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At the federal level, the Trump administration has adopted a no-corporate-lobbyist-left-behind hiring practice that emphasizes placing former industry executives and lawyers in key decision-making positions where they can push policies that will benefit their former employers and clients.
At the state level, the revolving door is swinging in the opposite direction. Former regulators and government employees are getting their chance to cash in on the decisions they made as public employees that benefited their new clients. With huge amounts of dollars on the line, companies are hiring high-powered lobbying firms, which are bursting at the seams with former regulators and government employees, to ensure their bottom lines aren’t impacted by an undesired outcome.
In New Jersey, the corporate sponsors of a major natural gas pipeline project are pulling out all the stops to make the $1 billion project a reality. A new report released this week by the Public Accountability Initiative (PAI), a nonprofit public interest research organization, names the individuals, lobbyists, regulators, and “under-the-radar profit motives” behind the PennEast Pipeline.
The report, “The Power Behind the Pipelines: PennEast Pipeline,” reveals the army of revolving-door lobbyists with ties to New Jersey politicians and Pennsylvania regulatory agencies working on behalf of the pipeline. In New Jersey alone, PennEast has more than a dozen registered lobbyists with extensive professional and personal ties to New Jersey politics. Even the administration of New Jersey’s new governor, Phil Murphy (D), has several ties to the pipeline project. The governor appointed five registered PennEast lobbyists to his transition committees, according to the report.
At the moment, PennEast has received approval from the Federal Energy Regulatory Commission (FERC) and Pennsylvania regulators. The project must still gain approval from several regulatory agencies, including the New Jersey Department of Environmental Protection (DEP) and the Delaware River Basin Commission. On February 1, the New Jersey DEP rejected PennEast’s application for a water quality permit but said the company could reapply.
Despite his appointment of PennEast lobbyists, Murphy remains a wildcard. He’s a progressive Democrat who is pushing strong environmental policies early in his tenure as governor. Similar to how New York Gov. Andrew Cuomo eventually banned fracking in his state, Murphy could pressure state agencies to kill the pipeline project once and for all. But lobbyists are lining up to convince Murphy to stay out of the way of the project.
“Pipeline lobbyists and corporate networks are in positions to try to influence Murphy. These are really powerful, well-connected interests with a lot of leverage in the state,” Derek Seidman, a research analyst at the Public Accountability Initiative and author of the report, said in an email to ThinkProgress. “So it’s up to Murphy to show that he’s truly serious about moving towards a carbon free future — in this case, by forcefully opposing a controversial pipeline that, if built, will lock in large emissions for decades to come.”
The PennEast Pipeline will begin in northeastern Pennsylvania, and end near Trenton, New Jersey. The project is backed by subsidiaries of a long list of powerful North American energy companies: UGI Corp., New Jersey Resources, South Jersey Industries, Southern Co., and Canada’s Enbridge.
Murphy has signaled he wants to stand up to the fossil fuel industry in New Jersey. He’s supported a ban on hydraulic fracturing in the Delaware River Basin, and he vowed to bring New Jersey back into the Regional Greenhouse Gas Initiative, a program that places a regional cap on the amount of carbon that fossil-fuel-based power plants can emit. Murphy welcomed state Attorney General Gurbir Grewal’s decision to sign onto a multi-state letter opposing federal expansion of offshore drilling. He’s also signed an executive order to promote offshore wind energy.
Outside of the New Jersey government, a potential conflict of interest exists at the Delaware River Basin Commission, where PennEast is moving through the application process. According to the PAI report, the executive director of the Delaware River Basin Commission, Steven Tambini, was formerly a top executive for a wastewater company that is a member of the pro-fracking Marcellus Shale Coalition. UGI Corp. and Cabot Oil & Gas, a shale gas producer that would be a customer of PennEast, also are members of the coalition.
In Pennsylvania, where regulators already approved the portion of the project that would travel through the state, Pamela Witmer, a former commissioner on the state Public Utility Commission, now serves as vice president of government affairs for PennEast sponsor UGI. Former Pennsylvania Department of Environmental Protection official Alissa Harris serves as vice president of legislative affairs at UGI, according to the report.
The lobbying effort on behalf of PennEast also has ties to the Koch Brothers, according to the report. Paul Cicio, president of the Industrial Energy Consumers of America (IECA), has lobbied for PennEast. One of the members and funders of IECA is Koch Industries.
In both New Jersey and Pennsylvania, state lawmakers must wait one year before working as industry lobbyists. Most states impose similar “cooling off” periods of one or two years during which legislators or government officials are restricted from lobbying. In about a dozen other states, there aren’t any laws preventing legislators and state officials from resigning one day and registering as lobbyists the next, according to a Center for Public Integrity report.
Revolving-door policy-making is not unique to New Jersey. In South Carolina, for example, an estimated three dozen lobbyists have been hired by major utilities to work the State House in Columbia as lawmakers decide what to do about a failed nuclear plant project. The project has already cost South Carolina power customers more than $2 billion.
