The Mariner East Project and Conflicts of Interest at the Pennsylvania PUC

I. Introduction and Key Findings

On Thursday, May 24, a judge halted construction of two controversial Sunoco pipelines – Mariner East 2 and Mariner East 2x – as well as the operations of an existing pipeline, Mariner East 1. The judge deemed the pipelines a risk to public safety and declared that Sunoco “shall cease and desist all current operation, construction, including drilling activities” in West Whiteland Township in Chester County, Pennsylvania. This is the latest in a string of controversies surrounding the pipeline project, which have included the opening of sinkholes along the pipeline construction route and the spilling of drilling fluid onto private land and waterways. By the judge’s order, the Pennsylvania Public Utilities Commission (PPUC) will soon decide whether to overturn the halt and allow the construction of Mariner East 2 and Mariner East 2x and the operation of Mariner East 1 to resume. Chester County commissioners have requested that the PPUC uphold the suspension of the Mariner East project.

This report brings to light a range of potential conflicts on the PPUC – most of which have largely gone unnoticed until now – that raise questions about the impartiality of its commissioners in deciding on Sunoco’s Mariner East project. A majority of commissioners built careers prior to joining the PPUC that were tied to fossil fuel companies or tied to law firms that represent the interests of the oil and gas industry. Below, we profile four commissioners’ extensive ties to the oil and gas industry – including to Sunoco. Key findings include:

• Overall, 4 of 5 commissioners have close ties to the fracking industry and have expressed support for it. Two commissioners are attorneys who were partners at firms that have represented oil and gas clients that include Sunoco, and one was a registered fracking industry lobbyist; another is a longtime executive at a major Pennsylvania fracking corporation; another is a board member of a company that makes coatings for oil and gas companies, and has openly expressed support for expanding fracking and fracked-gas pipelines. Of these four commissioners, three have held leading roles at law firms or companies tied to the Marcellus Shale Coalition.

• Commissioner’s former law firm partner is representing Sunoco to PPUC. Commissioner Norman Kennard’s former law firm, now called Hawke, McKeon and Sniscak, is representing Sunoco to the PPUC in the current Mariner East proceedings. Kennard was a partner at the firm up to about a decade ago. His former partner, Thomas Sniscak, is currently co-attorney for Sunoco. This means that in the coming PPUC decision over Mariner East, Kennard will be deciding on a case brought by his former firm partner who represents the pipeline project.

• Commissioner was a registered lobbyist for major oil & gas companies. While at Buchanan Ingersoll & Rooney, Commissioner David W. Sweet was a registered lobbyist for major fossil fuel companies until 2015. His clients included EQT, GE, Kinder Morgan, Koch Companies Public Sector, NRG, PECO Energy, and Philadelphia Energy Solutions.

• Commissioner arranged private equity raid on PA refinery tied to Sunoco. Commissioner Sweet was part of the legal team that worked for private equity firm Carlyle Group to craft its joint arrangement with Sunoco to acquire Philadelphia Energy Solutions, the largest oil refining complex on the eastern seaboard. Soon after, Carlyle Group, who became 2/3 owner of PES, stripped the company of its financial assets and failed to pay hundreds of millions in taxes.

• Revolving door commissioner is former executive at top fracking company. Commissioner and Vice-Chair Andrew G. Place was a top executive at EQT, based in Pittsburgh, from March 2011 until he joined the PPUC in October 2015. EQT is the largest U.S. natural gas producer.

• Two commissioners were partners at law firms tied to the fracking industry & Sunoco. Commissioner Sweet is a former partner at the Harrisburg office of Buchanan Ingersoll & Rooney, a major fracking industry law firm and member of the Marcellus Shale Coalition. Sweet is also a former partner at Pepper Hamilton, which has represented Sunoco at times over the past two decades, including as late as 2016 (though Sweet left the firm in 2006). A number of attorneys at Pepper Hamilton have gone on to top positions at Sunoco. Commissioner Kennard was also partner at Thomas Niesen Thomas, which has represented EQT, Sunoco (the latter in the early 2000s, before Kennard joined the firm), and other companies tied to the fracking industry.

