2nd Hydrogen Hub No-bid Contract Awarded to Oil and Gas Insider – This One Connected to $18,000 in Contributions to Governor Lujan Grisham.

Two Secretaries Silent on the Award of No-bid Contract to Oil and Gas Insider Connected with Campaign Contributions To Michelle Lujan Grisham.

“It’s all hydrogen all the time here!” – That’s what The Candle reported April 7, 2022, quoting New Mexico Environment Department (NMED) Secretary James Kenney from an email he sent to a Hydrogen development advocate in late August of 2021.

More evidence is beginning to leak out from the administration of Governor Michelle Lujan Grisham regarding the depth of Kenney’s commitment to her hydrogen hub – despite the strong warnings from numerous environmental organizations that the concept is half baked.

A close look at documents received in response to an Inspection of Public Records Act (IPRA) request reveals disregard for ethical and financial guardrails that public officials are expected to follow.

The Candle previously reported on the NMED no-bid contract to research and draft hydrogen hub legislation to Adelante Consulting, Inc.

Adelante’s lead researcher for the contract sits on the board of directors of a trade organization funded by companies seeking to invest in hydrogen.

In addition to the Adelante contract, Kenney’s agency, along with the Secretary of the Economic Development Department (NMEDD), signed a no-bid contract with a hydrogen hub and oil and gas industry advocate with close ties to the governor.

This is the second no-bid contract Kenney’s department has signed with an industry insider to work on the Governor’s Hydrogen Hub Development agenda.

The services described in the contract were to create opportunities to gather information from stakeholder meetings of hydrogen development, commercialization and energy justice advocacy, recommend a work plan for a hydrogen advisory committee, identify so-called clean commercialization opportunities and develop a Hydrogen Hub strategy.

The report was developed by a former chairman of an oil and gas trade organization with input from other advocates; but there is no evident inclusion of input from critics of the governor’s proposed Hydrogen Hub Development Act.

Looking at the sequence of events surrounding the creation, authors, and use of the report, raises questions about the objectiveness of the conclusions and recommendations contained in the document the state agencies were seeking to pay for with government funds.

And in their collective haste to advance the hydrogen hub legislation, the NMED and NMEDD may have violated state procurement protocols for professional services contracts by engaging the services and receiving deliverables before a contract was properly vetted and signed.

The actions of the leaders of those departments have raised the eyebrows of more than one state employee who track procurements for executive agencies. But they are fearful of retaliation for speaking publicly.

Governor’s Office Neglected to Mention Study Was Prepared by Industry Insider When It Linked the Report to the Governor’s Announcement About HB4, the Hydrogen Hub Act .  

On January 25, 2022, Nora Meyers Sackett, press secretary for Governor Michelle Lujan Grisham, emailed a media release headlined, “New Mexico to boost clean energy economy with Hydrogen Hub Development Act.”

The contents of the release included a link to a study the administration claimed envisioned “what a clean hydrogen hub looks like in New Mexico.”

What the governor’s press secretary did not mention in the announcement, was the study was authored by industry insiders who could potentially benefit from the governor’s proposal.

That fact is obliquely exposed through a disclaimer in the study, which states, “New Mexico energy (sic) Prosperity and other contributors and participants are advisory in nature providing independent advice and recommendations on the issue of hydrogen energy development in New Mexico.”

The disclaimer also asserts that, “This policy report, including its recommendations, has been written as part of a grant provided by the New Mexico Economic Development Department (EDD).”

But the disclaimer does not acknowledge the New Mexico Environment Department (NMED) as a signatory to the industry insider contract, encumbering public funds normally used for addressing environmental problems facing the state of New Mexico.

Such NMED funds are not normally used for advocating an unproven policy adventure – especially policy that is one dimensional and has critical environmental challenges.

The contract (which can be seen by clicking here), was given to Jason Sandel d/b/a NM Energy Prosperity, LLC.

Jason Sandel, an acknowledged cheerleader for the development of a hydrogen hub initiative for the state of New Mexico, is a well-entrenched oil and gas industry insider.

According to the United States Energy Association, he served as chairman of the New Mexico Oil and Gas Association (NMOGA).

Sandel, and his father and business partner, Jerry Sandel, are long-time Democrats.

They are well known as business partners and as father and son politicians in northwestern New Mexico.

