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With help from investor-Gov. Scott, Sabal Trail natural gas pipeline looks to open in June

By Joseph A. Mann Jr., FloridaBulldog.org 

A protest in January against the Sabal Trail natural gas pipeline in Suwanee River State Park, Live Oak. Photo: WCTV CBS Tallahassee

The Sabal Trail natural gas pipeline, a giant interstate project whose tail reaches over 268 miles into Florida, has generated fierce opposition as its construction moves through the state from Georgia to its end-point in Osceola County, where it is scheduled to link up to an existing gas pipeline in June.

Starting late last year, hundreds of protestors picketed construction sites in northern and central Florida. Some of them handcuffed themselves to machinery, confronted police, set up a camp and organized sit-ins and meetings along the route, which passes through 12 Florida counties. A lawsuit also was filed by a non-profit to halt the project, but the action was denied.

The $3.2-billion project, called Sabal Trail Transmission LLC, is a joint venture among Houston-based Spectra Energy Partners, a major owner of pipelines and storage facilities that is now part of Enbridge Inc., a Canadian energy firm; NextEra Energy (parent of Florida Power & Light) and Duke Energy. FPL and Duke plan to use Sabal Trail’s natural gas to generate electricity in their Florida power plants.

Construction on Florida’s third major gas pipeline, which will run about 516 miles through Alabama, Georgia and Florida when completed, began in September 2016. The line also has two gas compression plants, one at each end, and plans to build three more by 2021.

Opponents – including environmentalists, residents and landowners along the route – warn of environmental harm. For example, they say that drinking water sources and surface water bodies are being damaged by problems like leakage of diesel fuel on land and in water around construction sites, spills of drilling mud used when running the line under the Suwannee River, the appearance of sinkholes near building sites, which could foreshadow damage to karst limestone bedrock in the region, and damage to wetlands and other parts of the countryside as crews clear a 75- to 100-foot swath to lay the underground pipeline.

Complaints also come from landowners whose property was split to accommodate part the pipeline route and from people worried about the long-term safety of the line, which carries large volumes of flammable natural gas under extremely high pressure.

Moreover, some opponents question whether the utilities building this pipeline will actually need the new volumes of natural gas for Florida, and say they may be planning to liquefy and export gas at a later date.

Sabal Trail pipeline route

“The construction of a natural gas transportation corridor threatens the state’s vulnerable fresh water supply and will leave Florida citizens having to deal with this forever,” Merrilee Malwitz-Jipson, an organizer for the Sierra Club in northern Florida told the Florida Bulldog. Projects like this will make Floridians dependent on fossil fuel for many decades “when its citizens continually vote for solar energy and renewables,” she said. “We’re not alone. This is happening all over the country.”

Sierra Club volunteers watching construction work proceed have seen heavy equipment tipped over in wetlands, leaking fuel, a lack of appropriate fencing for wildlife and drainage of some bodies of water along the pipeline route, she added. “The pipeline is impacting 700 bodies of water between here and Alabama, and we don’t know if they are being restored.”

Broad media attention

While not receiving national attention like protests over the Dakota Access oil pipeline or the Keystone XL, Sabal Trail has become a cause célèbre, receiving broad media attention, particularly in northern Florida.

More than a dozen protesters have been arrested and later released at different locations. In an incident apparently unrelated to the peaceful protests, a 66-year-old man was shot and killed by police after he used a rifle to shoot at the pipeline and equipment in Marion County and then fled the scene, according to media reports. Police are still investigating the case, but pipeline opponents said that they rejected violent acts and that the individual was not part of their movement.

Gov. Rick Scott also is a factor in the Sabal Trail story. The governor actively supported the project, signing two bills in 2013 that helped speed up the extended approval process.

Gov. Rick Scott

In 2014, Florida Bulldog reported exclusively that the governor owned a stake in one of the pipeline partners, Spectra Energy, and that he apparently still owns shares in the company through a blind trust. Florida ethics rules generally ban government officials from owning stock in companies subject to their regulation, or in companies that do business with state agencies. Scott also has holdings in other pipeline companies that produce or transport natural gas, some with Florida operations, the Bulldog reported.

In subsequent reporting, the Bulldog asked the governor’s office about potential conflicts of interest, but was told there are no conflicts since Gov. Scott has no knowledge of the current investments held in the blind trust, which is administered by third parties.

“Florida is swarming with protests, like an antbed stirred up by a 600-mile pipeline stick,” John A. Quarterman, president of WWALS Watershed Coalition and a key pipeline opponent, said in a recent interview. The coalition is the WATERKEEPER affiliate for the Suwannee River and its tributaries.

“I was the first to call for protests against the pipeline in 2014, and we’ve seen a big swell of support since the middle of last year,” said Quarterman, whose non-profit organization works for water conservation.

Hoping to derail the pipeline, WWALS filed a petition against Sabal Trail and the Florida Department of Environmental Protection, seeking an administrative hearing. WWALS said that the pipeline poses a threat to native wildlife and that drilling in karst limestone along the pipeline would cause sinkholes. It also said that Gov. Rick Scott has a conflict of interest, since he has investments in Spectra Energy, part of Sabal Trail joint venture. This legal challenge was turned down.

In an interview, Quarterman also said that Florida utilities will not need the new volumes of natural gas to be provided by Sabal Trail, and suggested that they instead plan to liquefy and export a major share of future gas deliveries.

Pipeline needed?

“There is no need for this pipeline, and the approximately $3 billion being used would provide a lot of solar power for the Sunshine State,” he said.

In defense of the natural gas transmission project, Andrea Grover, a spokeswoman at Spectra Energy, pointed out the following:

  • Before construction work began, she said, the company successfully went through an extensive permitting process, obtaining approval from a variety federal and state entities, including the Federal Energy Regulatory Commission, the U.S. Army Corps of Engineers, the Florida Department of Environmental Protection and others. The need for new natural gas supplies in Florida and an additional pipeline were demonstrated in the planning, permitting and approval process.
  • Karst conditions exist in south-central George and northern Florida, the company spokeswoman said, and much larger infrastructure projects – highways, railroads, urban development have been built in these areas already.
  • Sabal Trail uses best practices for its construction work, and its safety programs often exceed regulatory requirements.
  • After completion, the pipeline will be monitored around the clock according to state and federal safety regulations.
  • According to outside analysts, Sabal Trail is having a significant economic impact on Alabama, Georgia and Florida. This includes the creation of more than 5,600 construction jobs, over $207 million paid to construction workers and about $1 billion spent directly and indirectly on construction activities. Once completed, the pipeline and compression plants will have more than 500 permanent jobs and will provide new tax revenues for local governments. In Florida, the pipeline is expected to create more than 2,700 jobs during construction, and 288 permanent jobs after completion. Aside from construction wages, tens of millions of dollars are being spent in Florida for items like trucking, security, fuel, gravel, equipment rentals, meals and lodging, as well as other supplies and services.
  • Pipeline representatives held public outreach meeting with landowners, community members and public officials. “Some stakeholders did raise concerns,” Grover said. “These have been vetted and addressed by Sabal Trail or federal and state agencies. No one had to be required to permanently relocate during construction.”

