In February 1989, the Department of Business and Economic Development signed a one-year, no-bid contract with Cassidy and Associates, one of the largest Washington lobbying firms. The contract was renewed for another 12-month period last year. All totaled, Cassidy and Associates is to be paid $225,000 to “seek substantial U.S. Government financial support of up to $15 million for the State of Hawai`i’s geothermal exploration and development project” (in the language of the contract).
Cassidy and Associates made a name for itself by lobbying on behalf of universities and medical research centers. Frustrated by peer-review processes set up by Congress to provide a modicum of assurance that federal research funds are spent on scientifically worthwhile projects, several dozen institutions (including the University of Hawai`i) have been drawn to Cassidy and Associates. Its lobbyists have proven adept at planting in congressional bills language that puts clients’ pet projects ahead of research proposals approved and ranked for financing by panels of scientific experts.
But Cassidy and Associates has been carving out another niche: federal support for geothermal energy — support, at least, to the extent that it potentially benefits the Pirelli Cable Corp. of New Jersey and its Italian parent, Società Cavi Pirelli, S.p.A.
Running Interference
Through the lobbying of Cassidy and Associates, Pirelli got Congress to help pay for a new Pirelli plant in South Carolina. Once Pirelli became the cable supplier for the decade-long undersea cable transmission research project known as the Hawai`i Deep-Water Cable program, or HDWC, Cassidy and Associates threw itself into winning continued funds for that, too. Pirelli got about $4 million in business from its work on the HDWC. If geothermal energy is ever exported from the Big Island, Pirelli, as a member of the top-ranked consortium of investors for commercial geothermal development, is well positioned to get a contract of easily $200 million or more.
From the outset, some officials at the Department of Energy appear to have doubted whether the Hawai`i Deep Water Cable project would yield results having value outside Hawai`i. Political pressure helped launch the project and keep it alive. As Dan Morgan wrote in a June 13, 1988 article in The Washington Post, “With Sen. Daniel Inouye and Rep. Daniel K. Akaka strategically placed on the Appropriations committees, and Sen. Spark M. Matsunaga on the Energy and Natural Resources Committee,” the Hawai`i delegation “could put funds in the budget and see that the Department of Energy spent them…
“The first $1.4 million to develop an ‘interconnect cable’ was appropriated in 1981. After that, a former House staffer recalled, questions about the cable would be dismissed with a brief ‘Akaka wants it.'”
An attendance list (found in DBED’s files) for an October 23, 1983 meeting suggests ongoing political interest in the HDWC project. Attending were representatives from the Energy Department, Parsons, Hawaiian Electric, Simplex Wire and Cable Co. of New Hampshire, which was the original cable supplier — and staff from the offices of Hawai`i’s two senators and from New Hampshire’s Senator Warren Rudman.
No other reference to the meeting was found, but the occasion may have been the desire to ease Simplex out of the project. Simplex was not able to deliver cable equal to the task, and in late 1983, a sole-source contract for cable was awarded to the Pirelli Cable Corp.
In a letter to Energy Secretary John Herrington on January 24, 1986, Inouye and Akaka again ran interference for the cable project. “It is our understanding that the prime contract between the DOE and HECO is scheduled to expire on March 31, 1986, and that a proposed revision to the contract is pending approval by your Assistant Secretary for Conservation…
“Timely approval of the revised contract is extremely important to allow the program to remain on a schedule which is consistent with the pace of geothermal development on the Big Island. … We would like to know if there is reason to be concerned about any delay.”
There was no delay. But the Energy Department and others continued to have reservations. In 1987, the DOE recommended rescission of the contract, while in 1988, according to The Washington Post, the National Research Council (which develops the peer-reviewed ranking of federally financed research proposals) recommended phasing out the project.
‘Better Coordination’
Morgan’s Washington Post article sheds more light on the way Cassidy lobbyists have advanced the interests of Pirelli — and themselves. “In January 1985,” Morgan wrote, “Pirelli paid (then-Rep. Don) Fuqua a $2,000 honorarium for a seminar in Honolulu, and picked up half the tab for the round-trip travel and lodging for Fuqua and his wife,” Morgan wrote. “The other half was paid by the University of Hawai`i, which has since become a Cassidy client.” The support of Fuqua for the cable project was vital; Fuqua was then chairman of the House Committee on Science and Technology, and approval from his committee was needed for the cable program.
