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Vice President Cheney meets with Enron CEO Kenneth Lay as part of Cheney’s secretive energy task force (the National Energy Policy Development Group—see May 16, 2001). Though Cheney may not know it, Enron is on the verge of collapse, with liabilities far outweighing assets and heavily doctored earnings statements. Enron’s only income generation comes from the unregulated energy markets in California and other Western states (see January 23, 2001). Enron traders are gouging the California markets at an unprecedented pace; as authors Lou Dubose and Jake Bernstein later write, Enron is “taking power plants off-line to create shortages, booking transmission lines for current that never move[s], and shuttling electricity back and forth across state lines to circumvent price controls,” among a plethora of other illegal market manipulations.
Ignoring California's Energy Crisis - Unable to make a profit between buying Enron’s energy at staggering prices and then selling it at regulated rates, one of California’s two largest utility companies has filed for bankruptcy and the other has accepted a government bailout. California is in a calamitous energy crisis. Governor Gray Davis is pleading for rate caps that would help both utility companies and consumers. But price caps are the last thing Lay wants. Once in Cheney’s office, Lay gives Cheney a three-page memo outlining Enron’s recommendations for the administration’s national energy policy Cheney’s group is developing. Prominently featured in the memo is the following recommendation: “The administration should reject any attempt to deregulate wholesale power markets by adopting price caps.” Almost every recommendation in the Lay memo will find its way into the energy task force’s final report. Cheney may not know that Enron is in such dire financial straits, but he does know that energy prices in California have gone from $30 to $300 per megawatthour, with periodic jumps to as high as $1,500. He also knows that Enron’s profits in California, along with other power producers, have gone up 400% to 600%.
Price Caps in Spite of Lay, Cheney - Lay does not get his way; the Federal Energy Regulatory Commission will override Cheney’s arguments and impose price caps on energy traders working in California. The state’s energy prices are brought under control, Enron’s trading schemes—luridly given such sobriquets as “Death Star,” “Fat Boy,” and “Get Shorty”—are brought to an end, and Enron collapses six months later (see December 2, 2001). Cheney will have a measure of revenge by forcing one of Lay’s adversaries on FERC, Curtis Hebert, out of his position (see August 14, 2001).
Avoiding Scrutiny and Oversight - This meeting and others are cleverly designed to avoid legal government oversight. According to the Federal Advisory Committees Act (FACA), the energy task force should be subject to public accountability because private parties—in this case, oil and gas industry executives and lobbyists—are helping shape government policy. Cheney’s legal counsel, David Addington, devises a simple scheme to avoid oversight. When a group of corporate lobbyists come together to create policy, a government official is present. Suddenly, FACA does not apply, and the task force need not provide any information whatsoever to the public. Dubose and Bernstein will later write: “It was bold as [artist] Rene Magritte’s near-photographic representation of a pipe over the inscription ceci n’est pas une pipe—‘this is not a pipe.’ Fifteen oil industry lobbyists meet in the Executive Office Building and one midlevel bureaucrat from the Department of Energy steps into the room—and voila, ceci n’est pas une foule de lobbyists. Because one government employee sat in with every group of lobbyists, a committee of outside advisers was not a committee of outside advisers.” Between Addington’s bureaucratic end-around and Cheney’s chairmanship of the working group giving the entire business the cloak of executive privilege, little information gets out of the group. “The whole thing was designed so that the presence of a government employee at a meeting could keep the Congress out,” a Congressional staff lawyer later says. It also keeps the press at bay. (Dubose and Bernstein 2006, pp. 3-4, 10)
In an 8-0 ruling, the District of Columbia Court of Appeals dismisses a lawsuit by the Sierra Club and Judicial Watch asking that the court require information to be disclosed from Vice President Cheney’s energy task force from 2001 (the National Energy Policy Development Group—see May 16, 2001). The US Supreme Court sent the case back to the appeals court (see April 27, 2004 and June 24, 2004). The appeals court ignores reports from the Government Accountability Office finding that energy executives and lobbyists took part in the task force deliberations (see After January 20, 2001, Mid-February, 2001, March 21, 2001, March 22, 2001, April 12, 2001, and April 17, 2001), and accepts the government’s contentions that the executive branch should not be forced to disclose information about its workings to either the legislative or judicial branches. Because no evidence was submitted that showed the energy executives or lobbyists cast votes or exercised veto power over task force decisions, the court rules, the task force is not obligated to comply with federal laws mandating that such governmental working groups reveal details of their deliberations. The executives and lobbyists are essentially no different than staff aides, the court finds. Cheney’s energy task force was not an advisory committee, and therefore “the government owed the plaintiffs no duty, let alone a clear and indisputable or compelling one,” says the court’s opinion. The court applies the Supreme Court’s standard of law as recommended in the case, a standard far more favorable to the executive branch than any previously applied in the case. Several of the appellate judges will later say that they took the Court ruling to mean that the judiciary should not be involved in a legal struggle with the executive branch. The ruling allows Cheney to keep the task force documents secret, and says that the task force is not bound by the Federal Advisory Committees Act (FACA). (Associated Press 5/10/2005; Savage 2007, pp. 176)
'Double Blow' - David Bookbinder, a lawyer for the Sierra Club, says, “The decision is not going to be helpful in assuring open and accountable government.” (Sierra Club 5/15/2005) He says the ruling is a double blow: “As a policy matter, we see the Bush administration has succeeded in its efforts to keep secret how industry crafted the administration’s energy policy. As a legal matter, it’s a defeat for efforts to have open government and for the public to know how their elected officials are conducting business.” Judicial Watch official Chris Farrell will later say the ruling leaves the open-government laws “a hollow shell.” (Savage 2007, pp. 176) The New York Times calls the decision “regrettable,” and observes, “The Bush administration hardly needs encouragement to deny public access to vital government information.” (New York Times 5/15/2005)
Rejected Judicial Precedent - In 2007, author and reporter Charlie Savage will write: “The decision relied entirely upon the assertion of two Cheney aides that the lobbyists had not cast any votes, a claim no judge ever verified by looking at the records. The court’s ruling also dismissed arguments that ‘influential participation’ by outsiders made them de facto members of the task force whether or not they cast votes, rejecting the standard the courts had applied to the 1994 Clinton health care task force.” (Savage 2007, pp. 176)
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