Asked if protests had significantly delayed construction, Grover said that the current in-service date (June 2017) was changed from May 2017 due to normal internal decision-making, planning (which began around 2013) and permit applications.

However, one section of Sabal’s website said that original in-service date would be March 2017.

Construction is still underway in several of the Florida counties in the pipeline’s path, and over 81 percent of the pipe is in the ground. The pipeline is installed in a type of “assembly line” process. Construction crews first clear an area up to 100 feet wide, grade the land, dig a ditch for the pipeline, string pipe sections together, weld and then lower the pipe into the ditch, which is filled in. The work area is then cleaned up and vegetation is restored.

“Following pipeline installation,” Grover said, “all disturbed areas will be returned as close as possible to their original contours. Temporary [construction] workspace will be allowed to return to its original state. The entire work area will be restored in compliance with all applicable federal, state and local permits.

“As part of our commitment, we want to establish a positive footprint in the communities along the pipeline route where [permanent] Sabal Trail representatives will live and work.” This means donations and community efforts from pipeline employees over the long run.

“By bolstering community vitality, Sabal Trail is supporting the communities where we will be working and operating for many years to come,’’ Grover said. “Sabal Trail operators and their families are part of these communities too.”

Gov. Scott’s blind trust and a company with a massive pollution problem

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

When Gov. Rick Scott put $133 million of his assets into a blind trust two years ago, he included his shares of Mosaic, owner of the Central Florida fertilizer plant where 215 million gallons of contaminated wastewater recently drained into an aquifer that provides drinking water for millions of Floridians.

Scott’s ownership interest in Mosaic was relatively small – he valued it at about $14,000 on the list of assets he placed in the blind trust – yet it provides another example of how the governor’s sprawling personal finances conflict, or appear to conflict, with his official duties.

Does Gov. Scott still have an ownership interest in Mosaic? Has it increased? On Wednesday, his office released a statement saying the governor is unaware of any sales, purchases or changes in the trust because it is “under the control of an independent financial professional.”

The trustee is New York-based Hollow Brook Wealth Management, whose chief executive is longtime Scott crony Alan Bazaar.

U.S. Securities and Exchange Commission documents filed earlier this year state that Bazaar also serves as an advisory board member of G. Scott Capital Partners, the private equity firm co-owned by First Lady Ann Scott and run by a trio of the governor’s former employees at Richard L. Scott Investments. Both the governor and Mrs. Scott have been substantial investors in Scott Capital’s investments.

Republican Gov. Scott’s handpicked Secretary of the Department of Environmental Protection, Jon Steverson, is now overseeing Mosaic’s response to the massive dump of contaminated water that occurred in late August when a 45-foot wide sinkhole opened at Mosaic’s New Wales fertilizer manufacturing plant in Mulberry, about 55 miles east of Tampa.

The Mosaic plant sinkhole in what was a large pond atop a gypsum stack. When the sinkhole opened, millions of gallons of acidic wastewater drained into an aquifer used for drinking water. Photo: WFLA Tampa

The Mosaic plant sinkhole in what was a large pond atop a gypsum stack. When the sinkhole opened, millions of gallons of acidic wastewater drained into an aquifer used for drinking water. Photo: WFLA Tampa

“Governor Scott will hold all responsible parties accountable for their actions and has directed the Department of Environmental Protection (DEP) to expedite their investigation,” Scott’s communications director Jackie Schutz said in a Wednesday statement. “Governor Scott has also directed the Department of Health to partner with DEP in their investigation to ensure all drinking water in the area is safe. We know Mosaic has taken responsibility, but our job is to ensure 100 percent safe drinking water.”

Earthjustice is a large nonprofit environmental law firm. Informed that Gov. Scott previously disclosed his ownership of Mosaic stock, Senior Associate Attorney Bradley Marshall said, “We’re always concerned about the governor’s ties to industry. We certainly do think the governor has not been a good protector of the environment in Florida. We’ve already seen veterans at DEP fired for doing their jobs.”

Mosaic, based in Plymouth, Minnesota, is a Fortune 500 company (NYSE: MOS) with extensive operations in Florida, where it employs 4,000 workers. According to the company’s web site, it mines phosphate rock from nearly 200,000 acres of Mosaic-owned land in Central Florida and potash from mines in Canada. The products are processed into crop nutrients that are shipped around the world. Mosaic’s revenues last year were about $9 billion.

Mosaic politically active

Mosaic Fertilizer LLC, the company’s principal operating subsidiary in Florida, is politically active. State records show it fields a team of 14 executive branch lobbyists in Tallahassee. Since 2008, Mosaic entities have contributed about $1.9 million to political candidates and causes, with about $840,000 going to the Republican Party of Florida and the Florida Republican Senatorial Campaign Committee, records show.

In October 2015, Mosaic Fertilizer LLC agreed to a nearly $2 billion settlement with the U.S. Environmental Protection Agency (EPA) regarding charges that its New Wales facility and other plants in Florida as well as Louisiana improperly handled 60 billion pounds of hazardous waste. Specifically, EPA inspectors found that Mosaic had mixed certain types of highly corrosive substances like sulfuric acid from its fertilizer operations with phosphogypsum and wastewater from its mineral processing. Sulfuric acid is used to extract phosphorus from mined rock.

Phosphogypsum is the radioactive byproduct that’s created when phosphate is turned into fertilizer.

An EPA press release at the time said the settlement “will ensure that wastewater at Mosaic’s facilities is properly managed and does not pose a threat to groundwater resources.’’

Gypsum stacks at a a phosphate plant in Florida Photo: Engineering and Mining Journal

Gypsum stacks at a a phosphate plant in Florida Photo: Engineering and Mining Journal

The sinkhole formed beneath one cell of a mountainous phosphogypsum stack topped with a 250-million-gallon pond filled with acidic wastewater from the fertilizer manufacturing process.

According to the company, plant workers noticed a decline in the water level on Aug. 27. While Mosaic quickly notified the DEP and the EPA, no public announcement was made until Sept. 15.

“A sinkhole formed under the west cell that we believe damaged the liner system at the base of the stack,” said the company’s initial press release. “The pond on top of the cell drained as a result, although some seepage continues.”

Mosaic went on to say it “immediately implemented additional and extensive groundwater monitoring and sampling regimens and found no offsite impacts.”

Company officials who appeared Tuesday before the Polk County Commission reiterated, “No water from the stack has migrated off our property.” The company also apologized for not notifying the public sooner.

Gov. Scott’s blind trust – his second while in office – was created under the terms of a secret trust agreement signed in June 2014. His office has declined to make the agreement with the trustee public.

Scott acquired Mosaic while in office

Gov. Scott acquired his Mosaic investment while in office. His first blind, created in April 2011 a few months after he was sworn in, disclosed no ownership of Mosaic shares.

Florida’s qualified blind trust law was passed by the Legislature and signed into law by Scott in 2013. The idea was to prevent conflicts of interest by blinding public officials and the public to their holdings, and also afford those who use them immunity from prohibited conflicts.

“The Legislature finds that if a public officer creates a trust and does not control the interests held by the trust, his or her actions will not be influenced or appear to be influenced by private considerations,” the law says.

But Florida’s blind trust law, crafted with mega-wealthy Gov. Scott in mind, did not contemplate that such a trust could at times become a see-through entity, making it ineffective.

