REPORT

The Power Behind the Pipelines: Pilgrim Pipeline

Pilgrim Pipeline Holdings, LLC (PPH) is proposing a 178-mile double pipeline from Albany, New York to Linden, New Jersey. The underground pipelines will carry fracked Bakken crude oil southward and refined oil products (heating oil, gasoline, diesel, and kerosene) northward. PPH estimates that the pipeline will carry 200,000 barrels per day in both directions – a total of 73 million barrels annually – through six counties in New York and five in New Jersey. PPH claims the total cost of the pipeline construction will range between $900 million and $1 billion.

Beyond the oil drillers and petroleum refiners who will benefit from new pathways to markets for their products, the primary beneficiary of the pipeline is Ares Management, a global asset manager that oversees tens of billions of dollars in investments.

Environmental groups, elected representatives, and residents who stand to be impacted by the pipeline have mounted an intense opposition to it. As of January 2017, dozens of communities have approved resolutions against the pipeline, as has the New Jersey State Assembly. Residents worry that the pipeline will have potentially devastating effects on environmentally sensitive land and drinking water that millions of people depend on. The pipeline has also stirred protest by the Ramapough Lenape Nation, as it may run through the Ramapo Valley Reservation.

This is the first report in PAI’s new series on the power behind the pipelines, which will focus on following the money to investors, uncovering cronyism, and exposing captured regulators.

Key findings of this report include:

  • Private equity backing. Ares Management, an asset management company that oversees close to $100 billion in assets, is a key financial backer of the pipeline. Ares managers have close ties to the hedge fund Apollo Management and to powerful elite-led institutions in Los Angeles, California.
  • Koch connections. Top management at PPH previously held high-up positions at Koch Industries. The Koch brothers are major backers of oil and gas corporate interests and have been big supporters of New Jersey Governor Chris Christie. The Pilgrim Pipeline needs the Christie administration’s approval to proceed.
  • Well-connected lobbyists and revolving door concerns. PPH has hired law firms and lobbyists with close ties to Governor Chris Christie and Governor Andrew Cuomo. Partners of one law firm have donated to two of Christie’s campaigns, and a former partner of the same firm served in the Christie administration. Governor Christie’s appointee to head the New Jersey Department of Environmental Protection also has a long history in private-sector consulting with energy firms.

Pilgrim Pipeline Holdings, LLC


Pilgrim Pipeline leadership and Koch Industries, see map below for more details

Pilgrim Pipeline Holdings, LLC, is overseeing the pipeline proposal and construction. PPH is based in New Jersey and will manage pipeline construction in that state. Its subsidiary, Pilgrim Transportation of New York, will oversee construction in New York. According to their website, the company is also working with several development partners that include Appalachian Pipeline Contractors, BL Companies, TRC Companies, Petersen Engineering Inc., Pilgrim Land Services, Salem Professional Services Group, and Spectra Environmental Group, Inc.

Top PPH management have long histories with and close ties to the oil and gas industries. One example of this is PPH’s Director of Business Development, Bill Wince. Before joining PPH, Wince held a variety of management positions at oil and gas behemoth Chesapeake Energy Corporation, where he worked from 2003 until December 2015. Prior to this, he held a range of management positions at Devon Energy Corporation. As Vice President of Business Development at Chesapeake, Wince lauded the company’s status as one of the country’s top drillers of natural gas, and he openly displayed his deep commitment to fracking. Wince continues to be a booster for the oil and gas industry; he appears to be scheduled to speak at the CWC World LNG & Gas Series that will take place from June 20-23, 2017, in Houston.

Perhaps more importantly, top PPH leadership have close links to Koch Industries, the powerful oil and gas corporation owned by the far-right billionaire Koch brothers. According to the PPH website, President Errol Boyle is the former President of Koch Shipping, Inc. Roger L. Williams, who appears to be PPH’s Vice President of Operations, or was until very recently, has even more extensive ties to the Kochs. Williams has held positions that include Vice President of Koch Industries, Inc., President of Koch Oil Company, Chairman of Koch Dock Company, President of Koch Shipping Company, and Director of Koch Qatar. (It is not entirely clear whether Williams, who at least since 2014 has been a central player in the progression of the Pilgrim Pipeline, is still with PPH, though he was publicly quoted as PPH’s Vice President of Operations as recently as November 2016. Williams is listed on the company’s staff page, but not under its management bios to which PPH’s homepage directs visitors).

Though PPH is clearly tied to Koch Industries through its top management, a Pilgrim spokesman said in early 2014 that that the Kochs themselves were not personally invested in the Pilgrim Pipeline. Still, these ties are noteworthy in light of the Koch network’s tremendous political power, particularly in relation to New Jersey Governor Chris Christie and to the climate change denial industry.

