This is the third of a regular E&E Daily series on the environmental and energy records of the potential Republican candidates for president. Click here for the first story and here for the second.

Indiana Gov. Mitch Daniels (R) is best known as an unrepentant fiscal hawk. But as he ponders a run for president, his views on a variety of issues -- including energy and the environment -- are coming under greater scrutiny.

Back home, two of the most often-used descriptors of Daniels -- anti-environmentalist and conservationist -- conflict, creating a complicated profile.

To some Hoosiers, Daniels is known as an award-winning conservationist, who has successfully protected Indiana wetlands, something his predecessors failed to do. To others, Daniels as governor has systematically stripped away environmental protections and pushed for measures that aid business at the expense of the environment.

Mary McConnell, the Indiana director for the Nature Conservancy, said the governor's conservationist credentials are surprisingly strong.

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"He really, really likes doing big conservation projects and things that are really going to make a difference for the citizens of Indiana in the long haul," McConnell said. "Coming into this term, no one really thought of him in that light."

Ducks Unlimited, a hunting and conservation group, gave Daniels two awards in the past year for his work, including setting aside more than 69,000 acres of land along the Wabash and Muscatatuck rivers. Calling the initiative "big," Kristin Schrader, the spokeswoman for Ducks Unlimited, said it is especially striking at a time of shrinking budgets and greater government austerity.

"The environment gets put down to the bottom of the list of things you want to keep and Governor Daniels has been sensitive to the natural heritage of Hoosiers," Schrader said.

David Pippen, the governor's general counsel who previously served as Daniels' senior policy director for energy, environment and natural resources, touts the governor's wetlands restoration but said that Daniels' legacy will extend far beyond that.

Among the successful environmental policies that Daniels has pushed, Pippen includes the Great Lakes Compact, which mandates management by eight states of the Great Lakes water supply. In an historical first, last year every county in the state met the ambient air standards of the Clean Air Act.

But where some are effusive in praise of Daniels, others in the state are less so -- especially when it comes to protecting the environment.

Pippen boasts about the governor's successful push to end a backlog of permits for economic development projects -- a process that has upset environmentalists.

John Blair, the president of the Ohio River environmental group Valley Watch, said Daniels has turned the office that oversees permitting into "nothing more than a permit factory."

While the governor has undone a huge backlog in the permitting process, Blair and others charge that he has ensured that permits receive a cursory challenge because the review process has been limited to 30 days.

Steve Francis, the chairman of the Hoosier chapter of the Sierra Club, said that Daniels has pushed to "really rush permits, ignoring obvious flaws that violate federal and state laws."

Pippen dismisses those complaints.

"Issuing a lawful permit is better than keeping an expired permit for 19 years," he said. "We think it is more important to get current standards in place rather than allowing them to run expired."

Handing his hat to industry

But critics say the reforms in the permitting process are just one example of Daniels being too cozy with industry.

Jesse Kharbanda, the executive director of the Hoosier Environmental Council, said "the governor hangs his hat on grand economic development projects that are environmentally problematic and prove to be economically questionable."

As an example, Kharbanda points to the governor's support of a new road from Evansville to Indianapolis that would destroy thousands of acres of forest instead of building upon current infrastructure. Also at issue for the group are the factory farms that dot the state and produce excessive waste and air pollution, Kharbanda said. And finally, the environmentalist criticizes the governor's support of the coal industry, especially for projects that he said do not make economic sense.

Blair also takes issue with Daniels over the building of two energy plants in the state. Blair said the coal-gasification plant to be built in Rockport represents an environmental atrocity, especially in such close proximity to a steel mill and the country's largest coal-fired power plant.

"When they flip the switch, they don't have any idea what they are doing to us," Blair said.

Additionally, the state has approved and given a substantial tax credit for the building of a 618-megawatt coal-gasification plant in Edwardsport that will replace a 160-megawatt power plant in the western central part of the state. The price tag for the plant currently sits at $2.9 billion -- making it the most expensive undertaking ever in the Hoosier State and coming in at a far higher price than the $1.3 billion originally forecast.

However, the project has been marred by controversy. The state launched an investigation into the project, and the governor fired the chairman of the Indiana Utility Regulatory Commission last November over conflicts of interest.

The Daniels administration defends its actions.

"You understand that some of the folks you talk to don't want coal used at all," Pippen said. And Daniels spokeswoman Jane Jankowski said the governor "has long been looking for a mix of energy that is homegrown and using the latest technology available. That is what we will have with Rockport-Edwardsport. We are looking for less reliance on energy sources outside of Indiana but also creating a good mix of clean uses of coal and wind for which we've been a leader for the last couple of years."

In 2006, Daniels released a strategic plan, "Economic Growth From Hoosier Homegrown Energy."

The plan stated three main goals: to "trade current energy imports for future Indiana economic growth," "produce electricity, natural gas and transportation fuels from clean coal and bioenergy," and "improve energy efficiency and infrastructure."