For example, in March 2014 Florida Bulldog reported that SEC records showed Gov. and Mrs. Scott had recently sold $17 million worth of shares in Argan (NYSE:AGX), a company whose principal subsidiary builds and operates power plants in Florida and elsewhere.

Florida Bulldog reported in July 2014 about Scott ownership of shares in a natural gas pipeline firm, Spectra Energy, looking to build the $3-billion Sabal Trail pipeline across North and Central Florida.

In 2013, Florida’s Public Service Commission – five members appointed by Gov. Scott – unanimously approved construction of Spectra’s controversial pipeline venture with Florida Power & Light. Florida’s Department of Environmental Protection subsequently approved it, too.

What didn’t become known until the following year, however, was that Scott had investments totaling $110,000 in Houston-based Spectra and DCP Midstream Partners, a natural gas limited partnership 50 percent owned by Spectra. Scott only disclosed those interests in June 2014 when he closed his first blind trust and created his second blind trust while qualifying to run for re-election.

Florida’s ethics laws generally prohibit public officials like the governor from owning stock in businesses subject to state regulation, or that do business with state agencies. A similar prohibition exists on owning shares in companies that would “create a continuing or frequently recurring conflict” between an official’s private interests and the “full and faithful discharge” of his public duties.

The governor has said he was unaware of his Spectra investments because they were in his blind trust.

In February, Florida Bulldog reported that in 2012 Scott owned a $210,000 stake in a private equity firm that owned Fort Myers-based 21st Century Oncology when it was awarded a unprecedented 25-year, no-bid contract to supply radiation oncology services to taxpayer-supported Broward Health. An all-Republican board of commissioners appointed by Scott and his Republican predecessor made the award.

A spokeswoman for the governor said Scott wasn’t aware that 21st Century had sought the Broward Health contract and that no one at the private equity firm, Vestar Capital Partners, or 21st Century, had asked him to try to influence the hospital district’s selection process.

Gov. Scott’s undisclosed interest – via First Lady – in Zika mosquito control company

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott and First Lady Ann Scott

Gov. Rick Scott and First Lady Ann Scott

Florida Gov. Rick Scott has an undisclosed financial interest in a Zika mosquito control company in which his wife, Florida First Lady Ann Scott, owns a multi-million dollar stake through a private investment firm she co-owns.

The company is Mosquito Control Services LLC of Metairie, LA. According to its web site, MCS “is a fully-certified team of mosquito control experts – licensed throughout the Gulf Coast, including Louisiana, Georgia, Mississippi, Alabama and Florida.”

On June 23, Gov. Scott signed an executive order allocating $26.2 million in state emergency funds for Zika preparedness, including “mosquito surveillance and abatement, training for mosquito control technicians and enhanced laboratory capacity.”

It is not known whether MCS, whose services include monitoring and aerial spraying, stands to benefit from Florida government funds. Company manager Steven Pavlovich holds an active Florida “public health applicator” license with the Department of Agriculture and Consumer Services through April 2019, but MCS is not a registered state vendor. The Department of Health contracts with two other two mosquito control vendors.

MCS did not respond to two requests for comment.

Ann Scott’s large stake in MCS is via G. Scott Capital Partners, an investment firm that boasts $291 million of client assets. The firm manages several private equity funds and various “family accounts primarily comprised of trusts and family entities,” according to U.S. Securities and Exchange Commission records.

The Florida Bulldog reported in 2014 that Scott Capital, as it is known online, is operated by a trio of men who once worked at Richard L. Scott Investments, the private equity firm where Gov. Scott made millions for himself and his family putting together big-money investment deals when he was in the private sector.

Scott Capital posts its portfolio online. All nine listed companies are current and former investments of the governor and/or Mrs. Scott, including Mosquito Control Services, described as providing “mosquito abatement services primarily to municipalities.”

The SEC requires investment companies like G. Scott Capital Partners to file periodic disclosure reports. The firm’s most recent report, filed in March, shows that the three-employee, Connecticut-based firm caters to a handful of high net worth individuals – less than 25 – who invest directly and through various pooled investment funds.

A mosquito control investment

The firm’s latest fund is GS MCS, LLC, a Delaware company formed two years ago this month to recapitalize and take control of Mosquito Control Services. The current value of the fund is just under $10 million and the fund has nine beneficial owners, SEC records say. The owners’ names were not disclosed.

The managing director of G. Scott Capital Partners is Gregory D. Scott – no relation to Gov. Scott. He directs the firm’s investments, as he did when he led the private equity group at Richard L. Scott Investments from 2000 to 2012.

A screenshot from the web site of Mosquito Control Services LLC.

A screenshot from the web site of Mosquito Control Services LLC.

Gregory Scott owns 50 to 75 percent of the Delaware holding company that owns 100 percent of G. Scott Capital, according to the SEC. The First Lady owns the rest through the Frances Annette Scott Revocable Trust, which owns Tally 1, a Delaware company that in turn owns 25 to 50 percent of G. Scott Holdings LLC.

Gregory Scott has described Ann Scott, an interior decorator and owner of AS Interiors LLC, as a “passive investor” in G. Scott Capital.

Gov. Scott has not disclosed his ownership interest in his wife’s investments. Florida law, unlike federal law, does not require state public officers to disclose the assets or income of a spouse or minor child.

The governor’s office on Tuesday declined to discuss the matter or make Gov. Scott or the First Lady available for an interview.

The Republican governor, a multimillionaire, puts his personal investments in a “qualified blind trust” that his office has described as being overseen by “an independent financial professional.” Florida public officers who use such a trust to “blind” themselves to the nature of their holdings get in exchange immunity from prohibited conflicts of interest under a law that Gov. Scott signed in 2013.

FloridaBulldog.org has reported, however, that the person overseeing Gov. Scott’s trust is yet another former employee at Richard L. Scott Investments and that the trust has been ineffective in keeping the governor’s assets secret.

When Gov. Scott opened his current blind trust in 2014 – the second of his administration – he was required to disclose the assets he put into it. His current mix of assets is not known, but the Florida Bulldog reported last year that the blind trust has in the past coordinated stock transactions with the First Lady’s trust a family partnership.

The Solantic transfer

When Gov. Scott took office in 2011, he transferred tens of millions of dollars in assets to his wife, including a $62-million investment in the walk-in clinic chain Solantic. Mrs. Scott reportedly sold the family’s stake in Solantic that same year.

Gov. Scott’s transfer of his Solantic shares came amid an uproar about perceived conflicts of interest. Florida ethics laws generally prohibit public officials from having an ownership interest in companies that do business with the state or are subject to state regulation.

In 2013, Gov. Scott had an undisclosed ownership stake in Houston-based Spectra Energy when Florida’s Public Service Commission – five members appointed by Gov. Scott – unanimously approved construction of the controversial $3-billion Sabal Trail natural gas pipeline by a joint venture of Spectra and NextEra Energy, parent of Florida Power & Light.

The governor’s investment in Spectra became known about a year later when he filed a lengthy list of his assets as of Dec. 31, 2013 when he closed his original blind trust and opened a new one while qualifying to run for re-election.

