Questions Swirl On Foreign Influence In Maine Elections As Canadian Energy Company Readies Campaign

Dec 13, 2019

Hydro-Quebec, the Canadian energy company poised to supply hydropower to a proposed transmission line through western Maine, is joining a campaign to defeat a referendum that could scuttle the $1 billion project at the ballot box next year.

The company’s relationship with the provincial government of Quebec could draw protests from project opponents who see it as a foreign attempt to influence an election.

However, the Hydro-Quebec effort appears to be legal because Maine election law does not restrict foreign entities from contributing to ballot committees and because federal laws barring contributions and expenditures from foreign nationals apply only to elections involving candidates, not referenda. 

The company in November formed a ballot question committee anticipating that opponents of the 145-mile project will succeed in putting the proposal on the 2020 ballot. The committee, Hydro-Quebec Maine Partnership, is the latest effort by the Canadian power giant to ensure that its controversial transmission line – opposed by many of the communities it would pass through – will come to fruition.  

The formation of the new committee also marks a more public-facing progression in the year-long lobbying campaign by Hydro-Quebec on behalf of its sole shareholder, the government of Quebec.

The relationship between the company and the provincial government will likely become the focus of increased scrutiny and has already prompted questions about previously unpublicized meetings held last year between Quebec officials and leadership in the Legislature, as well as with the administration of Democratic Gov. Janet Mills. 

That scrutiny stems from the intertwined financial fortunes of Hydro-Quebec and the provincial government as the company seeks to expand power exports to the U.S.  

Hydro-Quebec sent nearly $2.4 billion in dividends to the provincial government last year after netting $14.37 billion in revenue. Those earnings were driven in part by what the company calls “unprecedented” energy exports to the U.S. last year. Those exports, and dividends to the province, stand to increase if the Maine project, called the New England Clean Energy Connect, is approved.

In its financial report last year, Hydro-Quebec dubbed the project the “biggest sales contract in our history.” But when asked to explain a series of meetings earlier this year with Gov. Mills, her staff and Republican and Democratic leaders in the Legislature, Marie-Claude Francoeur, the New England delegate from the Quebec government, told Maine Public Radio that her job was not to advocate for Hydro-Quebec or the project. 

“I am not a lobbyist for Hydro-Quebec,” said Francoeur, adding that her role is to maintain regional agreements with the Quebec government. 

Francoeur was responding to disclosures made by the Quebec government through the U.S. Foreign Agents Registration Act, or FARA. The law requires agents working on behalf of foreign governments to disclose political and other activities in the U.S.

The FARA disclosures show multiple meetings with Francoeur, and her public relations attache’ Michael Pizziferri, with Maine officials in February, March and May of this year on matters described broadly in the documents as trade, energy and climate change.

The exact timing of the February meetings is not listed, but Mills announced support for the corridor project that same month.

In a statement, Lindsay Crete, a spokeswoman for Mills, said the February meeting was an introduction between the governor and Canada’s deputy ambassador to the U.S., Kirsten Hillman, and a discussion about climate change. 

In May, documents show several separate meetings with Francoeur, Republican and Democratic legislative leaders and members of the governor’s administration and staff. While the Legislature was considering several bills at the time that could have delayed or torpedoed the corridor project altogether, Crete said Quebec officials did not attempt to lobby the administration or the governor’s newly-hired energy director, Dan Burgess.

“The May meeting with Dan Burgess was to discuss general climate issues, including sharing information on multiple clean energy initiatives such as electric vehicle policies and NECEC (the corridor project), but they did not attempt to lobby our office regarding bills before the Legislature,” Crete said. 

Statements from Democratic leaders largely echoed Francoeur’s assessment: The corridor project and related legislation may have come up, but there was no attempt to persuade leaders to defeat the anti-corridor bills. 

“I report on the process,” said Francoeur, adding that Hydro-Quebec employs its own lobbyists. “I’m not there to influence it by any means.”

A spokeswoman for House Speaker Sara Gideon, who opposes the project, said in a statement that she met with Quebec officials to discuss an array of issues, including potential greenhouse gas emission reductions and dam generation related to the project. But Gideon’s statement – as well as one from Senate President Troy Jackson’s office – did not characterize the meetings as attempts to lobby. 

Had Quebec officials expressly lobbied against anti-corridor bills they might have been required to register as lobbyists with the Maine Ethics Commission, the agency that oversees Maine election and paid advocacy laws. However, triggering the lobbying registration requirement – paid influencing for at least eight hours in a month – is a high bar.  

Maine and Quebec officials interviewed for this story described the meetings as brief. 

Hydro-Quebec’s domestic subsidiary hired its own lobbyist, Tim Walton, last year. Walton, who is no longer working for Hydro-Quebec, said he was unaware of the meetings between government officials from Quebec and Maine, and that he worked exclusively for the company’s U.S. affiliate.

Walton’s former client is now behind the ballot question committee formed last month, Hydro-Quebec Maine Partnership. In response to questions from Maine Public Radio, Serge Abergel, the committee’s lead decision maker, said the committee is gearing up to provide “accurate information” if a 2020 referendum materializes.

