Dem Senate Recruit Advised Federal Energy Regulators While Employed by Green Energy Firms

Blurred lines between Kathleen McGinty's policy, business interests

Katie McGinty / AP
July 28, 2015

A Pennsylvania Democrat’s expected U.S. Senate run could renew scrutiny of her role in crafting green energy and environmental policies while she helped run, and was paid by, companies that received billions in taxpayer dollars.

Kathleen McGinty resigned as chief of staff for Gov. Tom Wolf (D) last week, paving the way for her likely bid to challenge Sen. Pat Toomey (R). She will face Joe Sestak in a Democratic primary, easing some Democrats’ fears of nominating the former congressman, who lost to Toomey in 2010.

However, McGinty has baggage of her own. If she does enter the race, state Republicans might look to revive allegations of cronyism from her time leading Pennsylvania’s Department of Environmental Protection.

Those allegations led to an official ethics probe that eventually reached the state Supreme Court. The investigation was unsuccessfully challenged by Ed Rendell, then the state’s governor, who had appointed McGinty to the department and later worked with her at a green energy investment firm.

Subsequent roles with both federal regulators and large energy companies raise similar questions. As McGinty advised energy regulators, she was employed by or served on the boards of numerous companies that collectively benefited from billions in federal grants, contracts, and loan guarantees.

Efforts to reach McGinty for this story were unsuccessful.

McGinty chaired the White House Council on Environmental Quality under President Bill Clinton. A protege of Al Gore, she was considered a potential nominee to lead the Environmental Protection Agency after Barack Obama was elected president in 2008.

McGinty went to the private sector instead. In October 2008, she joined the board of NRG Energy. In January, she signed on with "cleantech"-focused venture capital firm Element Partners as an operating partner. In June, she joined the board of the Spanish energy company Iberdrola’s U.S. arm. Four months later, she was hired as a managing director at Weston Solutions, an environmental consultancy.

"Ms. McGinty is the ideal choice to lead Weston’s green development business based on her strong track record in creating economic growth out of environmental challenges, a key tenet of Weston’s approach to green development," the company said in a news release.

She would soon be in an advantageous position for Weston and her other private sector employers. By the end of 2010, McGinty had a direct line to top administration officials crafting energy and environmental policies.

In November 2010, a month after joining Weston, McGinty was appointed to the Department of Energy’s Energy Efficiency and Renewable Energy Advisory Committee.

"ERAC is a federal advisory committee whose members will report directly to the Secretary of Energy with advice on the portfolio of the Office of Energy Efficiency and Renewable Energy (EERE)," the department said in a news release.

McGinty also had the ear of top White House officials. She visited the West Wing in February 2010, where she met with Nancy Sutley, who directed the administration’s envrionmental quality council at the time. In September, McGinty met with Phil Hernandez, then an official in the White House’s Domestic Policy Council on Energy and Climate Change.

Three months after joining the ERAC, McGinty announced, in her capacity at Weston, that the Department of Energy had designated the firm as a "qualified Energy Service Company." The designation made Weston "eligible to perform energy-savings performance contracting at any federal agency," the company said.

Since fiscal year 2011, Weston has received more than $850 million in federal contracts, according to government data.

Meanwhile, companies for which McGinty served as a director raked in federal subsidies. In April 2011, the Energy Department awarded $1.6 billion in loan guarantees to the Ivanpah solar plant in California, which is co-owned by NRG. Five months later, it awarded a $1.2 billion loan guarantee to the NRG-owned California Valley Solar Ranch and a $1.4 billion partial loan guarantee for Project Amp, a rooftop solar panel installation project in which NRG was the lead investor.

The following year, Iberdrola received a $172 million green energy grant from the Treasury Department. It was just a fraction of the more than $2 billion in federal subsidies that Iberdrola has received during the Obama administration, according to the corporate transparency group Good Jobs First.

Iberdrola is "the largest recipient of grants and allocated tax credits" of any company in the past 15 years, Good Jobs First said in a March report on "Uncle Sam’s favorite corporations." NRG is the third-largest, according to the report.

In late 2013, McGinty was looking to get back into public service. She resigned from Element and NRG in November in preparation for a gubernatorial run in her home state.

She also resigned from the board of Iberdrola USA, the company’s American arm. However, an Iberdrola USA spokesman told the Free Beacon that two days after her resignation McGinty joined the board of Iberdrola USA Networks, which manages the company’s power generation operations in the Northeast.

She continued to receive compensation from Iberdrola USA in 2014, according to financial disclosure documents filed with the Pennsylvania Ethics Commission in May.

On the campaign trail, McGinty hammered then-Gov. Tom Corbett (R.) for opposing green energy subsidies such as the wind Production Tax Credit (PTC). Iberdrola relies on that credit, according to the American Wind Energy Association. Congress renewed it last year, "allowing us to continue growing in 2015 and 2016," Iberdrola said.

Issues of alleged cronyism could come up if McGinty launches another political campaign in the state, said Lowman Henry, who leads the Lincoln Institute of Public Opinion Research, a conservative nonprofit group based in Harrisburg.

"This issue will be exploited by Republicans, no doubt about that," Henry said in an interview on McGinty’s energy and environmental policy record. That record will not be a problem during a Democratic primary, he predicted, but "Pat Toomey would be wise to have Katie McGinty answer for her role in crafting policies" that benefitted groups with which she was involved.

McGinty’s prior roles in Pennsylvania politics drew criticism from state Republicans. In 2007, a state ethics panel ruled that McGinty’s Department of Environmental Protection had improperly awarded $2.8 million in state funds to a group that employed her husband, who was also paid $3,750 in DEP funds.

Then-Gov. Rendell challenged the panel’s unanimous ruling, which was eventually upheld by the state Supreme Court.