Feeds:
Posts
Comments

Archive for the ‘Water Sales’ Category

For a man who has received more than $20 million in contributions to his various political campaigns, perhaps a half-million or so in questionable contributions shouldn’t raise too many eyebrows. After all, that’s less than 2.5 percent of the total.

Still, for the man who set himself up as the beacon of all that’s pure and pristine, the one who established the “gold standard” of governmental ethics, the one who loves to boast (only in out-of-state speaking engagements, of course) of “the most transparent” administration in the state’s history, anything less than clean campaign money should be unacceptable.

Alas, such is simply not the case.

Even his mother, a state civil service employee, got into the act in open violation of civil service regulations, but more about that later.

We have written at various times of many of the contributions which appear to be directly related to appointments to state boards and commissions. Donald “Boysie” Bollinger was appointed last March to the State Police Commission and Aubrey Temple of Deridder was appointed in July of 2008 to the Coastal Protection and Restoration Financing Corp.

Together, the two men and their businesses and family members have combined to give Jindal’s campaigns at least $95,000 and three of their business associates, Red McCombs ($15,000), Corbin Robertson ($5,000) and James Weaver ($1,000) formed a partnership to purchase water from the Toledo Bend Reservoir on the Louisiana-Texas border for re-sale in Texas. That attempt, at first supported by Jindal, failed when the Sabine River Authority reversed itself and killed the deal at least for the time being.

Temple, meanwhile, was paid $400,000 by the Coushatta Tribe back in 2001 for undisclosed services but he was never able to give an accounting for how the money was used. Also involved with the Coushatta Tribe was Alexandria attorney Jimmy Faircloth, who chipped in another $23,000 to various Jindal campaigns and has since reaped more than $1 million in legal fees for defending the state in various legal proceedings, most of which saw the state end up on the losing end of key court decisions.

Faircloth, while serving as legal counsel for the Coushattas, advised the tribe to sink $30 million in a formerly bankrupt Israeli technology firm call MainNet for whom his brother Brandon was subsequently employed as vice president for sales. The investment, to no one’s surprise except perhaps Faircloth, proved to be a financial bust for the tribe.

This is the same tribe, with Faircloth as legal counsel, that Paid disgraced lobbyist Jack Abramoff $32 million to help promote and protect their gambling interests but who provided little in return for his fee.

Another Abramoff associate, former House Majority Leader Tom DeLay, also contributed $5,000 to Jindal. DeLay was convicted of scheming to influence Texas state elections with corporate money but a federal appeals court overturned that conviction last month.

There was the $55,000 in laundered money the Jindal campaign received in 2007. Richard Blossman, Jr., president of Central Progressive Bank of Lacombe in St. Tammany Parish, issued $5,000 “bonuses” to each of 11 board members but instead of giving them the money, 11 contributions of $5,000 each were funneled into the Jindal campaign in the names of the board members—without their knowledge or permission. Regulators subsequently took over the bank and Blossman was sentenced to 33 months in federal prison for bank fraud.

Jindal has refused to return the money.

The State Board of Ethics also said River Birch, Inc., of Jefferson Parish formed six “straw man entities” through which it laundered $40,000 in illegal donations to Jindal.

Again, Jindal kept the money.

The governor accepted $158,500 in contributions from Lee Mallett and a host of his companies in Iowa, LA., and Lacassine and in return, Jindal appointed Mallett to the LSU Board of Supervisors—even though Mallett attended McNeese State University only briefly and received no degree. Jindal also had the Department of Corrections issue a directive to state parole and probation officers to funnel offenders into Mallett’s halfway house in Lacassine.

Jindal appointed Carl Shetler of Lake Charles to the University of Louisiana System Board of Supervisors in July of 2008 after Shetler, his family and businesses contributed $42,000 to Jindal. Shetler’s biggest claim to fame came when he managed to get McNeese placed on athletic probation by the NCAA after it was learned that he paid money to McNeese basketball players. Now he helps preside over the very school that he placed in jeopardy. So much for that “gold standard” of governmental ethics.

Jindal also accepted $2,500 from Hospital Corp. of America (HCA) which paid a record settlement of $2 billion to settle the largest Medicare fraud case in U.S. history. The founder and CEO of HCA was Rick Scott, later elected governor of Florida, for whom Jindal campaign extensively.

