Sunday, August 12, 2012

The Oil and Gas Industry Crony Capitalists


In Texas we have a large number of crony capitalist and corporate conservatives serving as elected officials.  In their campaign speeches, they claim to hang on traditional conservative values, such as property rights and local control.  However, their actions tend to be quite different, and they back peddle pretty quick when they are exposed for what they really are.  In Texas, pretty much anyone who has more money than you, can do what they wish to your property, or just take it altogether if they want it.

In Texas, the crony capitalists are allowed to live a life of luxury that far exceeds their talents or mental abilities.  Although, they require some intelligence to see these crony capitalist opportunities, their talents certainly would not elevate them to the status that they have found themselves in by taking the crony capitalist shortcut.  Take our governor for example, he is college educated and was an officer in the Air Force, and although he made a fool of himself on the national stage, through my interactions with him, I would not consider him dumb.  He does however appear to be the epitome of the sleazy politician and crony capitalist.  Furthermore, he is a career politician that has never been successful at anything else.  This was sniffed out pretty quickly on the national scene, and he was sent back to apathetic voters of Texas with his tail between his legs.  He would certainly never have made to the level he has on brains alone, so he is afforded a life of power and luxury due to being a crony capitalist  here in Texas.   

Another prime example of the crony capitalist, is Texas State Representative Dennis Bonnen.  Mr. Bonnen was an insurance agent prior to realizing the crony capitalist game.  Although being an insurance agent is a respectable field, this was not good enough for Bonnen.  Him and a number of other crony capitalists have purchased a bank in Pearland, TX.  Mr. Bonnen has put other current and former elected officials on the board of directors for this bank.  Another member of the board is a licensed lobbyist in the state of Texas, so once again this line between government and industry gets blurred.  Bonnen's bank will succeed, not because of his business savvy, but rather by the backs he scratches while serving in the legislature.  Mr. Bonnen, has a history of skirting the law, and has a couple of ethics violations here in Texas, but has never faced legitimate opposition for his seat.   

Traveling around the United States, it is clear that Texas does not own the market on the crony capitalists.  Several other states have elevated the one sold to the highest bidder to positions of leadership within their perspective states.  They use the cash from their new found friends to portray an image of the second coming of Ronald Reagan.  However, it is doubtful that most of these corporate conservatives have ever even read Reagan's book, much less model their political philosophy after him.  To put it bluntly, they wouldn't amount to a pimple on Reagan's…well you know.  However, that does not stop them from hanging the picture of Reagan in their offices, and portraying themselves as Reagan capitalists.

Why do I bring these stories up in this manner?  We because for the most part, the legislation and  regulations written by these individuals, clearly go against the principals of conservatism.  Their actions tell a much different story than their campaign speeches.  Whether it be Texas, Pennsylvania, Ohio,  North Carolina, or Michigan, they pass legislation that destroys private property rights, takes away local control, and undermines the free market system. 

One example is the rule 37 exceptions that has become the norm in Texas.  This allows a private company to take a person's private mineral property without compensation.  With the frequency of this use, there have been close to 5,000 natural gas well permits issued in the Barnett Shale with rule 37 exceptions.  This could amount to a billion dollars in private property transferred to a corporation without compensation.  So much for that free market I keep hearing about.

There are other mechanisms used to accomplish the same thing called compulsory integration or forced pooling, which forces someone to sell their minerals to a company against their will, something like eminent domain.  In these cases the mineral owner is typically paid something for their minerals.  The minimum payment s and terms vary by state, some are better than others, but all are typically against the will of the mineral owners.  For the most part, these crony capitalist do not even understand the problem with allowing a for profit company to take private property.  They believe that as long as you get a "fair price" for your land then it is ok, completely missing that the taking is against the will of the property owner.  There is no such as fair and equitable negotiations when a company has the power of eminent domain, even if you call this power something else.  The citizen always loses in these situations, the corporation always wins.    

