Wednesday, May 02, 2007

Giuliani’s Tie to Texas Law Firm May Pose Risk

The New York Times
Giuliani’s Tie to Texas Law Firm May Pose Risk

For a native New Yorker mounting a first bid for national office, Rudolph W. Giuliani has shown an impressive ability to raise money in Texas, where his Republican presidential campaign collected $2.2 million in the first quarter of the year, far more than any other candidate.

Mr. Giuliani has drawn support from Texans who were notable donors to President Bush, including a former Enron president, Richard D. Kinder, and business executives who direct many of the nation’s oil, gas and energy producers.

And a good part of this success, analysts say, stems from his affiliation with a well-established and politically connected law firm that is based in Houston and bears his name, Bracewell & Giuliani.

That affiliation adds to Mr. Giuliani’s personal wealth but also could pose political risks for him. The firm is perhaps the nation’s most aggressive lobbyist for coal-fired power plants, heavy emitters of air pollutants and carbon dioxide, a gas associated with global warming. Environmentalists say the firm played a significant role in persuading the Bush administration to roll back major provisions of the Clean Air Act.

Mr. Giuliani joined the 400-lawyer firm as a name partner two years ago, and though his legal work has been limited, his association with it has provided him entree into the wellspring of Texas money that meant so much to the Bush campaigns.

In addition to collecting $89,000 in contributions from Bracewell partners and employees, Mr. Giuliani has held a fund-raiser in Houston. The firm’s managing partner, Patrick C. Oxford, is a top-shelf Bush fund-raiser with a wealth of contacts within Republican money circles.

Most significantly, perhaps, the law firm is one of the higher-profile defenders of the oil, gas and energy industries, to which it provides legal help and extensive lobbying services in Washington. It is difficult to say just how much of Mr. Giuliani’s contributions from those industries stem from his affiliation with Bracewell, but employees of companies in those sectors, including several Bracewell clients, have contributed more than $400,000 to Mr. Giuliani’s campaign so far.

Allen Blakemore, a Republican political consultant based in Houston who is not working for any of the presidential candidates, said the Bracewell affiliation must be seen as an important part of Mr. Giuliani’s fund-raising success in Texas.

“That law firm has been engaged in Houston in the energy sector for a long time, and they’ve got a platinum client list,” Mr. Blakemore said. “I think it’s safe to say that this is a law firm that is incredibly well connected in the oil patch. Pat Oxford knows those connections and can connect the dots better than anyone else.”

Texas, in fact, trailed only New York and California in Mr. Giuliani’s first-quarter fund-raising, in which he collected $16.1 million over all. His campaign raised twice as much in Texas as that of Senator John McCain, the Arizona Republican who had been expected to do well there.

Mr. Oxford, who is chairman of Mr. Giuliani’s national campaign committee, said the Bracewell firm had no role in generating contributions from the energy industry. He said executives were giving because “Texas loves Rudy’s message.”

In public remarks, Mr. Giuliani has supported increased use of nuclear power, natural gas, Alaskan oil drilling and ethanol to reduce American reliance on foreign oil. He has also expressed support for cleaner technology in the use of coal. He has not taken a position on reducing power plant emissions, but aides have said a major statement on environmental issues is being prepared.

Scott Segal, a Bracewell & Giuliani partner and a leading energy industry spokesman, said the firm’s energy clients had kept energy affordable and spent billions to comply with environmental laws.

“We believe the work we do is constructive for the environment and our clients,” Mr. Segal said. “Experience shows that the best environmental policy is made when all sides come prepared and represented.”

But critics say the firm has been central to rolling back environmental regulations in the Bush years, when the firm’s lobbyists met with Vice President Dick Cheney.

“From clean air to mercury pollution to global warming policies,” said Gene Karpinski, president of the League of Conservation Voters, “Giuliani’s firm has been perhaps the most anti-environment voice in Washington, representing some of the biggest corporate polluters.”

The Giuliani campaign said in a statement that he did not engage in any energy lobbying and did not take policy cues from his law firm’s clients.

Mr. Giuliani’s consulting company, Giuliani Partners, has also represented energy clients, like the operators of the Indian Point nuclear plant in Westchester County and a joint venture that is seeking to build a large natural gas transfer facility nine miles offshore in Long Island Sound.

Lawyers seeking public office often field questions about their clients, and Mr. Giuliani, who has been affiliated with several firms over his 38-year legal career, survived such questioning in his campaigns for mayor. But his past firms did not have high-profile roles in shaping public policy on a contentious national issue.