New Mexico Secretary of State records reviewed by The Candle list the father and son as officers of oil and gas related businesses, including Aztec Well Servicing Co., Double M Mudd Co., Inc., Roadrunner Fuels, Inc.

Jerry Sandel served as a Democratic state representative in New Mexico for close to thirty years.

Jason Sandel was a member of the Farmington City Council.

The senior Sandel’s political and business connections are lengthy and significant.

According to the reporting of Dennis Domrzalski for Albuquerque Business First in 2003, Jerry Sandel was the Chairman of (former) Governor Bill Richardson’s “Blue Ribbon Tax Reform Committee” which was established “to make the tax code more business friendly.”

The Sandels also have history with Michele Lujan Grisham – including making considerable contributions individually, and through at least one of their companies, to her campaigns.

And Jason Sandel seems to have followed in his father’s footsteps when it comes to favored gubernatorial attention and appointment, as even before getting that no-bid contract used by the governor in press release announcing her Hydrogen Hub Act, he received Lujan Grisham’s nod to be a Methane Advisory Panel member in 2019.

As Environment Groups are Kept In the Dark by MLG, Sandel Quietly works with Kenney to Advance Hydrogen Hub Initiative.

In June of 2021, months before environmental organizations inadvertently discovered Governor Lujan Grisham’s industry inspired and developed hydrogen hub initiative, emails and documents reveal Jason Sandel was collaborating with Secretary Kenney on an agenda for the governor entitled “Putting H2 to Work in New Mexico” to be the basis for a planned July 9, 2021 Hydrogen Hub hoedown of sorts in Farmington, with hydrogen development notables BayoTech, Escalante Power, Sempra Infrastructure, Kinder Moran Midstream, and others as attendees.

This meeting promised to be a great venue for the Governor to mix with hydrogen interested industry heavyweights – a point likely not lost on Sandel and Kenney as unofficial party planners.

The Governor headlined Sandel’s “Hydrogen Roundtable,” as it is officially entered into the governor’s Official Schedule, on Friday morning, July 9, 2021.

That gathering coincidentally aligns with campaign contributions for the governor’s reelection campaign from some who have a potential interest in the Hydrogen Hub Act initiative.

According to campaign reports located on the secretary of state website, the day before the event, the governor’s campaign committee, New Mexicans for Michelle, received $500 from Jerry Sandel; $500 from Basin Disposal, Inc. (the company headed by both Sandels); and $2,500 from Sean Thomas Dugan, president of oil and gas company Dugan Production Corp.

(There were also more than $12,600 raised by the governor’s campaign from Farmington and Aztec area contributors dated the day before the Roundtable – at this time The Candle cannot confirm any direct connection to oil and gas interests.)

Not all of Sandel Family and Business Contributions to Governor Revealed in Contract Documents

Campaign contributions and expenditures reports are public records.

And so are contracts executed by the state of New Mexico.

A standard document attached to the contract given to Jason Sandel’s company required him to make separate disclosures of all campaign contributions made “the two years prior to the date the contractor signs the contract, if the aggregate total of contributions given by the prospective contractor, a family member or a representative of the respective contractor to the public official exceeds two hundred and fifty dollars ($250) over the two year period.”

Sandel signed the document entitled “Campaign Contribution Disclosure Form” on December 20, 2021, and listed three contributions: $500 from Jerry Sandel (7/8/21); $500 from Jason Sandel (7/31/21); and $500 from Jerry Sandel (8/30/21).

Jason Sandel neglected to include in the disclosure report, the July 8, 2021 contribution of $500 from Basin Disposal, Inc. – a company in which he is a partner with his father.

Although the contract did not require disclosure of any contributions made by the Sandels prior to the two year period preceding Jason Sandel signing the contract, The Candle has reviewed secretary of state campaign records which identify an additional $16,000 in contributions to Michelle Lujan Grisham from the Sandels and their companies:

  • January 10, 2017 Jerry Sandel – $200
  • January 10, 2017 Jerry Sandel – $5,500
  • September 29, 2017 Jerry Sandel – $5,300
  • August 21, 2019 Basin Disposal, Inc. (Headed by Jerry and Jason Sandel) – $2,500
  • August 21, 2019 Jerry Sandel – $2,500

In other words, since Michelle Lujan Grisham became a candidate for governor in 2017, the Sandels have contributed at least $18,000 to her gubernatorial aspirations.

