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Biofuels, Flights Benefit Graves

At the beginning of October, Rep. Sam Graves (R-Mo.) joined several other Midwestern lawmakers in sponsoring legislation to create a national mandate for the use of increasing quantities of biodiesel as a replacement for regular diesel fuel.

Graves has long been an advocate of renewable fuels, and his spokesman argues that biodiesel is “good for the environment, good for the economy and good for the producers.”

But the bill also would be good for Graves’ wife, Lesley, a public school teacher who in 2005 invested $15,000 in a new biodiesel plant that has since become the largest biodiesel facility in the state.

The biodiesel plant is one of several questionable entries on Graves’ financial disclosure forms, including his receipt of thousands of dollars worth of flights on the private plane of a personal friend who is also a contractor with significant financial interests before the committees on which Graves serves.

Graves spokesman Jason Klindt said the Congressman has long been a supporter of renewable fuels. “There is a wide and deep support in Missouri and the Midwest for biodiesel and renewable fuels,” Klindt said, and Graves’ “support of renewable fuels is well documented.”

In May 2004, when Graves was chairman of the Small Business Subcommittee on Rural Enterprises, Agriculture and Technology, the panel held a hearing on the promise of renewable fuels and tax incentives for ethanol and biodiesel.

One of the witnesses was the treasurer of Golden Triangle Energy Cooperative, a small ethanol plant in northwest Missouri. At the time, Graves listed on his financial disclosure forms that he owned jointly with his wife stock in Golden Triangle worth between $1,000 and $15,000, which produced less than $1,000 in dividends.

In his most current disclosure report filed in May, the Golden Triangle stock is listed as belonging to his wife, and the dividend income is listed between $15,000 and $50,000.

Another witness at the May 2004 hearing was Brooks Hurst, a farmer from Graves’ small hometown who spoke on behalf of the Missouri Soybean Association. Hurst discussed the importance of a tax incentive for the use of biodiesel in blends with regular diesel fuel. Congress passed the biodiesel tax credit in 2004; Hurst called it “the single most important legislative initiative in the history of the soybean industry.”

The following year, Hurst and a dozen other Missouri farmers established a new company to build a biodiesel plant in the state. They put up their own money and then recruited friends and colleagues to make up the rest of the initial capital.

Hurst said in an interview this week that in 2005, “I got in touch with the Graves family and told them about the opportunity.” Hurst said he has known the Graves family for years, and he and Graves are among the handful of users of an airstrip in Tarkio, Mo.

Lesley Graves invested $15,000 in the plant; Hurst said there are about 400 investors in the project, which is now up and running with a production capacity of about 30 million gallons a year, according to statistics provided by the National Biodiesel Board. The plant is in Mexico, Mo., next door to an existing Archer Daniels Midland processing facility, Hurst said.

In 2005, national biodiesel capacity was 75 million gallons; with the federal incentives in place that number is likely to reach 300 million this year, according to the Biodiesel Board. The legislation Graves introduced with the other Midwestern members in October would set a national target of 1.25 billion gallons of biodiesel consumption annually by 2012.

Klindt said there is nothing untoward about Lesley Graves’ renewable-fuels investments. “Most of [the fuels plants] in Missouri are small-town farm families that band together to support ethanol and biodiesel in order to revitalize small-town Missouri and break our dependence on foreign oil.”

Klindt also argues that Graves and other Members regularly vote on issues that affect their own finances. “He votes on No Child Left Behind and his wife is a schoolteacher,” Klindt said.

Ethics experts say Graves’ investments are probably not in violation of any House rules, though they may create the appearance of a conflict of interest.

Several ethics lawyers consulted for this article — none of whom would agree to speak on the record — said the more troubling items on Graves’ financial disclosure form are the regular recreational flights he accepts from Stanley Herzog, who owns a road and rail contracting company in Graves’ district.

According to Graves’ financial reports, the Congressman accepted trips to Florida on Herzog’s corporate jet in 2006, twice in 2004 and once in 2003. In 2002, he reported accepting a flight to Arizona from Herzog and another to Florida from another friend. Most of the flights were to NASCAR races in Florida.

Graves’ financial records vary on how the flights are characterized. The 2006 report values the one-way flight to the NASCAR race “in excess of $250”; the 2003 report values the round-trip flight to the same event at $1,004.90. In each case, Graves’ reports say “Determination on personal friendship received from the Committee on Standards.”

Under House ethics rules, Members of Congress and their staff can receive gifts of value from personal friends, though for any gift valued over $250 they need to get prior approval from the ethics committee.

The problem posed by the Herzog flights, ethics lawyers said, is if the airplane belongs not to Herzog but to his company, Herzog Contracting Corp. As one ethics lawyer said, “corporations don’t have friends,” so in order for the flights to be a “gift” from a “friend,” Herzog would have had to reimburse the company for the cost of the flights, unless the cost of the airplane comes directly out of his pocket.

In addition, Herzog Contracting has significant issues pending in Congress, and Graves, as a member of the Transportation and Infrastructure Committee, may have input on those issues.

For example, Herzog’s transit subsidiaries provide rail service in competition with Amtrak in several cities. In 2002, Graves’ local newspaper, the St. Joseph News-Press, wrote that with Congress considering reform of Amtrak, “Mr. Herzog, executive vice president of Herzog Contracting Corp., said the St. Joseph company is ready to roll as a major competitor to Amtrak — if Congress takes action. He’s optimistic that, after years of lip service, Congress is on board with the idea of competition.”

In 2005, Graves was named by then-Transportation Chairman Don Young (R-Alaska) to be a member of a special Amtrak working group to review Amtrak management and finances.

In a letter dated Nov. 29, 2006, the bipartisan leaders of the ethics committee wrote Graves saying he would be allowed to accept a flight from Herzog under the circumstances that Graves had described to them. The letter quoted Graves as saying Herzog “is in the construction business and has no official business before the House.”

But between April 2001 and December 2006, Herzog’s firm employed Ann Eppard Associates to lobby the House on railroad issues.

Graves also described the airplane as belonging to Herzog LLC, but the Federal Aviation Administration has no record of an airplane registered to an entity of that name.

Klindt said Graves “sought and received permission from the chairman and ranking member of the Committee on Standards of Official Conduct” after accepting the flight. “If there are any discrepancies, we will immediately work to resolve those issues,” Klindt said.

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