State Sen. Maralyn Chase rails against Clean Energy Fund

OLYMPIA — Maralyn Chase is a hybrid-driving environmentalist who considers herself a cheerleader for finding alternatives to fossil fuels for energy.

Yet the Democratic state senator from Shoreline has been railing for months on Facebook against a signature piece of Gov. Jay Inslee’s strategy to make Washington the epicenter of a revolution for a thriving clean energy industry.

She’s questioned the constitutionality of a program known as the Clean Energy Fund that funnels money through public and investor-owned utilities to private energy firms for research and development.

“I see no reason why public dollars should be given to private companies when we don’t get our money back,” she said in a recent interview. “I think those firms, who have incredibly creative people that are going to be absolutely wealthy, should pay their own way.”

And Chase is particularly critical of a grant that will steer millions of dollars to 1Energy Systems, a company led by former state officials who helped shape Inslee’s industry-boosting policies. The state Executive Ethics Board is investigating their actions since leaving leadership posts in the Department of Commerce.

Chase insists she’s not out to shut down the Clean Energy Fund, only reform it and, in the process, put the brakes on what appears to be a revolving door between government and firms benefitting from the fund’s proceeds.

“We can provide the infrastructure that the clean energy sector needs,” she said. “That’s the role of government. It’s not the role of government to invest in private enterprise.”

State officials defend the program that has received $76 million in funding from the Legislature since 2013.

“We think we’ve run a good solid competitive process,” said Tony Usibelli, director of the Washington State Energy Office in the Department of Commerce. “We have selected a number of excellent projects and we think they are going to provide significant economic benefit for the utilities and for the state.”

And there’s no sign Inslee is backing away from it.

“I’m proud of the success of our first Clean Energy Fund, and looking forward to the second generation CEF efforts now under way,” Inslee wrote in a letter to attendees of Washington’s Energy Future conference in Seattle on Monday.

Investment or giveaway?

State lawmakers established the Clean Energy Fund in the final days of the second special session in 2013.

As crafted, the fund is intended to “provide a benefit to the public through development, demonstration, and deployment of clean energy technologies that save energy and reduce energy costs, reduces harmful air emission or other increase energy independence for the state.”

Lawmakers put $36 million in the fund for the 2013-15 capital budget and added another $40 million in the current two-year spending plan.

It has three components. One is to provide loans to nonprofits to carry out energy efficiency projects. Another chunk of dollars is used to match federal funds for energy-related research at places such as the University of Washington and Washington State University. The third batch of money is for the grants.

Of the total, $35 million is earmarked for public and private electrical utilities that serve retail customers in Washington. These grants are intended to advance the development of renewable energy technologies.

Chase argues the grants constitute a gift of public funds because taxpayers won’t recoup their investment. She says the state constitution requires a clear public benefit and demands the tax dollars cannot enrich the profits of a private company.

Chase felt the same way when she voted against creation of the Life Sciences Discovery Fund in 2005 and a cancer research fund earlier this year.

“That’s not what public dollars are for,” she said.

But a June memo from the state Attorney General’s office rebutted Chase’s contention.

“The Clean Energy Program serves a public purpose and there is a persuasive argument that conserving energy, improving the reliability of renewable energy and reducing harmful air emissions protects the health and welfare of the public and serves a fundamental government purpose,” Kathryn McLeod, senior counsel in the agency’s Agriculture &Health Division, wrote in an email prompted by queries from Chase.

McLeod acknowledged a court might consider the public benefit if it appeared the money did not serve a “fundamental purpose of government.”

But, she wrote, “There is no proof of donative intent under the Clean Energy Program and the courts will not inquire into the adequacy of the consideration the public receives unless there is proof of a “grossly inadequate” return.”

Chase is pretty much a lone voice on this among her peers.

Rep. Hans Dunshee, D-Snohomish, authored the capital budget in 2013 that contained the energy fund’s initial dollars.

“I disagree with her. I don’t think it is a gift of public funds,” said Dunshee whose environmentalist credentials match Chase’s. “We give private companies money all the time if there is a public purpose and there is a public purpose in this.

“If you can give someone public money for a football stadium then you can do this. There’s much more public use in this,” he said.

There are lawmakers who think Chase is onto something. And those who are Republicans are glad that Chase is a Democrat so the pursuit can’t be dismissed as partisan politics.