Ares Management

A major funder of the Pilgrim Pipeline is Ares Management, LP. In a recent presentation to investors, Ares described itself as “a leading global alternative asset manager” that oversaw $97 billion dollars in credit, private equity, and real estate assets as of September 30, 2016. Ares’ private equity group manages $24.9 billion dollars, and its “Key Strategies” include “U.S. Power & Energy Infrastructure.”

In January 2015, Ares acquired Energy Investors Funds (EIF), which it described at the time as “a leading asset manager in the energy infrastructure industry with approximately $4 billion of assets under management.” EIF was an investor in the Pilgrim Pipeline prior to being acquired by Ares. According to Private Equity Closer Look (PECL) in May 2015, Ares’ acquisition of EIF showed that it was “joining a surge in private equity into energy-related funds.” PECL reports that Ares had committed $195 million to the Pilgrim Pipeline as of January 2015, with more investment possible in the future.

Dozens of pensions funds are or have recently been invested with Ares, including those of public employees across nearly twenty US states, such as New York and California. Some, like the Nebraska Investment Council, are directly invested in Ares’ energy-related portfolios.

Three top leaders at Ares have striking ties. David Kaplan, John Kissick, and Antony Ressler are all Co-Founders of Ares. (Kaplan is Director and Partner of Ares and Co-Head of its Private Equity Group. Ressler is Chairman and CEO of Ares. Kissick is on the Ares Board of Directors and was Partner until he retired in early 2017).

Kaplan, Kissick, and Ressler are all former employees of Apollo Global Management, one of the largest US-based private equity firms. Kaplan and Ressler both sit on the board of directors of the Cedars-Sinai Medical Center in Los Angeles, and Kissick used to. In addition to its status as a top hospital in the US, Cedars-Sinai is also a meeting point for regional economic, political, and cultural elites, with its Board’s gala fundraisers featuring renowned bigwigs and celebrities. It is unclear why Cedars-Sinai, an institution dedicated to public health, retains directors who are closely involved in a pipeline project that carries well-documented health risks for millions of people.

Ares CEO Antony “Tony” Ressler stands out as a particularly influential figure. According to Forbes, Ressler had a net worth of $1.9 billion dollars as of February 22nd, 2017, and was the 486th richest person in the US in 2016. Before Ares, Ressler co-founded Apollo Management with Leon Black, who is Ressler’s brother-in-law (Black is married to Ressler’s sister, Deborah).

Ressler’s close professional and personal relationship to both Apollo Management and Leon Black is important to note. Apollo Chairman and CEO Black is a multi-billionaire hedge fund manager who engages in anti-worker and anti-environmental business practices as well as lavish consumption (he owns multiple mansions and once paid $120 million for a single painting).

In addition to his position on the Board of Cedars-Sinai, Ressler is Co-Chair of the Board of Trustees of the Los Angeles County Museum of Art, or LACMA (also on the LACMA Board is Ares Management Director Michael Lynton). Ressler is a member of the Board of Trustees of Georgetown University, and he is a Founder of the Alliance for College Ready Public Schools, Los Angeles’ largest network of charter schools. Ressler is also the principal owner of the Atlanta Hawks, a National Basketball Association franchise.

Some opponents of the Pilgrim Pipeline have targeted Ares specifically. For example, in May 2016 the Village Board of New Paltz, New York, passed a resolution calling on the New York State Pension Fund to divest from a nearly $800 million fund managed by Ares. Pipeline opponents also disrupted an energy industry finance conference in Manhattan as an Ares Vice-President spoke on a panel.

 

Chris Christie and the Pilgrim Pipeline

New Jersey Governor Chris Christie, whose office and appointees must ultimately approve of the Pilgrim Pipeline, is a big supporter of the oil and gas industry, from whom he’s received millions in donations. Christie is on record as voicing his support for the expansion of pipeline construction, including the Tennessee Gas Pipeline that cuts through New Jersey as well as the controversial Keystone XL. He has also vetoed legislation that attempted to ban the treating or storing of fracking waste in New Jersey.

Christie has a clear allegiance to oil and gas big donors, especially the Koch Brothers. As Republican Governors Association (RGA) Chair, Christie raised a total of $18 million from oil, gas, and utility industries in the first nine months of 2014 alone. The Kochs donated $2.5 million of this — at the time, their biggest gift to the RGA in a decade. Christie was the keynote speaker at a secretive 2011 conference of the Koch donor network in Colorado, where billionaire David Koch called Christie “my kind of guy” and “a true political hero.” Christie, like the Koch brothers, has long denied that there is a climate change crisis.

