Oregon has public money tied up in pending local coal and oil projects
May 18th - Millions of dollars of Oregon’s public money are being invested in risky, controversial fossil fuel ventures. What’s worse, some of these projects are in Oregon and still depend upon state approval. Thus creating what appears to be a terrible conflict of interest within the state's halls of power -- one wing decides whether massive oil and coal projects should be permitted, while the other pours millions of Oregonians’ pensions and state accounts into those same projects. It’s not happening in the legislature, but instead a dull corner of the executive branch and that might be why no one has caught on.
The Oregon Investment Council is a little known, much less scrutinized wing of the state treasury, a small part of the executive branch. The OIC is responsible for making all of Oregon's public investments. Public money is not often talked about but the state invests billions of dollars a year for public employee pensions and retirement accounts, labor and industry insurance and care coverage and developmental disability programs.
Thousands of Oregonians' futures depend on this money being managed wisely. The OIC invests in a wide variety of areas; everything from real estate to government bonds. Investments on this scale are notoriously hard to track. But a major section of the funds are in an area where we can draw direct connections.
The OIC has billion tied up in private equity companies who pitch investors, like the OIC, on specific projects and packages. Unlike other investment avenues, the OIC knows exactly what it is putting its money into. There are a whole host of fossil fuel focused packages and specific projects that they've invested in all over the world. Among these, are investments tied to projects in Oregon, and even more specifically tied to fossil fuel projects that need state approval.
Let's get into the specifics to understand exactly what we're talking about:
Crude Flowing West
Casper Crude to Rail, a Wyoming-based project, is a major oil shipment hub moving mostly Bakken shale oil, the volatile crude involved in numerous oil train explosions. BNSF’s (Burlington Northern Santa Fe Railroad) new dedicated oil train website shows detailed maps of the Casper Crude facility's integral role in the rail super highway from the Bakken region to the west coast. This includes Port Westward East of Portland and the Tesoro Savage facility along the Columbia River in Vancouver WA. The facility also serves West Coast oil refiners; Tesoro, Shell, and Phillips 66, all of which have major oil-by-rail projects planned for the Northwest. Oil trains have been a source of tremendous controversy, as they continue to derail and explode at an alarming rate. Fires are often so bad that first responders have to simply let them burn out. The worst of these happened in Lac-Mégantic, Quebec, where an oil train disaster leveled 10 blocks of the small town, killing 47 people.
Screenshot from BNSF site
Tidewater a Vancouver, Washington-based firm, later signed a deal with Ambre Energy to barge coal downriver from Boardman to Port Westward, Oregon, for its proposed Morrow Pacific coal export project. While the downstream portion of this facility was once thought dead in the water, (it was rejected from a state lands permit last August) it received another and is challenging the decision on the first. It bears repeating that public money was put into this company specifically for its involvement in this project, one that still needs public approval.
Too Many Oil Trains to Count
2013 Lac-Mégantic Disaster
In 2013, after several years of major shifts, permit changes and bankruptcy a once promising ethanol facility was acquired by Global Partners as an oil train facility at Port Westward on the Columbia River (you can read the whole bizarre story here). Bankrolling this purchase was a $70 million loan (3rd paragraph) from a “lender of last resort”and longtime OIC investment partner, GSO Capital. OIC has been investing with GSO and its parent company Blackstone Capital for years; $100 million in 2010 for example which has specifically slated for "distressed companies in need of financial backing”, the exact type of investment given to Global Partners.
The new Global Partners facility wasted no time in rolling oil trains through Oregon and Washington to their facility. Despite only having secured permits for 50 million gallons, the facility brought in over 300 million gallons in 2013. For exceeding their permit limit by 600%, Global Partners paid a negotiated significantly reduced fine, in which they admitted no wrongdoing. This punishment, that amounts to a “slap on the wrist” for blatant violations, raises questions about the state’s ability to impartially rule on these projects.
Conflict of interest is difficult to prove. It comes down to intent. We don’t know how much influence these investments play into approving these projects. Yet funds for firefighters, schoolteachers and government employees (even members of the OIC) were all invested in projects that needed state approval. Agencies (in the same branch of government no less) then need to make impartial decisions about whether these projects are in the public interest. It’s tough to see how this would not have impacted their decisions.
It might be time to ask whether public funds should be invested in any projects needing state approval, much less ones that are such a risky bet for Oregonians.
portions of this article are taken from a piece written for daily.sightline.org
Nick Abraham - Editor and lead contributor Oil Check Northwest