Rep. Bill Flores, R-Bryan. (AP Photo/Waco Tribune Hearld, Duane A. Laverty)
WASHINGTON — As a former oil industry executive and a member of the House Natural Resources Committee, Texas Rep. Bill Flores is at the center of big debates about offshore drilling, hydraulic fracturing and domestic energy supplies.
He also is a big trader in energy stocks.
According to Flores’ most recent financial disclosure filings with the House of Representatives, the Bryan, Texas Republican spent at least $1.6 million — and possibly as much as $3.25 million — buying energy-related stocks during the first half of November.
Lawmakers can report stock sales, purchases or exchanges under widely varying categories of value, such as $250,001-$500,000 or “over $50 million.”
Among Flores’ pickups: Tesoro Logistics, the master limited partnership formed by San Antonio-based refiner Tesoro Corp. in 2011, and Tulsa-based Williams Companies Inc.
During the same time frame, Flores also collected as much as $1.4 million from selling energy stocks, such as Linn Energy LLC, Crestwood Midstream Partners and NGL Energy Partners. He had previously purchased $250,001 to $500,000 in Linn Energy stock on Oct. 25 and as much as $250,000 in Crestwood stock on Oct. 18.
The Capitol Hill newspaper Roll Call first reported the transactions. You can see a full list of Flores’ stock trading activity below.
There are no congressional ethics rules that widely bar lawmakers from taking official action that affects entities in which they have financial interests — unless they would uniquely be affected by the move. That means lawmakers who hold pharmaceutical stocks in their financial portfolios are free to cast votes on health care bills and even introduce such legislation.
In Flores’ case, it means he was able to freely introduce legislation in July that would change rules for taxing natural gas pipeline property, sign on to a bill that would do away with federal renewable fuel mandates and sponsor legislation that would effectively block new Interior Department rules governing hydraulic fracturing on public lands.
That fracturing bill — backed by oil and gas industry trade groups who oppose the Interior’s proposed fracturing rules — passed the House on Nov. 20.
Robert Walker, a former counsel to the House and Senate ethics committees who now is in private practice at Wiley Rein, notes that lawmakers also are not barred from trading in securities unless they would be acting with material, non-public information — the same insider trading prohibition that applies to Average Joes, too.
Flores stressed that an independent third-party manages his financial portfolio, often making trades well before the lawmaker is notified about them. For instance, Flores reported that he shed as much as $500,000 in Kinder Morgan stock on Oct. 25 but first learned of the transaction when he received statement on Dec. 9. The transaction was reported in Flores’ filing with the House of Representatives a day later.
“There has been no conflict of interest between my service in Congress and the management of my investment portfolio by an independent, third-party portfolio manager,” Flores said in an emailed statement to FuelFix. “This portfolio manager executes trades based upon a pre-established portfolio allocation and a formula-driven income generation strategy (that) has included an active energy MLP trading component since January 2009.”
Flores said many of the short-term trades in master limited partnerships are based upon the quarterly cash distribution schedules of the companies he holds.
A handful of lawmakers have opted to put financial holdings in blind trusts to avoid the appearance that they are profiting from legislative dealmaking.
But Walker notes that these are individual judgment calls for lawmakers.
“By their very nature, such appearance calls are for individual members to make — and to live with — as they judge best,” he said.
Calls for scrutiny
Government watchdog groups say financial activity like Flores’ merits extra scrutiny.
“While it’s not strictly prohibited, members are still supposed to avoid even the appearance of impropriety,” said Melanie Sloan, the executive director of the not-for-profit Citizens for Responsibility and Ethics in Washington. “Given how much concern there is about members using their position to profit, this is the kind of activity . . . that feeds public skepticism about Congress.”
Lawmakers are required to regularly file disclosures on their financial transactions, under a 2012 law known as the “Stop Trading on Congressional Knowledge” Act. Previously, they only had to file annual disclosures that shed some light on their holdings.
For some lawmakers, the revelations may feed concerns about insider trading, if only because lawmakers and congressional aides may get non-public information during the course of their work. A lawmaker who sells an asset to avoid the appearance of impropriety during a congressional investigation or talks with federal regulators may actually open themselves to insider trading accusations.
“When you are trading on issues you are getting a lot of information on,” Sloan said, “your trades certainly merit greater scrutiny.”
Flores is one of the richest members of the House of Representatives. He spent years at Phoenix Exploration Co., before being elected to the House in 2010.