Potential Commerce successor has close ties to EDF

[Capt. Keith]

Potential Commerce successor has close ties to EDF

By Richard Gaines
Staff Writer The Gloucester Daily Times Fri Mar 11, 2011, 04:24 PM
EST


U.S. Trade Ambassador Ron Kirk, identified in multiple news reports as
President Obama's potential choice as the next Commerce secretary
overseeing the oceans and atmosphere, has worked on two major business
deals in Texas involving the Environmental Defense Fund.

That $200 million nonprofit is known for its faith in markets,
business partnerships and authorship of the Obama administration's
"catch share" initiative, which treats fisheries like commodities
markets.

The National Oceanic and Atmospheric Administration's new fishery
management system built on those principles has set off intense
ideological and political battles along the coasts, in the courts, and
in Congress.

The first Texas deal involved an epic buyout of an energy company, and
led to the partnering of EDF and KKR & Co., which pioneered the
leveraged takeover, in a "green portfolio program."

The second deal involved Kirk and EDF's Texas chief in an the ill-
fated launch of an ethical investment bank.

The transition from Commerce Secretary Gary Locke, Obama's nominee to
be ambassador to China, comes with much of the U.S. fishing industry
along the East and Gulf coasts in fierce resistance against re-
engineering of the traditional fisheries, long featuring small,
independent, owner/operator boats and businesses, into catch share
systems built on trading or selling fishermen's "shares" of an
assigned fish catch to larger corporations and outside investors.

EDF's former vice chairwoman, Jane Lubchenco, heads the National
Oceanic Administration, reporting to the Commerce secretary. And
Lubchenco has expressed that one of her goal's is the elimination of a
"significant fraction of the vessels."

Locke is perceived not as a partisan allied to Lubchenco and EDF, as
much as a buffer to the industry's push-back against the EDF-crafted
catch share policy, which has come from a broad bipartisan coalition
in Congress.

Seen as weakling

Congressman Barney Frank had derided Locke as a weakling without the
courage to stand up to Lubchenco and her ideological cohorts in NOAA
and EDF, while Sen. Scott Brown said earlier this week that Locke's
departure "represents a real opportunity for President Obama to begin
to rebuild the relationship between his administration and our
fishermen."

But reports show that, in 2007, Kirk, then a lobbyist and former
Dallas mayor, was hired by the KKR & Co., a private equity and buyout
firm, to lead lobbying efforts ensuring that the heavily leveraged $45
billion acquisition of TXU Corp., the state's largest energy utility
conglomerate, was not derailed by the Texas legislature.

Facing potentially lethal opposition based on TXU's plans to build a
11 new coal-fired plants, KKR and its partners, Goldman Sachs and
Texas Pacific Group, brought in EDF and the Natural Resources Defense
Council to instill environmental stewardship, evinced by the buyers'
agreement to scale back new plant construction to three.

At the time, James Marston, EDF's chief in Texas, called the
partnership "a turning point in the fight against global warming." But
the price of possessing TXU was a crushing debt load, and when natural
gas prices began dropping precipitously, KKR's gamble didn't look so
good anymore.

EDF had opposed the buyout before partnering with KKR in the
mitigation agreement. Out of the deal they formed a permanent
subdivision of KKR.

A 'green portfolio'

"The Green Portfolio Program marries the private equity model of
revitalizing companies over the long run with EDF's environmental
expertise," KKR's promotional copy reads.

This winter, in the extreme cold that enveloped the south and west for
long periods, Texans suffered through rolling blackouts that were
attributed by some observers to the diversion of infrastructure
maintenance allocations into debt service.

"The company formerly known as TXU — reborn in 2007, after the largest
leveraged buyout in history, as Energy Future Holding Corp. — appears
to be slowly collapsing under its own weight," wrote Forrest Wilder,
the primary chronicler of the saga, in the Aug. 25 Texas Observer. "It
seems that the Masters of the Universe have screwed up again..."

'One Earth Bank'

The second project pairing Kirk with EDF was One Earth Bank, a
virtually stillborn effort in Austin behind a socially responsible
deposit and lending institution, which reportedly failed for its late
start after the onset of the global economic decline, and for
inadequate capitalization.

Among its high profile backers, according to the Austin American-
Statesman, were Kirk and EDF's Ron Marston.

The newspaper reported that the idea behind One Earth Bank was to
"weight environmental and social considerations alongside standard
underwriting criteria in granting loans," and feature a "green
deposits program channel money to green building projects, clean-
energy businesses and organic food companies, among other sustainable
enterprises."

But having raised less than 10 percent of $23 million to $29 million
in the startup plan, the Statesman reported, the green dream fell
apart and in March 2009, the nascent bank board folded.

Days later, the Senate confirmed Kirk's nomination to be U.S. trade
representative, a post with cabinet rank.

Questions from the Times to Kirk's office Thursday were referred to
the White House, which declined comment. EDF did not return phone
calls or respond to a written inquiry from the Times.

On Wednesday, the White House announced that President Obama intends
to nominate Commerce Secretary Gary Locke to replace Jon Huntsman, a
Republican, as ambassador to China. Huntsman resigned after signaling
the possibility of running for president against Obama.

On the heels of the earlier Locke nomination rumors came reports in
the Dallas Morning News, Reuters and other news outlets that Kirk,
said to be a friend of the president, was under consideration to
become Locke's Commerce successor.

Third choice at the time

A former governor of Washington State, Locke was Obama's third choice
to head the Commerce Department. Former New Mexico Gov. Bill
Richardson, first choice, withdrew after questions were raised about
his political fund-raising. Sen. Judd Gregg, a New Hampshire
Republican, the second choice, agreed to take the post, but after
meeting with the president, rejected the nomination in February 2009,
saying only that he had discovered "irresolvable conflicts" with the
new president's stimulus plan to shore up the economy.

Locke was viewed initially as potential counterpoint to the ideologues
at EDF and a handful of ethical philanthropies including the Pew
Environment Group, the Gordon and Betty Moore Foundation and the
Walton Foundation, which, combined, have distributed about $500
million to study oceans and influence fisheries policy.

EDF has received more than $30 million to advance its catch share
agenda, which was launched during the presidential transition with a
manifesto co-written by Lubchenco insisting catch shares were needed
lest the oceans be emptied of all but "swarms of jellyfish."

Most mainstream and independent scientists scoff at that; the longtime
chief scientist at NOAA, on his retirement in January, gave an
interview to the Associated Press, contending the U.S. has effectively
brought an end to overfishing.

But Locke took no action to stop or slow Lubchenco and EDF's re-
engineering of the fisheries.

"Locke doesn't have the courage to stand up to them," Frank said in an
interview on WBSM, AM 1420 of New Bedford. "He can't fend off the
bureaucracy."

In January, Obama also hired Nat Keohane, EDF's environmental
economist, to be special assistant to the White House's National
Economic Council.

Richard Gaines canm be reached at 978-283-7000, x3464, or at
rga...@gloucestertimes.com