Speaking of Florida and records, Fort Lauderdale attorney Scott Rothstein was disbarred and sentenced to prison for running the largest ($1.4 billion) Ponzi scheme in the state’s history but not before he, his wife, his law firm and three of his corporations contributed $30,000 at a 2008 Jindal fundraiser hosted by Rothstein.

Most news media found the $10,000 contributed by Rothstein and his law firm but missed his wife’s and the corporation contributions that totaled an additional $20,000. Jindal announced that he would refund the money to a victims’ fund but instead, gave the $30,000 to the Baton Rouge Food Bank.

Jindal also took $10,000 from Affiliated Computer Services (ACS) and later gave ACS employee Jan Cassidy, sister-in-law of Congressman Bill Cassidy, a state job with the Division of Administration. ACS, meanwhile, has come under investigation by the Securities and Exchange Commission for certain accounting practices.

Then there was the $11,000 Jindal accepted from the medical trust fund of the Louisiana Horsemen’s Benevolent and Protective Association (LHBPA), whose board president, Sean Alfortish, was sentenced to 46 months in prison for conspiring to rig the elections of the association and then helping himself to money controlled by the association.

The association also was accused of paying $347,000 from its medical and pension trust funds to three law firms without a contract or evidence of work performed. A state audit said LHBPA improperly raided more than $1 million from its medical trust account while funneling money into political lobbying and travel to the Cayman Islands, Aruba, Costa Rica and Los Cabos, Mexico.

The association, created by the Louisiana Legislature in 1993, is considered a non-profit public body and as such, is prohibited from contributing to political campaigns.

Saving the best for last

All these were sufficiently questionable to tarnish the “Mr. Clean” image Jindal has attempted to burnish throughout his administration but the most blatant display of arrogance and complete disdain for campaign laws has to be three individual contributions in 2003 that totaled a mere $5,000—from Jindal’s mother.

So what’s wrong with a relative contributing to his campaign? Several family members, after all, gave to the campaign as do family members of many other candidates.

Well, nothing…except that his mother, Raj Jindal, is a classified state employee, according to Civil Service records, an IT Director 3 with the Louisiana Workforce Commission, formerly the State Department of Labor. She earns $118,000 per year and has been working for the state for 38 years, certainly long enough to know the prohibition against state classified employees being active in political campaigns. State employees, after all, are routinely sent periodic reminders of civil service regulations governing political activity.

Records provided by the State Ethics Commission campaign finance reports indicate that Raj Jindal contributed $3,000 on April 23, 2003, to son Bobby. Nine days later, on May 2, she contributed another $500 and on June 17, she chipped in an additional $1,500, bringing her total contributions to the $5,000 maximum allowable by law—for non-civil service employees.

Article X, Part I, Paragraph 9 of the Louisiana State Constitution says:

“Section 9.(A) Party Membership; Elections. No member of a civil service commission and no officer or employee in the classified service shall participate or engage in political activity; be a candidate for nomination or election to public office except to seek election as the classified state employee serving on the State Civil Service Commission; or be a member of any national, state, or local committee of a political party or faction; make or solicit contributions for any political party, faction, or candidate (emphasis ours); or take active part in the management of the affairs of a political party, faction, candidate, or any political campaign, except to exercise his right as a citizen to express his opinion privately, to serve as a commissioner or official watcher at the polls, and to cast his vote as he desires.

“(B) Contributions. No person shall solicit contributions for political purposes from any classified employee or official (emphasis ours) or use or attempt to use his position in the state or city service to punish or coerce the political action of a classified employee.”

One veteran political observer said that unless Jindal solicited the contribution, all liability lies with the governor’s mother for the rules violation.

But Jindal is a big boy, as evidenced by his advice earlier this year to his fellow Republicans to put on their “big boy pants.” He has to accept the responsibility for allowing his mother to flaunt state civil service rules not once, not twice, but three times. And yes, she also should be held accountable for her violation of rules that apply to every other state civil service employee.

Now the only question remaining is what will the Civil Service Commission do about the governor’s mother violating state campaign regulations governing political activity by Civil Service employees?

Our best advice is: don’t hold your breath waiting for disciplinary action.

The rules obviously do not apply to this governor.

Read Full Post »

“I don’t think water is so damn special.”

—Dave “Lefty” Lefkowith, speaking at a “Liquid Assets” seminar in Florida in 1996 at which he advocated the privatization of public water supplies in Florida.

“I have no idea who made him a panelist.”

