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About The daily Astorian. (Astoria, Or.) 1961-current | View Entire Issue (Dec. 9, 2015)
3A THE DAILY ASTORIAN • WEDNESDAY, DECEMBER 9, 2015 GOP wants probe LNG opponents want state of energy tax to block Jordan Cove project credit allegations By HILLARY BORRUD Capital Bureau By HILLARY BORRUD Capital Bureau SALEM — Republican state lawmakers are calling for a probe of allegations that employees at the Ore- gon Department of Energy and Department of Revenue violated state law on energy tax credits, engaged in fa- voritism and allowed some people to evade the capital gains tax. The lawmakers outlined the allegations in letters sent Monday to Oregon Attorney General Ellen Rosenblum, the state’s U.S. Attorney, the FBI, the IRS and Mari- on County District Attorney Walter Beglau. The legislators who sent the letter were state Sen. Doug Whitsett, R-Klamath Falls; Rep. Gail Whitsett, R-Klamath Falls; Rep. Cliff Bentz, R-Ontario; Rep. Mark Johnson, R-Hood Riv- er; and Rep. John Davis, R-Wilsonville. “We hope to achieve a broad legal investigation of what may or may not have gone on,” Whitsett said. “That was the purpose of sending the letter to six different law enforcement agencies and (carbon copy- ing) the others so everybody knew they got it.” Lawmakers based their allegations on interviews with whistleblowers who were former or current em- ployees of the Department of Energy and Department of Revenue. Tax credits for renewable energy The state issued the tax credits to owners of renew- able energy and ef¿ciency projects. Project owners could use the credits to off- set their taxes, or sell them at a discount to raise capital. Those sales produced a capi- tal gain for the purchaser. Business energy tax cred- its issued between 2006 and 2014 could cost the state up to $968.1 million in tax rev- enue, according to the De- partment of Energy. A ma- jority of that cost — $703.6 million — comes from tax credits that were sold to in- vestors. The companies and in- dividuals who bought those credits could realize a to- tal gain of $209.4 million, which is the difference be- tween the value of the tax credits and the price taxpay- ers paid to purchase them, according to an analysis by the EO Media Group/Pam- plin Media Group Capital Bureau. The lawmakers wrote that “(business energy tax credits), as they were issued by the (Department of Ener- gy), were hand-delivered by a (Department of Energy) employee to a select buy- er of those credits without an opportunity for others to bid.” The same employee allowed the tax credit re- cipients to ignore state price regulations on the sales of the energy tax credits. “The capital gain on the sale of the credits by the en- tity purchasing the credits was not appropriately re- ported to either the state or federal taxing authorities,” lawmakers wrote. A state auditor who raised the issue was told to “stand down,” and the Department of En- ergy never issued 1099 tax forms to report the capital gains, according to the law- makers. SALEM — Opponents of the Jordan Cove liTue¿ed nat- ural gas project asked the State Land Board on Tuesday to de- cide whether the state should issue permits for parts of the project. The interim director of the Department of State Lands, Stephanie Hallock Cummins, would normally make a deci- sion on whether to approve two “removal ¿ll” applications by developers of the Jordan Cove project and related pipeline. Under state law, the develop- ers need the permits before any construction work in wetlands. The State Land Board con- sists of the governor, secretary of state and treasurer. Gov. Kate Brown did not attend the meeting because she was trav- eling on the East Coast, accord- ing to spokeswoman Kristen Grainger. The other two members of the board did not agree to con- sider the permits. Treasurer Ted Wheeler said he was not necessarily opposed to taking up the decision. “We want to respect that there’s a process underway and personally I want to be respectful of the process,” Wheeler said. Well-connected broker The EO Media Group/ Pamplin Media Group Cap- ital Bureau reported many of the same issues in recent months. For example, the bureau reported in August that the well-connected energy tax credit broker Blue Tree Strategies was able to get the Department of Energy to change the rules for energy tax credits. The bureau also reported in June that wealthy individuals and companies were able to avoid paying taxes on capital gains they realized by purchasing dis- counted energy tax credits, because auditors at the De- partment of Revenue were told by top of¿cials in 2012 to ignore the problems. “It certainly appears that there was some favoritism going on,” Whitsett said Tuesday. “There certainly sounds like there may have been signi¿cant taxes fore- gone ... It certainly sounds as if there was one particular brokerage that was garner- ing great favoritism.” “I’m not opposed to the land board taking this up,” he said. “Nobody has made the case that the process is broken, so let’s continue with the process we’d agreed to.” Wheeler said there would be a public meeting in Coos Bay to gather input on the permit applications. The state has also extended by another month the public comment deadline, which is now Jan. 8. Secretary of State Jeanne Atkins declined to comment on the situation. Molly Woon, a spokeswoman for Atkins, wrote in an email that “Secre- tary Atkins will be watching the Department of