Morgan reported being told by Fuqua that while he was in Hawai`i, he attended a dinner hosted by Pirelli, where Cassidy associate Carl Godfrey was present.
Federal Election Commission filings show another aspect of lobbyists’ activities. In 1986, Inouye was up for re-election against token opposition. His report to the FEC showed contributions of $1,800 from the Pirelli Cable political action committee, and the following amounts from Cassidy associates: $1,000 from Gerald Cassidy (and $500 from his wife, Loretta); $1,000 from Godfrey; and $500 from Vincent Versage, former senior assistant to Spark Matsunaga who manages the Pirelli account for Cassidy and Associates.
During this election cycle Inouye seems to have adopted a more aggressive public stand favoring geothermal energy. Two months before his perfunctory re-election, for example, Inouye attended a September 3, 1986, meeting of the Geothermal Energy Advisory Commission, a group that had been put together by then-Big Island Mayor Dante Carpenter. Minutes show that Inouye told the committee “a change of operations has already started and he plans to personally involve himself in the process of policy and decision making, and develop better coordination in the major energy projects such as geothermal energy projects and undersea electrical cable.”
‘Some Federal Possibilities’
On November 2, 1987, Hawaiian Electric briefed representatives from the leading manufacturers of deep-sea cables on the prospects for geothermal development in Hawai`i. Attending were legations from ASEA Cable Transmission Co. (of Sweden); Les Cables de Lyon (France); Pirelli (Italy); Sumitomo Electric (Japan); and STK Cables (Norway). According to minutes of the Governor’s Advisory Committee on the Geothermal/Cable Project (the Quinn Board), Pirelli’s delegation was accompanied by three representatives from Cassidy and Associates, including Versage.
Versage also made a presentation to the Quinn Board at that time, in which he “suggested some federal possibilities” for geothermal financing “that added up to several hundred million dollars.”
In May and June of 1988, Cassidy and Associates continued to lobby Congress hard for the deep-water cable project. According to Morgan, language raising the House appropriation from $5.2 million to $6.2 million “was written at Cassidy and Associates,” specifically earmarking $1 million “to the designer and manufacturer of the deep water test cable” — i.e., Pirelli.
“A few days later,” Morgan wrote, “the full House reduced the fiscal 1989 appropriation to $4 million. But last Tuesday, the amount was raised to $5.6 million in the Senate Appropriations energy and water subcommittee. The sum was reached in an amendment introduced by the subcommittee chairman, J. Bennett Johnston (D-La.), at the request of Hawai`i’s Inouye.” The $5.6 million appropriation lasted through the conference committee and was included in the appropriations bill signed by President Bush.
‘Analogy and Rhetoric’
By early 1989, Hawaiian Electric was ready to issue its request for proposals for the geothermal/cable project. Studies on legal and financial feasibility had been completed (with state funds); planned tests of the technical feasibility of laying the cable (financed with federal funds) were also nearing an end. But no systematic study had been undertaken through the 1980s of the most basic element in any geothermal development: the resource itself.
Warnings had been sounded at least six years earlier that in their pursuit of geothermal energy, the state and private developers were putting the cart before the horse. At a contested case hearing in Hilo November 19, 1982, Augustine S. Furumoto, professor of geophysics at the University of Hawai`i-Manoa, told the Board of Land and Natural Resources that the data used by Campbell Estate did not support plans for large-scale commercial development. As The Honolulu Advertiser reported: “Furumoto, who participated in the exploration for the Hawai`i Geothermal Program from 1973 to 1977, warned the board that if the massive geothermal project … is approved, ‘you will set a dangerous precedent of approving a project based upon only analogy and rhetoric’ and not on site survey data.”
The project planned at that time had completed “only phase one,” Furumoto said, while proposing to “skip eight phases and jump to phase 10.”
