Feeds:
Posts
Comments

Archive for the ‘Toledo Bend, Water Sale’ Category

Civil Service rules prohibit campaign contributions by classied employees—unless you’re the governor’s mom

Posted in Boards, Campaign Contributions, Civil Service, Commissions, Ethics, Governor's Office, Toledo Bend, Water Sale, Water Reservoirs, Water Sales on October 15, 2013| 9 Comments »

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 »

After three legal setbacks, the next logical step for π-yush is to follow the lead of Egypt’s Morsi: suspend the court system

Posted in ALEC, American Legislative Exchange Council, BESE, Education, Ethics, Golf Courses, Governor's Office, Health Care, Higher Education, Judges, Legislature, Legislators, LSU, Prison, Privatization, Retirement, Teague, Toledo Bend, Water Sale on December 6, 2012| 7 Comments »

First it was a federal judge who threw out Piyush Jindal’s voucher plan in Tangipahoa Parish because it posed a major setback to the parish’s current desegregation consent decree.

Then, last Friday, a state district judge, Tim Kelley, whose wife once worked for Piyush, said the method of appropriations to fund the statewide voucher program is unconstitutional.

Fast on the heels of Kelley’s ruling, fellow Baton Rouge District Judge William Morvant refused to throw out a lawsuit challenging the only part of Piyush’s far-reaching retirement reform proposals that survived the legislative session earlier this year.

In case you’re counting, that’s oh-for-three—not a good batting average for the governor who would be president.

Keep in mind that Piyush is the incoming chairman of the National Republican Governors’ Association.

Remember, too, that he thought he would be moving into that position in the hope that it would be the launching pad for his presidential aspirations. To do so, he needed to bring something substantial to the table.

That something was to be sweeping education reform. That was to be the centerpiece of his list of grand accomplishments, the bold-face type on his curriculum vitae.

Now, the status of both education and retirement reform are suddenly in jeopardy.

Suddenly the star of the errand boy of the American Legislative Exchange Council (ALEC) doesn’t shine quite so brightly.

What to do?

The obvious answer would be to teague someone. That practice, after all, has served him well in the past. No college president, attorney, doctor, agency head, legislator or rank-and-file state employee will dare rebuke Piyush lest he or she be shown the door.

There was a time when we would have run a recap of those teagued by this peevish little man, but the list has grown so long that it would take up far too much space.

On reflection, however, one must ask just what are Piyush’s alternatives?

Well, normally he could campaign against the re-election of judges Kelley and Morvant—except he already did the anti-judge campaign thingy in Iowa.

He can’t teague the federal judge; he was appointed by the president.

He can’t teague either of the state judges—Kelley or Morvant—because they were elected by voters of the 19th Judicial District.

He can’t teague Jimmy Faircloth, the attorney who so expertly represented the interests of the state in arguing on behalf of the voucher program because Faircloth was working under a contract that ends when all appeals are exhausted—about $100,000 or so down the road.

He can’t teague Angéle Davis, wife of Judge Kelley because she already resigned her position as Commissioner of Administration.

He can’t teague the legislator who introduced the education bills because they were not written by any Louisiana elected official but by the corporate honchos at the American Legislative Exchange Council (ALEC).

He might consider teaguing Superintendent of Education John White since there are already unconfirmed rumors floating around that he is leaving soon.

But there is a far better option open to Piyush:

He could take a page from the playbook of Egyptian President Mohammed Morsi.

It’s such a simple solution we’re surprised no one has thought of it before.

All he has to do is first invoke that obscure nullification clause which several states unhappy with last month’s presidential election are bantering about—the one that says states can unilaterally ignore a federal law they don’t like. Or even opt out of the union itself. Some in Texas are talking about splitting off and breaking the state into five separate states (pure lunacy, but a philosophy that dovetails nicely with that of the Tea Party).

Then, like Morsi, Jindal can unilaterally decree greater authority for himself, including issuing a declaration that the wrong-headed courts are henceforth barred from challenging his decisions.

