Law firm has connections with LIPA
An influential Uniondale law firm and its government relations arm have a history of close ties to the Long Island Power Authority and stand to gain if billions in new LIPA contracts come their clients' way in coming weeks and months.
Ruskin Moscou Faltischek, which long has represented Caithness of New York City through its government relations arm Empire Government Strategies and its predecessor, Island Strategies, in 2005 helped the energy company through lobbying and consulting work to secure a $1.49 billion LIPA contract for a new power plant. The law firm and its lobbying arm at the time also were representing LIPA. At the same time, certain Ruskin partners had a financial interest in a holding company that profited from sale of an option to buy the land in Yaphank upon which the Caithness plant was built.
LIPA and Ruskin Moscou, in separate responses, say all the transactions were fully disclosed and the attorneys who worked for LIPA did not represent Caithness or other LIPA contractors.
This month, Caithness will go before LIPA again, when the utility chooses between Caithness and another company, JPower, to build what would be LIPA's next big power plant -- a 700-megawatt facility, also in Yaphank, costing upward of $3 billion called Caithness II. Empire Government Strategies has been lobbying for the new plant, under a $2,500 monthly contract, since 2011.
Empire Government Strategies, meanwhile, also has represented PSEG of New Jersey since at least last year. PSEG is slated to see a $200 million-plus expansion of its $3.8 billion contract with LIPA if the State Legislature OKs Gov. Andrew M. Cuomo's proposal to give PSEG near total control of the LIPA grid in January.
Ruskin Moscou ended its legal work for LIPA in 2007 -- billing the authority more than $770,000 for lobbying and litigation work since LIPA first retained Ruskin in 2001, records show. From 2005 through 2007, LIPA had contracts for up to $100,000 with Ruskin Moscou for "complex litigation" services -- such as defending the authority against lawsuits. In addition, LIPA in 2006 and 2007 retained Ruskin's government relations arm, Island Strategies -- now known as Empire Government Strategies -- for "government relations services" for up to $72,000 a year, according to the state comptroller's office, which approves LIPA contracts. During its six-year contract with Ruskin Moscou, LIPA paid the law firm $631,745, while it paid affiliated lobbying firm Island Strategies $144,582.
Other Ruskin-LIPA connections include:
Ruskin founding partner Michael Faltischek is a former LIPA trustee -- he served on the utility's board from 1995 until 2001. The Ruskin website says Faltischek "represents many energy providers, including the Caithness Energy Center."
Arthur "Jerry" Kremer, a former Democratic state assemblyman who operates Ruskin's lobbying arm, Empire Government Strategies, was a former special counsel to LIPA, handling "all of its major cases," according to the Ruskin Moscou website. Kremer's website, jerrykremer.com, lists him as a government relations representative for both Caithness and PSEG Electric.
Stanley Klimberg, now a Ruskin Moscou partner, was a top lawyer at LIPA from its inception in 1995. Klimberg, who left LIPA in 2007 with a $188,669 annual state pension, was on hand when LIPA awarded one of its largest contracts -- a $3.8 billion, 10-year pact to manage the local electric grid -- to PSEG last December.
State records show PSEG Energy Holdings paid Empire Government Strategies $120,000 last year. In a statement, PSEG Long Island said Klimberg has attended recent LIPA board meetings for PSEG as an Empire employee. "PSEG engaged Empire Government Strategies in August 2011, as an adviser on stakeholder outreach in Long Island and New York," the company said.
State Senate co-leader Dean Skelos (R-Rockville Centre) serves in an of-counsel capacity at Ruskin Moscou. Skelos as Senate leader has three appointees to the LIPA board, and the Senate ratifies LIPA's chief executive. Katherine Heaviside, a spokeswoman for Ruskin Moscou, said the senator "does not have any involvement with the firm's representation of clients doing business with LIPA."
Go-ahead for project talks
In October, LIPA trustees authorized the authority to begin negotiating with Caithness and JPower to determine which will win a contract for up to 900 megawatts of new generation LIPA said it needs by the end of the decade.
In December 2005, when LIPA trustees first gave the utility the right to enter a contract with Caithness for its 350-megawatt Yaphank plant, trustees approved in the same meeting a measure extending a LIPA contract valued at up to $100,000 to retain Ruskin Moscou Faltischek for two more years.
In advocating to renew Ruskin Moscou, then-LIPA chairman Richard Kessel noted the law firm's "substantial and unique experience."
What was not mentioned publicly during that meeting, according to board minutes, was that Ruskin Moscou at the time also represented Caithness.
What also wasn't mentioned was that several Ruskin partners, including Faltischek, had a financial interest in a firm called Suffolk Power Holdings that owned an option to purchase the land on which Caithness was built -- an unspecified business relationship from which they still profit. Heaviside acknowledged the partners' financial interest.
LIPA spokeswoman Elizabeth Flagler, in a statement, said it was LIPA's understanding that Island Strategies, not Ruskin Moscou, represented Caithness when its contract was awarded.
"Based on information provided to LIPA at the time, the law firm Ruskin Moscou Faltischek did not represent Caithness from 2001 through 2006," she said.
