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KEYCODE BAYER #107

December 2003

Dow, Du Pont, Bayer, BASF and Monsanto:

CHEMICAL INDUSTRY'S SECRET PLAN TO ATTACK CALIFORNIA'S ANTI-TOXICS TREND

Memo Calls for Phony Front Groups, Spying on Activists

The precautionary principle, a policy that says new chemicals should not be allowed on the market unless they´re proven safe, has gained a strong foothold in Europe, and in recent years California has enacted measures applying the principle to several pollutants. The chemical industry now plans to conduct a covert campaign attacking the growing movement in California for more chemical safety testing, with tactics including the creation of phony front groups and spying on activists, according to an internal American Chemistry Council (ACC) memo obtained by Environmental Working Group (EWG). The ACC comprises more than 100 companies - among others Dow, Du Pont, Bayer, BASF and Monsanto.

The memo (see below) offers a rare inside glimpse of the deceptive and underhanded tactics used by some corporations and public relations firms to lobby against tougher environmental regulations. It recommends that ACC, the lobbying association for U.S. chemical companies, hire a crisis communications firm that promotes itself as the attack dog of the public relations industry to fight back against California's adoption of laws and regulations that embrace the "precautionary principle."

The precautionary principle, a policy that says new chemicals should not be allowed on the market unless they're proven safe, has gained a strong foothold in Europe, and in recent years California has enacted measures applying the principle to several pollutants including, most recently, chemical flame retardants. Despite the fact that two-thirds of the public believes that such protections are in place already, the Bush Administration has opposed their realization here in the U.S.

The memo warns that the state's embrace of the precautionary principle is a threat to the entire U.S. chemical industry because "California's political climate makes the state more susceptible to policy and thinking inspired by the PP precautionary principle than other geographic region... California is a bellwether state, and any success enjoyed here could readily spill over to other parts of the country."

It recommends to ACC members that they pay $120,000 a year to Nichols-Dezenhall, a Washington-based firm that hires former FBI and CIA agents, to conduct "selective intelligence gathering ... about the plans, motivations and allies of opposition activists... Focus on the PP 'movement leadership' in the U.S., and in particular, California."

The memo says Nichols-Dezenhall would also "create an independent PP watchdog group to act as an information clearinghouse and criticize the PP in public and media forums... The group could be structured as a tax-exempt organization."

EWG obtained the document from a confidential source outside the chemical industry who received it from ACC, which was recruiting other industries as allies in the campaign. Microsoft Word data embedded in the document confirms that it was written in July by Tim W. Shestek, an ACC lobbyist in Sacramento.

In a Nov. 19 letter to ACC's President Greg Lebedev and Vice President for State Governmental Affairs Roger Bernstein, EWG asked if the association had hired the firm to execute the plan. Among Nichols -Dezenhall's reported tactics are digging through the trash of its' clients opponents.

Creating phony front groups is "patently deceptive in its effort to use third parties to carry the message because, understandably, the ACC lacks credibility and trust in any discussion of the safety of its members' products," said the letter from Bill Walker, EWG's vice president for the West Coast. "However, the third tactic, "selective intelligence gathering," pushes the ethical envelope toward dirty tricks, given Nichols-Dezenhall's reputation for such techniques."

"As someone whose trash might be searched," Walker said today, "I'd at least like to know the lengths ACC is planning on going to in order to stop common-sense public protections in the State of California. ACC has spent millions on advertising and corporate PR to position itself as a solid corporate citizen, with nothing to hide from the public."

Nichols - Dezenhall
Precautionary Principle Campaign Proposal

The Precautionary Principle (PP)

The American Chemistry Council believes that the Precautionary Principle is a top priority and an emerging issue in California for two main reasons: it has affected and is negatively affecting a cross section of California industry in a variety of ways; and California's political climate makes the state more susceptible to policy and thinking inspired by the PP than other geographic region.

California's business community has done little to date to counter the PP, largely allowing PP proponents to control the debate and spread their messages unfettered. Should this trend continue, industry runs the risk of allowing the PP to gain additional momentum, with potentially much broader and more severe implications. Moreover, California is a bellwether state, and any success enjoyed here could readily spill over to other parts of the country.

Proposed Strategies and Tactics

In order to help California industry build awareness and respond to legislative and regulatory attacks on an as-needed basis, the American Chemistry Council is supporting and recommends an aggressive awareness campaign as outlined in the following strategies and tactics. We also believe that in order for such a campaign to succeed, it must be deployed in close coordination with - and with an aim to complement and enhance - the business community's current and future legislative advocacy efforts.

Strategies

1. Define the issues on our terms to stigmatize the PP, win control of the message war and build awareness of the negative consequences associated with its implementation.

2. Generate support for our position by identifying, recruiting and mobilizing non-traditional allies in the scientific, academic and activist communities to call into action when needed to fight, or preempt unwelcome initiatives.