Dominion Energy, a Virginia energy company seeking to buy SCANA, a part owner of the nuclear plant, reportedly has hired former South Carolina Gov. Jim Hodges (D) to lobby state lawmakers as they prepare to debate legislation that could make or break Dominion’s proposed $14.6 billion buyout of the South Carolina company.
The new legislative director for North Carolina Gov. Roy Cooper (D), Lee Lilley, worked for McGuireWoods Consulting in Washington where he lobbied on behalf of the oil and gas industry, WRAL.com reported Wednesday. Lilley was registered to lobby Congress on behalf of the American Petroleum Institute and Dominion Resources, the primary sponsor of the Atlantic Coast Pipeline. The controversial natural gas pipeline project is designed to travel from West Virginia through Virginia into North Carolina.
In Washington, FERC represents the quintessential revolving-door regulatory agency. In 2015, E&E News reported that employees at the commission had deep ties to the industry they regulate. Documents obtained by E&E News showed more than 40 instances in one year — 2014 — when FERC employees entered into negotiations for jobs outside the agency. The companies interested in hiring agency staff fell under the commission’s jurisdiction, including Dominion Energy, Xcel Energy Inc., TransCanada Corp., Florida Power & Light Co., FirstEnergy Corp., and American Electric Power Company Inc.
Before taking over as FERC chairman in December, Kevin McIntyre spent his entire legal career working as a lawyer and lobbyist for the energy industry in matters before the commission. On the other side of the revolving door is William Scherman, who served as FERC’s general counsel before leaving to serve as energy industry attorney.
Controversy has surrounded Scherman after it was revealed last month that he contacted FERC Commission Neil Chatterjee on behalf of his client FirstEnergy Corp. in the lead-up to the commission’s decision on whether to approve the company’s proposed sale of a coal plant to its utility affiliates in West Virginia. Before the commission issued a decision in the case, Chatterjee released a notice of an ex parte — or outside — communication with Scherman, who works as an industry attorney for the law firm of Gibson Dunn.
McIntyre said he would speak with commission staff about the incident in order to avoid future inappropriate communications with officials or representatives of companies that have pending cases before the commission. FERC ultimately rejected FirstEnergy’s sale of the plant.
Scherman told S&P Global Market Intelligence that he believes he did nothing wrong when he contacted Chatterjee about the FirstEnergy. For several years, Scherman has argued that ex parte rules are difficult to enforce and serve to cut off federal and state commissioners from vital information.
This is not the first time Scherman has run into trouble with potentially improper communications at FERC. In the early 1990s, Scherman was on the other side, serving as FERC’s general counsel. During this time, congressional investigators determined that commission staff members had violated federal law and FERC rules when they met privately with sponsors of the Iroquois Pipeline to discuss ways to expedite approval of the natural gas project. Prior to the start of regular protests at FERC in recent years by activists who accuse the commission of serving as a rubber stamp for the natural gas industry, the Iroquois Pipeline battle was the most contentious case to come before the agency.
A House committee chairman suggested that FERC’s internal investigation of the incident was a whitewash, the Washington Post reported in 1992. A federal investigator found that FERC employees who met with the pipeline company said Scherman, who directed the internal investigation, asked them only perfunctory questions about it, according to the Post. Investigators determined that “FERC officials engaged in prohibited ex parte communications” at their meeting with the gas pipeline company. Scherman and the commission employees who met with the pipeline company did not face any disciplinary action.
Sherman had not responded to a request for comment from ThinkProgress at the time this article was published.
— LittleSis.org (@twittlesis) February 7, 2018
In New Jersey, PennEast lobbyists are arguing the pipeline is needed to meet consumer demand and increase grid reliability. Opponents say the pipeline is unnecessary, harmful to the environment, in violation of landowner rights, and motivated primarily by high rates of return.
Last month, in a 4-1 vote, FERC approved PennEast’s application to build the pipeline, concluding that the project’s benefits outweigh any adverse effects on landowners and surrounding communities. The lone dissenter, Commissioner Richard Glick, who joined FERC late last year, said he does not believe PennEast’s sponsors made a convincing argument that the project is needed.
The New Jersey Division of Rate Counsel, which serves as the state’s consumer advocate, agreed with Glick’s assessment. The Rate Counsel argued that an independent analysis of the project — as opposed to the claims of the pipeline’s sponsors — would have revealed that the PennEast project was unnecessary because projected demand requirements for New Jersey and Pennsylvania natural gas utilities could have been met through existing supply arrangements.
In the end, New Jersey’s new governor — with or without the help of a revolving door of corporate lobbyists — might be the person who decides the future of PennEast. As the PAI report concluded: “Gov. Phil Murphy’s administration holds significant influence over whether entities within New Jersey will ultimately approve the pipeline in that state, which may be the last hope for pipeline opponents.”