tobacco commission logo By Peter Galuszka

Dominion Resources, the powerful, Richmond-based utility with $13 billion in revenues, has strangely been getting $30 million public funds to bring a natural gas pipeline to a new generating plant in Brunswick County.

Odder still (or maybe not so) the public funds are coming from the GOP-controlled Virginia Tobacco Indemnification and Community Revitalization Commission which has figured in a wave of corruption since it was formed in 1999.

Even more bizarre, the tobacco commission made up of politically-appointed people arranged for Dominion to receive millions more than its own staff recommended, according to an intriguing report by the Associated Press.

The tobacco commission was created to use money from a massive 1996 settlement that 46 states received from four top tobacco companies in health-related lawsuits. Many states used their funds to promote health and anti-smoking campaigns. Virginia did some of that but created a pork barrel commission to dole out $1 billion to projects allegedly aimed at helping residents of Virginia’s Tobacco Road along the state’s southern tier for economic development projects.

In the Dominion case, the utility says it never lobbied for grants, but somehow it got $30 million – or $10 million over three years for a pipeline to its $1.3 billion Brunswick gas plant. The commission’s own staff said $6.5 million should have been sufficient for the first installment.

So, you have a situation where Dominion, which is a huge contributor to political campaigns,  says it never really wanted grants, the commission staff recommended one amount and the tobacco commission awarded a much bigger one. And, according to the AP, no one seems to know anything about it.

Well, that’s about par for the course. Here’s something I wrote for The Washington Post in September:

“No one seems to be checking whether commission projects are worth it. A 2011 study by the state’s Joint Legislative Audit and Review Commission found that, of 1,368 projects funded for $756 million, only 11 percent were measured for results. “They are just handing out money,” Del. Ward Armstrong (D-Henry) said in 2011.

John W. Forbes II, a former state secretary of finance and a tobacco commission board member, was convicted in 2010 of defrauding the commission of $4 million. He used the money for “The Literary Foundation of Virginia,” which he created, and set up himself and his wife with six-figure jobs. The rest was siphoned to shell companies.

The commission has awarded $14 million in grants to the Scott County Economic Development Authority, which is headed by John Kilgore Jr., Terry Kilgore’s brother (Terry heads the commission and his brother Jerry is major Republican politician). Meanwhile, their father, John Kilgore Sr., heads the nonprofit Scott County Telephone Cooperative’s board, which has received $7 million in tobacco money to expand broadband access.

The Kilgore family affair isn’t illegal, but it looks bad. The tobacco stench just doesn’t go away. In June, federal agents subpoenaed commission records in their probe of former state senator Phillip P. Puckett. The powerful Democrat from Russell was supposedly discussing a lucrative staff job on the tobacco commission with Terry Kilgore just before a key vote on expanding Medicaid. Puckett resigned in time to throw the vote toward opponents, most of them Republicans.”

The gas pipeline apparently would connect with a major interstate pipeline operated by Transco and runs from the Gulf State gas fields through Virginia to the Northeast. And, Dominion is one of four utilities planning a brand new $5 billion that would take natural gas fracked in West Virginia, over sensitive tops of the Appalachians, southeast to North Carolina. That project includes a spur line to the Dominion Brunswick plant.

One wonders why Dominion needs two pipelines to one plant — especially one built with funds intended directly for public service.

Well, as they say in the giant newsroom in the sky, good stories only get better.

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13 responses to “Dominion’s Strange Tobacco Money”

  1. 30 million not billion but just as egregious given all the fru fru here about tax breaks for films or tolls for MWAA and god-forbid – spending taxpayer money for more Title 1 teachers for economically disadvantaged kids in Lynchburg for instance – .. where is the tobacco commission money on THAT issue?

    Turns out the taxpayers ALSO spent 30 million on the Brunswick Natural Gas Plant – for a utility that makes excuses for why it can’t use less coal!

    This is the kind of thing that makes you wonder about Bob McDonnell testifying that he could not influence the Tobacco Commission – that it was an independent agency.

  2. Peter Galuszka Avatar
    Peter Galuszka

    Larry already fixed the 30 million txs.