Other presidential hopefuls have already sought to distance themselves from the Bush administration’s environmental record. Among them is Mr. McCain, who last week renewed his call for limits on emissions of carbon dioxide and other heat-trapping gases.

Founded in 1945 as Bracewell & Patterson, Mr. Giuliani’s law firm specializes in banking, corporate finance and energy matters. It now has nine offices, including two in Kazakhstan and one in Washington, where it has a professional staff of more than 40.

“They are probably the most influential voice on behalf of big-polluting industry in Washington, D.C.,” said Frank O’Donnell, president of Clean Air Watch, which regularly battles the firm’s clients. “It’s quite remarkable. They are without peer when it comes to communicating the industry position.”

Mr. Giuliani was introduced to the firm’s managing director, Mr. Oxford, by Roy W. Bailey, a former finance chairman of the Texas Republican Party who met Mr. Giuliani during his 2000 Senate campaign. Mr. Giuliani joined the firm in March 2005, and it opened its Manhattan office that year. Mr. Bailey is now the Giuliani campaign’s national finance chairman.

Bracewell has had numerous ties to the Bush White House. In addition to Mr. Oxford, who also raised money for Mr. Bush’s campaign for governor in Texas, another partner, Marc F. Racicot, a former Montana governor, was picked by Mr. Bush to lead the Republican National Committee from 2002 to 2003 and was chairman of his re-election campaign in 2004. Mr. Racicot left the firm in 2005.

Environmentalists say the firm has had considerable success in persuading the Bush administration to ease Clinton-era enforcement efforts against coal-fired plants and write policies favored by that sector over tougher alternatives.

In his third month in office, Mr. Bush reversed a campaign pledge to cap carbon dioxide emissions from power plants. The administration also adopted a slower timetable for reducing mercury emissions from power plants than had been recommended by the Environmental Protection Agency’s own staff.

Bush administration officials have argued that their policies are the best course to ensure an adequate supply of affordable power while making substantial improvements to the environment. Environmentalists have credited the administration with creating one regulation, the Clean Air Interstate Rule, that will reduce power plant emissions.

Several years ago, the Bracewell firm played a significant role in an effort to block the E.P.A. from continuing a series of lawsuits filed against coal-fired electric power plants under the Clinton administration. The suits sought to enforce a rarely used provision of the Clean Air Act that required plants to install pollution controls when they altered their facilities.

Bracewell lawyers and other industry representatives argued that the E.P.A. under President Bill Clinton had retroactively redefined routine maintenance as modifications to bring the regulation into play.

Bracewell and some of its biggest clients, including the Southern Company, formed a new lobbying group, the Electric Reliability Coordinating Council, to fight for legislative and policy changes to kill the lawsuits. The council operates as an extension of Bracewell’s Washington office and is staffed by its partners and professionals. It also contracted with Haley Barbour, the former Republican National Committee chairman, as a lobbyist. (Mr. Barbour is now governor of Mississippi.)

During the debate in 2001, Mr. Barbour and Mr. Racicot met with Mr. Cheney and federal energy officials to suggest that the enforcement effort was misguided. An internal struggle ensued and several E.P.A. enforcement officials resigned, saying they feared that their regulatory role was being subsumed by energy industry concerns.

At one point, Christie Whitman, then the E.P.A. administrator, sent Mr. Cheney a memorandum arguing that the administration would “pay a terrible political price if we undercut or walk away from” the lawsuits.

Mr. Cheney’s task force ultimately called on the agency to review the rule, and a new regulation said utilities would have to add pollution-control devices only if construction projects were valued at more than 20 percent of the plant’s value.

Eliot Spitzer, then New York attorney general, was among many officials who took issue with the rule, later calling it “part of a Bush administration efforts to eviscerate the Clean Air Act.”

It was quickly challenged in court. Last month, the United States Supreme Court ruled against the government’s position. It remains unclear whether the administration will pursue the pending enforcement lawsuits that have been stalled for years.

Bracewell’s effectiveness in the regulatory arena has been enhanced by its hiring of experts who worked for the E.P.A. in policy-setting capacities. Last October, the firm hired Jeffrey R. Holmstead, a former E.P.A. assistant administrator who oversaw the writing of the struck-down regulation. Two other agency officials have also joined Bracewell in recent years.

“We are so pleased to welcome Jeff Holmstead to Bracewell,” Mr. Giuliani said in announcing the new executive last year. “Jeff’s familiarity with the compliance challenges facing the private sector will be a big asset to our firm.”