“She’s doing a good job bird-dogging it. I’d like to get those questions answered,” said Sen. Doug Ericksen, R-Ferndale, chairman of the Senate Energy, Environment and Telecommunications Committee. “My concern is you have a department trying to be a venture capitalist with the public’s tax dollars.”

The Snohomish PUD connection

Chase isn’t just fired up about the money doled out in grants.

She’s also pressing for answers on whether any rules were broken by former state officials now working for 1Energy Systems.

The Seattle-based firm is central to the Snohomish County Public Utility District’s ambitious effort to develop new clean-energy technology using industrial-size batteries.

That effort, with its $20.5 million cost, is paid for, in part, with a $7.3 million Clean Energy Fund grant to the PUD by the Department of Commerce. Thus far, the PUD has received about $1.85 million of the grant, according to utility district spokesman Neil Neroutsos.

The state Executive Ethics Board is investigating whether former state Commerce Director Rogers Weed and former Deputy Director Daniel Malarkey violated ethics law in the course of their work for 1Energy Systems.

In June, current Commerce Department Director Brian Bonlender said there was no evidence of wrongdoing, but with taxpayer dollars involved and lawmakers asking about the situation, he decided to ask the ethics board for assistance.

At that time Malarkey and Weed issued a statement expressing their willingness to cooperate fully.

“We believe that, when the timeline and facts are examined closely, our departure from the Department of Commerce, before the selection committee responsible for choosing Clean Energy Fund grantees had even been formed, will prove compelling, and we will be exonerated of any suggestion of wrongdoing,” they said.

In mid-July, before Bonlender got an answer to his request, the ethics board received formal complaints against Weed, Malarkey and several other current and former Commerce officials. Bonlender and Usibelli are among those targeted.

The identity of the complainant has not been disclosed.

Washington’s Ethics in Public Service Act lays out the ground rules for what employees can do and when they can do it upon leaving the state payroll for a job in the private sector.

The complaints against Weed and Malarkey allege violations of several sections. One cited is “Employment after public service” which contains a proviso requiring a person to wait two years before having a “direct or indirect beneficial interest in a contract or grant funded by specific legislative or executive action” in which they participated.

Weed left the department in February 2013 and five months later joined 1Energy’s board of advisers. In April 2014, he joined the company as an employee.

“From my side, I had no involvement whatsoever in the Clean Energy Fund while in state service,” he said in a recent email to The Daily Herald. And “my duties at 1Energy do not involve any interaction with the Clean Energy Fund program.”

Malarkey left Commerce and joined 1Energy in September 2013 where he helped put together the PUD’s grant application, which did not mention his involvement.

Before leaving state employment he “played a significant role” in establishing the Clean Energy Fund, a Commerce official wrote in an email to lawmakers in June.

Many of the allegations came out of the PUD’s own ethics investigation earlier this year into its no-bid contracts with 1Energy Systems. The independent investigator found that PUD officials and 1Energy’s founder, Dave Kaplan, broke the district’s ethics policy by failing to take adequate steps to avoid the appearance of favoritism.

Kaplan is named in the complaints. He is a former consultant for the commerce department and a former PUD employee.

The complaints, filed in mid-July, also name Michael Carr, who helped launch the state’s Clean Energy Fund while working at the department. Carr is now an attorney with UniEnergy Technologies, a PUD subcontractor through 1Energy Systems.

In search of answers

A whistleblower, Anthony Curtis, prompted the PUD investigation. He then turned to Chase for help as well.

“When a whistleblower brings me an issue, I’m obligated to look into it,” she said without mentioning Curtis by name. “What I found was a can of worms. And the deeper I get into this, the madder I get.”

She insisted she would “love” to have a Washington company leading the world in the battery storage technology. She said she just can’t understand why it had to be with no-bid contracts for companies with ex-state workers.

“No one can make the case we needed to put public money into this private company to get battery storage,” she said. “There were plenty of companies doing battery storage.”

The next step depends on what comes of the ethics investigations.

“I want to stop what I believe could be corruption but I don’t know,” Chase said. “If they don’t do anything, the next thing we’ll have to do is go to the ballot to fix this. Am I wasting my time? No, absolutely not. All of this reminds me of Watergate. Follow the money.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.