article

09.22.11

Rick Perry’s Natural Gas Cronyism

Exclusive: Documents from the Texas governor’s blind trust show he gave state jobs to friends from a natural-gas company he co-owned, raising more questions about his ‘crony capitalism.’

In Texas Gov. Rick Perry’s world, politics, and business seem to mix like natural gas and drilling rigs—literally.

Documents released in Texas this week show the 2012 GOP president candidate’s blind trust, which has managed his investments since he first ran for statewide office in the mid-1990s, owns a stake in MKS Natural Gas Company, a firm founded by Perry friends that controls about $3.4 million in gas rights in the heart of the shale field that has fueled Texas’s recent natural-gas boom.

The investment last year earned Perry less than $25,000 in income. The relationship, however, landed the company’s founder and his wife two premier jobs in state government during Perry’s tenure—just another example of a culture that Perry’s critics have derided as “crony capitalism.”

MKS was founded by the late Ric Williamson, a former state representative from Weatherford, Texas. Williamson became a mentor and close friend of Perry’s when Perry joined the state legislature in the late 1980s. It is unclear from Perry’s trust documents exactly when he became a co-owner of MKS with Williamson and Williamson’s wife, Mary Ann.

In March 2001, shortly after he took over as Texas governor from George W. Bush, Perry appointed Williamson to the Texas Transportation Commission where he was a strong advocate of Perry’s ultimately doomed plan to build a 4,000-mile toll-road system called the Trans-Texas Corridor that would have run through property owned by MKS.

The project cratered, however, after massive public outcry over the large amount of private property that would have been appropriated for the construction through the use of eminent domain laws.

Williamson died in late 2007. A year later, Perry named Williamson’s widow, Mary Ann Williamson, to the Texas Lottery Commission and elevated her in 2009 to commission chairwoman.

To those who have fought Perry over the years, the relationship with MKS and the Williamsons remains shrouded in mystery, including how Perry landed the stake in the company in the first place.

“Rick Perry appointed the owners of MKS to chair the Texas Department of Transportation and the Texas Lottery Commission,” says Bill White, the Houston Democrat who ran against Perry for governor last year and lost. “Perry was given a partial ownership of MKS, and he has never disclosed the details of what he did to earn it, or how much he made from it, or what it is worth. Texas deserves better.”

A spokesman for Perry and Mrs. Williamson did not return calls and emails seeking comment.

The MKS story touches some of the key narratives of Perry’s gubernatorial tenure. The Texas Republican is fond of boasting that he has presided over a boom in natural-gas exploration in Texas’s Barnett Shale, where a controversial extraction technique known as hydraulic fracturing, or fracking, has helped free massive amounts of gas trapped in rock formations. The gas boom has helped Texas weather the latest recession, creating jobs when other states were hurting, and has become a key emphasis in Perry’s own campaign narrative about his political stewardship.

When controversy erupted over whether fracking might pollute drinking-water supplies, Perry became the first governor in the country to sign a law requiring gas companies to disclose the chemicals—some toxic—that are pumped into the ground during the process of freeing the natural gas.

But when Perry joined the 2012 presidential race and questions turned to the long arm of regulation that many conservatives despise, the governor seemed to back away from his fracking concerns and suggested the controversy over possible pollution was overblown.

“You have this (Obama) administration talking about stopping hydraulic fracking, trying to scare people, saying that hydraulic fracking somehow or other is going to damage the groundwater, and we’ve got to stop this,” Perry said during an Iowa campaign stop. “Not one time that I’m aware of has hydraulic fracking impacted groundwater.”

What isn’t overblown is MKS Natural Gas Company’s unique location at the center of the Texas boom.

Located in Weatherford, MKS and its properties are situated near the heart of the much-ballyhooed Barnett Shale geological formation with its huge, rich natural-gas pockets that stretch from north of Fort Worth, south toward Johnson and Hill counties, and west and southwest to counties such as Bosque, Palo Pinto and Erath.

For decades, the area didn’t produce much more than limestone, cedar trees, prickly pear cactus, and dangerous fishing and swimming holes along the Brazos and other rivers—that is, when the waterways weren’t sucked dry by droughts like the one currently ravaging the state. The area also spawned the Comanche Peak Nuclear Plant—and gave birth to inspired ballads by Texas folk singer-songwriters such as Steven Fromholz.

“Bosque County Romance,” part of Fromholz’s “Texas Trilogy,” paints a beautifully sad, yet inspirational recreation of the hardscrabble, seat-of-your-pants days of the 1950s, when residents were forced by financial constraints to move to nearby cities and towns, and sell their land that continued to decline in value.

Ironically, during that same decade, geologists discovered that bountiful deposits of natural gas were located under Barnett Shale. But there were two major problems. The pockets of gas were located deep below the surface, and the Barnett Shale was so impenetrable, drilling efforts were written off as cost-prohibitive. That is until the late 1990s, and the advent of hydraulic fracking, where water, sand and additives are pumped at high pressure into wells, cutting through the shale at a much faster rate than traditional drilling methods. Suddenly, landowners in North Central Texas were collecting royalty checks as if they had found themselves holding winning numbers to the Texas Lottery.

The MKS investment “does not appear to be totally blind—except to the extent that love is blind,” says a watchdog group.

MKS is among the firms collecting royalties for natural-gas extraction.

Texans for Public Justice, a liberal-leaning government watchdog, questions the independence of Perry’s blind trust, given that the governor knew his MKS partners and was appointing them to state jobs at the same time his investment was generating money.

The MKS investment “does not appear to be totally blind—except to the extent that love is blind,” the group said.

The group released a report (PDF) this week identifying other holdings in Perry’s blind trust in companies that received taxpayer grants from the governor’s Texas Enterprise Fund or that funneled political money to Perry’s campaign or to the Perry-led Republican Governors Association.