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State Finds Misconduct in LNG Lease

An Oregon Department of Justice investigation has found evidence of corruption in former Port of Astoria Director Peter Gearin's arrangement of the Port's 2004 lease agreement with the liquefied natural gas developer Calpine Corp.

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The Daily Astorian

An Oregon Department of Justice investigation has found evidence of corruption in former Port of Astoria Director Peter Gearin's arrangement of the Port's 2004 lease agreement with the liquefied natural gas developer Calpine Corp.

Investigators believe Gearin used his position at the Port to get Calpine to hire his "then-girlfriend" Susan Trabucco in 2004, while the Port was negotiating a lease deal for 96 acres on the Skipanon Peninsula. In a letter sent today to Clatsop County District Attorney Josh Marquis, DOJ Chief Counsel Sean Riddell wrote the state believes it could prove that Gearin is guilty of official misconduct in the first degree, a class A misdemeanor punishable by up to a year in jail.

Trabucco, who also worked as a contractor for the Port under Gearin, earned $41,030 from Calpine from October 2004 to February 2005, the letter states. She and Gearin are now married.

The Port signed a controversial pass-through lease with Calpine in November 2004 in which the Port leases state land and subleases it to the company without making a profit.

Click to read the letter from Chief Counsel Sean J. Riddel to Clatsop County District Attorney Josh Marquis.

LNG opponents and some Port commissioners have long suspected foul play in the lease deal, which was rushed through the approval process on very short notice at a Friday afternoon meeting on Nov. 5, 2004.

While Gearin's alleged misdeeds cannot be prosecuted because of a two-year statute of limitations, some are hoping evidence uncovered by the state will give the Port enough leverage to break its lease with Calpine Corp.'s successor, Oregon LNG.

Gearin was dismissed from the Port in 2007 and was convicted of a felony violation of the Clean Water Act earlier this year for his role in the Port's 2005 dredging violations.

The state investigation was triggered in 2006 when Port Commissioner Larry Pfund blew the whistle on Gearin's mismanagement, charging that Gearin had sweetened Port deals for his pals and lied to commissioners. Pfund's concerns were relayed to Marquis by Astoria resident Floyd Holcom, who has since been elected to the Port Commission. Marquis said he asked the state to investigate the matter largely because his office lacked the resources to look into it.

According to Riddell, the DOJ interviewed 31 people, issued 11 Attorney General subpoenas, reviewed hundreds of documents and conducted a three-hour interview with Gearin before concluding the investigation.

Marquis said it is "extremely unusual" for a state attorney to issue a letter detailing a possible crime that cannot be prosecuted. He said he doubts the investigation could have concluded within the statute of limitations.

"They did everything they could," he said.

Marquis said that folded into the investigation's findings is a "suspicion of bribery" in the LNG lease deal.

LNG lease was suspicious

Calpine went bankrupt in 2006 and sold the Port's lease to Leucadia National Corp. of New York, the parent company to Oregon LNG. The Port charges the company $38,400 per year to sublease the Skipanon property and turns all the money over to the state.

Rumors about why the Port signed the dubious LNG lease have been festering for years. As opposition against LNG development has grown, so have suspicions about the Port's dealings with former Calpine executive Peter Hansen, now CEO of Oregon LNG.

"We've always known this was a bad deal," said Peter Huhtala, Astoria resident and vocal LNG opponent. "This appears to give the Port a way out of the lease. If the lease was the culmination of the official misconduct I would say the lease is fraudulent."

This year as the deadline to renew the lease approached, Port leaders complained there were still too many unanswered questions about why the agency signed onto the money-losing lease in the first place.

A five-year term on the Port's Skipanon lease with the state ends this year, and the Port Commission had to decide whether to renew it for the first of two 30-year terms. The board decided to take an offer from the state to extend the current lease by two years instead of renewing, and has been waiting for the outcome of the state investigation to determine its next move.

Port Commission President Bill Hunsinger said Port leaders are preparing a statement in response but need to be cautious about ongoing lawsuits with Oregon LNG.

Because of the delay in renewing the company's lease, the Port is currently fending off a breach of contract lawsuit from Oregon LNG in federal court while simultaneously suing the company in Clatsop County Circuit Court.