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Ohio’s House Bill 6 scandal widened in 2021, but more is yet to come in 2022

The Plain Dealer  Cleveland logo The Plain Dealer Cleveland 12/30/2021 Jeremy Pelzer, cleveland.com

COLUMBUS, Ohio — The House Bill 6 scandal took on a new dimension in 2021, with FirstEnergy Corp. paying a $230 million fine for bribing top state officials, lawmakers passing a partial repeal of the infamous energy law, and ex-Ohio House Speaker Larry Householder being kicked out of the state legislature.

And there’s much more to come in 2022, as Householder’s upcoming trial on a federal corruption charge, as well as multiple civil lawsuits, are likely to reveal even more scandalous details about the passage of HB6. It remains to be seen whether authorities will charge Sam Randazzo, the former chair of the Public Utilities Commission of Ohio who FirstEnergy admitted to bribing, as well as FirstEnergy Corp. company executives who were fired for paying the money.

The HB6 scandal consists of two separate but related corruption controversies centering on FirstEnergy payments to Householder and Randazzo.

One involves $60 million in FirstEnergy money funneled through dark-money groups to help Householder pass HB6, which helped the Akron-based utility in several ways — including, most notably, giving a $1 billion-plus ratepayer bailout to two nuclear power plants owned by FirstEnergy Solutions, a then-subsidiary of FirstEnergy. FirstEnergy Solutions is now a separate company called Energy Harbor.

The other centers on what FirstEnergy says was millions in bribe payments to Randazzo — in the years before Gov. Mike DeWine appointed him PUCO chair in 2019 — to push for changes worth hundreds of millions of dollars to the company. Texts from FirstEnergy’s then-CEO also show Randazzo, while serving as PUCO chair, overruled other commissioners and staffers to secure policies that benefited the company.

Here’s more on how the largest bribery scandal in state history widened in 2021 and how it might continue to grow in the coming year.

House Bill 6

Last March, DeWine signed House Bill 128, which repealed two critical parts of HB6 — the nuclear bailout and a so-called “decoupling” measure that allowed FirstEnergy to collect millions more from ratepayers than it otherwise could have. State lawmakers passed the partial repeal after Energy Harbor lobbied for the option of turning down the bailout money because a federal regulatory ruling might make the subsidies a liability.

By the time the governor signed HB128, FirstEnergy had already reached an agreement with Attorney General Dave Yost’s office to halt its decoupling policy. In late summer, the utility also refunded more than $26 million in decoupling fees to customers.

Other important parts of HB6 remain on the books today: most notably, language that guts Ohio’s energy efficiency and renewable-energy requirements for utilities. Ohioans are also still subsidizing six solar projects and two coal-fired power plants in Ohio and Indiana, thanks to HB6. The Republican-dominated Ohio General Assembly has shown no sign to date that it intends to repeal any of these HB6 remnants.

Earlier this year, lobbyists with the prominent law firm Akin Gump Strauss Hauer & Feld LLP told a federal judge details about their important role in getting HB6 passed — organizing lobbying efforts, setting up massive political donations, and even helping to write the legislation. An Akin Gump partner also said the firm’s attorneys drafted resolutions adopted by the board of FirstEnergy Solutions in 2019 to donate a total of $40 million to Generation Now, the pro-Householder dark-money group at the center of the bribery scheme.

Householder

Despite fiercely protesting his innocence, the Ohio House expelled Householder in June, marking the first time since the Civil War that a state lawmaker was kicked out of office.

Householder is now awaiting trial along with Matt Borges, a lobbyist and former Ohio Republican Party chair accused of helping in the bribery scheme. Borges also denies any wrongdoing. If convicted of racketeering conspiracy, they could each face up to 20 years in prison and a $250,000 fine.

Three other co-defendants have already pleaded guilty to their roles in the scheme: ex-FirstEnergy lobbyist Juan Cespedes, Householder political aide Jeff Longstreth, and Generation Now. A fifth defendant, Columbus superlobbyist Neil Clark, took his own life last March in Florida.

In addition to admitting to bribing Householder, FirstEnergy also said that it funded Householder’s attempt in 2020 to dodge term limits and remain in office through 2036.

Randazzo

Even though FirstEnergy admitted to bribing Randazzo, the longtime utilities lawyer from Columbus has, so far, not been charged with any crime.

However, Yost’s civil lawsuit accuses Randazzo and former FirstEnergy executives of engaging in extortion, money laundering, coercion, intimidation, and an attempted coverup. The suit asks that Randazzo be required to help pay any damages the court orders in the case and return his $110,000 PUCO salary and the money he got from FirstEnergy.

In August, a Franklin County judge ordered the seizure of up to $8 million of Randazzo’s assets after he sold $4.8 million in real estate and transferred a $500,000 house to his son.

Last July, DeWine’s office said that a few weeks before the FBI raided his home in November 2020, Randazzo told DeWine’s then-chief of staff, Laurel Dawson, about a $4.3 million payment from FirstEnergy that the company now admits was a bribe. However, a DeWine spokesman said at the time that the governor wasn’t told about the payment until the FBI raid.

In March, DeWine picked former Franklin County Common Pleas Judge Jenifer French to replace Randazzo as PUCO chair.

FirstEnergy

In the wake of the HB6 scandal, FirstEnergy has been working to move past the scandal.

In February, FirstEnergy agreed to limit lobbying and political donations and publicly release more information about the money it gives to politicians and political groups.

The following month, the utility hired a new CEO, Steven Strah, who has emphasized a focus on ethics, compliance and accountability. In July, the company entered into the already-mentioned deferred prosecution agreement with the feds that included a $230 million fine.

Despite these moves, FirstEnergy shareholders have filed civil lawsuits against the company over the HB6 scandal in Akron and Columbus.

Meanwhile, activist investor Carl Icahn has moved to take a major ownership share in FirstEnergy, which gives him control of two seats on the company’s board of directors.

What’s coming in 2022

Next year, the HB6 scandal will continue to play out on several fronts.

The U.S. Justice Department’s investigation into the scandal is still in progress, and it remains to be seen what new findings or arrests might happen in 2022.

Also, Householder’s trial is set to begin sometime well into 2022, unless something changes in the case, such as a plea deal or other routine delays. No exact trial date has been set yet.

Yost’s civil lawsuit against Householder, Randazzo and FirstEnergy remains on hold pending the outcome of the federal investigation. A PUCO audit investigation into FirstEnergy for not disclosing Randazzo’s contracts is also on ice for the same reason.

The two ongoing civil lawsuits filed against FirstEnergy by company shareholders are worth watching — not only because of their potential outcome but also because of what previously unknown details might be uncovered during the proceedings.

Former FirstEnergy executives Chuck Jones and Mike Dowling, who are defendants in the suits, have submitted a list of names of people who might have information to help their defense (including Lt. Gov. Jon Husted) and asked for documents and correspondence from an even longer list of people (including Husted and DeWine).

Husted said he had “no idea” why his name was mentioned, and DeWine’s office has repeatedly denied any involvement in the HB6 scandal. But several past and present DeWine administration officials have connections to FirstEnergy, and the governor’s political opponents will very likely do what they can to tie him to the corruption scandal.

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