARG member companies, according to a September 2018 recusal statement to acting EPA Administrator Andrew Wheeler.
Wehrum has in the past tried to firewall his work on litigation and policy, suggesting he would recuse himself from matters in which Hunton has represented clients in lawsuits challenging Obama-era policies. But the newly obtained documents show how deeply Hunton was involved in the cradle-to-grave formation of policy through UARG. For example, the June 2017 briefing materials cited “possible participation in rulemaking activity” among the services for which Hunton expected to bill the group’s members.
Since he was confirmed by the Senate in November 2017, Wehrum has undertaken many of the policies UARG identified as top priorities.
For example, the June 2017 UARG document says the group will “coordinate member efforts and strategy regarding EPA review and potential reconsideration of” an Obama-era rule that justified major limits on mercury from power plant smokestacks by counting “co-benefits” from incidental reductions in other types of air pollution.
Then, last December, after Wehrum joined the agency, EPA proposed changing the rule to disregard the co-benefits, aligning itself with the position UARG has taken since at least 2016. (The agency also opened the door to revoking rule entirely — something that would benefit the dirtiest coal plants in the country — although it says it has no immediate plans to do so.)
Another area of focus UARG outlined in June 2017 was “potential administrative actions related to the New Source Review program,” a reference to permits that coal plants have to receive before conducting major upgrades.
Wehrum included major changes to that program as part of EPA’s new carbon rule for power plants. The proposal would waive the New Source Review requirements for coal plants installing efficiency technology because the permitting costs would make the upgrades “no longer viable,” Wehrum told reporters last week. That change could allow coal plants to run more frequently, potentially increasing overall emissions even if the plant is more efficient.
And in a separate move last November, Wehrum revived a New Source Review rule issued in the final days of the George W. Bush administration but halted by the Obama administration. The project “aggregation” rule could help utilities avoid more stringent permitting requirements, and it is also listed as an action item on UARG’s 2017 list.
The Edison Electric Institute, the main trade association for the nation’s investor-owned utilities, foots most of the UARG bill, according to the newly obtained briefing materials. But UARG doesn’t show up in any official documents — it has no tax identification number, no address, no incorporation filings. In lawsuits, UARG generally describes itself as a “not-for-profit” or “ad hoc” group of electricity generators without further describing its membership.
UARG’s structure allows it to avoid a paper trail. Utilities are dues-paying “members” of the organization. Many of those members, though, are also part of EEI. Rather than collect directly from companies, the briefing materials show that Hunton bills EEI directly — thus avoiding involvement of any formal entity known as UARG. EEI’s 990 filings with the IRS, which nonprofits file annually, show a more than $8 million “consulting” tab for Hunton dating back years, making up more than half of the trade organization’s independent contractor services.
“EEI provides accounting services to groups such as UARG and participates in a number of coalitions covering a range of issues important to our members,” EEI spokesperson Brian Reil said in a statement to POLITICO. “UARG provides a variety of services to its members, including regulatory, technical, and compliance advice and information. EEI does not participate in any votes on UARG policy matter decisions. EEI files our own comments on the issues that are important to our members and their customers.”
The names of the UARG members are some of the biggest in the business, along with some of the largest consumers of coal.
The documents show that 25 companies that are EEI members — including AEP, Ameren, Dominion, DTE Energy Co., Duke, FirstEnergy Corp., NiSource, South Carolina Electric & Gas Co. and Southern Co. Services — accounted for $6.8 million in 2017 dues to UARG.
Organizations that have backed efforts to soften pollution and climate regulations account for the remaining $1.4 million in dues: American Coalition for Clean Coal Electricity, American Public Power Association, EEI, National Rural Electric Cooperative Association and the National Mining Association. The Tennessee Valley Authority also paid $462,967 in dues that year, according to the documents.
Wehrum thus can have a significant effect on keeping business flowing to his old firm through regulatory maneuvers that affect the power industry. Some companies have already questioned whether some of Wehrum’s moves are necessary. Redoing the Mercury and Air Toxics Standards, a pollution rule that most utilities already have spent millions complying with, tops that list. UARG member Duke, for example, has publicly criticized EPA’s decision to revisit that rule.
In an interview, Wehrum cited EPA’s work on the mercury rule as one area where his policies have diverged from the wishes of some UARG members. “I’m not going to put words or thoughts into anybody’s mouth,” Wehrum said of UARG, but he added, “I know at least a lot of individual member companies wanted to go the other way.”
Given that Hunton participates both in regulatory comment periods and litigation, Wehrum’s old firm would be slated to be involved in every step of the policy process. The June 2017 UARG document lists specific budget allocations for various programs, such as climate change, pollution control technologies, hazardous air pollutants and regional air quality.
Wehrum told POLITICO he believes he’s doing things by the book.
“I don’t believe anybody has gotten special access because they’re a friend of mine,” he said.
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