Visiting the beautiful state of North Carolina, I found that their "conservative" State Senate and House passed a draconian forced pooling act.  This bill essentially gave the industry the ability to take mineral interests at will, and goes as far as to set the minimum royalty that must be paid, which is about half of the going rate in other areas.  Therefore, those who live in gas producing areas of North Carolina, your state government has decided that you no longer have any say so in what happens to your property.  If you don't believe me, just wait and see.  I hate to bring you the bad news, the confiscation of private property is not a founding principle of conservatism.  

Another issue that continues to pop up around the country is the removal of local control in regards to the oil and gas industry.  The State of Texas has made several attempts to take away local control, while many other states have succeeded.  I served as a local official for six years, and feel that there is not a purer form of democracy than a small town government.  I also have a particular passion about maintaining local control of things that greatly affect the future of small communities.  Local officials who are visionaries trying to develop a comprehensive plan for these communities have their hands tied by overreaching and overbearing state governments. 

Currently the "conservative" government in Pennsylvania has passed legislation that removes local control over gas drilling in the Marcellus Shale.  If they were successful in implementing this legislation, this would cripple local communities, and prevent them from being able to effectively plan for their future.  Oddly enough, the same politicians that have aggressively sought to take the decision-making away from local officials, are the same ones who complain about an over reaching federal government.  It would appear that these state officials are looking to have all of the control and power reside solely with them.  Perhaps, they prefer to keep all of those campaign contributions to themselves. 

Fortunately, the courts has overturned parts of this legislation for being unconstitutional.  However, that has to say something when your state government attempts to pass legislation that is unconstitutional, it really shows where their heart is at, and it is not with the citizens of Pennsylvania.   Again, I will let you in on a little secret, overbearing, unconstitutional governments that take away local control, are not a principle of conservatism.  

The oil and gas industry itself is the epitome of crony capitalism.  They receive billions in corporate welfare every year, and billions more in tax breaks and exemptions, and that is only at the federal level.  They are given as much or more at the state level.  So the taxpayers are paying this industry's bills already, and they would likely not survive otherwise.  Also, they are exempt from most every environmental law that could apply to them, so they virtually have no rules to follow.  Furthermore, there is no one watching to make they follow the few that do apply.  Therefore, they do not have to follow the same rules that similar industries have to follow.  For their troubles, the oil and gas politicians receive hundreds of millions of dollars in campaign contributions every year.  However, this industry does nothing but trample on the Constitution, and private property rights of those in their path, not sure how else to describe this arrangement.  Wonder if that is what the founding fathers envisioned when forming this nation?

So those of you who support the crony capitalist and corporate conservatives ways mentioned above, I would ask that you first come clean with your citizens and tell them you are not the Reagan like politician that you have portrayed yourself to be, nor are you even a real conservative.  You do not support the constitution, or the citizens who voted you into office.  The next item that would be in order, is to go ahead and take down that picture of Reagan on the wall in your office, and install a photo of someone more appropriate of your true values.  If you are having difficulty finding that perfect photo, give me a call, I just might have some suggestions for you.  Oh, and you also will need to go ahead and turn in your conservative card, because you know that is not what you are, so it is probably time to give it up.  The taking of property rights and an all powerful, over bearing, centralized state government are not founding principles of conservatism or capitalism, but rather they are founding principles of communism, and that was what Reagan spent his life fighting.    