• Commissioners tied to Sunoco through Marcellus Shale Coalition. Three commissioners have ties to the Marcellus Shale Coalition (MSC), a major fracking industry association in Pennsylvania. Commissioner Sweet was a registered lobbyist for three corporations that are members of the MSC, and Sweet was partner at the Harrisburg office of Buchanan Ingersoll & Rooney, also a MSC member. Commissioner Place was a senior executive at EQT and Commissioner Kennard’s former firm represented EQT; EQT is an executive board member of the MSC. Commissioner Place’s wife is also an attorney at a law firm that is a MSC member. Sunoco’s Mariner East pipeline interests are represented in the MSC; its parent company, Energy Transfer Partners, is on the MSC board.

• Commissioner married to attorney for fracking industry law firm. Commissioner Place’s wife is an energy attorney for Reed Smith, a member of the Marcellus Shale Coalition. Reed Smith represents fossil fuel industry powerhouses like Range Resources, Chesapeake, and EQT.

• Three commissioners tied to EQT Corporation. Commissioner Place is a former top executive at EQT, the biggest U.S. natural gas company. Commissioner Kennard’s former firm represented EQT, while Commissioner Sweet was a registered lobbyist for EQT.

• Commissioner worked for pro-fracking Trump FERC appointee. Prior to joining the PPUC, Commissioner Kennard was counsel to former Commissioner Robert F. Powelson, who is now a FERC Commissioner appointed by Donald Trump. Powelson is cozy with the fossil fuel industry, accepted gifts from the industry, referred to pipeline protesters as engaged in a “jihad,” and endorsed the Mariner East project.

• Commissioner headed pro-fracking industry-backed “green” group. Commissioner Place helped establish the Center for Sustainable Shale Development (now called the Center for Responsible Shale Development) and served as its Interim Executive Director. The CRSD sells itself as an industry/environmentalist not-for-profit aimed at making fracking safe and sustainable. As we previously reported, the CRSD is funded and led by companies tied to the fracking industry.

• Commissioner is a board member and officer in company that provides services to fracking industry. According to his 2017 financial disclosure, Commissioner John F. Coleman Jr. is a board member and officer at SilcoTek, which makes coatings for the oil and gas industry.

• Commissioner expressed pro-fracking views and wants more pipelines. In an interview last year, Commissioner Coleman called shale gas a “game-changer” and touted what he sees as its benefits, and he stated that more gas supply was needed. Of pipeline critics, he said: “I understand that a pipeline coming through your neighborhood to deliver gas to people somewhere else is not appealing. But that’s the nature of the beast with pipelines, power lines, water or telecom.” Coleman appeared to endorse more eastward gas pipeline expansion – what projects like Mariner East represent.

II. Commissioner Norman J. Kennard

Kennard was in private practice as an attorney for over 30 years. He has served on the PPUC since November 2017.

Kennard’s former law firm currently represents Sunoco to PPUC in Mariner East matters

Kennard was a partner at the Harrisburg-based law firm Hawke, McKeon & Sniscak until around a decade ago (the firm use to be called Hawke, McKeon, Sniscak & Kennard; in 2008 Kennard joined a new law firm as partner, but a PPUC document from 2010 still has the firm Hawke, McKeon, Sniscak & Kennard listed.) While it’s not clear when Kennard joined the firm, a May 2004 letter from Kennard to the PPUC shows he was part of the firm then. This means, at minimum, he was partner for four to six years.

Kennard’s former firm co-partner, Thomas Sniscak, is representing Sunoco in its attempt to gain the PPUC’s approval to resume construction and operations with its Mariner East pipelines (Sniscak is one of two Sunoco attorneys on the pipeline; the other is from a different firm). Sniscak and his firm have represented Sunoco to the PPUC since at least last December.

In other words, Kennard’s former colleague and law firm of at least several years are representing Sunoco to the PPUC in an effort to get Kennard and other commissioners to vote in Sunoco’s favor.

Kennard & his firms represented numerous oil and gas clients

Kennard was partner at Thomas, Long, Niesen & Kennard (now Thomas Niesen Thomas) from 2008 until he joined the PPUC. While Kennard was at the firm, it represented EQT, Noble Americas Energy Solutions (later acquired by Calpine), and Aqua America, a water company tied to fracking. The firm also represented Sunoco in the early 2000s (this was before Kennard joined; it is unknown if it represented Sunoco while Kennard was there). It should be noted, though, that Kennard himself mostly represented clients from the telecom industry.