—David Struhs, secretary of the Florida Department of Environmental Protection and a close friend of Lefkowith, responding to inquiries about Lefkowith’s participation in the seminar. (Struhs said Lefkowith had traveled from California to Florida to celebrate Struhs’ birthday.)

Read Full Post »

LouisianaVoice has learned that the Department of Education may have an understandable, if not altogether legitimate reason for refusing to release information to the public: a candid response to one request for information might well lead to additional requests and subsequent release of information that the department simply does not want on the street. In short, things could get out of hand in a hurry. That’s called the domino effect.

Accordingly, DOE is following the lead of Gov. Piyush Jindal, who hides behind the “deliberative process” in not releasing information, by likewise clamping down on all information flowing from the department.

That, if nothing else, should be sufficient for Louisiana citizens to demand a more open administration from their absentee governor.

It turns out that Dave “Lefty” Lefkowith, DOE’s new Director of the Office of Portfolio, has quite a past, with strong connections to former Florida Gov. Jeb Bush, the infamous Enron Corp. and a spinoff company called Azurix. More about that later.

Our initial request for public records resulted in the disclosure that Lefty was an employee of DOE. The obligatory follow up request for information revealed that the Louisiana taxpayers got him for a mere $144,999.88 a year, with a “free” Youtube video to boot, albeit a largely amateurish effort to hype DOE’s computer Course Content.

It might also be worth noting that on that video, Lefkowith gives himself a promotion—from being Director of the Office of Portfolio to Deputy Superintendent.

That, of course, prompted a more thorough background search and what we found was a real eye-opener and should be a red flag to state legislators and Louisiana taxpayers alike. If, after all, the past is really prelude, then his appointment does not bode well for education in this state. This could well be a train wreck waiting to happen and it begs the question: just how much tolerance will the citizens of Louisiana have for this administration’s shenanigans before enough is enough?

The information that follows comes from investigative reports by Michael Pollock and Chris Davis of the Sarasota (FLA) Herald-Tribune. Davis is now leader of a Pulitzer Prize-winning investigative team at the Tampa Bay Times in St. Petersburg, FLA.

In 1998, when Jeb Bush was running for governor of Florida, Enron, then a fast-rising Houston energy broker, was in the process of diversifying into the potentially profitable new field of water supply privatization through a subsidiary called Azurix Corp.

Secretary of the Florida Department of Environmental Protection (DEP) David Struhs, a Bush appointee, was simultaneously promoting two concepts on behalf of Azurix: auctioning off blocks of water to the highest bidders and obtaining underground water and storing it for later withdrawal through a process called aquifer storage and recovery (ASR).

Enron sank $900 million in Azurix, hoping to duplicate the proposed action in two other states, California and Enron’s home state of Texas, as well as in South America. Ultimately, however, Enron lost $500 million when the project failed to materialize, eventually selling what was left of the company in 2001 to American Water Works as a precursor to the eventual collapse of Enron.

Struhs also pushed another project to deregulate energy in Florida and to open the state to competition by allowing companies to build power plants, using existing power lines for the purpose of selling electricity to the highest bidding utility or other customers.

Standing shoulder to shoulder with Struhs was his good friend, David “Lefty” Lefkowith, president of Canyon Group, Inc., of Los Angeles.

First, a little background:

Back in 1991, President George H. Bush named 23 industrialists and environmentalists to the President’s Commission on Environmental Quality and named Struhs to run the commission. One of the 23 commission appointees was then-Enron CEO Kenneth Lay.

When Bush lost his re-election bid to Bill Clinton in 1992, Struhs went to work for Lefkowith as vice president of Canyon Group. Lefkowith has represented as many as 60 different electric power companies through his company.

By 1998, Struhs was working for Jeb Bush and Lefkowith was on board with the ill-fated Florida water privatization project. “I don’t think water is so damn special,” he said at the time. “If you let markets take over, you’d find water was cheaper, there would be more of it, and customers would be better served.” He neglected to explain how water quantity would increase.

Fast forward to 2002 and Struhs and Lefkowith were back at the forefront of market manipulation in Florida at the behest of Jeb Bush, but by now, their dealings were with electric power companies. Struhs was DEP Secretary and Jeb Bush had set up Energy 2020 Commission, a group assembled to study deregulation.