Christie’s top environmental regulator, NJ Department of Environmental Protection (NJDEP) Commissioner Bob Martin, was previously a longtime consultant to the utility and energy industries. Commissioner Martin is a Christie ally who has helped shape the administration’s energy and environmental policies. He served as a policy advisor during the governor’s 2009 campaign and chaired the Christie’s energy and utilities transition team. Christie appointed Martin as NJDEP commissioner in January 2010.

Martin’s role as NJDEP head raises revolving door questions. Prior to his appointment by Christie, Martin was a partner at Accenture LLP for 25 years (he retired in 2008). Accenture is a major consulting firm with links to the oil and gas industry, and Martin’s primary clients were drawn from the utility and energy sectors.

Martin has previously supported the highly controversial Spectra Energy pipeline through New Jersey, using Spectra’s own talking points to justify his stance, according to the Hudson Reporter.

Finally, Pilgrim Pipeline has hired two law firms that have close ties to Governor Christie. One firm, Bracewell, describes itself as “a leading law and government relations firm” that serves “the oil and gas” and “power” industries, with “in-depth knowledge of the commercial, legal and regulatory challenges faced by our clients” to help “facilitate transactions and resolve disputes.” Until last year, the firm was known as “Bracewell and Guiliani,” with former New York mayor Rudy Giuliani serving as partner. Giuliani has close links to Governor Christie, and the two were both prominent early Trump supporters.

Pilgrim Pipeline’s other hire, DeCotiis, FitzPatrick & Cole (DFC), is well-known as one of New Jersey’s most politically powerful and connected law firms. DFC describes itself as “a firm with very deep roots in New Jersey” with lawyers who have “extensive experience in New Jersey government and political affairs, many at senior levels” that give them a “unique ability to help our clients navigate the intricacies that doing business in our state can require.” DFC partners donated to Christie’s last gubernatorial campaign as well as his 2016 presidential run. Moreover, former DFC partner Wayne Hasenbalg was chosen in 2010 to serve as Deputy Chair of Staff and Policy Planning for Christie and “assisted in the coordination and oversight of Executive Branch activities”. Christie also appointed Hasenbalg to serve on the New Jersey State Ethics Commission.

Andrew Cuomo and the Pilgrim Pipeline

While Governor Christie has been an open pipeline advocate, New York Governor Andrew Cuomo is a bigger question mark. In 2014, after heavy pressure from activists, Cuomo agreed to a temporary ban on fracking, and in April 2016 he blocked the proposed Constitution Pipeline in New York State. Moreover, in September 2016 the New York Department of Environmental Conservation and the New York State Thruway Authority, who would serve as co-lead agencies on the Pilgrim Pipeline in New York, declared that “there is a potential for multiple significant adverse environmental impacts from the construction, operation and maintenance of the pipeline.” Pilgrim Pipeline advocates viewed this verdict as a setback.

While it appears that there may be momentum against the pipeline in New York, it’s important to be aware of Governor Cuomo’s direct ties to some of the players surrounding the Pilgrim Pipeline.

In March 2016, Public Accountability Initiative reported that, according to filings with New York’s Joint Committee on Public Ethics (JCOPE), Pilgrim Transportation of New York spent a total of $216,250 on lobbying from 2013 to 2015, and that the pace of spending doubled from 2014 to 2015. Moreover, in 2016 the company spent $149,750 — just over $3,000 more than in 2015 — to bring their grand total doled out on lobbying in New York State to $366,000 since 2013.

PAI also reported that over two thirds of Pilgrim’s lobbying expenditures were with Bolton-St.Johns, a Cuomo-tied firm. As we wrote:

Bolton’s top lobbyist, Giorgio DeRosa, is the father of Cuomo’s Chief of Staff Melissa DeRosa and husband of one-time Cuomo patronage chief Maureen DeRosa. Giorgio DeRosa lobbied against the fracking moratorium for the Pipe Trades Association and American Petroleum Institute, and lobbied for Bluestone Gas around its Broome County pipeline. The most recent lobbying disclosure for Bolton show DeRosa was still lobbying for API. He has personally given $10,000 to Cuomo’s campaigns, and given $14,018.94 to his Bolton St. Johns political action committee, BOLT-PAC, which donated $12,000 to the governor.

Another key lobbyist at Bolton St. John’s, Emily Giske, has given $6,250 to Cuomo’s campaigns and volunteered to coordinate floor operations during Cuomo’s campaign for attorney general. She joined DeRosa on the team lobbying on behalf of API in the most recent lobbying cycle for which there are filings.

Bolton St. Johns has donated $42,500 to the governor.

About the Public Accountability Initiative

The Public Accountability Initiative (PAI) is a non-profit, non-partisan research and educational organization focused on corporate and government accountability. In addition to publishing research on critical public accountability issues, PAI maintains LittleSis.org, an involuntary facebook of powerful people and tool for power research that was used to compile date for this report. PAI’s work is funded by a variety of non-profit sources.

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