Calvin Tillman
Former Mayor, DISH, TX
(940) 453-3640

"Those who say it can not be done, should get out of the way of those that are doing it"

Friday, August 10, 2012

Judge Hears First Landmark Case After Texas Supreme Court Decision Protects Landowners from Takings


Press Release                                            August 10, 2012

Contacts:  Debra Medina, We Texans, 512.663.8401, Terri Hall, TURF, 210.275.0640, Linda Curtis, Independent Texans, 512.657.2089, Jessica Ellison, Texans for Accountable Government, 512.653.9179, Tom “Smitty” Smith, Public Citizen, 512.797.8468, Rita Beving, Paris Organizer, 214.557.2271
               
Courtroom Showdown with Landowner Challenges TransCanada’s Right to Eminent Domain in Condemnation Proceedings to Build Keystone Tar Sands Pipeline

Judge Hears First Landmark Case After Texas Supreme Court Decision Protects Landowners from Takings

PARIS, TX – Today statewide groups of all political persuasions came to the Lamar County courthouse to support Texas landowner Julia Trigg Crawford against TransCanada which has announced plans to start building the southern segment of the Keystone pipeline to carry tar sands crude from Cushing, Oklahoma to Texas Gulf Coast refineries. 

[[This courtroom showdown marks the first landmark battle following a recent Supreme Court case ruling in favor of landowners.  Crawford’s hearing is the first case since the Supreme Court ruling to protect private property from an illegal taking.   Julia Trigg Crawford, along with her attorney Wendi Hammond, faced Judge Bill Harris and a team of TransCanada lawyers in a packed courtroom of observers with an overflow crowd for more than __ hours.  Crawford’s attorney contended that TransCanada is a foreign-owned pipeline carrying tar sands for private profit, challenging its qualifications as a common carrier with eminent domain rights.]]

Texas courts have long held that property owners could not challenge property takings by pipelines, but a recent, unanimous Texas Supreme Court decision, which highlighted the fight between Texas Rice Land Partners versus Denbury Green Pipeline changed that equation.  In the Denbury Green court case, the justices unanimously ruled that the pipeline company had to prove it was meeting the state’s statutes and serving a common good before it should be given the right to “take” private property.

[[“Today the eyes of Texas were shining upon the Judge in this case.  All of us were here to see if he would stand up to protect landowners from illegal takings or side with a foreign pipeline company. The Crawford case begged the question of whether Judge Bill Harris would allow a hearing on the facts or whether he would deny a landowner justice in favor of this Canadian company” asked Debra Medina, former gubernatorial candidate and executive director of We Texans, a nonpartisan public policy advocacy group.  The court has been saddled with volumes of paper and will take it along with the arguments heard today into consideration before rendering its decision.]]

“The question remains "Why are Texans made to fend for themselves against the likes of corporations like TransCanada?” Medina asked.  “The leaders of this state often talk about protecting property rights – but when the abuse starts, they stand up for the politically influential. This is in keeping with the crony capitalist lethargy that grips Austin. They pretend to see and hear no evil.  The fervor by which people from all political stripes came here today to rally for the Crawford’s cause should make it clear: Texans are tired of abuse at the hands of big business and big donors.”

“The Texas Railroad Commission approved TransCanada’s permit to operate a pipeline as a common carrier, yet the agency has stated that it doesn’t review the applications for pipelines and doesn’t have the authority to determine common carrier status or give eminent domain permission to TransCanada,” commented Jessica Ellison, director of Texans for Accountable Government.  “TransCanada has yet to prove to the court that they meet the legal requirements of transporting the product for the public good or for public use.”


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With the threat of imminent trenching for TransCanada’s southern pipeline segment to begin, landowners such as David Daniel of Winnsboro have now told TransCanada that it can no longer come on his property.  Daniel has recently been served with notice by TransCanada that they are seeking a court order with the threat of damages should he continue to refuse entry onto his property.  Daniel’s Winnsboro neighbor, Susan Scott, has also recently refused the entry of surveyors on her land.

"Here we've had a private company masquerading as a 'common carrier' pipeline in order to obtain the power of eminent domain in Texas. The Crawford family, along with those landowners supporting her today and more than 90 other landowners, have had their land condemned by TransCanada.  These landowners deserve to be protected from eminent domain abuse before irreparable harm is done to their property," contended Terri Hall, Founder and Director of Texans Uniting for Reform and Freedom. "It's an outrage that in a state that claims to be pro-property rights, that there's absolutely no state authority checking to see whether or not these private companies meet the legal requirements of a public use pipeline. Landowners should not be put in the position of law enforcers at great personal expense."