Rather, "LIPA was aware that Island Strategies provided consulting services to Caithness" and on more than just lobbying, Flagler said, including power plant "siting, taxes, power contracting and as a liaison with media, community organizations, business associations, and state and local governments and agencies."
Flagler said LIPA also knew that Suffolk Power Holdings had an option to buy the Caithness land and that it "sold those options to Caithness in exchange for a financial interest in the Caithness I project." She said LIPA doesn't know if the interest continues.
Heaviside said the Ruskin partners' interest in Caithness "arises from our sale of the option to purchase the land and, as a consequence, the facts have not and will not change."
Flagler said LIPA "never" used Ruskin Moscou attorneys "in connection with any Caithness matter," and that their work centered primarily on Shoreham-related litigation.
She also noted that Island Strategies "provided a different scope of services to LIPA than it did Caithness" and that the firm "did not lobby LIPA" for the initial Caithness plant.
Caithness Energy president Ross Ain didn't return calls seeking comment.
Ruskin Moscou, in a written statement, said LIPA was fully informed of its client and partner relationships. It also noted that its partners' financial stake in the land company, Suffolk Power Holdings, was not an ownership interest in Caithness.
"All of our business relationships and transactions were fully disclosed to LIPA," said Heaviside in written responses. "In no case was any Ruskin Moscou Faltischek attorney working for LIPA involved in dealings with LIPA on Caithness's behalf."
'All sorts of questions here'
Government watchdogs said the arrangements raise questions about transparency and the potential for conflicts.
"It raises red flags," said Susan Lerner, executive director of Common Cause New York. "There are all sorts of questions here, which LIPA and the law firm should be willing to clear up . . . This fuels an incredible skepticism on the part of the public that the money is being well spent."
LIPA said authority trustees, who are appointed by the governor and leaders of the Senate and Assembly and meet once a month in public, were told of the relationships. "It is my understanding that trustees were made aware" of them, former LIPA spokeswomen Vanessa Baird-Streeter said.
Trustee minutes of the December 2005 meeting make no mention of the Ruskin partner's financial stake in the land upon which the Caithness project was built, or Faltischek's former position on the board. And several trustees said they had no recollection of a discussion of the matter.
Former LIPA board member Robert Maimoni was the only trustee to vote against the Ruskin Moscou appointment. Asked last December why, he said, "I didn't think the transaction reached the level of transparency the public deserves," because a principal of the firm had been a board member.
LIPA could have avoided any appearance of a conflict by hiring firms without such close ties, said one utility legal expert. "It would seem to me a lot simpler and clearer if the lawyers had no other interests that were even potentially in conflict," said Gerald Norlander, executive director of the Public Utility Law Center, a watchdog group.
Through an entity known as IS Ventures, certain Ruskin Moscou partners, including Faltischek, held a minority stake in Suffolk Power Holdings, which had an exclusive option to purchase the 96-acre Yaphank parcel on which Caithness was built.
Ruskin Moscou, in its statement, acknowledged that IS Ventures is "owned by some of the partners" of the firm, and that the stake in Suffolk Power Holdings was a "minority interest."
"As in many law firms, partners occasionally enter into business dealings that are not involved in their day-to-day practice," the statement said. "In all cases, the partners must get approval from the management committee of the firm before entering into any outside business agreements."
Ruskin Moscou confirmed that Suffolk Power entered an agreement with Caithness to sell its option to buy the land, but the value of the Suffolk Power option remains unclear. Property tax records show Caithness spent some $6.7 million to buy property in Yaphank from landholders there in 2006.
Harry Davitian, co-owner of Suffolk Power who also has been a longtime consultant to Caithness through his company, Entek Power of East Setauket, acknowledged that Suffolk Power has a continuing financial interest with Caithness.
Suffolk Power "pursued a business opportunity with Caithness which proved successful and beneficial to Long Island," he said. "For its efforts, Suffolk Power Holdings has been and continues to be compensated."
State Assembly member
Kremer joined Ruskin in 2000 after 23 years in the State Assembly, where he was chairman of the ways and means committee, and authored the power-plant siting law known as Title X.
In 2006, Kremer, as a Ruskin counsel to LIPA, provided an opinion that Kessel could receive a salary as chairman of LIPA, in addition to being chief executive, according to a 2008 state inspector general's report.
Under Kremer, Empire also won a contract to lobby for the New York Power Authority plan to site an offshore wind farm in the Great Lakes region. It was a plan touted by Kessel, then NYPA chief executive. NYPA trustees subsequently scuttled the controversial project after Kessel's resignation in 2011 amid a state inspector general's investigation into donations and other expenditures he made while at NYPA. Kessel denied any improprieties.
IS Ventures has contributed $13,000 to a political action committee registered under Ruskin Moscou's name, according to state databases. Among the candidates who have received funds from the committee and Ruskin Moscou are Brookhaven council members Connie Kepert and Tim Mazzei, both of whom initially opposed the Caithness plant before voting to approve it. Former Brookhaven Supervisor Brian Foley received $1,850 from the PAC in 2006-07. Caithness entities have donated $84,000 to New York races over the past decade, much of it to Brookhaven Town officials.