This time when Struhs brought him in as a consultant, Lefkowith was given unlimited access to all the emails of Bush’s Energy 2020 Commission members and staffers even though most of the 2020 commissioners never heard of him, never saw him and never knew he access to their correspondence. The Energy 2020 Commission was a group Jeb Bush assembled to study deregulation.

On Feb. 4, 2001, Struh’s deputy chief of staff, Mollie Palmer, ordered a half-dozen top DEP employees to start sending Energy 2020 Commission documents to Lefkowith with emails from Energy 2020 Chairman Walter Revell or from commission executive director Billy Stiles to be “forwarded to Lefty upon receipt.”

After receiving a copy of that memo, Pollock and Davis requested copies of all documents sent to Lefkowith but DEP officials responded that no documents existed. (That sounds much like the responses received by Capitol News Service from the Division of Administration and from the Louisiana governor’s office.)

“Who is this guy to get this information?” asked Florida Democratic Party Chairman Bob Poe. “From the tone and tenor of these emails and communications, he is directing energy policy (for the state). What authority does he have to do that? And for what purpose?”

Democratic State Sen. Kip Campbell of Tarmarac was even less forgiving of the practice. “Suppose I was sending letters to Struhs, like ‘here is my thought process on what we are going to do legislatively.’ And Lefkowith knows this ahead of time. Lefkowith might be working for Calpine and all those other companies, and selling that knowledge for profit. I’d be willing to wager he probably was.”

Lefkowith also attended strategy sessions with Gov. Jeb Bush to discuss findings of the Energy 2020 Commission.

In addition, he lobbied Florida utility representatives in private meetings on the issue of building power plants in order to broker power sales.

He would later use the information he had obtained as confidant to Struhs and Jeb Bush to wrangle a consulting job with the Florida PSC.

So now “Lefty” Lefkowith is in the employ of Louisiana Department of Education as Director of the Office of Portfolio, which is over the Office of Parental Options—whatever the function of those offices may be.

Given his past efforts at privatizing water sales and his attempt at forming a consortium to sell electric power to the highest bidder in Florida, it should come as no surprise to see him attempt to implement much the same type of coup with charter schools or the computer Course Choice program in Louisiana.

Whatever the case, one can bet there is money to be made somewhere in the grand scheme of things.

All this from our initial request for the amount he was paid for making a video of embarrassingly amateurish quality.

No wonder news outlets are experiencing difficulty in obtaining information from the “most open, accountable and transparent administration in the history of Louisiana.”

Our mothers always told us one thing leads to another.

There’s another adage that applies here: Sunshine is the best disinfectant.

Read Full Post »

The clock has run out on Gov. Bobby Jindal and like the Honey Badger, he’s now yesterday’s news insofar as any aspirations either one may have had for bigger and better things.

Realistically, time had run out on Louisiana’s wunderkind some time ago even though like a loyal trooper, he keeps soldiering on—perhaps hoping for a prestigious cabinet position like Secretary of Health and Human Services, something he denies aspiring to.

“I would not consider a cabinet post,” he sniffed like the spoiled little boy that he is after being passed over for the vice presidential nomination by Mitt Romney. “I consider being the governor of Louisiana to be more important and the best job there is.” Well, it is the only job he has for the moment and if he doesn’t challenge Mary Landrieu in 2014, we’re stuck with him through 2015.

Break out the champagne.

We can only surmise that Secretary of Education is out of the question since both Romney and Paul Ryan advocate that department’s abolishment in favor of state and local control (read: vouchers), although Romney has tempered his position somewhat.

But Jindal’s real quandary is not that he was passed over for vice president, but that he needs desperately to advance his career quickly—before all his “reforms” as governor come crashing down around him, doing even more damage to his reputation than that disastrous response to President Obama’s State of the Union Address in 2009.

That image as the crusading reformer who gets things done against all odds is already beginning to wear thin in Louisiana and it’s only a matter of time before the national media begin to take a critical look at his administration. The Washington Post and New York Times already have.

Beginning with his repeal of the Stelly Plan only a few months into his first term—the move is costing the state about $300 million a year while benefiting only couples earning more than $150,000 per year or individuals making $90,000 per year—through this year’s veto of a car rental tax renewal for New Orleans, Jindal his consistently found ways to cut taxes while doling out tax breaks to corporate entities.

In 2011, the legislature could not muster the votes to override a Jindal veto of a cigarette tax renewal and the renewal had to go before voters in the form of a constitutional amendment—which easily passed.