Served as counsel to Trump FERC appointee Robert F. Powelson

Prior to joining the PPUC, Kennard was counsel to Robert F. Powelson, a Republican who who served as PPUC commissioner from June 2008 to May 2015 and chaired it from February 2011 to May 2015. Powelson was nominated by Donald Trump to be a FERC commissioner in May 2017 and was subsequently confirmed in August 2017.

Powelson is a big fossil fuel industry supporter who is personally cozy with its executives and trade groups. As PPUC chair, he accepted two tickets to a Philadelphia Eagles football game from NRG Energy and attended the game with an NRG senior vice president. At a gas industry conference in March 2017, Powelson referred to pipeline protesters as engaged in “jihad.” There was also controversy in 2014 surrounding Powelson’s endorsement of the Mariner East project and his membership in an energy industry group even as he was PPUC chair.

III. Commissioner David W. Sweet

David W. Sweet is an attorney who joined the PPUC in June 2016. He succeeded Pam Witmer, who subsequently became an executive at UGI Energy Services, a natural gas company, after leaving the commission.

Former partner of firm that is member of fracking association & another that represents Sunoco

Sweet was a longtime partner at two law firms that represent a range of oil and gas clients in Pennsylvania. He’s a former partner at the Harrisburg office of Buchanan Ingersoll & Rooney, a major law and lobbying firm that represents fracking interests and is a member of the Marcellus Shale Coalition. The firm has also been a revolving door pass-through between the oil and gas industry and the state government and regulatory bodies (former commissioner Kim Pizzingrilli, for example, joined Buchanan Ingersoll in 2011, after she left the PPUC). Sweet was at Buchanan Ingersoll from 2007 to 2015; he left to join the Wolf administration as a senior advisor of energy and economic policy before joining the PPUC.

Sweet is also a former partner at Pepper Hamilton, where he worked from 1989 to 2006. Pepper Hamilton has represented Sunoco over the past two decades, including as late as 2016. A number of attorneys at Pepper Hamilton have gone on to top positions at Sunoco – for example, a Pepper Hamilton partner went on to become a Senior Vice President at Sunoco, while a firm associate later became assistant general counsel at Sunoco.

Both of Sweet’s former firms regularly appear before the PPUC representing oil and gas and other corporate clients.

Sweet was a registered lobbyist for major fossil fuel clients until 2015

At Buchanan, Ingersoll & Rooney, Sweet was a registered lobbyist for a range of fossil fuel clients, including EQT, GE, Kinder Morgan, Koch Companies Public Sector, NRG, PECO Energy, and Philadelphia Energy Solutions. He remained a lobbyist for most of these companies until early 2015, shortly before he joined the Wolf administration. The chart below shows the years that Sweet was registered as a lobbyist for some of his firm’s oil and gas clients.

Source: Pennsylvania Department of State

Helped arrange Carlyle Group raid on Philadelphia Energy Solutions

Sweet has worked for Wall Street clients that include Goldman Sachs, PNC, Bank of New York Mellon, and Carlyle Group. Sweet was a member of the legal team that set up the joint arrangement between Carlyle Group and Sunoco whereby the former paid $175 million to become a 2/3 owner of Philadelphia Energy Solutions (PES), the largest oil refining complex on the eastern seaboard.

As we reported, Carlyle Group subsequently stripped the company of its financial assets, with PES taking out loans to channel huge sums of payout money – $151 million in total – to Carlyle, even as the company fell deep into debt. Carlyle then refused to pay hundreds of millions – perhaps billions – in state and federal taxes, with PES instead filing for bankruptcy.

IV. Commissioner Andrew G. Place

Andrew G. Place has been on the PPUC since October 2015 and has served as the commission’s vice chair since December 2015. He is a longtime oil and gas executive with close ties to the industry.

Former top executive at major fracking corporation

Place was a top executive at EQT Corporation, an oil and gas company based in Pittsburgh. EQT is a central player in the fracking industry – indeed, it is the largest U.S. natural gas producer. Place served as EQT’s Corporate Director of Energy and Environmental Policy from March 2011 until he joined the PPUC in 2015.

As of May 2017, EQT’s market cap was $10.9 billion and its sales were $1.81 billion, according to Forbes. EQT is the driving force behind the controversial Mountain Valley Pipeline, a proposed 300-mile fracked-gas pipeline that will run through West Virginia and Virginia, and which has generated intense opposition and controversy. EQT is represented on the Executive Board of the Marcellus Shale Coalition.

