Courting big business

Is the Bush White House using the courts as another way to pay back special interests?


Dan Noyes
April 3, 2004 12:28AM (UTC)

When President Bush nominated William G. Myers III to the 9th U.S. Circuit Court of Appeals in San Francisco in May 2003, judicial experience apparently wasn't a factor in the choice. Myers has spent little time in the courtroom as a lawyer, and has never been a judge. Instead he made his name as a lobbyist for major Republican donors, especially in the coal industry. Despite that lack of experience, the Senate Judiciary Committee voted 10-9 to move Myers' nomination to the full Senate on Thursday.

But a Federal Trade Commission decision to block a Wyoming coal consolidation that was made possible by a Myers lobbying blitz is shining a spotlight on the nominee's corporate background, and raising new questions about whether the Bush White House is using the courts as another way to pay back the special interests from which it raises millions of dollars. Corporate interests have become increasingly involved in attempts to influence the outcome of state judicial elections, so developing sway with the federal judiciary seems a logical step. There is no doubt that confirming Myers would give big business a friend on the crucial 9th Circuit Court of Appeals.

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Myers and his law firm earned hundreds of thousands of dollars representing the cattle and coal industries that are so important in Vice President Dick Cheney's home state of Wyoming. The new 9th Circuit nominee lobbied successfully on behalf of the state's three largest coal operators, Arch, Peabody and Kennecott, to pass legislation to significantly boost the amount of coal these companies mine on U.S. government land. The government controls coal leasing on federal land to promote market competition among coal producers and thereby control costs that utilities must pay to produce electricity from coal for consumers. The three Wyoming giants also happen to be the largest coal operators in the nation.

When Sen. Dianne Feinstein, D-Calif., asked Myers about his role in lobbying for the legislation, he pointed out that it passed with widespread support and was signed into law by President Clinton just weeks before the 2000 election. What Myers didn't say is that the new legislation, known as the Coal Market Competition Act of 2000, helped pave the way for the proposed Arch-Triton consolidation, which the FTC has now ruled will weaken domestic competition in the coal industry, particularly in Wyoming, the so-called Saudi Arabia of coal.

Myers' client Arch Coal, the nation's second-largest coal producer, announced last year that it had reached agreement to purchase the seventh-largest producer, Triton. Consolidation in the coal industry was helped considerably by the higher coal-lease limits that are now allowed on federal land, thanks to Myers' lobbying. Arch currently leases or has applied to lease nearly 40,000 acres of federal coal in Wyoming, while Triton has over 11,000 acres in that state. Arch's acquisition of Triton would not have been possible under the pre-2000 rules that limited federal coal leases in any one state to 46,080 acres.

The proposed deal has been controversial even in the coal industry. One anonymous source told trade publication Coal Week last year, "I'm afraid that Arch purchasing Triton is going to get us into that oligopoly situation -- and I just wonder if anybody's going to fight it and complain to the Justice Department." Covering the Arch-Triton deal, Platts Coal Outlook reported, "Many coal industry officials believe concentration of production would mean a shift in market power toward coal producers instead of consumers." And a major electricity company that purchases Wyoming coal has voiced its concern to the government over the possible impact on coal prices for its coal-based generating plants. Arch Coal has vowed to appeal the FTC action in court. The head of Arch counters that "we continue to believe that this acquisition is pro-competitive and would create tremendous efficiencies that would benefit our customers and ultimately consumers of electricity."

The deal received lengthy scrutiny at the Federal Trade Commission because of its anti-competitive implications. In announcing its 4-1 decision on Tuesday, the FTC found that "the acquisition would result in the top three competitors controlling 86 percent of 2003 coal production in (Wyoming's key coal fields) and would substantially increase the possibility of, and harm from, coordinated interaction by these major players ... (the FTC action) will protect electricity consumers from higher energy prices that would result from reduced competition in (Wyoming) coal, an important low-cost energy source for electric generators." Almost all of Wyoming's coal is used to produce electricity in the approximately 26 states where it is shipped.

The FTC review comes on the heels of a Justice Department investigation into possible anti-competitive practices in Wyoming coal production, an investigation reportedly triggered by allegations about Myers' lobbying clients Arch, Peabody and Kennecott. (The lobbying disclosure forms that Myers' law firm filed for these three coal producers also seem to indicate they were at least coordinating their political activities back then, as each indicates identical payments for different reporting periods in 1999 and 2000.)

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Why would the Bush administration want to support Big Coal with a friendly judicial nominee who has been a lobbyist for the three largest U.S. coal producers? Bush White House political guru Karl Rove is no stranger to judicial politics. Rove, a former Texas tobacco lobbyist, ran the campaigns of several Texas Supreme Court judges, who must stand for election and raise money from special interests. The growing involvement of special interests in the election of state judges has been highly criticized by legal experts, and even Supreme Court justices Anthony Kennedy and Stephen Breyer have questioned the trend. Millions of dollars is being raised from the business community, as well as from trial lawyers and unions.

Last year, the Washington publication the Hill reported that Senate GOP conference chairman Rick Santorum, R-Penn., urged business lobbyists to get more involved in federal judicial nomination battles, stating, "It's one of the most fundamental issues we have." Business groups and Republican supporters have donated tens of thousands of secret dollars to the newly formed Committee for Justice, a partisan group headed by former Bush White House counsel C. Boyden Gray that has run ads attacking senators for opposing the administration's judicial nominees.

The coal companies that Myers lobbied for, and the coal industry in general, routinely give substantial campaign contributions to congressional Republicans and the Republican Party. Peabody and Arch gave over a million dollars to congressional candidates during the 2002 election cycle, most of it to Republicans. The coal industry regularly has cases before the federal courts. Peabody Coal, for example, has two cases currently before the 9th Circuit.

Although the Senate Judiciary Committee approved the Myers nomination, Democrats may block a vote by the full Senate. President Bush can still prevail, at least during 2004, if he takes the opportunity to place Myers on the 9th Circuit with a recess appointment that bypasses the need for full Senate confirmation. A Senate recess is scheduled for April.

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Ann McArthur contributed research to this report.


Dan Noyes

Dan Noyes is a reporter at the Center for Investigative Reporting. The Open Society Institute supports the Center's reporting on the federal judiciary.

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