FloridaBulldog.org reported in July 2014 that Gov. Scott’s list included a $53,000 stake in Spectra Energy and a $55,000 stake in DCP Midstream Partners, a natural-gas limited partnership 50 percent owned by Spectra Energy.

The governor’s investments included numerous other oil and gas assets, including a $712,000 stake in Texas-based Energy Transfer and its affiliates and subsidiaries. Through other subsidiaries, giant Energy Transfer owns a 50 percent interest in the Florida Gas Transmission pipeline, which delivers nearly 65 percent of the natural gas consumed in Florida.

Gov. Scott has had other conflicting investments.

FloridaBulldog.org reported in February that in 2012 Scott owned a $210,000 stake in the private equity firm that owned 21st Century Oncology when the all-Republican governing board of taxpayer-supported Broward Health awarded the company an unprecedented 25-year, no-bid contract to supply radiation oncology services. The governor appoints Broward Health’s board members.

A Scott spokeswoman has said the governor wasn’t aware that 21st Century had sought the Broward Health contract prior to its award in January 2012 and that no one at the private equity firm, Vestar Capital Partners, or 21st Century had asked him to try to influence the hospital district’s selection process.

Gov. Rick Scott won’t release 2014 tax return or info about his blind trust

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

When Gov. Rick Scott qualified to run for re-election last year, he made public his federal income tax returns for 2010-2012 “in the interest of full and complete public transparency,” according to his lawyer.

Four months later, with Election Day approaching and media inquiries rising, Scott also disclosed his 2013 tax return.

But today, amid news of Scott’s investment in a company that’s seeking to build a controversial, $3-billion natural gas pipeline in north and central Florida, the governor won’t make public his federal income tax return for 2014.

“If he’s provided his income tax returns in the past, it would seem in the spirit of transparency that he should provide it now,” said Ben Wilcox, research director for the nonpartisan government watchdog group Integrity Florida.

The governor’s office also declined a request by FloridaBulldog.org for copies of the federal tax returns filed by the now-closed blind trust that Scott used during his first term to hold his assets outside public scrutiny.

Scott revoked his original blind trust in June 2014 in order to run for re-election, immediately opening a new blind trust into which he rolled over his assets. By state law, public officials do not have access to the tax returns of their active blind trust.

Likewise, the governor’s office would not make public copies of the agreements Scott signed with the trustee of his blind trusts in 2011 and again last year. Those trust agreements control the trustee’s actions. Florida’s “qualified blind trust” law specifically allows the governor to make his trust agreements public, but it does not require him to do so.

“A search of the Executive Office of the Governor’s files produced no documents responsive to your request,” said Savannah Sams of the governor’s Office of Open Government.

In 2013, the Legislature decided that if a public official creates a trust and does not control the interests it holds, his “official actions will not be influenced or appear to be influenced by private considerations.”

BLIND TRUST = IMMUNITY FROM CONFLICTS 

That justification underlines the enactment of Florida’s qualified blind trust statute, which effectively grants immunity from prohibited conflicts of interest to public officials regarding assets they stash in a blind trust.

There is strong evidence, however, that Gov. Scott retains control over his blind trust.

An investigation last year by FloridaBulldog.org found that the state’s blind trust law has been ineffective in keeping Scott from becoming aware of what’s in his trust. Indeed, on several occasions in the last three years Gov. Scott signed paperwork filed with the U.S. Securities and Exchange Commission that reported in detail on large stock transactions made by his blind trust. Those transactions brought the governor tens millions of dollars.

Alan Bazaar, CEO of Hollow Brook Wealth Management

Alan Bazaar, CEO of Hollow Brook Wealth Management

Further, the governor has described his trustee, New York’s Hollow Brook Wealth Management, as “independent,” yet the firm’s chief executive officer is longtime Scott crony and former employee Alan Bazaar. Also at Hollow Brook: Cathy Gellatly, Scott’s former corporate accountant at Richard L. Scott Investments.

Bazaar signed paperwork in 2011 and again last year certifying the blind trusts met the requirements of Florida law and were independent of the governor. His certifications, however, were not made under oath and were not notarized, offering the public little assurance or recourse.

When Scott revoked his original blind trust last year while qualifying to run again for governor, he made public a lengthy list of his assets. The maneuver served to insulate Scott from criticism about financial transparency during his successful re-election campaign against Charlie Crist, but it also revealed that since 2011 Scott had placed a large personal bet on the natural gas industry.

One of Scott’s investments was in Texas-based Spectra Energy, which wants to build Sabal Trail, a controversial 474-mile underground pipeline designed to run from Alabama and Georgia to a hub in central Florida near Orlando, in partnership with Florida Power & Light. Scott reported owning $108,000 in shares of Spectra and its affiliate DCP Midstream Partners.

Florida ethics laws generally prohibit public officials from owning stock in businesses subject to their regulation or that do business with state agencies.

Gov. Scott’s stake in Spectra wasn’t publicly known in 2013 when he signed into law a pair of bills designed to speed up permitting for the pipeline project, or when the state Public Service Commission – whose members he appointed – unanimously approved its construction.

In July, the Department of Environmental Protection announced it intended to award both a permit and underwater drilling rights for the project to Sabal Trail Transmission LLC. An environmental group challenging that decision has accused the governor of a conflict of interest. A state administrative judge is considering the matter.

Judge: Pipeline foes can’t raise Gov. Scott’s alleged conflict of interest

By Dan Christensen, FloridaBulldog.org pipebury

A Tallahassee administrative judge has ruled that environmental opponents of the proposed Sabal Trail natural gas pipeline cannot raise allegations that Gov. Rick Scott has a financial conflict of interest in the project.

Twin rulings this month by Judge Bram D.E. Canter held that questions by the nonprofit WWALs Watershed Coalition regarding “non-environmental public interest factors” are outside the court’s jurisdiction.

“Petitioner may not present evidence or argument regarding whether there has been a violation of Florida ethics law,” Canter wrote. “Petitioner must confine its claims and evidence to the criteria applicable to the issuance of an environmental resource permit.”

The decision was a win for Sabal Trail Transmission LLC and its attorneys. Last month they called evidence of the governor’s financial interest in Sabal Trail’s majority owner, Spectra Energy, “irrelevant” and “unfairly prejudicial” while asking the court to prevent WWAL’s from bringing it up.

The Florida Department of Environmental Protection (DEP), which is backing the $3 billion pipeline proposed to run from the Georgia state line to a hub south of Orlando, also had called evidence of Scott’s investment in Spectra “not material to this proceeding.”

Sabal Trail is a joint venture of Spectra and Florida Power & Light parent, NextEra Energy.

WWALs president John Quarterman said his group considered filing a conflict of interest claim against Scott with the Florida Commission on Ethics, but decided against it.

“We’d be happy to do it if we had any resources to do it,” said Quarterman.

WWALs asked for the administrative hearing on Sept. 3 after the DEP announced its intention to award Sabal Trail both an environmental resources permit and rights to drill under riverbeds in order to build the 267-mile Florida leg of the underground pipeline.

Sabal Trail is an interstate project proposed to run a total of 474 miles through Alabama and Georgia into Florida. The Federal Energy Regulatory Commission is the lead federal agency responsible for reviewing the project and preparing an environmental impact statement. FERC is expected to issue that statement by the end of the year.

