LOBBYING:

'Hot button' climate issue spotlights how U.S. Chamber sets policy

U.S. Chamber of Commerce staff decides the trade group's climate and energy policy positions without approval from the board of directors, Nike Inc. charged as it formulated a plan to call for greater chamber openness.

Nike, which last week left the chamber's board of directors but decided to remain a chamber member, described a lack of transparency at the group that conflicts with how the chamber describes its operations. Beaverton, Ore.-based Nike said it is determined to work for changes in the group.

"We just weren't clear in how decisions on climate and energy were being made," said Brad Figel, Nike's director of government relations. "They're not being made at the board-of-director level, because we're a member of the board of directors. We were not consulted. We're convinced that's not really where the action on climate change is being made."

The chamber reaches its positions through a "democratic process" that is "driven by members," chamber spokesman Eric Wohlschlegel said yesterday.

Questions about how the chamber decides its legislative positions come as some companies have been leaving the well-heeled trade group over how it handles lobbying on federal climate policy. A widening, albeit small, group of businesses has departed, citing a difference of opinion over not just policy but rhetoric used by business' biggest lobbying arm.

Apple Inc. left yesterday via a letter to chamber President Tom Donohue that said "we strongly object to the Chamber's recent comments opposing the EPA's efforts to limit greenhouse gases." The chamber in August filed paperwork asking U.S. EPA to hold a public debate on climate change science, as the agency prepared to regulate greenhouse gas emissions under the Clean Air Act.

Energy companies Chicago-based Exelon Corp., California-based Pacific Gas & Electric Co. and New Mexico-based PNM Resources Inc. in the last few weeks decided not to renew chamber memberships. All three stand to benefit from the House bill on climate that passed in June. Each has invested in renewable energy, has large amounts of nuclear power, or both.

There have been earlier departures over climate, as well. PSE&G, a company with a New Jersey-based utility, left about a year ago. The company has a growing renewable-energy business as well as nuclear, coal and natural gas generation. About half the power it delivers comes from nuclear energy. Levi Strauss & Co. said it left in 2001, with disagreement over climate legislation one of the key reasons.

Scrutiny of the chamber is likely to continue. About a dozen other companies are talking about joining Nike's planned call for more chamber transparency, said a representative of a technology company who asked not to be identified because the group is not yet formal.

Among the questions for the chamber, the technology company representative said, is "how do they deal with the issue of climate change and hear all of the different perspectives?"

The internal strife at the chamber and questions about its operations underscore the difficulty the biggest business trade group has in satisfying members with diverse and often conflicting financial interests, analysts said. The chamber said it has about 3 million members.

"Basically, they're simply responding to the majority of their businesses' expressed needs," said Kenneth Green, resident scholar at the American Enterprise Institute. "They're a membership-driven organization. You have to figure that the majority have said, 'I come up a loser under this stuff.'"

The flurry of exits and Nike's questions about the board of directors, however, throw a spotlight on how trade groups make decisions. While some boards of directors are more active than others, there are some commonalities in how industry groups formulate policy positions, Green said.

"Generally speaking," Green said, "what you have is a charismatic leader who makes the policy decisions, probably based on the policy recommendations of staff ... and a board that is mostly ceremonial."

Green added, "When you have a board that's less engaged, decision making happens at the level of the executive director. It works pretty well unless you hit a hot-button item."

Committee system

The chamber supports "strong federal legislation on climate," it said in a statement last week from Donohue. The group opposed the House climate bill from Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), calling it "fundamentally flawed."

"It is neither comprehensive nor international," Donohue said, "and it falls short on moving renewable and alternative technologies into the marketplace and enabling our transition to a lower carbon future."

That position, and ongoing concern about aspects of the climate bill in the Senate, reflect what the majority of its members want, the chamber has said.

"Policy is developed and recommendations are made to the whole board," spokesman Wohlschlegel said yesterday. "It's an open and voluntary process, and it's formulated by a majority of our members that represents the broader business community's perspective and not just the interests of one sector, one energy sector ... or one sector of the economy."

He would not address Nike's statement, however, that while it had representation on the board of directors, the board did not vote on climate policy positions. Wohlschlegel would not say when the board last took a vote on its position on climate legislation.

Wohlschlegel in an interview last week said the chamber's board meets twice a year to vote on recommendations from the chamber's 16 issue-related committees. Any member company can join the committees, he said.

Nike said that when it asked the chamber how it makes its decisions on climate policy, however, it got a different answer.

"They told us these decisions were made by staff," Figel said. He said that Nike was told that "this is a longstanding chamber policy," and that "once the policy is established, a lot of these decisions can be made at the staff level."

