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Why Granholm’s energy holdings could fuel questions from senators

Washington — President Joe Biden’s energy secretary nominee, former Michigan Gov. Jennifer Granholm, is stepping down from the board of an electric bus manufacturer and pledging to divest her interests in entities tied to the energy industry if confirmed to the Cabinet-level post.

To guard against potential conflicts of interest, Granholm signed an ethics agreement saying she intends to sell off shares in Ford Motor Co., the power generator Duke Energy and a host of other corporate and private holdings. Some of the investments could draw scrutiny at her Wednesday nomination hearing before the Senate Committee on Energy and Natural Resources.

Granholm filed paperwork with the Office of Government Ethics last week disclosing roughly $4 millionto $15 millionworth of assets — the most valuable including a residential property worth $1 million to $5 million in Oakland, California, and vested stock options valued at $1 million to $5 million for Proterra Inc., a manufacturer of electric municipal buses and batteries.

The Democratic former governor also reported income of at least $1.9 million last year,including for positions as an adjunct professor at the University of California at Berkeley ($114,000); a political contributor at CNN ($200,000); CEO of the political consulting business she co-owns with her husband ($958,376); and board chair of the Democratic group American Bridge Foundation ($228,608).

The disclosure report provides the first detailed summary of Granholm’s business dealings and investments since she left office 10 years ago after two terms as governor and moved to California.

As she prepares to reenter government service, ethics experts said her plan to divest and resign from board positions is relatively standard, even as they expected her to be pressed by senators about her holdings in the energy sector.

Michigan Republican Party Chair Laura Cox said Granholm’s energy investments should be reason for the Senate to reject her nomination and called on Biden to “pick a more suitable candidate who will represent the interests of the American people over their own financial interests.”

“Ideally, there’d be no conflicts of interest coming in, and no one’s ever worked in the industry that they’re going to regulate, and that’s just not realistic,” said ethics expert Delaney Marsco, senior legal counsel at the Campaign Legal Center.

“There are people who come from industry and work in the government, and we try and limit the conflicts related to that best we can.”

‘Everything is fair game’

Any pushback that Granholm might face during her hearing might come down to political calculus, said Sandy Baruah, president of the Detroit Regional Chamber: “Anything and everything is fair game in a Senate confirmation hearing.”

“If they want to oppose a nominee, you could always find something in somebody’s background” to protest, said Baruah, who has been through two confirmation hearings himself as an appointee in Republican administrations.

But Baruah noted both parties seem to have agreed that Biden’s nominees will largely go through the Senate confirmation process quickly and easily.

“I have not heard Jennifer Granholm is going to be one of those nominees that is going to have to be sacrificed on the altar,” he said.

Granholm intends to resign her position on Proterra’s board — where she’s served since 2017 — and if confirmed would divest her vested stock options in the company within 180 days of her confirmation, according to her ethics agreement.

She would also forfeit her unvested stock options and pledged to recuse herself from matters involving Proterra for one year.

The steps Granholm outlined in her ethics agreement in regards to Proterra are consistent with the law, said Kathleen Clark, who specializes in government and legal ethics at Washington University’s School of Law in St. Louis. But Clark raised what she called a “yellow flag.”

“The person on the street might wonder whether that one-year lag time is sufficient under this kind of circumstance, where she was on the board of company,” Clark said.

“If after the cooling-off period ends, Granholm plays a role in whether Proterra or another company receives a contract, competitors for that contract might reasonably question Granholm’s ability to be impartial.”

Keeping Berkeley ties

Granholm also intends to resign her membership on the board of the Marinette Marine Corp., which builds combat ships for the U.S. Navy on the Michigan-Wisconsin border. Political appointees are prohibited from receiving compensation for serving as an officer or member of any organization, corporation or entity.

Granholm already resigned earlier this month from her teaching job at UC-Berkeley as well as from her positions at American Bridge; Media Matters for America; the California Institute for Energy and Environment; and the venture capital firm Ridge-Lane, among other roles.

While Granholm has left her post at UC-Berkeley, she will continue to participate in the pension plan there and may receive health care coverage through the university, since her husband, Daniel Mulhern, will continue to teach there, according to her ethics agreement.

Because UC-Berkeley has a contract with the U.S. Department of Energy to operate the 202-acre Lawrence Berkeley National Laboratory, Granholm intends to seek a written waiver from her agency’s ethics official to participate in oversight of the Berkeley Lab.

In the ethics agreement, Granholm stipulates the science-lab waiver would not allow her to participate in anything that would affect her pension, her husband’s compensation or any matter that would have “a direct and predictable effect specifically and uniquely” on UC-Berkeley.

“These are enormous, industrial operations, and in the past, there have been management challenges at such places,” said Clark at Washington University in St. Louis.

“It’s a manageable ethics problem, and the way they managed it makes sense. Particularly because you don’t want the secretary of energy to have to recuse from really important stuff.”

Nominee’s ‘boring’ conflicts

Granholm’s potential conflicts of interest are kind of “boring” compared with some of those presented by former President Donald Trump’s cabinet officials, said Norman Bishara, a professor of business law and ethics at the University of Michigan.

He highlighted the extensive ties to the gas and oil industry in Texas disclosed by Trump’s first energy secretary and another former state governor, Rick Perry.

In contrast, the Biden administration appears to be striving for transparency and accountability, while balancing the need for appointees with actual experience in their jobs, Bishara said.

“That’s why we have these revolving door prohibitions,” Bishara said. “Because it’s on the margins — when their knowledge and their influence is still operative — that you don’t want them abusing that by engaging these conflicts of interest on the way in the door, or on their way out the door.”

Granholm also co-owns Granholm Mulhern Associates, an S corporation, with her husband. Granholm said in her ethics agreement that the company will stop providing consulting and leadership services and will cancel any client contracts in the case of her confirmation, but it would continue to manage investments.

The disclosure does not identify any clients of Granholm Mulhern Associates, but the former governor pledged to recuse herself from matters involving former clients for one year after she last worked for a particular client.

Her husband, Mulhern, intends to form a new consulting company that he will solely own and will transfer his clients from GMA to this new entity, per Granholm’s ethics agreement. She says in the document she will recuse in matters involving the financial interests of his new business, unless she first obtains a waiver to participate.

“What’s important to note is that if her husband holds any particular financial interest, she’s also conflicted out of working on anything related to those interests as well,” said Marsco of the Campaign Legal Center.

Some of the assets that Granholm said she would divest are held by Granholm Mulhern Associates, including shares in the solar panel producer First Solar Inc.; Duke Energy; Ford; Hannon Armstrong, which provides capital to firms in the energy efficiency and renewables sector; and Ablemarle Corp., which provides lithium for electric vehicle batteries. Ablemarle has said it’s working with the Energy Department on two lithium research projects.