KEYS TO THE PIPELINE

The ability of Sabal Trail to obtain a Florida environmental permit and rights to drill beneath state-owned submerged lands is also key to the project.

Gov. Scott’s alleged conflict involves his oversight of both the DEP, and his membership on the Board of Trustees of the Florida Internal Improvement Fund. The fund owns submerged lands beneath several rivers in north Florida where Spectra Energy wants to drill to install the 36-inch Sabal Trail pipeline.

The board of trustees delegated decision-making authority to DEP to issue an easement to allow construction.

Central to the conflict of interest allegations are Scott’s sizeable investments in not only Spectra Energy, but also other natural gas companies that stand to benefit from Sabal Trail’s construction.

If approved, Sabal Trail would connect to the existing Transco Pipeline in Alabama. Financial disclosure papers filed last year by Scott while qualifying to run for re-election show the governor owned shares of Transco’s owner, Williams Companies, which he valued at more than $100,000.

Scott also reported owning shares of Houston-based Energy Transfer valued at $300,000. Energy Transfer’s holdings include 100 percent of Citrus Corp., which owns 50 percent of Florida Gas Transmission. Sabal Trail has said it plans to build a 13-mile extension from its hub in Osceola County to tie into Florida Gas Transmission’s existing natural gas pipeline in Orange County.

Judge Canter has set a hearing on WAALs’s petition at 10 a.m. Oct. 19-22 at the Hamilton County Courthouse.

Pipeline company to judge: Evidence of Gov. Scott’s investment in us ‘irrelevant’

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

Lawyers for a company that wants to build a natural gas pipeline in north Florida have told a judge that environmental opponents should be blocked from “presenting evidence or argument” about Gov. Rick Scott’s financial interest in the company.

“Such evidence is irrelevant and the admission of which would be unfairly prejudicial,” attorneys for Sabal Trail Transmission, LLC told Administrative Law Judge Bram D.E. Canter in last week’s filing.

The Florida Department of Environmental Protection (DEP), which is backing the $3 billion Sabal Trail pipeline, filed a similar argument earlier this month when it called the “allegation regarding a conflict of interest…not material to this proceeding.”

Sabal Trail is a joint venture of Spectra Energy Partners and Florida Power & Light parent NextEra Energy. Spectra Energy’s investors have included Gov. Scott.

The nonprofit WWALS Watershed Coalition filed for an administrative hearing on September 3 after state regulators said they intended to award Sabal Trail both a permit and rights to drill under riverbeds in order to build the 267-mile stretch of 36-inch underground pipeline in Florida. WWALS has asked the judge to deny the permit.

Among the documents WWALS has asked the DEP to produce are all communications from Scott or his executive office about the Sabal Trail project since the governor took office.

WWALS Watershed Coalition logo

WWALS Watershed Coalition logo

The case is proceeding quickly. On September 21, Sabal Trail’s attorneys at the Tallahassee law firm Hopping Green & Sams invoked a law that Scott signed in May 2013 that speeds up the permitting process for the construction of interstate natural gas pipelines.

Under the law, challenges to new pipelines must be heard within 30 days “regardless of whether the parties agree to the summary proceedings.” Before Scott signed the law, natural gas pipelines were specifically excluded from consideration for expedited review.

The bill (HB 999) that ultimately amended the law to include expedited review for natural gas pipelines was introduced by then State Rep. Jimmy Patronis, R-Pensacola.and overwhelmingly passed by the Legislature. Last October, Republican Scott appointed the term-limited Patronis to Florida’s Public Service Commission.

HEARING NEXT MONTH

Judge Canter has set a hearing on Sabal Trail, which is to run a total of 474 miles from Alabama and Georgia to a hub south of Orlando, for Oct. 19-22 in either Jasper or Live Oak. Click here to view documents filed in the case, 15-004975.

The issuance of a Florida environmental resources permit would be a key step toward construction of the pipeline. But it is not the only remaining hurdle.

The Federal Energy Regulatory Commission is the lead federal agency responsible for reviewing the Sabal Trail proposal and preparing an environmental impact statement. FERC’s decision is expected by the end of the year.

FERC’s first public hearing in Florida is 5:30 p.m. Thursday, October 1, at Columbia High School Auditorium, 469 SE Fighting Tiger Drive in Lake City.

WWALS’s petition contends the pipeline poses threats to native wildlife, including threatened species, and argues that proposed drilling into the area’s karst limestone to lay pipe could cause new sinkholes to form.

The group, an affiliate of the Waterkeeper Alliance, also raises a potentially explosive political issue: Whether Gov. Scott, as a trustee of the state board that owns the land beneath the rivers, has a conflict of interest due to his investments in Spectra Energy and Williams Company, owner of the Transco pipeline from which Sabal Trail plans to obtain its gas.

“The governor and other public officials are prohibited by state ethics laws from owning stock in businesses subject to their regulation or that do business with state agencies,” the group’s petition says.

The governor’s blind trust is supposed to shield him, and the public, from conflicts of interest by putting his investments under the control of an independent trustee, and keeping them secret. Public officers who put their assets in a qualified blind trust receive immunity from prohibited conflicts of interest.

As FloridaBulldog.org has reported, however, Scott’s trustee is Hollow Brook Wealth Management, run by his longtime business crony Alan Baazar. The blind trust also has proved ineffective in preventing public disclosure of Scott’s assets.

Moreover, Florida’s qualified blind trust law, which Scott signed into law in May 2013, does not contemplate the unique situation that has transpired as Scott has used the law.

SCOTT’S BIG INVESTMENT IN NATURAL GAS

Scott created his original blind trust in 2011. Last year, while qualifying to run for re-election, he dissolved that trust, disclosed a lengthy list of his assets, opened a new blind trust and immediately stashed his assets into it.

The asset list revealed that during Scott’s first term the governor acquired substantial investments in the natural gas industry. His holdings, first reported by FloridaBulldog.org in July 2014, included stock in Spectra Energy, majority owner of Sabal Trail Transmission; Williams and more than two-dozen other entities that produce and/or transport natural gas, including some with substantial Florida operations.

Scott’s investments in Spectra and Williams also gave him a financial interest in the Gulfstream pipeline that runs from Alabama to Tampa Bay under the Gulf of Mexico. Those companies and their limited partnerships jointly own and operate Palmetto-based Gulfstream Natural Gas System, LLC.

Scott, too, reported owning a bigger stake in giant Energy Transfer, the publicly traded master limited partnership whose subsidiaries include a joint venture that owns Florida Gas Transmission, Florida’s other major natural gas pipeline that runs from Texas through the Florida peninsula to Miami-Dade.

Scott also invested in Boardwalk Pipeline Partners (BWP), a master limited partnership that wholly-owns Gulf South Pipeline Co. Gulf South operates pipelines in Florida’s Panhandle.

Scott has declined to be interviewed about the matter, but his staff has said the governor has no conflicts of interest because he has no knowledge of the current contents of the blind trust that are under the control of trustee Hollow Brook Wealth Management and Alan Baazar.

You don’t need X-ray vision to see through Gov. Rick Scott’s blind trust

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott, right, and blind trust executive Alan Bazaar

Gov. Rick Scott, right, and blind trust executive Alan Bazaar

Governor Rick Scott keeps his $127.8 million stock portfolio in a blind trust intended, by law, to prevent him from having knowledge or control of his investments and to eliminate conflicts between the governor’s public responsibilities and his private interests.