While he defiantly categorizes tax renewals as “new taxes,” to which he is adamantly opposed, he has no compunctions about cutbacks to higher education that force colleges and universities to increase tuition. He considers the tuition hikes as “fees,” not taxes.

While turning up his nose at federal grants for early childhood development ($60 million), broadband internet installation in rural parishes ($80.6 million) and for a high-speed rail system between Baton Rouge and New Orleans ($300 million), Jindal, upon slashing funding for parish libraries throughout the state, apparently saw no inconsistency in suggesting that the libraries apply for federal monies in lieu of state funding.

The grumblings began ever-so-slowly but they have been growing steadily. The legislature, albeit the right-wing Tea Party splinter clique of the Republican Party, finally stood up to Jindal toward the end of this year’s legislative session and refused to give in on the governor’s efforts to use one-time revenue to close a gaping hole in the state budget.

Other developments that did not bode well for the governor include:

• A state budget that lay in shambles, resulting in mid-year budget cuts of $500 million because of reductions in revenue—due largely to the roughly $5 billion per year in corporate tax breaks;

• Unexpected cuts to the state’s Medicaid program by the federal government which cost the state $859 million, including $329 million the first year to hospitals and clinics run by Louisiana State University—about a quarter of the health system’s annual budget. Those cuts will mean the loss of medical benefits for about 300,000 indigent citizens in Louisiana;

• Failed efforts to privatize state prisons, even though he did manage to close two prison facilities and a state hospital without bothering to notify legislators in the areas affected—a huge bone of contention for lawmakers who, besides having their own feathers ruffled, had to try and explain the sudden turn of events to constituents;

• Revelation that he had refused to return some $55,000 in laundered campaign funds from a St. Tammany bank president;

• Failed efforts to revamp the state employee retirement system for civil service employees. State police were exempted—perhaps because they form his security detail. And despite questions about the tax or Social Security implications, Jindal plans to plunge ahead with implementation of the part of the plan that did pass without the benefit of a ruling by the IRS—a ruling that could ultimately come back to bite him;

• A failed effort by the Sabine River Authority to sell water to a corporation headed up by two major Jindal campaign contributors—Donald “Boysie” Bollinger of Lockport and Aubrey Temple of DeRidder;

• A school voucher system that is nothing less than a train wreck, a political nightmare. State Education Superintendent John White, after Jindal rushed the voucher program through the legislature, rushed the vetting process for the awarding of vouchers through the Board of Elementary and Secondary Education, abetted by members Penny Dastugue, Jay Guillot and Chas Roemer—quickly turning the entire process into a pathetic farce;

• A school in New Orleans run by a man calling himself an “Apostle,” a school in Ruston with no facilities—classrooms, desks, books or teachers—for the 165 vouchers for which the school was approved, tentative approval of vouchers for a school in DeRidder that could not even spell “scholarship” on its sign and for a school in Westlake that teaches that the “Trail of Tears” led many Native Americans to Christianity, that dragons were real, that dinosaurs and humans co-existed at the beginning of time (6,000 years ago, the approximate age of earth, according to its textbooks), that slave owners in America were kind, benevolent masters who treated slaves well, and that the Ku Klux Klan was a helpful reform-minded organization with malice toward none (Don’t laugh, folks; this is what many of these fundamentalist schools who qualified for vouchers are teaching.);

• Then there’s that charter school in Delhi that held girls to a slightly higher standard than boys. Any girl who became pregnant was expelled and any girl even suspected of being pregnant may be ordered to undergo an examination by a doctor of the school’s choice. The boy who gets her pregnant? Nothing. No punishment, no responsibility. Only after being subjected to public exposure, ridicule and criticism did the school alter its policy;

• A state legislator who said she approved of vouchers for Christian schools but not for an Islamic school in New Orleans because this country was founded on the Christian principles of the founding fathers, neglecting for the moment that the founding fathers were for the most part, Deists;

• And to top it all off, White smiles condescendingly and tells us that the criteria applied for approval of vouchers for these schools is part of the “deliberative process,” a catch-all exemption employed by the administration when it doesn’t wish to provide what are clearly public records—an administration, by the way, that touts its so-called “transparency.” Fortunately for the public, the Monroe News-Star is taking White’s pompous behind to court over that decision. (Confidentially, it is the humble opinion of LouisianaVoice that White never had any criteria and that he is creating policy and criteria on the fly because he simply is in way over his inexperienced, unqualified head as the leader of the agency charged with the education of our children. And that perhaps is the most shameful aspect of the entire voucher system and the single biggest act of betrayal on the part of a governor equally overwhelmed by the responsibilities of public office—especially an absentee governor.)