Daniels touted the projects in an opinion piece in The Wall Street Journal as part of the state's quest to be leaders in clean coal and as part of an "aggressive energy-conservation program, indubitably the most cost-effective means of limiting CO2."

The controversy over the plants underscores the mantra of "business at any cost attitude regardless of harmful effects on the environment" that Daniels has adopted since coming to office, environmentalists say.

And it points to another issue that environmentalists have been up in arms about: the governor has appointed business executives, including from the coal and steel industry, to key environmental jobs.

"We have an overarching concern about whether the administration cares about hearing from a diversity of viewpoints," Kharbanda said.

Trimming state government

From his first day in office in 2005, Daniels has pushed a mandate of lower costs and smaller government. One of his first acts was to roll back an executive order from 1991 that ended collective bargaining rights for government workers. He also told The Weekly Standard that he instructed his agency heads to "do everything we can to raise the net disposable income of individual Hoosiers."

Part of that was rethinking the way agencies worked. In some cases, like the reform of the state's Department of Motor Vehicles, the changes were met with gratitude, as wait times plummeted from hours to mere minutes.

The governor, who previously served as budget director for former President George W. Bush, immediately set about shrinking the size of government. The state now employs fewer workers than it has since the 1970s.

Since winning a second term, Daniels has tried "to keep the focus on his agenda and tried to downplay and discourage diffusive social issues," said David Hadley, political science chairman at Wabash College. He noted that the governor has not had "complete success" -- though Daniels' recent statement urging national Republican leaders to de-emphasize social issues did not win him any fans among certain conservative groups.

Many of Daniels' accomplishments in Indiana have Republicans nodding approvingly. In six years, the governor has turned around the state's finances, erasing a huge budget deficit to a reported surplus. He has overseen the elevation of Indiana to a triple-A bond rating, marking a first for the state and making it one of only nine states to hold that distinction.

The battle over the building of the two plants has only hardened one group of environmentalists against Daniels while many in the conservation world admire his preservation efforts.

Overall, Francis said Daniels "is not someone we would say confidently living in Indiana that he has a vision in terms of climate change and the environment and has standards because we haven't seen that in Indiana."

Although many people in Indiana appear to have made up their minds about Daniels, nationally he is still an unknown.

"Daniels is a bit of a question mark on federal environmental issues, but he does seem to buy into the notion that environmental regulations are a drag on economic prosperity and appears to have made environmental enforcement in Indiana more difficult," said David Jenkins, the vice president for government and political affairs at Republicans for Environmental Protection. "On the other hand, he has championed some major land/wetlands conservation measures."

Outside of the environmental community and Indiana, the governor has a lesser profile than many of the other would-be Republican candidates.

However, he has stepped up his national profile in recent years.

In The Wall Street Journal opinion piece published in 2009, Daniels spoke out against passage of the House's "American Clean Energy and Security Act," also known as Waxman-Markey, which to environmentalists demonstrated that Daniels' primary motivation is business not preservation.

Daniels wrote it was "clear to me that the nation, and in particular Indiana, my home state, will be terribly disserved by this cap-and-trade policy on the verge of passage in the House."

As part of his argument, Daniels said the bill would so adversely affect the state by doubling electricity bills that "years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke."

He continued: "No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world's thermometer by so much as a tenth of a degree a half century from now. My fellow citizens are being ordered to accept impoverishment for a policy that won't save a single polar bear."

In The Weekly Standard, Andrew Ferguson called the governor "an agnostic on the science of global warming but says his views don't matter."

"I don't know if the CO2 zealots are right," Daniels told the magazine. "But I don't care, because we can't afford to do what they want to do. Unless you want to go broke, in which case the world isn't going to be any greener. Poor nations are never green."

An old Washington hand

While he might be unknown to ordinary Americans, Daniels knows Washington.

With decades of public service from his beginnings as an intern for then-Indianapolis Mayor Richard Lugar to his last pre-governor job as director of the Office of Management and Budget under Bush, Daniels' decision to run for governor in 2003 was as surprising to many observers as his potential run for the presidency.

Daniels, who turned 62 yesterday, was seen more as a policy guy, a wonky lawyer who embraced conservative Republican ideals. After following Lugar to the Senate as his staffer, Daniels took leadership positions within GOP campaign committees while getting his law degree. When he and his wife left Washington, Daniels took a job at the Hudson Institute, a think tank that had been struggling. His work there caught the attention of Eli Lilly & Co., which he left after becoming president of the company's North American pharmaceutical operations.

Whether Daniels will run for president remains a hotly debated topic. Daniels has said that his family is against the idea. Some observers see recent statements by his publicity-shy wife as an indication that he will not run, while others suggest her public statements indicate that she is opening up to the idea.

But Daniels apparently does not necessarily want to run. He has said on the record that if a Republican candidate for the White House seriously addresses the need to reform entitlement programs, he will support that candidate.

In his Wall Street Journal opinion article knocking cap and trade, the governor said, "I'm not a candidate for any office -- now or ever again."

But that was two years ago. A final decision on a White House run should come in a matter of weeks.