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Revolving Doors & the PA Natural Gas Industry

By Susan Volz, FracTracker Alliance Intern

The result of this year’s presidential election has sent shock waves through all levels of government. Many are now wondering what the next four years will look like in terms of funding and policy decisions. Just a few days after the inauguration, the next administration’s cabinet choices have many worried. For example, the person President-Elect Trump has selected to lead the transition at the Environmental Protection Agency (EPA), Myron Ebell, has connections to the fossil fuel industry, suggesting national energy policy may embrace fossil fuel development. Of equal concern are the industry connections of former ExxonMobil CEO Rex Tillerson as Secretary of State and former Texas governor Rick Perry as Secretary of Energy.

While these transformations are happening at the federal level, Pennsylvania has its own long history of revolving doors between government and industry that deserve attention. Examination of data collected by citizen advocate, Dorina Hippauf, as well as my own independent research, shows a state government with extensive ties to the oil and gas industry. This relationship is a concern given that state responses to national energy policy and climate change will become particularly important in coming years.

The Governor’s Office

Former Governor Ed Rendell, who served from 2003-2011, has multiple ties to the natural gas industry and was governor during the initial stages of the shale gas boom in PA. During this time, Governor Rendell leased 130,000 acres of state land to gas extraction companies (he later imposed a ban on leasing state lands). After leaving office, Rendell joined Element Partners, an equity firm with investments in the gas industry. Currently, Rendell is Co-chair of Building America’s Future, a bipartisan coalition of elected officials advocating for investment in the nation’s infrastructure. As recently as August 2016, Rendell has said he makes no apologies and remains a “strong advocate” of unconventional gas extraction, also stating that weaknesses in regulation were “cured” in 2010.

Pennsylvania’s shale gas industry saw its beginnings under Governor Rendell, but the industry truly boomed under Governor Tom Corbett. Corbett, a Republican, served a single term from 2011 to 2015. One of Corbett’s first acts as governor was to sign Act 13, which revised oil and gas laws and implemented the controversial impact fee in lieu of a severance tax. Corbett overturned Rendell’s ban on leasing public lands to gas companies. Corbett accepted $1.8 million in campaign contributions from gas companies. These contributions came not only from the companies themselves but also individual contributions from industry executives. Many of the companies that donated to Corbett’s campaign also found themselves appointed to the Marcellus Shale Advisory Commission.

Pennsylvania’s current Governor, Democrat Tom Wolf, campaigned on a platform of tougher restrictions on natural gas companies, as well as a 5% severance tax. However, the severance tax has failed to be implemented due to contentious budget negotiations with the Republican-held General Assembly. There were also concerns during Wolf’s campaign when it was revealed he had received $273,000 in donations from members of the gas industry. Many environmental advocates called on Wolf to return the funds.

Another important point to consider in these transitions is that, as elected officials move through various offices, their staffers often move with them or are appointed to influential positions. For example, K. Scott Roy served as Rendell’s chief of staff while in Harrisburg. After leaving politics, Roy joined Range Resources, one of the largest gas extraction companies in Pennsylvania. In the past he has also served as Treasurer for the Marcellus Shale Coalition.

The DEP: Regulating in the Public Interest?

The Department of Environmental Protection (DEP) is the state agency responsible for enforcing and regulating the natural gas industry in PA. However, research shows a consistent thread of secretaries with ties to the oil and gas industry dating as far back as secretaries James Seif (1995-2001) and David Hess (2001-2003). Both joined lobbying firms after leaving government. Seif joined Ridge Global, LLC, a lobbying firm founded by former governor Tom Ridge, which has had contracts with the Marcellus Shale Coalition, and where Seif currently serves as Principal of Energy and Environment. Hess joined Crisci, a lobbying firm with many gas companies as clients, where he is currently the Director of Policy and Communication at Crisci.

Katie McGinty was appointed by Governor Rendell and served from 2003 to 2008. Since leaving the agency she has worked for a number of energy-related companies including NRG Energy (operator of natural gas plants),  Element Partners (the same firm Ed Rendell joined), and has been senior vice-president at Westen Solutions (a consulting firm with several natural gas companies as clients). During her Senate campaign, McGinty faced criticism for the significant campaign donations she received from the natural gas industry, as well as her employment past. McGinty was succeeded by John Hanger, who served from 2008 to 2011. Hanger left the DEP to join the law and lobbying firm Eckert Seamans Cherin and Mellott, LLC, which is a member of the Marcellus Shale Coalition. One of their clients is the Pennsylvania Independent Oil and Gas Association (PIOGA).

Perhaps the most infamous DEP secretary was Michael Krancer (2011-2013), who once notoriously said, “At the end of the day, my job is to get gas done.” Prior to joining the DEP, Krancer worked for Blank Rome, a law and lobbying firm that represents gas companies and is also a member of the Marcellus Shale Coalition, where he now currently works once again. Krancer also served as a member of the Marcellus Shale Advisory Commission, the panel that advised Governor Corbett on unconventional gas drilling regulations. Krancer’s father, Ronald, was also a significant contributor to Corbett’s 2010 gubernatorial campaign. After Krancer left the DEP, Corbett appointed Christopher Abruzzo, who served for about a year, followed by Dana Ankust, who also served a single year.

When Tom Wolf took office in 2015, he appointed John Quigley to head the DEP. Due to his past working with environmental advocacy group PennFuture, there was optimism that Quigley’s appointment would take the DEP in a different direction. Quigley had also previously served as secretary of the Department of Conservation and Natural Resources. In 2014, the Pennsylvania Environmental Defense Council sued the Commonwealth to try and stop the leasing of state lands to gas companies. Quigley testified that he had felt pressure to allow the lease of public land. Quigley dramatically resigned as secretary of the DEP in May, 2016, as a result of a leaked email voicing frustration with environmental advocacy groups and gridlock in the General Assembly. Quigley is an interesting counterpoint to the trend of DEP secretaries being influenced by the shale gas industry — an environmental advocate entering a political arena hostile to the DEP’s mission.

If one looks deeper at the DEP, there is further evidence of the revolving door between the oil and gas industry and the agency. For example, Barbara Sexton served as executive deputy secretary before leaving to join Chesapeake Energy, where she is currently Director of Government Relations. Another former deputy secretary, John Hines, left the agency to work for Shell. Michael Arch, who was an inspection supervisor, left to work for PIOGA. And finally, L. Richard Adams was formerly the DEP watershed manager before joining Chief Oil and Gas.

Conclusion

These findings suggest that multiple aspects of the Pennsylvania state government have historical and presently revolving-door relationships with the oil and gas industry. In a sense, this situation is not entirely surprising. PA is one of the largest natural gas producing states in the country, and the rhetoric of energy policy sells natural gas as a cleaner, cheaper, domestically-produced alternative to coal or oil. Historically, states have acted as “laboratories of policy,” as the federal government has been slow to pass legislation addressing energy and climate change. The incoming Trump administration has shown itself to be enthusiastic about expanding the fossil fuel market. However, it’s impossible to predict what changes will happen to the EPA and federal regulations. Such unpredictability makes states all the more important in shaping environmental protection policy in the next few years. We need to be aware of these revolving doors so we can be prepared for what’s coming in the future.

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