So as the Jindal Express rumbles down the track like a bad motorcycle going 90 miles per hour down a dead-end street (with apologies to Hank Snow) and things begin to unravel on the home front, just where is this absentee governor?

Well, it seems that rather than remain in the state and address the problems that are piling up and growing more complex with each passing day, he seems to prefer to spend his time stumping for Romney—or auditioning for a cabinet position he says he won’t accept—after seeing his chances for the vice presidency fall by the wayside.

A mature governor, a caring governor, a capable governor—one who is truly concerned about the welfare of his state—would defer from flitting all over the country spouting rhetoric on behalf of his presidential candidate in favor of remaining at home and addressing problems that are very real and very important to the people who elected him. Romney, after all, never once voted for Jindal.

There could be only one motive for turning his back on nearly 600,000 voters who first elected him in 2007 and the 673,000 who re-elected him last fall: he doesn’t really care about Louisiana and its people; he cares only about Bobby Jindal and those who can help him in the advancement of his political career.

If Gov. Jindal was truly concerned about the welfare of Louisiana, he certainly would have provided us with an encore of his hurricane and BP spill disaster performances: he would have headed straight to Assumption Parish to grab some TV face time at the Bayou Corne sinkhole and then flown away in a helicopter even as a ghost writer busied himself penning a book sequel: Failed Leadership and Fiscal Crisis: the Crash Landing.

That’s the very least he could do.

Read Full Post »

There is one intangible asset that is absolutely essential to the survival of any politician: deniability.

Gov. Bobby Jindal would dearly love to have that deniability right now.

The Sabine River Authority (SRA) has decided, for the time being, at least, to hold up on its proposal to sell up to 600,000 acre-feet (196 billion gallons) of water from the Toledo Bend Reservoir.

The action came after Jindal’s chief of staff Stephen Waguespack announced on Dec. 29 that the administration opposes a proposed sale of water from Toledo Bend reservoir by the Sabine River Authority of Louisiana (SRA) to a group of Texas and Louisiana investors.

The only problem with the administration’s stated opposition is that just four months earlier, an Aug. 25 letter, from Waguespack informed the SRA that the governor’s signature is required for the sale of water “outside of the boundaries of the state of Louisiana.” He added that no such concurrence would be considered “unless it is, at a minimum, the product of a competitive RFP.” In other words, the governor, through Waguespack, gave his tacit approval to the sale provided there was a “competitive RFP.”

Reminiscent of John Kerry, Jindal was for it before he was against it.

The board, thus empowered by the administration’s implied approval, on September 22 authorized by unanimous vote the preparation of the RFP for the out-of-state water sales contract. The result was a proposal from Toledo Bend Partners (TBP) that would lock the state in to a 50-year contract with an option to renew for an additional 49 years.

RFPs were sent to five separate firms or individuals who expressed an interest. A sixth was picked up at SRA offices by a representative of Toledo Bend Partners (TBP). The TBP proposal was the only one submitted pursuant to the RFP.

Public opposition to the proposed sale was such that Jindal, through Waguespack, quickly backtracked. “There’s talk of a January vote and I think that is way too fast,” Waguespack said. He said he was reviewing the proposal which he said would need Jindal’s signature.

That was quickly followed by a Jan. 12 vote by the SRA board to suspend any proposed out-of-state water sales until a comprehensive water plan for Louisiana has been completed.

But the issue is far from dead. There is too much revenue at stake and with another potential budget deficit looming, the state desperately needs revenue. With Jindal’s dogged insistence on no new taxes, coupled with his push for even deeper tax cuts, that revenue has to come from other sources.

That’s where his agenda for privatization comes in and the sale of water to private investors is part of that agenda: rather than selling the water directly to consumers, Jindal instructed the SRA to take proposals from private investors—a middle man, as it were.

And that is precisely why this issue demands a closer inspection to consider not only how the sale would affect the local area but also to see who the principals are and how much money is involved—on both ends of the sale.

While considerable emphasis has been placed on the potential revenue of $54 million per year for the state, little has been said of the potential windfall to the investors if the sale ultimately goes through or of strong political connections on the part of the individual investors.