State Lands closely and will request ongo- ing brie¿ngs as they move for- ward in decision making.” Several dozen opponents at- tended the meeting and dressed in red to distinguish them- selves, although not all of them spoke. Many said they lived in Portland, and some were also from Coos Bay and southern Oregon. Emmalyn Garrett, who lives Cannon Beach selects outside interim ¿re chief By DANI PALMER EO Media Group CANNON BEACH — The Cannon Beach Rural Fire Protection District’s new interim ¿re chief is on duty. The district’s Board of Direc- tors introduced Jim Stearns, of Hermiston, to the public Monday night during its reg- ular monthly meeting. The district provides fire- fighting and emergency ser- vice to the communities of Cannon Beach, Arch Cape and Falcon Cove. Board members interviewed Stea- rns and two other Special Districts Association of Or- egon candidates, Dale Kam- rath and Doug Dawson, in November in executive ses- sion. During a special meet- ing on Dec. 2, they selected Stearns. “I think he’ll be a good new addition,” Board Presi- dent Sharon Clyde said. Former ¿re chief Mike Balzer was dismissed in mid-October due to person- nel issues and Assistant Chief Frank Swedenborg has cov- ered his post since. Stearns is working with Swedenborg, who is ready to retire and not looking to ¿ll in permanently, to transition into the role. Stearns spent 31 years — 20 as chief — with Hermiston Fire and Emergency Services. He has served on the state’s wild¿re management team, performing as incident com- mander at one point, and been on a federal interagency wild- ¿re team that primarily cov- ered the Western states. He has also volunteered for the Sumpter Volunteer Fire Department, where he owns a cabin. Democrats considering legislation Whitsett said the Repub- lican lawmakers decided to send the letter because Democratic lawmakers are considering possible legis- lation to address liability the state could face as a result of the Department of Energy’s handling of the tax cred- its, including a new type of tax credit that replaced the business energy tax credit. The leaders of the Oregon House and Senate revenue committees, Gov. Brown’s energy policy adviser and lawyers from the Legislature and state Department of Jus- tice met behind closed doors at the capitol Wednesday to discuss the issue, as ¿rst re- ported by the Oregon Capi- tal Insider online newsletter. “We understood there was an effort being made to bring some legislation to clean up this thing,” Whit- sett said. “We thought per- haps it would be a good time to let the public know how bad it might be, before we started the cleanup.” A spokesperson for Rosenblum’s of¿ce said the attorney general is review- ing the letter. The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group. Gifts EO Media Group Opponents of the Jordan Cove LNG project proposed for Coos Bay attended a State Land Board meeting on Tues- day in Salem. Many of the opponents dressed in red to distinguish themselves from other attendees. near Grants Pass, challenged Wheeler to take up the issue and pointed out that environ- mental issues are important in Portland. Wheeler is running for Portland mayor. “Treasurer Wheeler, you’re looking at a powerful part of your constituency, if you’re planning on being mayor of Portland,” Garrett said. Lili Clausen, from the Clau- sen Oysters farm in Coos Bay, said the state should block the LNG project. “I’m here because I”m very concerned about the sustain- ability of the oyster businesses in Coos Bay,” Clausen said. “If that pipeline is getting the ease- ment, that would potentially destroy most of the oyster pro- duction in Coos Bay because the digging up of the ground and the pipes would create a lot of silt.” Jordan Cove is one of two proposed LNG projects in Ore- gon. Federal, state and local of¿- cials are also reviewing Oregon LNG’s proposal for a terminal on the Skipanon Peninsula in Warrenton and a pipeline that would link to a natural gas pipe- line in Washington state. The Capital Bureau is a collaboration between EO Me- dia Group and Pamplin Media Group. “I retired and didn’t take to school teacher who’s split- ting her time between Cannon retirement well,” he said. Cannon Beach is Stea- Beach and Hermiston. They have a daughter in rns’ third interim Medford and two gig since he began sons in the Seattle working for the area. Special Districts Stearns said he Association of Or- is “anxious to meet egon. He most re- folks in the commu- cently served as nity” and encourag- Washington County es residents to stop Fire District 2’s in- by and visit. When terim chief for six he interviewed for months. Jim Stearns the position there He will likely be were volunteer ¿re- in Cannon Beach ¿ghters in attendance along for half a year, as well. Stearns is staying in the with board members. “It seemed clear to me Cannon Beach RV Resort. His wife, Becky, is a retired everyone wanted to focus on the community and the de- partment being an active part of that community,” he said. “That’s what I like to see and do.” There has been some com- munity opposition to Bal- zer’s termination. Residents expressed disappointment in the board’s handling of the situation during its November meeting. Stearns said his outlook is to “start from today and move forward.” He and the Special Dis- tricts Association of Oregon will assist in the search for a permanent Cannon Beach Fire and Rescue leader. 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