Abergel says the committee is working independently from a Central Maine Power political action committee already spending on advertising in anticipation of a referendum. 

Abergel said it’s too early to estimate how much the new committee will spend. But in response to questions about foreign nationals participating in a 2020 referendum, Abergel said the committee is operating with the understanding that contributions or expenditures are only prohibited in connection with candidate elections. 

“This prohibition does not apply to contributions and expenditures by foreign nationals to initiate or influence a ballot question, as is the case with our [ballot question committee],” Abergel said.

Assistant Attorney General Phyllis Gardiner, who is the legal counsel for the Maine Ethics Commission, said she had not fully researched the issue, but cited the definition of an election as pertaining to candidates in the Federal Election Campaign Act. That definition has been referenced in several Federal Election Commission advisory opinions, including one in 1989.

While Maine election law does not have that same definition, Gardiner said Maine campaign finance law does not restrict the source of contributions to a ballot question committee or political action committee. 

Maine Public’s Morning Edition host Irwin Gratz talks with Steve Mistler about the significance of Hydro-Quebec’s decision to form a new ballot question committee, amid the ongoing battle over Central Maine Power’s proposal to import Canadian hydropower via a 145-mile transmission line through western Maine.

GRATZ: There is as yet no referendum plan regarding Central Maine Power's transmission line project to bring Hydro-Quebec power to Massachusetts. But that's not stopping key interests from behaving as if one is inevitable. You can see it in the television spots recently airing that support the project. Steve Mistler is here now with word of the latest entity to put money behind a message of support. Steve, who are we talking about?

MISTLER: Well, we're talking about Hydro-Quebec, which would be the energy supplier if this corridor is built. They have formed a ballot question committee. They did so a couple of weeks ago, and that signals that they are going to be getting involved in this referendum if one should materialize, and that seems highly likely at this point. But it also raises some interesting questions because of Hydro-Quebec's connection to the Quebec government.

GRATZ: Now, we often do talk about Hydro-Quebec as a company, but as you mentioned a moment ago, it's not quite that simple.

MISTLER: No, it's not. In fact, Hydro-Quebec's sole shareholder is the government of Quebec. And every year, they take a slice of their earnings and they send that as dividends to the province. And that's an interesting relationship because their financial fortunes are intertwined, and it helps explain why Hydro-Quebec is getting involved in a ballot campaign. A big reason why Hydro-Quebec has performed so well is that they are increasing their exports to the United States. The corridor project is, of course, an export project. In fact, in its annual report, the company described it as the biggest sales contract in their history, and their exports last year were already unprecedented. So they have a lot riding on the outcome of this referendum.

GRATZ: Is the government of Quebec getting actively involved in this debate?

MISTLER: Well, they say they're not, and we've asked some questions about that because, again, their interests are so intertwined with Hydro-Quebec. What we found in reporting this story is that there were a number of meetings between government officials from Quebec - from their New England delegate office, basically - with legislative leaders in Augusta, the Mills administration. The timing of these meetings is very interesting too. There were meetings in February, which is right around the same time as Mills announcing her support for the project. And then there were meetings in May, that were at the exact same time as the Legislature was considering three bills that could have either delayed the project or made it almost impossible to move forward. So the question is was the government of Quebec lobbying Maine officials on these bills? I spoke with the delegate from Quebec. Her name is Marie Claude Francoeur, and she insists that, no, we were not lobbying. We were basically talking to Maine officials about a variety of projects. Yes, the corridor may have come up, but it's not our job to lobby. Now, her account was basically confirmed by the people I talked to for this story, just to try to, you know, see if their explanation would square with Maine officials'. It largely did. But they did talk about the project. And that raises some questions about how much advocacy they were actually doing. And if they had actually talked about it for enough time, that would have potentially have triggered them to register as lobbyists.

GRAT: So, it's not illegal for them to lobby, if they register.
 
MISTLER: That's correct. That's the question, though, is where does the government of Quebec's lobbying and advocacy begin, and where does Hydro-Quebec's begin? We don't really know. They're trying to draw a distinction between the company and the province. And that's their explanation for these meetings. Now, it's true that these meetings seem to cover a range of topics. And it's also probably likely that they did not trigger the lobbying threshold, which is eight hours of paid advocacy in a month.

GRATZ: Is any of this involvement by Quebec in a potential referendum a problem legally?

MISTLER: That's a question I had when I initially saw the disclosure of the PAC. The answer:  It seems to be that it's fine. And that's largely because that Maine law makes no prohibition for donations to a political action committee or, in this case a ballot question committee. So there is no prohibition on where that money comes from. And additionally, federal law, while they have explicit prohibition on foreign nationals, which, in this case, that would be Hydro-Quebec, participating or trying to influence an election, federal law only defines an election as involving candidates, so only candidate campaigns. There is no prohibition on referenda, which is what this would be. So it appears to be entirely legal.

GRATZ: All right, Steve, thanks very much.

MISTLER: Thank you.

This interview has been lightly edited for clarity.

Originally published Dec. 12, 2019 at 5:29 p.m. ET.