And while most assume the water will be resold to municipalities in Texas, nothing definitive has been said about the investors’ potential market.

Toledo Bend, which sits astride the Louisiana-Texas border and is jointly-owned by the states of Louisiana and Texas, was created in the 1960s at a cost of $70 million for the purpose of water supply, hydro-electric power generation and recreation. It is the only public water conservation and hydro-electric power project to be undertaken without federal participation.

In order to express large volumes of water use, terms are generally expressed in acre-feet. One acre-foot equals 43,560 cubic feet and is equivalent to 326,700 gallons.

The reservoir covers about 185,000 surface acres, giving it a storage capacity of nearly 4.5 million acre-feet. The reservoir’s annual surplus water supply—water that may be sold—is slightly less than 2.1 million acre-feet with Texas and Louisiana each apportioned half of that total.

That gives Louisiana more than a million acre-feet per year in surplus water.

To put these numbers in perspective, imagine one acre of land covered by one foot of water; that’s one acre-foot of water. There are 7.48 gallons in a cubic foot and 748 gallons in 100 cubic feet.

An Analysis of Proposed Water Sale Agreement between Sabine river Authority, State of Louisiana and TBP says the Sabine River Authority of Louisiana “has the express statutory power” to enter into any and all contracts and other agreements with any person, but “in the case of contracts or agreements involving the sale and/or consumption of water outside the boundaries of the state of Louisiana, written concurrence of the governor is required.”

Louisiana’s counterpart, the Sabine River Authority of Texas, has been selling water to Texas municipalities and other water systems, including 600,000 gallons per day to Houston. Louisiana currently sells its water only for hydroelectric generating, historically tapping less than 3 percent of its annual allocation of surplus water.

Water supply demands in Texas are expected to grow. The 2007 State Water Plan for Texas anticipates that municipal demand will increase by 92 percent between 2010 and 2060—from 1.5 million acre-feet to 2.9 million acre-feet.

The water sale analysis calls for SRA to sell up to 600,000 acre-feet—196 billion gallons—of water per year to TBP at a price of 28 cents per thousand gallons ($91.24 per acre-foot).

Under its proposed 50-year contract, TBP would pay SRA the $91.24 per acre-foot on top of an annual “reservation fee” that begins at $1 million and gradually escalates to $25 million after 35 years. In addition, SRA could choose between taking 1 percent of gross revenues from water sales or 20 percent of net profits.

That price is substantially higher than the current sale price of one cent per thousand gallons ($3.27 per acre-foot) currently paid by Entergy to operate its hydroelectric generator that straddles the Louisiana-Texas border at Newton County, Texas, and Sabine Parish.

Should the sale to TBP eventually be approved, it is anticipated sales to Entergy will be terminated when the current contract expires in 2018.

And while it is generally assumed that TBP will purchase the water for re-sale to municipalities, there is no guarantee of that. Consider the development of the Haynesville shale formation in northwest Louisiana and east Texas and the Eagle Ford shale formation in south Texas, said to contain rich oil and natural gas deposits. The method of extracting the oil and gas is expected to be hydro-fracturing, or fracking, a procedure that takes millions of gallons of water to break up the rock formations and release the oil and gas.

The going price for water for fracking is considerably higher. In Anadarko, Pennsylvania, a community near State College, drillers are paying $6 per 1,000 gallons. In Shalersville, Ohio, near Akron, the price for potable water to perform fracturing runs between $5.20 ($1,700 per acre-foot) and $8.88 ($2,903 per acre-foot) per thousand gallons, depending on the volume.

In California, the state’s water-distribution and pricing systems vary widely and are highly complex. More than 2,800 local agencies provide water service to 35 million people and 8.7 million acres of irrigated farmland.

While about 75 percent to 80 percent of the state’s water goes to agriculture, all users must vie for the limited resources available in the state, with diversions from the Sacramento-San Joaquin and Colorado systems being the most important. Water prices vary widely by jurisdiction, ranging from less than $10 per acre-foot to more than $100 per acre-foot at the retail level.

Because of stipulations that limit water availability based on reservoir and ground water levels, depending on wet or dry years, there are no guarantees of unlimited access from those myriad systems.

At a purchase price of 28 cents per 1,000 gallons, the sale of tens of millions of gallons of water at those prices represents a significant markup and an eye-popping return on investment for the TBP that could approach 2,000 percent.

