Senate candidate McGinty's role in energy industry is questioned
November 16, 2015 8:11 AM
Democratic candidate for the U.S. Senate Katie McGinty, center, shares a laugh with Allegheny County Executive Rich Fitzgerald, left, and U.S. Rep. Mike Doyle at the Allegheny County Courthouse on Sept. 5.
Democrat Katie McGinty’s bid for U.S. Senate is being powered by a longtime commitment to clean energy and natural gas. But skeptics say the way she’s moved between the public and private sector puts her resume under a cloud.
Ms. McGinty’s environmental credentials include advising former Sen. Al Gore and heading the Council on Environmental Quality during the Clinton Administration. She also headed Pennsylvania’s Department of Environmental Protection between 2003 and 2008 under Gov. Ed Rendell, on whose watch the state pursued both renewable energy and natural-gas development.
“Energy is critical to our environment, our economy, our national security,” Ms. McGinty said. “We have to develop energy cleanly, tackling climate change and keeping jobs here at home.”
But her work since leaving state government in July 2008 has generated criticism.
“She’s used her role as a government official to profit from the revolving door,” said Alleigh Marre, a spokeswoman for the National Republican Senatorial Committee, which hopes to see incumbent Sen. Pat Toomey re-elected next year.
In October 2008, Ms. McGinty took a board position with NRG Energy, an increasingly green-focused power provider with natural-gas, coal, wind and other energy facilities across the state. Between 2008 and 2013, when Ms. McGinty left the board, she received $1.1 million in cash and stock awards, SEC filings show.
Ms. McGinty also took a board position at Iberdrola USA in 2009. The wind-energy and natural gas firm had previously acquired Community Energy, a renewable-energy developer from which the state purchased power. The two firms parted ways in 2009, but in 2010, Iberdrola received a $10 million federal stimulus grant though the state, to help build a Fayette County wind farm. Ms. McGinty would say only that she earned “the same as all the board members made” at Iberdrola, a privately held subsidiary of a Spanish firm that does not publicly report such compensation.
Ms. McGinty made at least one effort to help Iberdrola while still in office, when Iberdrola was seeking to merge with Energy East, a utility company with operations in New York and New England. In April 2008, Ms. McGinty wrote a letter to Mr. Rendell, notifying him that Iberdrola hoped he’d put in a good word for the company with New York’s then-Governor, David Paterson. New York’s approval was needed for the merger to proceed, she wrote: Iberdrola "requests that you contact Governor Paterson to provide him with information on Iberdrola's operations in Pennsylvania and Iberdrola's commitment to good corporate citizenship and investment."
Though the request had no impact on Pennsylvania, Ms. Marre said the letter was notable, coming as it did just a few months before Ms. McGinty’s departure from government, and her subsequent board position at Iberdrola. “It’s a very close tie from the [letter] to the board position and to her personal finances,” she said.
Mr. Rendell said the request for a recommendation was “not unusual,” and that he had no objection to honoring it. “As governor, I wanted to help Pennsylvania companies grow and expand and do good things,’ he said. “Iberdrola did great things for us, and all they wanted me to do was vouch for that. “
Once she left office, Ms. McGinty said she didn’t lobby the Rendell Administration on behalf of those firms or others she consulted for; state lobbying-disclosure records show no such activity on her part. “I’m proud to have served as a board member of Iberdrola and NRG, both recognized leaders in renewable energy,” she said. “I was involved in encouraging management in investing in clean energy.”
But Ms. Marre noted that Ms. McGinty was still on Iberdrola’s board in 2014, when she was campaigning for governor, and criticizing incumbent Tom Corbett’s energy policy.
“It’s not just that she is benefiting financially,” Ms. Marre said of Ms. McGinty’s Iberdrola ties. “She then turns around and campaigns on it.”
It’s no surprise that Republicans are grousing about Ms. McGinty’s ties. Even before she formally announced her campaign this summer, the conservative online Washington Free Beacon predicted that “Republicans might look to revive allegations of cronyism from her time leading Pennsylvania’s Department of Environmental Protection.”
