Firms with interests in Md. pour cash into DGA,
November 27th, 2011
Some companies with interests in Maryland have found a new way to show support for Gov. Martin O'Malley: They're contributing tens of thousands of dollars to the Democratic Governors Association.
Last December, O'Malley took the helm of the DGA, where as chairman he is charged with raising large sums to elect Democratic governors nationwide. Under his leadership, the group raised a record $11 million during the first six months of this year — including donations from Exelon Corp. and more than a dozen other companies with issues before Maryland lawmakers or regulators, according to federal records.
Some government watchdogs say such donations — which are not subject to government limits on campaign giving and range as high as $250,000 — are troubling.
"Frankly, it sends a signal to other donors who want O'Malley help. Even if it is not 'pay to play,' it is going to give [donors] hope that they can influence him," said James Browning, a regional director of Common Cause.
O'Malley says there is no connection between DGA donations and his decisions as governor.
"What we have to always do is separate the campaign side from the governing side, which is what I've done," O'Malley said. "Does this contribution affect my judgment in making decisions in the interest of the people of Maryland? The answer is no."
A Baltimore Sun analysis of DGA contribution records shows:
•Energy Answers International, which is building a waste-to-energy plant in Baltimore, contributed $100,000 to the DGA during the period. The check is dated the day O'Malley announced he would sign into law a bill potentially worth millions to the company that allows garbage incineration to be counted as a renewable energy source.
•Exelon Corp., the Chicago-based firm seeking state approval to merge with Constellation Energy Group, gave $250,000 to the DGA during the six months. The amount is 10 times more than Exelon had ever previously contributed to the DGA.
•A Maryland-based energy company that wants to build a natural gas-fired power plant in Charles County gave $100,000 to the DGA, it's first contribution to the group. The company, Competitive Power Ventures, had been pressing for Maryland's Public Service Commission to order utilities to seek proposals for a new plant. The PSC did that in October.
•Two Maryland-based companies that want to design or build a wind farm off Ocean City donated a combined $35,000 during the six months. Another offshore wind company gave $50,000. A bill that would boost the development of offshore wind farms is expected to be a top priority of the governor during the General Assembly session that begins in January.
Browning said he was particularly concerned by the $100,000 donation from Energy Answers, given the day that O'Malley announced he would sign legislation beneficial to the company.
"The timing of the contribution suggests that he's fundraising with one hand and signing bills with the other," Browning said. "It is a dog whistle to other donors."
Money donated to the DGA is used primarily to support the election campaigns of Democratic governors. O'Malley, who is serving his second term as Maryland governor, by law cannot run for a third, so the money won't directly help him. Nevertheless, the robust fundraising numbers bolster his growing national reputation. When O'Malley leaves office in 2014, many political observers believe he might consider running for a seat in the U.S. Senate or even a presidential campaign.
The DGA says the $11 million raised during the first half of 2011 is a record for this period in a four-year election cycle. Jennifer Duffy, an analyst for the Cook Political Report, said O'Malley's demonstrated ability to raise money on a national stage "cements his credentials" as a viable candidate for higher office.
Extra cash at the DGA also has enabled O'Malley to expand the organization's mission. For example, this fall he poured $150,000 into a union-backed referendum in Ohio, the first time the DGA became involved with a ballot issue.
Unlike contributions to specific election campaigns, there is no state or federal limit on the amount that an individual or a company can give to a group such as the DGA (or its counterpart, the Republican Governors Association). In Maryland, by way of contrast, donors can give no more than $4,000 to a candidate during a four-year cycle.
"The DGA and the RGA are in the wild, wild West of campaign finance," said Brian J. Gaines, a professor at the Institute of Government and Public Affairs at the University of Illinois. "Both can rake in huge contributions, even though governors are obviously in a clear position to engage in quid pro quos with donors."
Contributors to the DGA are listed in disclosure reports that such tax-exempt, political fundraising groups — known as 527s for the section of the Internal Revenue Code under which they are organized — file periodically with the Internal Revenue Service. The DGA files its reports twice a year.
An analysis by The Baltimore Sun of the DGA report covering the first six months of this year showed that some companies on the list, including waste-to-energy firms, had issues before the governor and General Assembly during the 2011 legislative session. Others, such as the wind energy companies, will continue to have legislation before state lawmakers during the coming 90-day session.
Eight Maryland-based firms made their first contributions in at least three years to the DGA during the first six months of O'Malley's watch, together giving $187,000. Only one other state had more first-time givers: Illinois, home to Gov. Pat Quinn, the DGA's finance chairman.
Overall, most donations came from reliable DGA givers — companies with national reach and long records of supporting the organization. Many of these companies, including pharmaceutical giant Pfizer, Exxon Mobil Corp. and Hewlett-Packard, also give to the RGA. The average donation to the DGA in the first six months of 2011 was $27,373. The biggest was $265,000, from PhRMA, the trade group for pharmaceutical research companies.
Some companies with ties to Maryland were big DGA contributors long before O'Malley's tenure. GTECH, a technology company that won a $38.9 million state contract last year to create a monitoring system for Maryland slot machines, gave $100,000 this year. The company contributed the same amount in 2010 and 2009.
An analysis of DGA donations since 2009 showed 58 companies that gave money during the first six months of this year that had not previously done so. At least eight of them have business interests in Maryland.
Waste to energy
In the final weeks of the last legislative session, a bill steamed through the General Assembly to give new financial incentives for "waste-to-energy" plants. The legislation changed the law so garbage-burning would be on par with solar, wind and hydroelectric power as a renewable energy source.