All of which begs the question that if the SRA has surplus water to sell and there is the potential of a seller’s market, why can’t the sales be made directly to the end-users without a middle man? Why is it necessary to involve TBP?

To get an answer to that, it is important to know just who the players are and they would be principals of TBP. It is also important to know that campaign cash has a way of flowing almost as freely as, well…, as water.

TBP is a Delaware chartered entity comprised of trusts and entities owned by Billy Joe “Red” McCombs of San Antonio, Donald T. “Boysie” Bollinger of Lockport and Aubrey Temple of Coushatta and their families.

McCombs, who presides over the Koontz-McCombs Development Co., a string of automobile dealerships and radio stations, is a major player on the political stage. Between June of 2007 and August of 2010, he made 21 political contributions totaling $280,000 to Texas Gov. Rick Perry. He also made a $5,000 contribution to Jindal in November of 2010.

Jindal endorsed Perry for the Republican presidential nomination immediately after Perry announced his candidacy. He campaigned vigorously for Perry in Iowa, New Hampshire and South Carolina, leading to speculation that Perry would reward Jindal with a choice appointment if he were to win the presidency.

Bollinger is chairman and CEO of Bollinger Shipyards, a family-owned business established by his father, Donald Bollinger, in 1946. Donald Bollinger, Sr. served as Secretary of Public Safety under Gov. Dave Treen.

Bollinger, his family and businesses combined to contribute $10,350 to Jindal in 2003 and 2007. Tidewater, Inc., and Bank One of Louisiana, on whose boards he serves, also contributed another $7,000 to Jindal in 2007.

Tidewater, Inc. Political Action Committee (TIDEPAC) also made five contributions totaling $25,000 to Jindal in 2003 and 2004.

Temple, a banker and founding chairman of Louisiana Workers Compensation Corp., is a former chairman of the SRA. He and his wife made six contributions totaling $25,000 to Jindal between September 2006 and March 2011.

Steve Cummings, TBP CFO and treasurer, contributed $1,000 to Perry in October of 2010, and board member James Weaver contributed $1,000 to Jindal in December 2010 and $15,000 to Perry in June 2009 and December 2010. Both men are from San Antonio.

Rep. Gerald Long (R-Winnfield), in a Jan. 4 letter to the Sabine Index, pledged to meet with Jindal to discuss the issues surrounding the proposed sale. “As you may know,” he said, “any decision to sell water will be made by Governor Jindal and not the local SRA or the Louisiana Legislature.”

Long was the recipient of a $2,500 campaign contribution from Bollinger Shipyards last Aug. 4. Six days prior to that, he received a $2,500 contribution from the Jindal campaign.

In its proposal submitted to SRA, Toledo Bend Partners included nine letters of endorsement from Texas and Louisiana residents and political leaders, including former governors Buddy Roemer, Mike Foster and Kathleen Blanco.

Two of those letters, from Blanco and Texas Lt. Gov. David Dewhurst, supported the proposal to sell water but neither mentioned TBP by name. The remaining seven letters, including those from Roemer and Foster, specifically endorsed TBP for the contract.

Several of the letters were suspiciously similar in their wording, almost as if their letters were drafted from a template and presented to the presumed authors for their signatures. Two called the proposed sale a “win-win” opportunity.

Letters from Corbin Robertson, CEO of GP Natural Resource Partners; Paul W. Hobby, founding chairman of a Houston-based private equity business, and Texas State Senator-elect Ronnie Johns each submitted letters with identical wording: “Toledo Bend Partners encompasses a group of individuals whose business and civic leadership in Texas and Louisiana span many decades.” Robertson and Hobby went even further to say, “Specifically, B.J. “Red” McCombs’ track record of successful collaboration involving business and government entities in Texas is long-standing and distinguished.”

Both men also said in their respective letters, “I believe Toledo Bend Reservoir is an outstanding resource that should be managed with an eye towards the benefits that will be realized by current and future generations of Texas and Louisiana residents.”

Foster and Johns also had identical wording in their letters, each saying “Because power generation is heavily concentrated between May-September, Toledo Bend Lake levels are oftentimes strained during the summer months. Further, downstream residents may experience flooding as a result of the water releases” (from the hydroelectric generating plant).

Read Full Post »

Follow

Get every new post delivered to your Inbox.

Join 2,759 other followers