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The Enviros Try an End Run Around Washington

With the White House seemingly dedicated to the proposition that conservation is for wimps, environmentalists braced for the worst when Republicans won back control of Congress. At risk, they feared, were bedrock laws protecting air, water, public lands, and endangered species. Sure enough, just weeks after the election, the Administration began issuing proposals that make it easier for companies to modernize plants without installing costly pollution controls and for federal land managers to step up the pace of logging. "The very foundation of how we protect the environment is being undermined," says Debbie Sease, legislative director of the Sierra Club. "For the next two years, we will be playing very, very serious defense."

But how? The greens have only a small hope that moderate Republicans can rein in their drill-at-full-speed colleagues like incoming Senate Environment & Public Works Committee Chairman James M. Inhofe of Oklahoma. That's why the enviros are making a key shift in strategy. Instead of vainly lobbying lawmakers, they're increasingly going straight to the public. Their intention is not just to put grassroots pressure on Washington. They also hope to persuade corporations, which have poured millions into GOP coffers in expectation of less regulation, to mend their ways. "We can get nothing done in Washington, or we can go directly to the marketplace," explains Todd Paglia, campaign director for ForestEthics, a forest protection group.

By staging protests at Staples (SPLS) stores, Paglia's group recently persuaded the company to triple the recycled content of its paper products. It "showed us we could do more within the confines of good business practices," says Staples Vice-Chairman Joseph S. Vassalluzzo. Buoyed by such successes, enviros have everyone from retailers and Wall Street to Big Oil in their sights. "Companies are very sensitive to anything that would put their brand name in a bad light," says National Environmental Trust President Phil Clapp.

The Rainforest Action Network (RAN) is targeting banks that finance eco-unfriendly projects like pipelines that run through forests. Stop the funding, the theory goes, and the projects won't happen. ABN Amro (ABN) and HSBC (HBC) have agreed to pull back, so RAN has moved on to Citigroup (C), staging protests and running ads asking customers to cut up their credit cards. Thus far, RAN has received more than 20,000 mutilated cards. Citigroup says it agrees with RAN's causes but calls its "portrayal of our involvement in various projectshighly misleading."

Another battleground: energy. With no hope of getting energy-efficient bills through Congress, enviros are taking on Detroit and Big Oil. The Sierra Club is urging people to write to Ford, demanding fuel-saving technologies in SUVs. Soon, the group will launch a campaign charging that GM (GM) is irresponsible for building the Hummer. And Greenpeace is organizing boycotts of gas stations to force ExxonMobil (XOM) to soften its hard-line stance on global warming. "Being handed a reputation as environmental enemy No. 1 for such a big customer-facing business has to be considered a brand risk," warns a recent Deutsche Bank (DB) report on the company. Meantime, enviros are hoping to pin that label on Washington, too.

Still, it will be a hard sell. To avoid a backlash like the furor over relaxed arsenic standards, which embarrassed President Bush early in his term, the White House is spinning the new proposals as mere streamlining of cumbersome regulations. "We've got our work cut out for us," says New York Representative Sherwood Boehlert, a rare pro-environmental Republican. But in today's Washington, an outside-the-Beltway strategy may be the enviros' only hope. Outgoing SEC Chairman Harvey Pitt isn't going back to his old law firm, sources say. Pitt resigned under fire on Nov. 5 but is still at the agency awaiting the appointment of a successor. He was expected to return to Fried Frank Harris Shriver & Jacobson, where he pulled down $3 million a year as the go-to guy for Wall Street and accounting firms. But sources say neither Pitt nor Fried Frank have put out feelers about his return, and close friends say that Pitt may stick with his early pledge not to practice law at all after leaving the SEC. Other options: teaching or consulting. Retiring Senator Phil Gramm (R-Tex.), a prodigious fund-raiser, has turned over some $2 million in his reelection war chest to a new group, the Friends of Phil Gramm PAC. That lets Gramm use his campaign leftovers to support other candidates or causes as he sees fit. He can even spend it on travel and entertainment to raise more PAC money. Such a large kitty gives Gramm, soon to become a vice-chairman at investment bank UBS Warburg, financial muscle in Washington. UBS's own PAC contains only $29,000. Defense Secretary Donald Rumsfeld's decision on whether to O.K. the Air Force's controversial bid to lease Boeing 767s as refueling tankers, expected by yearend, won't come until spring, a defense official says. Delays are troubling the Air Force, which believes low interest rates and the ailing airline industry give it leverage now.

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