  3. Unbelievable. It would be bad enough if Dominion said it needed the $30 million in order to justify investing in the $1.3 billion gas plant. Giving them the money still would have amounted to corporate welfare but at least there would have been a rationale, however flawed. But giving the company money it didn’t even ask for? What the *&^#%?????? And no one seems to know anything about it? This is disgraceful!

  4. The Daily Press has a great series of articles on “The Virginia Way”. They quite correctly ascribe most of the problems in Virginia to a misshapen and out of control General Assembly.

    We need a new state constitution. The General Assembly is far too powerful, unaccountable and opaque under our present constitution.

    1. I’ve actually thought about contacting my Delegate and Senator and asking them if they knew about this and what should be done about it.

      Oh the other thing – where the H E L L is the Tea party?

    2. TooManyTaxes Avatar

      I like all the extra checks and balances built into the Virginia system. McAuliffe (or any other Governor, for that matter) could not pull an Obama and simply avoid the legislative process. Having said that, I’d like to see more transparency within the legislative process by requiring any one paid to lobby or make a presentation to a legislator to summarize the lobbying effort and for the GA to post it online within 24 hours.

      1. How did you get there TMT? The money was given to Dominion in a “fast one” with no checks and balances to stop it.. right?

        or were you being sarcastic?

        1. TooManyTaxes Avatar

          It’s a mere pittance to what was given to the Tysons landowners. There we are talking billions. Petty larceny versus the biggest case of fraud ever committed in the Commonwealth.

          1. “Created 15 years ago to spend Virginia’s portion of the national tobacco settlement, the Tobacco Indemnification and Community Revitalization Commission has doled out more than $1 billion on a wide range of projects in an effort to spur economic development in southwest and Southside Virginia. Led by powerful GOP lawmakers in recent years, the commission has come under fire for what critics say is an opaque, haphazard system of awarding grants often based on political considerations.”

            Who gave away billions on Tysons.. just curious.

          2. TooManyTaxes Avatar

            When the Silver Line project was conceived, several parties were intended to contribute to its funding: the Feds (c. $900 M); Fairfax County (the special tax districts); Loudoun County (special tax districts) and the Commonwealth of Virginia, which contributed several tens of millions in cash and the turnover of the DTR to MWAA. With the excited blessing of local government officials in NoVA, the Commonwealth put the bulk of the funding responsibility on users of the DTR. What do DTR drivers receive in return? Not much. All the projections showed traffic on the DTR would generally stay as bad as it would have been without the Silver Line because the added density generates substantially more traffic. What is worse: neighborhoods near the DTR are getting massive increases in cut through traffic as drivers avoid the DTR’s ever increasing tolls. According to an article in the WaPo, DTR transactions are down from 109 M in 2009 to 99 M in 2013. The 10 million trips likely occurred on local roads.
            But what the hell, some well-positioned landowners will make hundreds and hundreds of millions from their added density. It’s like comparing a kid shoplifting in a 7-11 to Ma Barker.

  5. Waiting to hear from the SCC on how taxpayers are harmed …

  6. Unbelievable! But I’ll note, in passing, that it is not at all unusual for a power plant owner to seek connections to multiple sources of fuel (e.g., multiple interstate pipelines, railroads, waterways), simply for the sake of competition among fuel suppliers and carriers. That doesn’t begin to explain this particular deal.

    1. I think there are some dimensions here.

      Dominion has made it clear that they are unhappy with the stricter rules on coal plants and they have no love for renewables like wind and solar.. and now we’re finding that the state taxpayers are subsidizing their natural gas efforts.

      I think if there was ever a classic definition of “slush fund”, it is the Tobacco Fund.

      I can think of a hundred things more needed and useful for the billion dollars they have spent it on instead – including this.

      and for all the fire and fury of the Tea Party about “out of control” govt, corporate cronyism, rent-seeking, etc, blah, blah, blah it appears they’re only concerned about the POTUS and not one scintilla about Virginia or local govt in Va.

      so the whole thing is a steaming pile of bat far as I am concerned. A pox on all of them.

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