Another warning appeared in 1984, in a “Preliminary Analysis: Legal, Institutional and Financial Aspects of an Inter-Island Electrical Transmission Cable,” prepared as an element in the Hawai`i Deep Water Cable project. In a footnote, that report stated: “geothermal developers … emphasized the following matters that they deemed critical to the coordinated development of Puna’s geothermal resources and the cable system: (1) proving the existence of sufficient geothermal resource potential to justify proceeding with the development and financing of a cable system.”
Suddenly the need to determine whether the Big Island could support the kind of development presupposed in the geothermal/cable project emerged with distressing urgency.
An Offer of Help
Riding to the rescue was Cassidy and Associates, which had apparently been wooing DBED as a potential client since at least the November 1987 HECO briefing. In early January of 1989, DBED finally was ready to take Cassidy and Associates up on its offer “to assist the state in obtaining federal funding to match state and private funds allocated for the development of the geothermal resource on the Big Island” — as Versage phrased it in a letter January 25, 1989, to Roger Ulveling.
In February, Versage and Donald P. Smith visited Hawai`i in an effort, Versage wrote, “to understand exactly how much funding is needed and how it will be used.” According to Versage, that information would be used to draft “a formal prospectus on the project which will be presented to the Hawai`i congressional delegation and the appropriate congressional committees as soon as possible.”
In March, traces of Versage’s lobbying of the congressional delegation surface again in DBED’s files. The state’s congressional was coming to Honolulu over Congress’ Easter break and Governor Waihe`e evidently wanted to have the group to dinner. Apart from Easter itself — which the governor ruled out — all openings were spoken for. According to a memo in DBED’s files dated March 16, 1989, Versage saved the day: “Vincent Versage has scheduled a dinner for Friday, March 24, 1989, but has graciously offered this evening to the governor.”
By April, Versage had prepared a major proposal on which the state would base its pitch to Congress and the federal agencies for $15 million. The document bore the title: “Hawai`i Geothermal Project: A Proposal to Establish the Hawai`i Geothermal Resource Verification and Characterization Program: The Final Step Toward Commercialization.” By Ulveling’s admission in a deposition taken by the Sierra Club Legal Defense Fund, the proposal book was not distributed in Hawai`i but was used exclusively in Washington.
‘A Critical Time’
In 1989, Versage’s efforts came to naught. In 1990, however, lobbying began again. By March 5, 1990, Versage was writing Ulveling that “The next two months are a critical time for our efforts to obtain federal funding… Frankly, we are in a much tougher position this year, … because of the fact that a lobbying campaign has begun in Congress against Hawai`i geothermal development…
“While Senator Inouye and Congressman Akaka do not appear to be shaken in their resolve to support geothermal development, Congressman Akaka did express concern to me that the opposition groups were beginning to get to some of his colleagues. The Congressman asked me about what efforts could be made by the state to help him present the truth on geothermal to his colleagues before things get out of hand. The bottom line is that we must develop a combined legislative and public relations strategy on verification funding and on geothermal development generally to counter the growing efforts of the environmental groups.”
The 1989 “blue book,” as the proposal was called, was dusted off and updated for presentation to Congress again. Versage recommended that a new passage be added to describe “steps the state is taking to mitigate any environmental problems and issues which might be caused by geothermal development.” The 1990 blue book did not do this, but it did include a brief statement that “Hawai`i’s rain forests are not ‘imperiled’ by our careful approach to geothermal energy development.”
Akaka’s support was not taken for granted by Cassidy and Associates. In a letter to Ulveling May 9, 1990, discussing Ulveling’s planned trip to Washington, Versage wrote: “I am sure I don’t need to point out that your visit coincides with Danny Akaka’s Senate swearing-in on Wednesday, May 16th. We are planning to host a reception for Danny after the ceremony which I hope you will be able to attend.”
(Versage was asked about that reception by Environment Hawai`i. He denied at first any knowledge of it. When reminded that he had invited Ulveling to attend, he said: “We may have contributed to a reception. That may be. I think we contributed to his swearing-in party — as I’m sure a number of other companies did.” He could not provide names of any.)