The Sandel/NM Energy Prosperity, LLC Contract’s Convoluted Creation.

While researching the MLG Hydrogen Hub initiative, The Candle noticed the contract to Jason Sandel on the Sunshine Portal.

We wrote to NMED’s public information officer seeking a copy of the contract and received the following message (along with the contract and the study which was a deliverable required in the contract):

“The New Mexico Economic Development Department and the New Mexico Environment Department executed a contract with NM Energy Prosperity Jason Sandel to conduct an economic study of the impact of the hydrogen economy in New Mexico, titled Defining and Envisioning a Clean Hydrogen Hub for New Mexico. A preliminary version (attached) of the report was shared with us in February and a final version is still forthcoming.”  

Upon reviewing the contract details it was evident that the economic study that was presented as Sandel’s work product was something we had seen a version of in an earlier response to and IPRA request.

It was also the same document the Governor had linked to through her press release on January 25, 2022, announcing her introduction of HB 4 – the Hydrogen Hub Development Act.

The contract with Mr. Sandel was signed by him on January 22, 2022, however it was not executed by NMEDD until January 28, 2022 and NMED until January 31, 2022.

And it was not approved by the General Services Department’s State Purchasing Division until February 15, 2022.

The Candle questioned NMED and NMEDD how the deliverables of the contract could be provided for the Governor’s press release when a contract did not actually exist until February 15, 2022.

Why would the state pay for a Hydrogen Hub study that was not only prepared by industry insiders, but for which a contract did not exist until ‘after the fact’ and without proper vetting by the procurement process?

On Thursday morning, The Candle emailed all of the NMED and NMEDD executive officials, and the agency lawyers, who signed the contract asking the following questions:

Question # 1 to each of the signers of the contract on behalf of the appropriate state agency:

As signer of the contract, were you aware of the fact that you were signing a professional services contract (essentially a no-bid contract barely under the $60,000 threshold prescribed by New Mexico law) for work that had already been completed?

Question #2 to the Chief Financial Officers of NMED and NMEDD:

Did you ensure that all requirements of the state purchasing laws and the guidance of the New Mexico Administrative Code for small purchases of professional services were adhered to when you signed professional services contract (#22 667 1210 0006)?

Question #3 to each of the signers of the contract on behalf of the appropriate state agency:

To your knowledge, when did your agency engage the services of Jason Sandel D/B/A NM Energy Prosperity, LLC?

The Environment Department Secretary and his staff have gone silent.

The public information officer for the Economic Development Department, wrote he was on vacation but could “work on this next week if you still need it then.”

There is no explanation as to why someone else could not respond for the Economic Department’s Secretary.

No-bid Contractor Acknowledges Study Completion Predates Contract.

The Candle spoke to Jason Sandel on April 6, 2022. (An earlier edition of this story incorrectly cited the date as April 6, 2021, which we have corrected.)

Unlike James Kenney and NMED representatives, Mr. Sandel responded to questions The Candle asked him about the contract he signed with the two state agencies.

He acknowledged he developed the study NMED and the governor were using to advance the Hydrogen Hub Act initiatives.

And he suggested that the study included input from other contributors and stakeholders.

The Candle looked to the end of the report where there is a list of “contributors and participants,’ and found it mostly populated with Sandel’s collaborators in advancing the hydrogen hub agenda. (Click here to connect to a copy of the report.)

He said he could not remember exactly when he did the study – although when pushed a bit in questioning about dates, he admitted it was prior to January 2022.

He also told The Candle he had not yet received payment for the work he did on the study, and that he still had some work to do according to the contract.

It remains a mystery why NMED claimed this week that the study was preliminary, yet it was linked in the Governor’s announcement more than two months ago, and used to advance her Hydrogen Hub Development Act during the legislative session.

Did NMED and NMEDD officials and their lawyers flout procurement rules, and are they now trying to cover their collective missteps?

Seeing as the officials involved refuse to respond, The Candle is sending a letter to the Office of the State Auditor asking to clarify that question.

One thing is clear though, regardless of whether or not they broke or stretched the state’s procurement rules, government officials 1.) using the public’s money for a no-bid contract, 2.) given to an industry insider to develop a state strategy for hydrogen development policy that, 3.) would benefit the insider and his colleagues, is bound to result in a lot of raised eyebrows.

Upcoming Stories in the Series “It’s All Hydrogen All the Time Here!”

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