NMED Hydrogen Hub Contracts go to Energy Industry Insiders – MLG Campaign Contributors

Governor Michelle Lujan Grisham and her administration flew below the radar of most environmental advocates in the late spring, summer and early fall of 2021, putting together her plan to make New Mexico the hub of the commercial hydrogen universe.

She partnered up with energy industry insiders, accepted tens of thousands of campaign dollars from energy focused companies and hid information from the public about her plan.

The Candle has been reviewing thousands of pages of memos, emails, contracts, letters, campaign contribution disclosures, and spreadsheets received from four of the administration’s agencies that worked on the governor’s Hydrogen Hub (H2H) initiatives through an extensive Inspection of Public Records Act (IPRA) request we made in mid-January.

The Governor’s Hydrogen Hub (H2H) efforts seem to include an old pay to play strategy – how special interests influence the state’s environmental policy through in-kind policy advocacy as well as whatever influence campaign contributions account for.

At times, the governor had the secretary of the state’s environment department, James Kenney, working like an advance man organizing speaking engagements and podcasts for her, even trying to hook her up with investment brokers and venture capitalists from both coasts.

(In an upcoming story The Candle will contrast the over the top efforts of the environment department secretary on behalf of the Hydrogen Hub plans, compared to an anemic and late effort to rescue his agency from budgetary neglect by the governor and the legislature – especially when the passage of the Hydrogen Hub Act would have added to the agency’s already overburdened and understaffed bureaus.)

But in a new twist, the state’s environmental department added something new, issuing at least two no-bid contracts to entities with connections to trade groups backing her H2H agenda.

These public expenditures were made to promote an agenda full of interests of value to trade organizations that the contractors were affiliated with, professionally and possibly financially.

The two contractors are Adelante Consulting, Inc., and Jason Sandel DBA NM Energy Prosperity, LLC. This article focuses on Adelante, with a second article soon to be released regarding Sandel’s NM Energy Prosperity, LLC contract.

The Adelante contract was issued by the New Mexico Environment Department (NMED) last September. The company was engaged by NMED with a mission “seeking technical and economic support in developing legislation, rules, policies, and guidance.”

The legislation referred to in the contract was the Clean Fuel Standard Act which had failed in the 2021 legislative session, and the Hydrogen Hub Act – a new initiative of the governor.

The president of the company, Adelante Consulting Inc., contributed a total of $2,828 to the governor’s re-election campaign in a series of five cash contributions between October 18, 2019 and September 4, 2021, according to disclosure records attached to the signed contract. (An earlier version of The Candle noted only $1,453 in contributions – this has been updated to include contributions made by Ms. Smith in 2019 and 2020 as well as those originally reported earlier for 2021.)

According to the contract, compensation was not to exceed $59,965.10 – avoiding the state requirement to seek bids for contracts more than $60,000.

The contract between NMED and Adelante was signed on September 20, 2021, by Virginia Smith, President of Adelante, and on September 21, 2021 by Rebecca Roose of NMED.

The disclosure form in the contract did not include additional contributions made by Ms. Smith in 2020.

We reached out via phone on two occasions over the last few weeks to speak with Ms. Smith about her company’s contract with NMED and left messages on her voicemail.

She never returned the calls.

Adelante’s chief operating officer Amy Brown, while not listing any campaign contributions to the governor’s re-election campaign, has been a member of the board of directors of the Low Carbon Fuels Coalition based in Sacramento, California.

Low Carbon Fuels Coalition (LCFC) is a 501(c)(6) nonprofit organization organized, according to the federal tax exemption law, such as a “business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.”

LCFC, in its 990 filings for its tax exempt status, states its primary purpose: “is to engage in activities which improve business conditions in the low carbon fuels industry, including but not necessarily limited to monitoring, communicating, and advocating on policy issues important to the low carbon fuels industry.”

LCFC’s board of directors is populated by representatives, consultants (including Amy Brown’s employer Adelante Consulting, Inc.), and officers of traditional oil and gas companies, and some relatively newer start-up businesses, exploring the new age of energy development – including conversion of aviation and other transportation fuels – and hydrogen development.

And LCFC’s executive director is described as having “worked with all sectors of the low carbon fuels sector including ethanol, renewable diesel, drop-in fuels, renewable natural gas, hydrogen, low carbon energy for electric vehicles, and carbon capture and sequestration.”

Ms. Brown appears to have done a substantial amount of the work under the NMED contract that was to provide research supporting the administration’s efforts to pass a Clean Fuel Standard Act and a Hydrogen Hub Act, according to records seeking payment for the work.

However, records also reveal the majority of the research and legislative drafting performed by Ms. Brown, and billed to NMED as of January 4, 2022, focused on advancing the governor’s H2H agenda.

The Clean Fuel Standard Act passed the Senate on a 24 to 14 vote, with only one Democrat opposing it.

And while there was general support among the environmental community for the revised elements of the Clean Fuel Standard Act that were offered in the 2022 version of the bill, it failed to pass the House on a tie vote in an overwhelmingly Democratic House.

Ten House Democrats voted against the Clean Fuel Standard Act in February, and there was one democrat absent and one excused from voting. If the House leadership and the Governor had been committed to the Clean Fuel Standard Act they might have changed one of those votes.

The House vote came after the Speaker of the House had announced that the Hydrogen Hub Act bill would be placed on the Speaker’s Table – a move that essentially meant it would not be further acted upon during the session.

Some proponents of the Clean Fuel Standard Act feel the failure of the administration to pressure Democrats in the House who were surprise “no” votes was in response to the strong opposition from environmentalists who opposed the Governor’s signature Hydrogen Hub Act.

And it’s not lost on them that “policy issues important to the low carbon fuels industry” were represented in the package the Governor, NMED, Adelante, and others advanced in her Hydrogen Hub Act agenda.

So, what about the concerns of those who question the science behind the H2H agenda?

The Candle will be reporting in more detail regarding the extractive industry’s oversized influence on the development of the governor’s H2H legislation and initiative.

Tomorrow – Former Chairman of the New Mexico Oil and Gas Association paid by the state’s Environment and Economic Development Departments to, among other things, “develop a New Mexico Hydrogen Hub Strategy.

NOTE: Although many documents have been released after months of foot-dragging by the governor’s office and NMED, the governor’s lawyers notified The Candle she has alternately invoked executive and attorney-client privilege on more than 120 responsive emails and additional documents.