Clean Air Villain of the Month

January 2002


(Washington, D.C. January 10, 2002) - What does a sunset cocktail party in ritzy Naples, Florida, have to do with an oil company indicted for "environmental crimes" and a soon-to-be-announced Bush Administration plan to weaken enforcement of the Clean Air Act?

They all involve Wendy Lee Gramm, named today by the nonprofit Clean Air Trust as its "villain of the month" for January.

Gramm is director of the "regulatory studies program" at the Mercatus Center of George Mason University. Mercatus is an increasingly influential, anti-regulatory "think tank" created by and subsidized by polluter money.

We are not singling out Wendy Gramm because of any connection she may have to the Enron scandal. 1 (The Washington Post reports that she may be subpoenaed by a Senate committee to determine her role, if any, in the company's epic collapse. In 1992, Wendy Gramm headed the Commodity Futures Trading Commission, when it exempted from regulation Enron trading in energy derivatives -- which later became Enron's most lucrative business. After leaving the government, Gramm was named to Enron's board. Enron has been among the financial backers of the Mercatus Center.)

The wife of Sen. Phil Gramm (R-TX), Wendy Gramm has a long track record of opposing regulations, including those involving health and environment. In the Reagan administration, she was executive director of the Presidential Task Force on Regulatory Relief, head of the White House Office of Management and Budget's regulatory review office, and director of the Federal Trade Commission's Bureau of Economics.

In this case, our attention was triggered by Gramm's role in a recent "hit list," compiled by OMB, of existing federal environmental regulations it believes should be changed or rescinded. OMB's regulatory czar, John Graham, conceded to USA Today that this review of existing federal rules is unprecedented.

Rules in the OMB bulls-eye include EPA's so-called "new source review," which is designed to keep polluters from increasing pollution when they make major changes to existing refineries, electric power plants and other factories. Major oil and power companies are pressing the Bush Administration to weaken current requirements, and an announcement is expected as soon as next week. There is no doubt that OMB is a major player in the upcoming clean air rollback. OMB noted that Gramm's Mercatus Center had instigated inclusion of new source review on the regulatory hit list.

Indeed, Gramm's Mercatus Center was responsible for no fewer than five of the eight EPA rules singled out by OMB for "high priority" treatment -- including standards for arsenic in drinking water. Altogether, OMB noted, Mercatus had called for a re-assessment of no fewer than 44 federal regulations -- including national public health standards for smog and soot, as well as standards for tailpipe pollution from cars and sport utility vehicles, low-sulfur gasoline, big diesel trucks and diesel fuel -- in other words, Gramm would like to pull the plug on virtually every effective air pollution cleanup measure adopted in recent years.

In effect, the OMB office is becoming a conduit for regulatory bashers such as Mercatus. And no wonder: Wendy Gramm actually ran the same OMB office during much of the Reagan administration. And Gramm's Mercatus Center and Graham's former employer -- the Harvard Center for Risk Analysis -- even had common financial backers. 2

It's worth a moment to explore the connection between Wendy Gramm and one of those key financial backers: Koch Industries, Inc., the largest independent oil company in America. Charles G. Koch is chairman of the board and CEO of Koch Industries. If you've ever heard of Charles Koch, it's probably because he was sued by his brother, Bill, for allegedly stealing oil from federal lands (they settled the suit last year), or because the U.S. Justice Department indicted Koch Industries in 2000 for "environmental crimes" at a Corpus Christi, Texas, refinery. A Koch subsidiary agreed to a settlement in the case last year, admitting that -- to save a few bucks -- it disconnected pollution controls and vented cancer-causing benzene directly into the air from the refinery.

Listed by Forbes as one of the 100 wealthiest Americans, Charles Koch also is a major mover and shaker in reactionary political circles. He runs the Charles G. Koch Charitable Foundation, which collectively doles out millions of dollars each year to reactionary groups including the previously mentioned Harvard center; the American Legislative Exchange Council (right-wing state legislators who receive their marching orders from industry); the Federalist Society (a reactionary legal fraternity that has placed numerous people at high levels in the Bush Administration, including DOE Secretary Spencer Abraham); and the Foundation for Research on Economics and the Environment (FREE), a Montana-based group that underwrites propaganda junkets for reactionary federal judges. 3

Which brings us back to Wendy Gramm and the Mercatus Center, which Charles Koch also chairs. Indeed, Koch helped launch the center with a $3 million contribution to George Mason University in 1997. The University proudly notes on its web site that Koch gave an additional $10 million multi-year grant "to support programs focused on market-based solutions to social and economic problems." In other words, Koch basically rents the university's name to give a patina of credibility to Wendy Gramm's anti-environmental agenda.

Although his contribution gives us a glimpse of the dark side of modern academia, Koch is by no means Wendy Gramm's only financial backer. The Mercatus Center's web site ( proudly displays vulgar pictures of a gathering of the "Founders Circle" -- annual contributors of $10,000 or more to the Mercatus Center -- at a "sunset cocktail party" last March in Naples, Florida.

If you missed last year's Mercatus gala, there's still time to sign up for the next one -- it's Feb. 15-17 at the Ritz-Carlton Laguna Niguel in Dana Point, CA. Wendy Gramm may need the money -- especially since Enron has gone down the tubes.

1 Though we would recommend an excellent report on this topic published last month by Public Citizen. It can be found at
2 One other thing in common: John Graham was our "Villain of the Month" for October 2001.
3 The Koch tentacles twist throughout Washington policy circles. For example, in addition to John Graham and the various reactionary lawyers and judges, a former Koch Industries lobbyist, Elizabeth Stolpe, now is a key staff person with the White House Council on Environmental Quality. Her job includes air pollution issues, including new source review.