The story recalled a controversy in which a non-profit that employed her husband had received grants from the state while she was DEP secretary. That situation, and a similar one, prompted a state Ethics Commission ruling that required department heads to separate themselves entirely from awarding money to anyone that employs a spouse.
But other than a one-year ban on lobbying, there’s no state law barring officials from post-government employment. But when high-level officials work in industries they once oversaw, it can “call into question who they were serving in their final months: the public, or a future employer?” said Barry Kauffman, executive director of Harrisburg watchdog group Common Cause.
Some environmental activists echo that concern.
Most environmentalists regard Ms. McGinty warmly. They tout accomplishments like the Rendell administration’s Alternative Energy Portfolio Standard, which is on pace to have sources like solar, wind and new coal technologies providing 18 percent of the state’s power by 2020.
“The Rendell administration spearheaded many of the commonwealth’s top environmental initiatives,” said David Masur, executive director of PennEnvironment. “It might not have happened at all if Secretary McGinty wasn’t tenaciously working the halls.”
But Ms. McGinty also presided over the onset of “fracking” for natural gas in shale deposits — a practice hotly debated by some environmentalists.
“Her work on clean energy is like community service: It hasn’t absolved her of the original crime” of backing natural gas, said Alex Lotorto, shale gas program coordinator for the Energy Justice Network.
Mr. Lotorto was particularly concerned about Ms. McGinty’s ties to firms in the gas industry, which include consulting work along with her NRG post. “She was DEP secretary when it was time to make the call on whether this industry should be welcomed, and then she went to work for the industry,” he said.
A spokeswoman said NRG did not comment on former board members. Ms. McGinty noted that shale drilling “was only in its infancy” during her DEP tenure, and that “Pennsylvania was a nationally and internationally renowned environmental leader during my tenure.”
Mr. Rendell said, Ms. McGinty “was the first person who came to me and said ‘this is going to be good for the economy, but we’ve got to pass regulations to do it.’” The administration later crafted new rules governing well construction and the disposal of contaminated frackwater.
Mr. Rendell said Ms. McGinty’s “fabulous job” of pursuing wind and solar firms helped the state rank third nationwide in a 2009 Pew Charitable Trust survey of green jobs. As for the conflict-of-interest complaints about her private-sector work, he said, “All you’re doing is fighting for the things you fought for in office. Where you’d have to worry is if Katie McGinty was hired by someone and then starts attacking wind companies.”
Not all the state’s investments in green jobs panned out. The Rendell administration provided nearly $20 million in financial aid so that wind-energy company Gamesa could build windmill manufacturing plants in Cambria and Bucks counties. (Iberdrola has been a main investor in Gamesa; when Ms. Mcginty wrote her 2014 memo to Mr. Rendell, she said Iberdrola “has just under 30 percent interest” in the firm.) Both plants have since closed down.
While Gamesa recently announced a contract to build 37 turbines for a New York wind project, it is unclear where they will be built: Gamesa, whose U.S. headquarters are in Bucks County, did not return calls for comment.
“McGinty clearly has close ties with the alternative energy industry and presided over a major expansion of taxpayer subsidies to the sector,” said John Bouder, a spokesman for the conservative Commonwealth Foundation. “That led to some significant failures and millions in waste.”
Mr. Rendell and Ms. McGinty both say the plant closures are the fault of Republicans who opposed renewing federal tax-credits for wind-energy producers. Ms. McGinty called that opposition “an economic crime.”
Luring the company ““was a huge win” that created “1,000 extremely good manufacturing jobs,” she said. But, “There’s only so many body-blows a company can take before you succeed in putting it out of business.”
Environmentalists say the fate of the wind tax credit shows why the stakes in 2016 are so high. Josh McNeil, executive director of Conservation Voters of Pennsylvania, said the Senate will be a key battleground over initiatives like the Obama administration’s Clean Power Plan -- an effort to fight global climate change by limiting greenhouse-gas emissions from electricity production.
Ms. McGinty “stands out as a candidate with decades of environmental experience, and that’s exciting,” said Mr. McNeil. I’m really interested to see how she and the other candidates talk about the environment. That will tell us how much their history matters.”
Chris Potter: firstname.lastname@example.org or 412-263-2533.
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