Headed industry-backed group that serves as environmental cover for fracking industry

Place helped establish the Center for Sustainable Shale Development and served as its Interim Executive Director (now called the Center for Responsible Shale Development). The CRSD sells itself as a collaborative project between the fracking industry and environmentalists aimed at making fracking safe and sustainable. It issues certifications to fracking companies that designate them as responsible gas drillers.

As we reported in 2013 and 2014, the CRSD is largely funded and led by the fracking industry. This undermines its credibility as an environmental organization and suggests that its purpose is to offer environmental cover to the oil and gas industry.

Revolving door figure

Prior to working for EQT, Place worked in the PA DEP from August 2009 to January 2011 – meaning he went from being a regulator of the fossil fuel industry, to working for the fossil fuel industry, and then back to being a regulator at the PPUC. His positions at the DEP included Special Assistant for Energy and Climate Change and Acting Deputy Secretary of the Office of Energy and Technology Development.

Married to energy lawyer for fracking industry law firm

Place’s wife, Stacey Jarrell, is Counsel for the Energy & Natural Resources Group at Reed Smith, a law firm that is a member of the Marcellus Shale Coalition. A 2015 article states that Reed Smith represents a number of major fracking corporations, including Range Resources, Chesapeake, and EQT, “as they work to tap the vast reservoir of natural gas trapped in the shale.”

V. Commissioner John F. Coleman, Jr.

John F. Coleman, Jr. has served on the PPUC since June 2010. Prior to that, he served 12 years as President and CEO of the Chamber of Business and Industry of Centre County, a business coalition for the Pennsylvania county where Penn State is located.

Coleman is deeply embedded in energy and regulatory entities in Pennsylvania and nationally. His PPUC biography states that he is a member of the Pipeline Safety Committee and co-chair of the Natural Gas Access and Expansion Task Force of the National Association of Regulatory Utility Commissioners (NARUC); is a member of the Board of Directors of the Mid-Atlantic Conference of Regulatory Utilities Commissioners; is a member of the Pennsylvania Energy Development Authority Board of Directors; and that he serves as a member of the PJM’s Independent State Agency Committee as well as a member of the Gas Technology Institute Public Interest Advisory Committee.

Big backer of fracking who appears to specifically support projects like Mariner East

In an interview last year, Coleman called shale gas a “game-changer” and touted what he sees as its benefits, and he stated that more gas supply is needed. Of pipeline critics, he said: “I understand that a pipeline coming through your neighborhood to deliver gas to people somewhere else is not appealing. But that’s the nature of the beast with pipelines, power lines, water or telecom.”

In the same interview, Coleman hinted that he believes more pipeline permits need to be approved that go into eastern Pennsylvania – in other words, pipeline systems like the Mariner East project. Coleman stated: “Pipeline access is a growing challenge… being able to build pipelines to serve a market. Pennsylvania is an exporter of natural gas and the electricity generated by it, but as we go from west to east – across our state and to the east – we see it’s more and more difficult to get permits for pipelines or power transmission lines. As I look at PJM [the regional transmission organization/grid operator that includes Pennsylvania and many surrounding Mid-Atlantic states], I see almost all of the power generation being built is natural gas. It’s going to take new gas supply.”

Board member and officer in company that provides services to fracking industry

According to Commissioner John F. Coleman Jr.’s official 2017 Statement of Financial Interest, he is a board member and officer at SilcoTek, which makes coatings for industries including “game changing coatings” for oil and gas exploration and midstream gas operations.

VI. Conclusion: PPUC dominated by commissioners with ties to the fracking industry

Overall, a majority of commissioners at the PPUC have close ties to the oil and gas industry. Different commissioners have built long careers at firms that represent and lobby for oil and gas interests, and one even served as a top executive at a major Pennsylvania fracking company. Two commissioners are tied to firms that have represented the oil and gas industry and Sunoco – including one commissioner whose former firm and law partner currently represents Sunoco to the PPUC on the Mariner East issue.

All this raises serious questions about the ability for the PPUC majority to impartially rule on matters tied to the oil and gas interests they have long served. The ties of some commissioners to the fracking industry and to Sunoco bring into question their credibility as regulators over the Mariner East project. Moreover, it’s not just Sunoco – many oil and gas companies that commissioners have ties to regularly go before the PPUC, as do commissioners’ former law firms on behalf of their corporate clients.