Last spring, Figel said, Nike told the chamber that it wanted to be consulted on climate issues. After that, he said, "there were several decisions that were made by the chamber that we weren't consulted on." One of those was the chamber's decision to file its petition opposing EPA's proposed decision to regulate greenhouse gases under the Clean Air Act.

In particular, Figel said, Nike recoiled at a chamber official's call for an EPA trial similar to the Scopes Monkey Trial on evolutionary theory.

"That's not helpful in any way," Figel said. "That put a lot of companies on edge, how they phrased that."

The statement this summer by William Kovacs, a chamber senior vice president, that the science of global warming should face a public trial similar to the Scopes Monkey Trial thrust the trade group into a new realm, Green said.

"That was beyond the pale in terms of aggressiveness that I've seen in a trade association," Green said. "At that point, they were really inserting themselves into the political process in an extremely visible way, not just a matter of lobbying for their companies but really engaging in the bigger cultural argument. I wouldn't be surprised if that wasn't what scared some people away."

'It's not the chamber's fault'

Nike's view of chamber operations is not one shared by at least one current member of the board of directors.

"I have never seen an instance where there has been an effort to limit debate and discussion," said Fred Palmer, senior vice president of government relations for St. Louis-based Peabody Energy, the world's largest private coal company. He is a member of the chamber's board of directors. "To the extent people feel their voice is not being heard at the chamber, it's not the chamber's fault."

Palmer described a chamber structure in which representatives from energy companies speak before policy committees or the board of directors. He said he has twice spoken about issues surrounding the future of coal at a chamber committee dealing with energy and technology. He has heard Duke Energy CEO Jim Rogers speak, as well, urging action on climate legislation.

In all cases, Palmer said, there are dissenting opinions, but "it's cordial."

Palmer, who said he has given presentations at the chamber more than he has attended board meetings, said votes were not taken at those policy meetings where he spoke.

Chamber President Donohue talks with company chief executives, Palmer said, and knows where they stand on climate legislation and other issues.

"A lot goes on before the meeting" of the board, Palmer said, because busy executives cannot have a "three-hour debate over one issue."

"The companies leaving by and large are utilities," Palmer said. "They just have a different view of their energy future, and they're acting accordingly."

"The membership supports the view of the chamber," he added.

Some other businesses that have representation on the chamber's board of directors, however, do not support the chamber's position on climate legislation. But that conflict, for now, doesn't appear likely to drive those companies away.

The chamber's board of directors numbers more than 100 people, according to a listing on its Web site. They include several company CEOs. Many of those companies do not have a direct interest in energy policy. But seven of the board members are from companies that are part of U.S. Climate Action Partnership, a coalition pushing for passage of climate legislation.

USCAP members on the board are Alcoa, Caterpillar, ConocoPhillips, Dow, Duke Energy, Siemens and Xerox. ConocoPhillips, like the chamber, opposed the House bill.

Staying despite differences of opinion

Some of those companies said that despite the difference of opinion on climate, they have no plans to leave the chamber.

"It just so happens on climate change they do not see eye to eye with us. We have told them we do not see eye to eye," said Kevin Lowery, spokesman for Pittsburgh-based Alcoa, an aluminum maker. "Everybody knows where Alcoa sits. We do not agree on this at all. Not at all. We've just been very open about it. We have in no uncertain terms made our position known."

North Carolina-based Duke Energy Corp. also plans to stay.

"I feel like the chamber is open to evolving their thinking," Duke CEO Rogers said in an interview last week. He said he thought he could push the chamber "to the center" on the issue by staying on the board.

Entergy, a New Orleans-based utility also on the board but not part of USCAP, said it disagrees with the chamber's position, but plans to stay.

"We hope to convince other members why legislation to limit greenhouse gas emissions is critical for long term economic prosperity and that all industries must play a role in working towards a market-based, cost-effective solution to what is the defining issue of our time," the company said in a statement.

USCAP member Johnson & Johnson, a chamber member that is not on the board, also is not leaving.

"We engage with the chamber on a broad range of topics, of which climate policy is one, and for that reason, we are not planning to resign the chamber," said Johnson & Johnson spokeswoman Carol Goodrich. "We remain hopeful that a consensus can be reached on climate change legislation that reflects the full membership of the chamber."

There are also energy companies on the board that are for the most part comfortable with the chamber's position on climate legislation, including Peabody and utility Southern Co. Coal company Massey Energy Co., which sits on the board, did not immediately respond to an interview request. The company last month held a rally to demonstrate opposition to climate legislation.

Southern Co. supports climate legislation that "mitigates cost impacts to our customers, supports the development of technologies to reduce greenhouse gases while assuring affordable power supplies and recognizes regional needs," spokesman Jason Cuevas said.

"We are in agreement [with the chamber] on many of the issues," Cuevas said, adding that Southern Co. belongs to the chamber for many reasons.

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