But Florida’s qualified blind trust statute, a little-noticed part of the large 2013 ethics reform bill signed into law by Scott himself, isn’t doing its job. While veiling the governor’s assets from the public, the blind trust fails to keep him blind to his investments.

There are at least two reasons why: disclosure requirements in federal securities law that can undercut blind trust secrecy, and weak conflict-of-interest rules in Florida that don’t require public officers like the governor to disclose assets they own or control when held in their spouse’s name.

For example, on June 25 Scott and the trustees of his blind trust told the U.S. Securities and Exchange Commission that Scott had sold 122,653 shares of Argan (NYSE:AGX) earlier that month for $4.87 million. Argan is a publicly traded holding company whose Gemma Power Systems subsidiary builds and operates power plants in Florida and elsewhere.

The report filed by Scott and his trustees at New York-based Hollow Brook Wealth Management also disclosed that the governor continued to own 4.2 percent of Argan – or 606,124 shares – worth nearly $23.7 million at Tuesday’s closing stock price of $39.06.

The public report says, “No other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares of common stock that are the subject of this filing.”

This wasn’t the first time Scott made millions on a private stock deal while in office.

In March 2014, FloridaBulldog.org reported that the governor and First Lady Ann Scott recently had collected $17 million selling hundreds of thousands of shares of Argan held by the blind trust and other entities. The story also reported about other large transactions involving several other companies whose stock Scott owned.

Scott’s Argan stock sales included at least 140,000 shares held by the blind trust – then worth $2.5 million – which also retained 523,000 shares. The two other selling entities: the F. Annette Scott Revocable Trust and the Richard L. and F. Annette Scott Family Partnership, in which Scott has acknowledged he was a beneficial owner.

Scott’s June filing does not break down the number of Argan shares sold then by each entity in five trades made June 15-19. But on more than one occasion the blind trust, the first lady’s trust and the family partnership have coordinated transactions – buying or selling large numbers of shares on the same day, at the same price or in similar proportions.

SCOTT ‘HAS NO KNOWLEDGE OR CONTROL’ OF BLIND TRUST

Scott’s office would not elaborate. Spokeswoman Jackie Schutz released a statement Tuesday saying the blind trust is “under the control of an independent financial professional” and that the governor “has no knowledge or control of anything that is bought, sold or changed in the trust.”

Nevertheless, trustee Hollow Brook Wealth Management’s chief executive is Alan Bazaar who worked for Scott from July 1999 to January 2010 as managing director and portfolio manager at Richard L. Scott Investments. Hollow Brook is also an “investment adviser” to the Scott family partnership and the revocable trust in Mrs. Scott’s name.

Further, Scott and Bazaar were partners in a company that in 1999 invested in Cyberguard, a Deerfield Beach computer security firm. The company’s board of directors included then-Broward Sheriff Ken Jenne, who later went to prison for corruption, and Fort Lauderdale lobbyist and Scott confidant William D. Rubin.

To date, Gov. Scott is the only public officer in Florida to use a state qualified blind trust to shield his assets and obtain the safe harbor it provides from prohibited conflicts of interest, according to the Florida Commission on Ethics.

Keeping his securities portfolio in the blind trust means Scott does not have to identify his individual securities on his annual financial disclosure form. Instead, his form describes his biggest single asset as simply “Governor Richard L. Scott 2014 Qualified Blind Trust.”

While the state form does not detail his blind trust holdings, mandatory reports he must make to the SEC about his large stock transactions do. But they aren’t the only way information about Scott’s stock holdings have gone public.

Companies must file reports identifying their biggest shareholders. For example, Argan’s May 16, 2015 report to the SEC in advance of its annual meeting listed Richard L. Scott as a principal stockholder who then owned 965,255 shares, or 6.6 percent of the company.

pipelineGov. Scott also has made public information about the contents of his blind trust.

In June 2014, while qualifying to run for re-election, Scott closed his original blind trust, made public a list of his blind trust assets, then immediately put those assets back into a new blind trust.

The maneuver presented a snapshot of Scott’s stock holdings as of Dec. 31, 2013. Among other things, it revealed Scott was heavily invested in energy companies, including those that control the two existing natural gas pipelines serving Florida.

Also disclosed was Scott’s $108,000 investment in Spectra Energy and its affiliate DCP Midstream Partners.

Spectra is currently seeking regulatory approval to build the $3 billion Sabal Trail Transmission, an approximately 500-mile pipeline to run from Alabama and Georgia into North Florida and south to Orange County. The underground pipeline would supply fuel to the state’s new gas-fired power plants.

The Florida Public Service Commission, whose five members were appointed by Scott, unanimously approved Sabal Trail in the fall of 2013, before Scott’s stake in Spectra was publicly known.

Last month, the Florida Department of Environmental Protection said it intended to award a key environmental permit and easement for the controversial Sabal Trail project that’s majority-owned by Spectra Energy.

FP&L and Duke Energy, also partners in the project, have contributed $1.4 million to Let’s Get to Work, the political committee branded with Scott’s campaign slogan, according to federal records. They also gave a combined $5.8 million to the Republican Governors Association in 2013-14, which in turn contributed $18.3 million to Let’s Get to Work last year.

Gov. Scott’s pipeline investment gets a boost from Florida environmental regulators

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

State regulators are quietly backing the award of a crucial environmental permit to a company that wants to build a controversial $3-billion natural gas pipeline in North Florida. The company’s investors have included Gov. Rick Scott.

Florida’s Department of Environmental Protection (DEP), overseen by the governor, published a notice of its intent to issue an Environmental Resources Permit to Sabal Trail Transmission LLC, a joint venture of Houston-based Spectra Energy and Florida Power & Light parent, NextEra Energy.

The July 10 notice also says the DEP intends to grant an easement that would allow Sabal Trail to use “submerged state lands” to help construct the pipeline. Some of those lands are beneath the Suwannee, Santa Fe and Withlacoochee rivers, where the 36-inch pipeline would be buried.

The Board of Trustees of Florida’s Internal Improvement Trust Fund owns the submerged lands, according to DEP’s notice. The board is comprised of the governor and Cabinet – Scott, Attorney General Pam Bondi, Agriculture Commissioner Adam Putnam and state chief financial officer Jeff Atwater.

FPL selected Spectra Energy to build and operate Sabal Trail in July 2013.

FloridaBulldog.org reported in July 2014 that Gov. Scott owned a $53,000 stake in Spectra Energy, and a $55,000 stake in DCP Midstream Partners, a natural gas limited partnership 50 percent owned by Spectra Energy. As detailed in a state financial disclosure form, the governor’s portfolio included several million dollars invested in the securities of more than two-dozen entities that produce and/or transport natural gas, including several, like Spectra, with substantial Florida operations.

CONFLICT OF INTEREST PROHIBITIONS

The governor and other public officials in Florida are generally prohibited by state ethics laws from owning stock in businesses subject to their regulation or that do business with state agencies. The law also prohibits them from having an interest in companies that would “create a continuing or frequently recurring conflict” between their private interests and the “full and faithful discharge” of their public duties.