Versage, at the same time, drafted a letter for Ulveling’s signature to Inouye, requesting Inouye’s help in setting up introductions to Senators Johnston, chairman of the Senate Appropriations subcommittee on energy and water development, and Mark O. Hatfield, the subcommittee’s ranking minority member. No record can be found of a meeting between Ulveling and Hatfield, but Ulveling and Inouye together did meet with Johnston in May 1990 to discuss the state’s geothermal research program.
Ulveling’s files contain dozens of other examples of Versage’s activities. They are not confined to ghost-writing letters for Ulveling. In the May 9 letter quoted above, Versage wrote: “The Inouye speech is now on the Senator’s desk and we expect him to sign off on it by the end of this week.” Inouye made his famous speech, denouncing geothermal energy’s critics, on the Senate floor June 26.
The files contain many draft letters from Versage that were retyped on state letterhead and sent out over official signatures, including the governor’s. (However, Waihe`e seems to have withheld automatic approval of Versage’s efforts. Following Health Director Jack Lewin’s candid comments on geothermal energy last spring, Versage wanted the governor to send letters to the congressional delegation reaffirming his support for geothermal energy. Waihe`e refused.)
Campaign Contributions?
Inouye has had no meaningful opposition for the better part of two decades. As indicated earlier, that did not stop lobbyists and others involved with the cable project from giving generously to his campaign (over and above contributions from local officers of Hawaiian Electric and the Campbell Estate).
The late Spark Matsunaga also benefited in his last campaign from the same interests. In the 1988 election cycle, he got $1,000 from Versage and $2,000 from the Pirelli political action committee. Like Inouye, he, too, faced but token opposition.
Akaka has been the real beneficiary, especially in the last election, where his race against Pat Saiki was anything but a walk. In 1988, the Pirelli PAC contributed $1,000; Versage contributed $1,500, while other Cassidy associates gave him a total of $2,500. In 1990, Pirelli’s PAC contributed $1,900. Versage gave a total of $2,000. Two other Cassidy associates gave a total of $1,000, while the lobbyist for Geothermal Resources Association, Ben Yamagata, gave Akaka $500.
(Saiki also received contributions from political action committees of firms with an interest in geothermal energy development. Dow Western Employees PAC contributed $1,000; the political action committee from Dow’s headquarters gave her $1,000; the Fluor PAC gave $3,000; the True PAC gave $300. Both Dow and Fluor were members of consortia responding to HECO’s request for proposals on the geothermal/cable development.)
Within five days of Akaka’s being sworn in as senator, Akaka had his biggest political payday in the 1990 campaign. His campaign reported receiving a total of $16,250 in individual contributions on May 21, 1990, while $63,300 was reported received from political action committees. That so much would be gathered in on a single day suggests someone had been “bundling” donations. Bundling is the practice of assembling a number of donations from various sources and then presenting them at one time to the candidate. The idea behind it is that political credit will accrue to the “bundler” as well as the donors.
Rules and Winks
Congress has long been aware of the temptation for lobbyists to abuse their powers. In a feint at sternness, it has regulated their actions. Among other things, lobbyists are required to report to Congress how much they expend each quarter on behalf of each of their clients.
Such reports are not good for much more than laughs. For example, for the 18-month period starting from the second quarter in 1989 (when it got the DBED contract) to the third quarter in 1990 (the most recent filing available), Cassidy & Associates reported an effort on DBED’s behalf of just $1,800. During that same period, the pro-rated charges to DBED totaled $175,000, or nearly a hundred times the reported amount.
Environment Hawai`i asked Versage whether the $1,800 represented full disclosure of Cassidy and Associates’ efforts on DBED’s behalf in this 18-month period. “I would have to check that out. It’s possible,” was his answer. When asked, then, about the discrepancy between the $1,800 and DBED’s payments, Versage invoked “client confidentiality” and refused to say more on the subject. He said he would have the firm’s spokesperson, Roy Meyers, call to explain matters. Meyers had not called by the time we went to press.
(Information on campaign spending was provided by John Baughman in Washington.)
Volume 1, Number 7 January 1991
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