3. Selectively challenge our adversaries and position their demands and political agenda as contrary to the best interests of Californians.

Tactics

1. Establish a computerized issue monitoring system to track all media, political, policy and regulatory information flow in California with regard to the PP. ID and catalogue the negative effects of the application/ implementation of PP and create a database for use by the coalition and allies for targeted response to initiatives.

2. Conduct and publicize an economic-impact study to dramatize the potentially devastating impacts to industry and consumers should California broadly adapt PP-based legislation and regulation. The study could specify threats to both innovation and technology-development, as well as provide region-specific breakouts (e.g., LA, San Francisco, Silicon Valley, Imperial Valley) so as to create multiple media-pitch opportunities and to generate support among target audiences.

3. Use satire and humor to demonstrate how, taken to its logical extreme, application of the PP would set Californians back to the stone ages. Tactics, through third-parties, would include websites, posters, bill boards, radio placements and internet communications.

4. Harmonize messages through materials by developing an "information and response package", including a fact sheet with substantive arguments and media-friendly sound-bites for use by the coalition and third party allies.

5. Media outreach - Provide a steady stream of information: studies, reports and other media products to advance the message and agenda of the coalition. Approach and educate conservative columnists and talk radio hosts on the issue to stimulate debate.

6. Recruit and energize the business community by creating and publicizing a coalition-sponsored business roundtable or lecture series and/or conferences to educate potential allies about the PP and the consequences of its implementation. These could be held in Sacramento, Los Angeles, San Francisco, San Jose and San Diego and done in conjunction with other business associations and/or California based think tanks.

7. Conduct selective intelligence gathering about the plans, motivations and allies of opposition activists on an as needed basis. Focus on the PP "movement leadership" in the U.S., and in particular, California.

8. Recruit and energize non-conventional third party critics. Mobilize existing critics of the PP while identifying, recruiting and arming new highly credible third party allies in from appropriate communities (e.g., the minority community, consumer activists, regulatory watchdogs, think tanks) to deliver messages critical of the PP concept that highlight the negative consequences of PP implementation. Encourage the formation of a second, non-business led coalition that can be used to provide testimony, demonstrations, press conferences and other defensive and pro-active situations.

9. Create an independent PP watchdog group to act as an information clearinghouse and criticize the PP in public and media forums. For too long the "common sense" appeal of the PP has gone unopposed. This group would serve as a rallying point for industry and third-party voices in the debate and seek out opportunities to reactively and proactively raise the profile of the negative consequences of the PP. It is possible that the group could be structured as a 501(c) (3) or 501(c) (4) tax-exempt organization.

10. Mount protests timed with debate/discussion/votes on PP-related legislative proposals. Mobilize recruited allies and PP watchdog group to vocally and visibly air arguments against the adoption of the PP in public forums, e.g., outside the capitol and/or local government hearing room.

11. Draft and sponsor ordinances/resolutions rooted in risk management and sound science. Just as activists convinced the San Francisco Board of Supervisors to adopt an ordinance requiring the PP to factor into their decision-making, industry and its third-party allies could propose ordinances/resolutions that call on municipalities and the state government requiring "sound science" to factor into theirs.

12. Fund a documentary and associated media blitz that examines "shocking" negative past consequences of the PP, in the context of present-day CA situations if possible. Possible topics include: the Peruvian outbreak of cholera; African nations' battle with malaria without DDT, vis-à-vis the possible spread of West Nile virus.

PROPOSED FIRST YEAR BUDGET

Based on their previous experience executing similar tactics for other clients, Nichols-Dezenhall estimates that the communications/public affairs program outlined in this memorandum would cost in the range of $12,500 - $15,000 per month (not including out-of-pocket expenses, e.g., travel costs, materials, printing, ally reimbursement, other costs listed below) during periods of intense activity, and $5,000 - $7,500 per month when the legislature is out of session. This estimate is subject to change if the proposal is trimmed or additional tactics added.

This estimate assumes that N - D Sacramento VP Dan Kramer and N-D Los Angeles VP Ryan Knoll, will serve as senior project managers and that N - D will be responsible for ensuring proper execution of tactics and strategies as well as the coordination of on-the-ground allies and assets.

Recruit & Mobilize Third Parties
$25,000

Media Outreach
$20,000

Recruit & Mobilize Allies
$15,000

Research and Investigation
$10,000

Study
$15,000

Documentary
$20,000

Legal
$15,000

This cost estimate is not a retainer. Nichols - Dezenhall only charges for hours worked on client-authorized projects.

N Ÿ D will be responsible for ensuring effective execution of the strategies and tactics and for coordinating on-the-ground allies and resources.

In the event we decide to move forward with all, or a portion, of this proposal N-D will be available to provide advice and counsel on a daily basis.