(Come to think of it, such a move is not exactly unprecedented. President Andrew Jackson said of the U.S. Supreme Court’s decision that the state of Georgia could not impose its laws on Cherokee tribal lands, “(Chief Justice) John Marshall has made his decision, now let him enforce it.”)

After that, he could even take it a step further and, like North Korea’s late Kim Jong-il, bestow upon himself the title of “Dear Leader,” and, again like Kim Jong-il, commission a song of the same name in his honor.

Think about it. If he were to take that action, he could sell prisons, the old insurance building property, hospitals, roads, universities, the Saints and the Zephyrs, not to mention a few state-owned golf courses and state parks.

That water from Toledo Bend Reservoir? Sold. Gone to Texas and a few select political cronies are even richer than before.

And you only think you’ve seen a lot of corporate tax breaks, incentives and exemptions. Once he issues his decree, corporate taxes would disappear into that sink hole in Assumption Parish.

All state employees who aren’t fired outright (to be replaced by telecommuting administrative types from Florida, California, Alabama and elsewhere) would immediately forfeit all health and retirement benefits—except for friendly former legislators who, of course, would be elevated to six-figure salaries with full benefits.

The Department of Civil Service, public schools and the State Ethics Board would become distant memories for the nostalgic among us.

Of course, were he to take such action, he could always say his decision was predicated “by three things: one, to protect needed reform packages; two, to streamline government so at the end of the day, we can do more with less, and three, I have the job I want.”

Opponents could be expected to condemn his decrees as heavy-handed and dictatorial but what else would you expect from those who represent the coalition of the status quo?

Read Full Post »

Toledo Bend water sale proposal just gets curiouser and curiouser; common thread is Jindal campaign donations

Posted in Campaign Contributions, Contract, Contracts, Governor's Office, House, Senate, Legislature, Legislators, Toledo Bend, Water Sale on March 5, 2012| 4 Comments »

Much like Alice’s observation in Lewis Carroll’s Alice in Wonderland, details surfacing about the proposed sale of 600,000 acre-feet (196 billion gallons) of water from the Toledo Bend Reservoir just gets curiouser and curiouser.

In attempting to follow the time line leading up to the issuance of a request for proposals (RFP) by the Sabine River Authority (SRA) and the sudden shelving of the water sale plan to private investors, events appear to be grotesquely out of sequence.

Sufficient questions exist to raise concerns over whether the SRA, at best, may have gotten the proverbial cart ahead of the horse and, at worst, the possibility that backroom deals may have been cut in anticipation of a financial windfall for investors and the SRA alike.

Toledo Bend Partners (TBP) initially approached SRA more than a year ago about purchasing the water for resale to Texas municipalities and at the SRA’s Water Sales Committee meeting on Jan. 19, 2011, SRA Executive Director Jim Pratt informed the committee that he had received a proposal for “an out-of-state water sales agreement from the Toledo Bend Partners, LLC.”

Pratt told the committee that TBP was offering to pay $3 million up front to reserve the water rights using a graduated pay scale over four years until the project was on online to actually take water. He added that TBP’s proposal was seeking to reserve 600,000 acre-feet of water from the reservoir and that the partnership would pay a $50,000 non-refundable application fee to help defray SRA legal costs.

Pratt also informed the committee that he had already spoken with attorney Marjorie McKeithen of the New Orleans law firm of Jones Walker about representing SRA during the sale negotiations with TBP.

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 respective families. The principals and their families and business interests have combined to contribute more than $75,000 to the political campaign of Gov. Bobby Jindal.

Jones Walker, a firm with hundreds of attorneys in at least 14 offices in eight states and Washington, D.C., is also a big supporter of Jindal. The firm itself had eight contributions totaling $22,000 and Paul Cabon of Washington, D.C., the firm’s Director of Government Relations, and wife Susan had 12 more contributions to the Jindal campaign that totaled $28,300. Various other law firm partners also contributed between $500 and $1,000 each.