Sabal Trail pipeline project map

Sabal Trail pipeline project map

As described in paperwork released by the department, issuance of the environmental permit would constitute certification that the pipeline project is in compliance with state water quality standards and consistent with Florida’s Coastal Zone Management Program.

DEP says it will issue the permit and easement unless an affected party files a petition seeking an administrative hearing by Friday, August 7. A spokesman for one environmental group, the Georgia-based WWALS Watershed Coalition, said it intends to file a petition by the deadline.

The Sabal Trail Transmission is proposed as a 474-mile natural gas pipeline to run from Alabama and Georgia to a hub in Central Florida, south of Orlando. The Florida leg, 257 miles long, will traverse a dozen counties in north Florida.

Florida Power & Light intends to use the pipeline as a dedicated supply of fracked natural gas to fuel a new generation of gas-fired power plants in locations that include Port Everglades.

According to the DEP, the project will affect 408 acres of wetlands and other surface waters. The notice says some wetland vegetation should re-establish fairly quickly, but “forested areas may take 2-50+ years to re-establish to pre-construction conditions.”

Sabal Trail applied for the permit, water quality certification and authorization to use the sovereign submerged lands on July 31, 2014.

PIPELINE ‘CLEARLY IN THE PUBLIC INTEREST’

“The department has determined…the applicant has provided reasonable assurance that the construction, including the direct, secondary and cumulative impacts, will comply with” state laws and rules, says the notice signed by Jeff Prather, director of the DEP’s central district. “The applicant has also demonstrated that the construction…is clearly in the public interest.”

The Federal Energy Regulatory Commission is the lead federal agency responsible for reviewing the project and preparing an environmental impact statement. FERC has accepted public comments in its ongoing review of the project. A decision could come as early as November.

Gov. Scott was heavily involved in the state’s early backing of the Sabal Trail pipeline project. In May and June 2013, he signed into law a pair of bills intended to speed up permitting. Later that year, his appointees on the Florida Public Service Commission approved construction of Sabal Trail as the state’s third major natural gas pipeline.

At the time, however, Scott’s ownership interest in Spectra Energy was not publicly known. Like tens of millions of dollars of the governor’s other assets, his Spectra shares were placed in a Florida blind trust.

Blind trusts are supposed to eliminate conflicts of interest by “blinding” public officials and the public to their specific assets. And a spokesman for Scott said the governor “had no knowledge of his Spectra investment because his decision to invest was made by a trustee of the blind trust.”

But Scott’s trustee wasn’t a disinterested manager. It was Hollow Brook Wealth Management and chief executive Alan Bazaar, a trusted former employee of the governor’s private investment firm, Richard L. Scott Investments.

Scott lifted the veil on his assets briefly in June 2014 after he closed his original blind trust and immediately opened a new one and placed all of his assets back into it. The maneuver served to insulate the governor from criticism about financial transparency in advance of last year’s election, but it also revealed the governor’s large personal bet on natural gas firms like Spectra and Energy Transfer Equity LP, entities with significant pipeline interests in Florida.

Energy Transfer’s subsidiaries include a joint venture that owns Florida Gas Transmission, the state’s largest natural gas pipeline and a major state vendor. Scott also has a financial interest in Florida’s other major natural gas pipeline Gulfstream, through his investments in Spectra and the large pipeline operator Williams Cos.

Last month, the Wall Street Journal reported that Energy Transfer Equity LP, run by Dallas billionaire Kelcy Warren, is pursuing a multi-billion dollar deal to acquire Williams.

In his most recent financial disclosure, Scott valued his units of Energy Transfer as worth $311,000 on Dec. 31 2013. He also reported a $400,000 stake in a pair of entities owned by Energy Transfer, Regency Energy Partners LP and PVR Partners LP.

Energy Transfer boss Warren has been a big political supporter or Gov. Scott. In Nov. 2013, two days after former Gov. Charlie Crist filed to run against Scott, Warren contributed $50,000 to Let’s Get to Work, a political committee backing Scott. In March 2012, an Energy Transfer subsidiary gave $25,000 to Let’s Get to Work.

On Sunday, The New York Times ranked Warren third among those who have given the most money in the 2016 presidential race. Warren’s $6 million in contributions all supported former Texas Republican Governor Rick Perry.

Gov. Scott and GE: Jobs, incentives and investments in Scott’s oil & gas partnerships

By Dan Christensen, BrowardBulldog.org 

Gov. Rick Scott with Jacksonville Mayor Alvin Brown and GE representatives on Friday

Gov. Rick Scott with Jacksonville Mayor Alvin Brown and GE representatives on Friday

When Gov. Rick Scott announced last week that GE Oil & Gas would open a $50 million manufacturing facility in Jacksonville he talked about how it would create 500 new jobs for Florida.

GE Oil & Gas’s official welcome package: up to $15.4 million in financial incentives, including $10 million from the city and $5.4 million from the state.

Not mentioned in the hoopla was how another division of General Electric, GE Energy Financial Services, has invested hundreds of millions of dollars in publicly traded oil and natural gas partnerships in which Scott had a financial interest.

Financial disclosure records made public by Gov. Scott in June show that as of Dec. 31 he was heavily invested in more than two-dozen oil and gas ventures. One was Spectra Energy, which is currently working with Florida Power & Light to build the contentious, $3 billion Sabal Trail pipeline in north Florida.

As BrowardBulldog.org reported in July, Scott and his appointees at the Public Service Commission backed construction of Sabal Trail despite state ethics laws that generally prohibit public officials from owning stock in businesses subject to their regulation. Scott acquired his Spectra shares via a controversial “qualified blind trust,” which by law allows politicians to hide their investment activity and also affords them immunity from prohibited conflicts of interest.

A spokesman for the governor’s re-election campaign, Greg Blair, has said Scott was unaware of his Spectra investment because the trustee of the blind trust made it. Longtime Scott crony Alan Bazaar runs the trustee, Hollow Brook Wealth Management.

Gov. Scott’s oil and gas assets include 18 publicly traded master limited partnerships, some with significant ties to GE Energy Financial Services. Oil and gas master limited partnerships don’t pay corporate income taxes, offering investors liquidity and tax benefits.

For example, the governor reported a $135,800 investment in Houston-based Crestwood Midstream Partners LP. He also disclosed an additional $110,600 stake in Crestwood Equity Partners LP, the master limited partnership that manages and controls Crestwood Midstream.

‘VALUE CREATION FOR STAKEHOLDERS’

Crestwood Midstream announced in June that GE Energy Financial was one of a trio of corporate investors that had agreed to buy up to $500 million worth of its Class A preferred units. The proceeds were earmarked to expand Crestwood’s ability to extract and process shale oil, reduce debt and “provide long-term value creation for all our stakeholders.”

GE Energy Financial made another large investment intended to boost Crestwood last year. In that July 2013 deal, GE provided $80.6 million to a Crestwood subsidiary that gathers and transports fracked natural gas extracted from shale in Wyoming. GE also agreed then to provide a total of up to $150 million in future capital contributions, according to a press release.

“This transaction is another step in the execution of our strategy to position Crestwood in rich gas plays,” Crestwood chairman and chief executive Robert G. Phillips said at the time.