Maryland law requires a certain amount of power to be generated from renewables, so the change makes the energy from garbage burning much more valuable.
O'Malley's Energy Administration "strongly supported" the legislation in the Assembly, but the governor has said he was personally torn. The environmental community argued that trash burning contributes to pollution, provides a disincentive for recycling and devalues other renewables such as wind.
O'Malley says he considered vetoing the legislation after the Assembly adjourned in early April. But on May 17, he issued a statement announcing that he would sign the bill into law. "The reality is Marylanders generate tons of solid waste each and every day," O'Malley said. "If there is no waste-to-energy facility available, these tons of trash are simply dumped into the landfills."
The same day, Albany, N.Y.-based Energy Answers International (which posted O'Malley's statement on its website) wrote a check to the DGA for $100,000. The company had never before given money to the DGA, according to IRS electronic records, which go back to 2000.
Today, the firm is in the process of building the Fairfield Renewable Energy Power Plant near Curtis Bay, a $1 billion facility that would generate energy by burning trash.
Energy Answers did not respond to emails requesting comment for this article. O'Malley denied any connection between the contribution and his decision, saying his signing of the bill was consistent with his previous support of waste energy. He said the timing of the contribution had to do with the May 21 Preakness, where the DGA had a tent for which it sought donations.
Two other energy companies involved with waste-to-energy plants in Maryland also supported the legislation and increased giving this year to the DGA. Waste Management, doubling its contribution of previous years, gave $20,000. The company owns Wheelabrator Technologies, which operates the RESCO waste-to-energy plant in Baltimore and is seeking state permits to build a plant in Frederick.
A Waste Management spokeswoman said the firm gave $10,000 more this year to sponsor a DGA energy conference in Cambridge that was attended by a number of governors.
Waste Management "does not base our contributions to the DGA or RGA on specific legislation that may occur in any one state," public affairs director Lisa Kardell said in a statement.
IRS records show that Covanta, another waste-to-energy company with interests in Maryland, gave $150,000 during the period, far more than it had previously. The company operates a garbage-burning plant in Montgomery County. It gave $100,000 to the DGA last year and $75,000 in 2009.
Covanta spokesman James F. Regan said the company in recent years has "undertaken an effort to educate policymakers about what we do, which is why we have joined groups like RGA and DGA." He said the firm received no financial benefit from the waste-to-energy bill passed in Maryland.
A company with billions of dollars at stake in Maryland is Exelon Corp., the Chicago-based firm that needs state approval to merge with Baltimore's Constellation Energy Group. The projected $7.9 billion deal would move the utility's headquarters to Chicago and lead to the expected loss of 600 jobs, mostly in Baltimore, in Constellation's legal, information technology, financial and other departments.
O'Malley says he wants a better deal for the state, and he has opposed the deal in its present form.
Exelon cut a check for $250,000 to the DGA in June 2011. The amount stood out for its size, tying with a donation from Pfizer as the second-largest to the organization this year.
The contribution also is noteworthy because it was far larger than Exelon's previous donations. IRS records show that the largest check Exelon had written previously to the DGA was for $25,000 in 2004. (The company says it gave $35,000 the next year, though there is no IRS record of the transaction.)
Exelon spokeswoman Judith Rader said the $250,000 check is for the DGA's "yearlong national energy policy symposium series," which is "taking place in multiple cities across the country."
She said the company supports groups and candidates in its service areas "who can impact energy policy through their roles."
Offshore wind energy
The financial rewards made possible by Maryland's waste-to-energy law are small compared with the potential profits at stake in the governor's proposal to spur development of a wind farm off Ocean City. O'Malley's bill essentially would require utilities to buy energy produced by its turbines. The legislation would put Maryland in the vanguard of the field.
As the governor has advocated for offshore wind, some companies have reached into their pockets to support the DGA. Beowulf Energy, a firm that employs O'Malley's former chief of staff, Michael R. Enright, gave $10,000 to the association this year. The firm was one of eight companies that told federal permitters they are interested in developing a wind farm off Maryland's coast.
A Beowulf spokesman said the company gave because officials "appreciated the opportunity to discuss national energy policy with a number of governors and energy leaders" at the Cambridge conference.
Another Maryland-based company, Atlantic Grid Operations A, which helps with design and permitting for offshore wind projects, gave $25,000. The firm is part of the Offshore Wind Developers Coalition, a group that testified in Annapolis in support of O'Malley's bill.
NRG Energy, which has an affiliate in the Offshore Wind Developers Coalition, doubled its previous contribution to the DGA, going from $25,000 to $50,000.
Competitive Power Ventures
Competitive Power Ventures, which wants to build a power plant in Southern Maryland, was candid about its support for the DGA. "In our world, when you have elected officials and organizations that agree with your outlook … of course you support them," said Senior Vice President Braith Kelly.
The company, based in Silver Spring, lobbied hard to have the Public Service Commission require BGE and Pepco to agree to buy power from a new plant in Maryland. CPV hopes to gain approval to build a $750 million, natural gas-fired power plant in Charles County.
Kelly said company officials have supported O'Malley's positions on energy for years. "He has stepped out in front of daunting, incredibly complex issues," Kelly said.
The company wrote five checks — for $20,000 each — to the DGA this year. CPV had never given significant amounts to the DGA before, but Kelly said there had been several years of "courting" by the association.
In October, CPV got what it wanted. The PSC ordered utilities to consider proposals for a 1,500-megawatt natural gas plant. It was the first time the regulatory commission had done so in more than 10 years and was widely seen as a step back from Maryland's policy of deregulation.