Corruption Conviction Prompts Neuhaus to Call for Power Plant’s Permits

John Jordan | March 2018

An aerial view of the CPV Valley Energy Center in Wawaynda in Orange County.

WAWAYANDA—The fallout from the corruption conviction of former Gov. Cuomo aide Joseph Percoco on Tuesday includes some officials from Orange County seeking an investigation or the outright revocation of permits granted for the $900-million CPV Valley Energy Center project here.

Joseph Percoco, a former executive deputy secretary to Gov. Cuomo, was found guilty on Tuesday of soliciting and accepting more than $315,000 in bribes in return for assisting Competitive Power Ventures Inc. of Silver Spring, MD and Syracuse, NY-based real estate developer COR Development in business dealings with New York State. Percoco, 47 of South Salem, NY was convicted of conspiracy to commit honest services fraud and solicitation of bribes and gratuities.

After an eight-week trial the jury was deadlocked on corruption charges against former CPV executive Peter Galbraith Kelly Jr.

Steven Aiello, a COR executive, was convicted of bribery conspiracy, while another COR executive Joseph Gerardi was acquitted of all charges against him.

Competitive Power Ventures is in the final stages of construction of a $900-million 680-megawatt gas-fired energy plant in Wawaynda in Orange County. At trial, the federal government charged Percoco with receiving more than $287,000 from CPV from around 2010 to the end of 2012. The bribe payments included approximately $90,000 paid to Percoco’s wife for little work performed. The federal government alleged at trial that the bribe payments were made for Percoco’s assistance to help CPV secure lower cost state emission credits and a “lucrative long-term purchase agreement with the state” that would guarantee a buyer for the energy produced at the CPV plant that the federal government estimated would have saved CPV approximately $100 million in development costs.

In response to the conviction of Percoco, several Orange County officials have questioned the permits granted for the CPV Valley Energy Center project. New York State Assemblyman James Skoufis has called for a “full, comprehensive investigation into the project’s approvals,” according to a report in the Middletown Times-Herald Record.

Orange County Executive Steve Neuhaus, who supported the project during its local approval process, went much further, stating, “The state should revoke any and all permits granted to CPV. You cannot act illegally in the permit approval process and then keep the permits. When the arrests happened, I called upon the state to review all of the permits that were issued. Now that a conviction has been handed down, state officials must do more.”

He is calling for the introduction and passage of state legislation that would create “a presumption of invalidity for any project in which criminal conduct by public officials occurred and for which permits were issued.” Neuhaus then said the bill should be retroactive and apply to CPV Valley Energy Center’s applications. The Orange County Industrial Development Agency announced it will conduct a full audit of the CPV tax incentive and PILOT agreements to ensure full compliance.

Tom Rumsey SVP, external affairs, Competitive Power Ventures, countered in a statement and noted that the allegations did not involve the local permitting approval process. “As we have stated from the beginning of this process, the alleged conduct does not reflect who we are as a company or what we expect from our employees,” Rumsey said. “At CPV, we make every effort to exceed all applicable ethical and legal requirements. The charges never alleged that the CPV Valley Energy Center project permits were obtained in an improper way and the validity of those permits has been upheld continuously by state and federal regulators and in state court.”

Gov. Cuomo also released a statement on Percoco’s conviction. While I am sad for Joe Percoco’s young daughters who will have to deal with this pain, I echo the message of the verdict—there is no tolerance for any violation of the public trust,” the governor stated. There is no higher calling than public service and integrity is paramount – principles that have guided my work during the last 40 years. The verdict demonstrated that these ideals have been violated by someone I knew for a long time. That is personally painful; however, we must learn from what happened and put additional safeguards in place.”

A day before the Percoco conviction, Competitive Power Ventures won an appeals court ruling on the critical Millennium Pipeline Valley Lateral Project, an approximately 7.8-mile pipeline that would connect Millennium’s mainline in Orange County to the CPV Valley Energy Center. The U.S. Court of Appeals for the Second Circuit in a ruling released on March 12 denied petitions by the New York State Department of Environmental Protection to vacate two orders of the Federal Energy Regulatory Commission authorizing the construction of the Lateral Project that is designed to transport approximately 130,000 dekatherms per day to the CPV plant.

 

John Jordan
Editor, Real Estate In-Depth