The committee voted unanimously to accept the $50,000 from TBP and to enter into a professional services contract “not to exceed $50,000” with Jones Walker “for legal counsel for the out-of-state water sales project.

Eight days later, at the Jan. 27, 2011 meeting of the full SRA Board of Commissioners, the Water Sale Committee’s actions were ratified, again unanimously and without discussion.

The board on Feb. 24, 2011, unanimously approved paying out-of-town travel expenses for commission Chairman Robert Conyer and Water Sale Committee Chairman Larry Kelly to attend negotiations for the out-of-state water sale.

That was six months before a letter from Jindal Chief of Staff Stephen Waguespack informing SRA that the governor’s signature would be required for the sale of water “outside the boundaries of the state of Louisiana.” Waguespack added that any sale would not be considered “unless it is, at a minimum, the product of a competitive RFP.”

Waguespack’s letter was dated Aug. 25, the same date that the SRA board voted unanimously to approve the water sale contract with TBP and to forward the signed contract to Jindal for his signature.

Those two documents apparently crossed in the mail because a month later, on Sept. 22, the SRA board, in a sudden reversal, unanimously authorized Water Sale Committee Chairman Larry Kelly, Pratt and SRA staff to prepare and issue the RFP—a month after first agreeing to and signing a contract to sell the water to TBP.

Several individuals and firms expressed an interest in purchasing the water and each was provided a copy of the RFP by mail except for TBP which had a representative pick up a copy of the RFP at SRA offices.

Despite the expressed interest of other entities, TBP subsequently was the lone bidder on the purchase of the water at a price of 28 cents per thousand gallons or $91.24 per acre-foot. That price is substantially lower than other localities where water sale prices range from $5.20 per thousand gallons ($1,700 per acre-foot) to $8.88 per thousand gallons ($2,903 per acre-foot).

Such a spread in the purchase price by TBP and market prices elsewhere would seem to set TBP principals up for substantial profits as middlemen, leaving unanswered the question of why the SRA could not issue an RFP and negotiate directly with the end users in order to enhance its financial bottom line.

If all this is not confusing enough, there is the business of a $10 million bond issue approved by the SRA in which the time line also appears to be out of sync.

The SRA ran the requisite legal advertisement on its intent to issue $10 million in revenue bonds on Sept. 7, 2011 even though the State Bond Commission had already approved the measure at its June 16 meeting in Baton Rouge—nearly three months before.

The legal advertisement said that the $10 million in revenue bonds to finance the acquisition of “any property or facilities which the Authority is authorized to acquire,” would be secured by the sale of water to industrial customers by the Sabine River Diversion System. The Diversion System sales water to the petrochemical industry in Southwest Louisiana and those sales are separate from the proposed purchase by TBP, according to SRA management consultant Carl Chance.

Read Full Post »

Notable Quotables (in their own words)

Posted in Campaign Contributions, Governor's Office, Notable Quotables, Toledo Bend, Water Sale on February 1, 2012| Leave a Comment »

“There’s talk of a January vote and I think that is way too fast.”

–Stephen Waguespack, Gov. Bobby Jindal’s Chief of Staff, in backtracking last month on his August letter giving the Sabine River Authority the governor’s tacit approval to move forward with a request for proposals (RFP) for the sale of surplus water from Toledo Bend Reservoir to a partnership comprised of Louisiana and Texas businessmen who also happen to be major contributors to the campaigns of Jindal and Texas Gov. Rick Perry. The partnership was the only entity submitting a proposal.

Read Full Post »

Jindal in need of deniability in Toledo Bend water sale issue; à la John Kerry, he was for the sale before he was against it

Posted in Campaign Contributions, Ethics, Governor's Office, Toledo Bend, Water Sale, Transparency, Water Sales on February 1, 2012| 4 Comments »

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 »