The governor’s spokesman, Greg Blair, said Monday that Scott’s backing for GE Oil & Gas’s Jacksonville plant was not influenced by General Electric’s favorable investments in partnerships in which he owned an interest. Blair also said again that Scott had “no knowledge” of his portfolio holdings “because the decision to invest was made by the trustee of the blind trust.”

GE Oil & Gas’s new plant will manufacture regulators, control valves and other products used by the industry. It is expected to open in November.

Regency Energy Partners, LP is another entity in which GE Energy Financial and the governor shared an interest.

Gov. Scott valued his Regency units at $194,000 as of Dec. 31, while reporting he also had a $206,600 stake in PVR Partners LP, which was acquired by Regency in March.

The governor obtained his Regency units sometime after he created his first blind trust in April 2011. That trust was terminated in June when he publicly disclosed his assets in a move apparently designed to make sure he qualified to run for a second term. The governor immediately opened a new blind trust instrument and placed his assets into it.

Dallas-based Energy Transfer Equity LP, another master limited partnership in which the governor reported owning a $310,600 stake, controls Regency.

Energy Transfer acquired Regency’s general partner from an affiliate of GE Energy Financial for $310 million in May 2010. Affiliates of GE Energy Financial retained 24.7 million limited partner units in Regency, according to a Regency press release.

In an October 2012 report to the U.S. Securities and Exchange Commission, GE reported that its affiliate had reduced its Regency holdings to 8.4 million units, or 4.9 percent of Regency’s outstanding units. The move meant that GE was no longer required to publicly disclose its ownership interest in Regency. Its holdings today, if any, are unknown.

Gov. Scott, his investments and the ‘temptation to dishonor’

 

By Dan Christensen, BrowardBulldog.org pipe

When Gov. Rick Scott set up his first blind trust in April 2011, his lawyers asked Florida’s ethics commission whether he had any conflicts of interest because of his investments in companies doing business in Florida.

Topping their list of concern was Texas-based Energy Transfer Equity – the multi-billion dollar parent of various limited partnerships and subsidiaries engaged in natural gas operations, including pipelines and retail propane sales.

The lawyers wanted a conflict ruling about Energy Transfer’s propane business and its 35 Florida outlets potentially subject to state regulation, not its pipelines. The company and its affiliate, Energy Transfer Partners, had pipeline operations in “Arkansas, Arizona, California and several other states,” but not Florida, the lawyers told the ethics commission.

The commissioners, all political appointees of the governor, the senate president and the house speaker, saw no conflict.

“The (propane) business operation that exists in Florida is a small portion of the entire business activities of the (ultimate) parent organization, which is the organization in which the governor has invested,” said the commission’s May 2011 opinion. “Given the scope of the governor’s investment portfolio” his nearly $600,000 investment in Energy Transfer wasn’t “so proportionately large as to provide a particular “temptation to dishonor.’”

Less than two months later, however, Energy Transfer announced it would acquire Southern Union Company and its 50 percent interest in Citrus Corp., owner of the Florida Gas Transmission (FGT) pipeline. The $9.4 billion deal closed in March 2012.

“FGT is the principal transporter of natural gas to the Florida energy market, delivering 64 percent of the natural gas consumed in the state,” Energy Transfer’s web site says. The pipeline runs from south Texas through the Florida Panhandle and south to Miami-Dade.

Also in 2012, Energy Transfer Partners purchased Sunoco and its pipeline, refining and retail businesses for $5.3 billion.

GOV. SCOTT’S BETS ON ENERGY TRANSFER

Gov. Scott’s most recent financial disclosure form, filed in June, shows that as of Dec. 31 he continued to own a stake in Energy Transfer that he valued at $311,000. Additionally, he owned two other entities in the “Energy Transfer family of partnerships” – Regency Energy Partners and PVR Partners, which Regency acquired in March for $5.6 billion.

The governor valued his Regency stake at $194,000 and his PVR units at $207,000 as of Dec. 31. The total of all three of the governor’s Energy Transfer investments: $712,000.

BrowardBulldog.org reported last week that the governor’s portfolio at the end of 2013 included several million dollars worth of investments in the securities of more than two-dozen entities that produce and/or transport natural gas, including several that control Florida’s two main natural gas supply pipelines.

One investment, Spectra Energy, is in a $3 billion joint venture with Florida Power & Light to build Florida’s third large natural gas pipeline, the Sabal Trail Transmission in north Florida. Gov. Scott signed legislation last year to speed up permitting for the project and his appointees on the Public Service Commission approved it last October.

Many of Gov. Scott’s natural gas investments, including Energy Transfer Equity, are publicly traded master limited partnerships. Such partnerships pay no federal or state income taxes and are required to pay out all earnings to their limited partners – investors like Gov. Scott – that aren’t needed for current operations and maintenance. The investors are then taxed on those earnings.

Florida ethics laws generally prohibit public officials from having an ownership interest in companies that do business with the state or are subject to their regulation.

The governor holds his personal investments in a so-called “qualified blind trust” that by a state law the governor signed in 2013 allows public officials to hide their investment activity from the public while giving them immunity from illegal conflicts of interest.

The law seeks to “blind” the governor, a multi-millionaire, to the nature of his many holdings by requiring that he turn over control of his assets to a disinterested trustee. But BrowardBulldog.org has reported that the person overseeing the trust is a former longtime employee of Scott at Richard L. Scott Investments and that federal records show the trust has been ineffective in keeping the governor’s assets secret.

INVESTMENTS DISCLOSED

Gov. Scott made public his investments last month when he closed his original blind trust, then opened a new one into which he placed his investments.

The governor’s office has declined to explain that maneuver, but it was the first time since 2011 that Scott has released information about his investments.

Gov. Scott and First Lady Ann Scott’s 2012 federal income tax forms show the couple claimed a gain of $75,884 that year selling shares of Energy Transfer Equity and its principal subsidiary, Energy Transfer Partners. Total proceeds from those sales: $500,000.

Most of the Scotts’ 2012 gains on Energy Transfer, nearly $48,000, resulted from the sale of Energy Transfer Equity units that the couple reported had cost them nothing. A spokesman for the governor declined to elaborate.

The Scott’s tax returns list the sales of their Energy Transfer units separately from securities sales by the governor’s blind trust that netted about $1.3 million, but are not further identified. That accounting suggests the Energy Transfer units listed on the form were held in Mrs. Scott’s name.

The couple’s tax returns for 2013 have not yet been made public.

Gov. Scott and his staff would not be interviewed about his investments, including Energy Transfer. But a spokesman for his re-election campaign said via email that the governor has “no knowledge” of the contents of his blind trust.

Dallas billionaire Kelcy Warren, number #257 on Forbes’ list of the richest people in the world, is the chairman of both Energy Transfer Equity and Energy Transfer Partners, and chief executive of ETP. He has a reported net worth of $5.8 billion.

Warren is a big political supporter of Gov. Scott. Last November, two days after former Gov. Charlie Crist filed to run against Scott, Warren contributed $50,000 to Let’s Get to Work, a political committee backing Scott.

In March 2012, Energy Transfer subsidiary LaGrange Acquisition LP gave $25,000 to Let’s Get to Work.

Federal election records show that Warren has given more than $500,000 to mostly Republican candidates and causes since 2008.

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