Recently, the Texas House Land and Resource Management Committee met at the Capitol to hear invited testimony from Crawford and other interested parties regarding the dilemma of industries self-proclaiming they are common carriers with no review from any state agency as to whether a company is truly a common carrier or not.

[[“The answers we need are not going to be here today, but in an appeals court.  Today’s outcome will also be laid at the foot of the Texas legislature to do something about this kind of abuse, “ noted Tom ‘Smitty’ Smith, executive director of Public Citizen.  “We have already begun the process of pointing out the grave inequities of companies being able to walk into the Railroad Commission saying ‘trust us’, we’re a common carrier, and then be granted eminent domain authority without the needed checks and balances and review by an authorized government agency. That needs to change with the next legislative session.”]]

“Today is not the end, but signals the beginning of the next steps we must take,” remarked Linda Curtis, director of Indy Texans. “Ms. Crawford’s case is emblematic of the continuing struggle of Texas landowners being tread upon by a private company, taking land for private use, and foreign profit.  In the revolutionary words of those who’ve come before us, ‘we’ve not yet begun to fight’…and tomorrow we will soldier on.”

Today’s trial before Judge Harris marks the continuation of proceedings which began in Paris on February 13th.  TransCanada’s attorneys have complained that the delay of the start of its southern segment has cost the company $3 to $4 million per day.

The southern segment of TransCanada’s Keystone pipeline encompasses a 485-mile trek from Cushing to refineries on the Gulf coast.  In Texas, more than 1,450 parcels of land have been acquired by TransCanada in its pursuit of construction on the pipeline which has been slated to commence any day pending any further legal delays.  Ms. Crawford’s 600-acre farm near Sumner north of Paris signifies the last tract in contention between Cushing and the refineries on the Gulf Coast. 

Wednesday, August 8, 2012

Letter To The Editor: Oil and Gas Financial Reporting


Below is a letter to the editor from John Teesdale of Michigan, and it shows that oil and gas companies must disclose their risks to investors.  There is also a link to the report John is referencing.  Very interesting stuff.  

The Oil and Gas industry is spending millions on ads to convince the public that fracking is safe,
clean and in our best interest. What people do not realized is that they are under no obligation
to be honest with the public or property owners where they operate. They are, however,
required to be absolutely honest with their shareholders and investors. So if you want to know
what is really going on you should read their 10-k filings with the Security and Exchange
Commission. Here is a direct quote from Cabot Energy, December 2011 10-k.

“We face a variety of hazards and risks that could cause substantial financial losses. Our
business involves a variety of operating risks, including: well site blowouts, cratering and
explosions; equipment failures; pipe or cement failures and casing collapses, which can
release natural gas, oil, drilling fluids or hydraulic fracturing fluids; uncontrolled flows of
natural gas, oil or well fluids; fires; formations with abnormal pressures; handling and
disposal of materials, including drilling fluids and hydraulic fracturing fluids; pollution and
other environmental risks; and natural disasters.

Any of these events could result in injury or loss of human life, loss of hydrocarbons,
significant damage to or destruction of property, environmental pollution, regulatory
investigations and penalties, suspension or impairment of our operations and substantial
losses to us.

Our operation of natural gas gathering and pipeline systems also involves various risks,
including the risk of explosions and environmental hazards caused by pipeline leaks and
ruptures. The location of pipelines near populated areas, including residential areas,
commercial business centers and industrial sites, could increase these risks.

We may not be insured against all of the operating risks to which we are exposed.
We maintain insurance against some, but not all, of these risks and losses. In addition,
pollution and environmental risks generally are not fully insurable.”

http://www.sec.gov/Archives/edgar/data/858470/000104746912001751/a2207418z10-k.htm#dg70901_item_1a._risk_factors