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Union Pacific defends chamber chief Tom Donohue

(The following story by Joe Ruff appeared on the Omaha World-Herald website on October 21, 2009.)

OMAHA, Neb. — An environmental group has questioned whether U.S. Chamber of Commerce President Thomas Donohue can serve on the board of Union Pacific Corp. and fairly represent the interests of all chamber members as Congress debates climate change legislation.

“What is the connection between Union Pacific Railroad, dirty coal and the U.S. Chamber?” Pete Altman of the Natural Resources Defense Council asked in a blog last month. “The dots connecting them draw what has the appearance of a conflict of interest.”

U.P. derives 20 percent of its annual revenue from hauling coal. Any climate legislation is expected to target coal because it emits more carbon dioxide, a greenhouse gas, than natural gas or crude oil when burned to generate electricity.

Union Pacific and U.S. Chamber officials said Donohue doesn't have a conflict of interest. He has been on U.P.'s board since 1998. Records show he received $235,000 from the company last year alone.

The Defense Council's criticism is part of the nationwide battle over energy policy being fought among a variety of interest groups and companies that provide coal, oil, natural gas, nuclear, wind and alternative energy. The chamber has been a flashpoint for competing interests because it represents firms in all areas of the debate.

Altman said the company's code of conduct for its board members requires them to avoid activities that could hurt the company.

Senior research associate Beth Young at the Corporate Library, a corporate governance and executive compensation research firm, said Donohue's presence on the board could raise questions for both parties.

Union Pacific would have to decide whether his position as chamber president could hamper his ability to serve the railroad, she said. Chamber members, meanwhile, might object to his ties to a company with a financial stake in climate legislation.

“I think the concern lies in whether he is swayed” by his relationship with Union Pacific, she said.

“Donohue might want to avoid ties with companies, organizations or any outside entities that have a strong financial interest in a particular outcome of the debate,” Young said.

Several companies have said the U.S. Chamber of Commerce is obstructing progress toward climate change legislation, and energy companies PG&E Corp. of San Francisco and PNM Resources of Albuquerque, N.M., have protested by not renewing their memberships.

PG&E distributes natural gas and derives most of its electric generation from nuclear and hydroelectric power. PNM Resources' power sources are 36 percent coal, 35 percent natural gas and 15 percent nuclear.

Union Pacific executive Bob Turner said board members are free to take diverse views on public policy issues and to talk about those views.

Turner, senior vice president of corporate relations, said Union Pacific's board includes Andrew Card Jr., former chief of staff to President George W. Bush, and Thomas McClarty III, former chief of staff to President Clinton.

“They obviously hold very different views on a wide variety of issues,” Turner said.

Union Pacific's conflict-of-interest provision is directed primarily at preventing personal gain at the company's expense, U.P. spokeswoman Donna Kush said.

Donohue is a desirable board member because as president of the U.S. chamber he regularly talks with Union Pacific customers, Kush said. He also understands the transportation industry because he is a former president and CEO of the American Trucking Associations, she added.

“We are pleased that Tom Donohue has served with distinction as a member of our board of directors for many years,” Kush said.

Union Pacific doesn't inappropriately influence Donohue or the chamber, she said. The company is one of many chamber members and it does not participate in the federation's policymaking procedures, she said.

Donohue did not respond to requests for an interview. Instead, the chamber released a statement accusing the Natural Resources Defense Council of distorting the chamber's position on climate change.

The nation's largest business lobby represents more than 3 million companies, including almost everyone in the climate change debate, the statement said.

“The overwhelming consensus among our members, including renewable and alternative energy companies, is that we need sensible climate change legislation that will actually achieve what it sets out to achieve — reductions in greenhouse gas emissions.”

Chamber spokesman Eric Wohlschlegel said the chamber develops its stance on policies in a democratic fashion through committees and votes by its board.

Wohlschlegel said the chamber's position on global warming is that an international agreement is needed to reduce carbon emissions and address climate change. Also, he said, U.S. legislation should encourage development of renewable energy and reduce emissions while not undermining the economy.

Altman said the chamber has consistently opposed clean energy and climate legislation.

Turner said the country needs to consider all energy sources, but it can't ignore coal because coal provides the power that generates half the electricity used annually in the United States.

U.P. supports initiatives to combat global warming that won't hurt the economy. Nebraska and other Midwest and Western states in particular rely on coal for energy and jobs, he said.

In addition, he said, the federal Surface Transportation Board requires railroads to carry coal. “It's not an optional business for us. We're going to move it.”

Efforts are progressing to create commercially viable methods to capture or lower carbon dioxide emissions from coal, and that work should continue, Turner said.

Union Pacific also is finding new business from renewable energy initiatives, including hauling wind turbines for wind farms, Turner said.

However, renewable energy sources cannot immediately replace coal, he said.

“Renewables are going to be out there. But I don't think they close the energy gap fast enough to say they will replace a significant portion of the energy created from coal.”

Thursday, October 22, 2009

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