The Impeachment Hearing Room

Pelosi Investment Shows
Unlikely Energy Alliance

Shares Purchased
In Pickens Firm;
Oil Man's New Role

By IAN TALLEY
August 23, 2008; Page A3

WASHINGTON -- House Speaker Nancy Pelosi and her husband invested between $50,000 and $100,000 in T. Boone Pickens's Clean Energy Fuels Corp., which could benefit from legislation the California Democrat favors to boost U.S. use of natural gas.

The investment is a small fraction of the Pelosis' net worth. But it highlights the unlikely alliance evolving between Mr. Pickens, an oil man with a long history of support for Republican causes, and powerful Democrats who have welcomed Mr. Pickens's recent campaign for developing alternatives to oil.

Drew Hammill, a spokesman for Mrs. Pelosi, said the investment "does not raise any direct conflict-of-interest issues" or violate any ethics rules of the House of Representatives. "The speaker has been an advocate for increasing our country's energy independence and for renewable energy for years, long before this purchase," Mr. Hammill said. He said Mrs. Pelosi was unavailable to comment directly on the issue.

Legal experts say that unless policies promoted by a lawmaker exclusively benefit him or her, no ethics laws are violated. "The ethics rules are so incredibly narrow that unless you are pushing or voting for something that will impact only you, it doesn't count as a conflict," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington.

Asked if the investment could raise the appearance of impropriety, even if it is legal, Mr. Hammill said such a standard would mean the speaker or her spouse wouldn't be able to own shares in any company given the comprehensive nature of her position.

The Pelosis got in on the ground floor at Clean Energy, purchasing shares in an auction when Mr. Pickens publicly launched the company on May 25, 2007. Clean Energy markets compressed natural gas and liquefied natural gas as a fuel for motor vehicles. The investment was valued at $50,000 to $100,000 when the shares opened at $12.10 apiece, according to Mrs. Pelosi's financial disclosure forms. These forms list investments only as a range of values. The purchase is listed as stock held by the speaker's husband, successful financier and businessman Paul Pelosi.

The investment rose at the end of 2007, when shares closed at $15.14, to between $100,001 and $250,000. On Friday, the stock closed at $14.23 a share, down from a high of $20.64 in October.

The shares' value represents less than 1% of the Pelosis' total 2007 public and private investment assets, which, not including real estate, are estimated at between $15 million and $52 million, based on the Speaker's disclosure record. Including real-estate and bank account assets, the Pelosis' net asset value is estimated at between $35 million and $156 million, according to the Center for Responsive Politics.

Key Platform Plank

Expanding use of natural gas is becoming a key plank of the Democrats' energy strategy. Among the proposals Congress is likely to consider is a bill from House Democratic Caucus Chairman Rahm Emanuel (D., Ill.). In July, Mr. Emanuel introduced a bill that would provide tax credits for the purchase of natural-gas vehicles and home-refueling systems.

A Dow Jones Newswires review of investments of other House and Senate leaders shows a variety of investments. For example, assets owned by House Minority Leader John Boehner (R., Ohio) are largely distributed through various investment funds, with the exception of $1 million to $5 million in retirement shares in packaging and plastics company Nucite Sales, where he served as the company's president. Mr. Emanuel holds his stock primarily in a blind trust.

Senate Minority Leader Mitch McConnell (R., Ky.) and Majority Leader Harry Reid (D., Nev.) have their assets largely tied up in IRA accounts and investment funds. And while Sen. Jeff Bingaman (D., N.M.) owns shares in a stable of energy companies, including Big Oil firms, the ties are indirect, as part of a broader investment fund.

This year, the speaker has aligned herself with a renewed interest in natural gas, promoted in part by gas industry executives eager to expand markets amid expectations of increased U.S. supplies. Mrs. Pelosi said last week the energy package she plans to unveil in September "will increase the use of natural gas, which is abundant, clean and cheap."

The company itself says lawmakers' proposals will boost its fortunes. "We believe Clean Energy stands to benefit from the momentum generated from energy issues coming to the forefront in the U.S.," the company's president, Andrew Littlefair, said in Clean Energy's second-quarter earnings report earlier this month.

"There is proposed legislation in Congress promoting natural gas as a transportation fuel, and we are seeing an increasing number of grants providing incentives to switch to natural gas fueling solutions," he said.

Shares of natural-gas companies have doubled since Democrats took control of Congress in late 2006. While much of that is likely due to rising oil prices, a portion has been the result of proposed legislation from Congress, some analysts say.

Seizing the Moment

Mr. Pickens seized the moment provided by the recent run-up in oil prices to campaign for a national energy plan that would move the country toward 20% reliance on renewable energy, such as wind turbines, and gradually changing the nation's vehicle fleet so it can run on natural gas. Besides natural gas, Mr. Pickens has also invested billions in wind farms.

Just four years ago, Mr. Pickens helped fund the Swift Boat Veterans for Truth, a political group that criticized then Democratic Presidential candidate Sen. John Kerry's Vietnam record. Those attacks have been cited as a factor in the Massachusetts senator's loss in the 2004 U.S. presidential election.

But Mr. Pickens's recent embrace of renewable energy has made him the darling of the Democrats. Since introducing his "Pickens' Plan," the Texas oil billionaire has met with presumptive Democratic presidential nominee Barack Obama, Senate Majority Leader Reid, Mrs. Pelosi and other top Democratic lawmakers.

Mr. Pickens "was my mortal enemy," Mr. Reid said in July. "He's my pal now."

-- Christina Wright and Siobhan Hughes contributed to this article.

Write to Ian Talley at ian.talley@dowjones.com