Interview With Ronald G. Miller | The Fixers | FRONTLINE

Ronald G. Miller

Ronald Miller is a former co-owner of Creek Systems/Gage Corp., an Oklahoma natural gas company that alleged discrimination by corrupt utility regulators. A court case that could have proved damaging to high-ranking Democrats was averted at the last minute when the Lums helped to purchase Gage Corp. and drop the lawsuit.

Q: Tell me about the development of Creek Systems/Gage Corp.

Miller: ...[In] the late 1970's, we had an opportunity to acquire a gas pipeline that was owned by Oklahoma Natural Gas, and they wanted to sell it...[We] had a contract that was a precondition with ONG that stated they wouldn't sell us the pipeline unless we entered into a contract with them. So, they provided us with a 15-year contract for a stipulated volume on a daily basis.

Q: What was the company's potential worth at that time?

Miller: Well, ... we probably would have been earning in the neighborhood of $2.5 to $3.5 million, some place in that area, if everything had been copascetic....

..[One] of the benefits of being in the gas gathering and pipeline industry is that it doesn't have the gigantic upward potential as being in the expiration business. You could be in the expiration business and go out and put your money in one well. And if you were successful, and the gods of oil and gas shined on you with a big smile, you could make a lot of money on that. Whereas with the gas pipeline, it was more predictable...

Q: As long as ONG was willing to honor their agreement with you?

Miller: That's correct.

Q: But they didn't.

Miller: That's also correct.

Q: What happened?

Miller: The first time that we had an inclination of a problem with ONG was in August of 1989, and out of the blue they curtailed our production for a couple of days.

...[We] were cut down to two million [from 18 million] per day. And we had ...employees and the situation of having to pay all of the field operations and the equipment that's used in gas pipelines is costly....

So, it was a terrible shock, and we made a phone call and suggested that we would like to come over and meet with them, which we did. And at that point our thoughts were to try to prevail upon them to realize that we had entered into the contract that they had demanded that we take, and that they had designed the price mechanism, and they had also designed the volumes that we were to supply to them.

....A couple of days after the meeting they turned the gas back on again, and it looked like maybe we had achieved that. However, a couple of months later, they shut it off again. And we went through the same situation.

Then, in December of 1989, we received a letter stating that through the winter, which is always the best part of the year as far as gas sales, that they were going to cut back our production of what they would buy from us down to approximately one-fourth.

...[The] reason that they used for breaching the contract was a set of rules - [called the Priority Rule] - that had been established by the [Oklahoma Corporation Commission] in the mid-1980's.

...[The] Priority Rule basically prioritized natural gas in the state of Oklahoma and categorized it from Priority One, which was the highest level of deliverability, down to Priority Five, which was the lowest level of deliverability or acceptance to buy. Our gas fell in that Priority Two and Priority Three, ...[but] they invoked the Priority rules and cut back on Priority Two, which was the majority of our gas.

Q: At the time what did you think was really going on?

Miller: They're trying to put us out of business.

...[We] filed a civil action in the State Civil Court. And the utility argued that the civil court really wasn't the arena for that case to be tried, and that we really should take our actions to the Corporation Commission, because that was who regulated the utilities in the state of Oklahoma.

Q: And what happened there in short?

Miller: In short? Probably one of the most eye-opening experiences in my ...business career, and I'm 57 years old....

...So we go to the [Oklahoma] Corporation Commission to plead our cases against ONG on the breach of the contract and through the first year, which was 1990, we made many appearances, and every time we would make an appearance, to me it was sort of obvious that the rulings we were getting were bizarre. And I went to our attorneys, ... and told them that I thought there was some hanky panky going on. And they basically tried to calm me down and tell me that it couldn't possibly be....

...The senior administrative law judge who heard our case...came out with a findings...which basically agreed with everything we had purported in our hearing. In fact, at the end of his findings, it stated that the utilities should go back and handle the implementation of the priority rules correctly. At that point we thought, "My gosh, we're right. Now we can see some justice, and everything will be great."

That same findings that we presented in the hearing to the administrative law judge then went back to the three commissioners. And the three commissioners all voted, two to one, against it. And there we were again.

So the only thing that we could do at that time was to appeal that ruling from the Commissioners to the State Supreme Court. So that would be in approximately September or October of 1990...It languished there for many years, but in the meantime, ...we continued to have more actions at the Corporation Commission.

...[Approximately] in about June of '92, maybe May of '92, we received a call from the Justice Department, that asked if I would be willing to sit down either formally or informally with the FBI. So I was perfectly happy to do it informally, because-...we were trying to find truth and justice. Okay? So we met with them and went over everything. And the questions that were being asked were mainly pertaining to rulings that we had had at the Corporation Commission.

Q: You were at the meeting when Commissioner Robert Anthony made his announcement. What happened?

Miller:[O]ur attorneys received a phone call from the Corporation Commission requesting that they come up to the Commission the next morning and bring their clients with them, meaning the [Creek/Gage] Corporation. And since I ran Gage, I was the one [who] would be attending it.

...There were television cameras, and there was a room full of people. And we had never seen that before in any of the hearings that we'd had....[Nobody] seemed to know why everybody was there. Well, when they convened the session, Commissioner Anthony came out and basically read a statement stating that he had received bribes and had turned them over to the FBI.

And as he walked through this, he mentioned the cases that...these pertained to. And one was the Southwestern Bell case and the other one was us....[Needless] to say, it was a shock....

Q: What are you thinking at this moment?

Miller: It was sort of like...the line from "Apocalypse Now": "I love the smell of napalm in the morning." ...It was an exhilarating thrill of realizing that we had basically been right in what we had assumed, and that our intelligence and our knowledge was correct...

But then it sort of turned back to the same old doldrums that we'd been battling all the time up to that [point] because we had to figure out how...the effects of that knowledge...affected these rulings that we'd had over these years.

Q: So what did you eventually do?

Miller: ...[We] decided...that we had a very strong violation of civil rights case, which is a federal offense, against [public utility attorney] William L. Anderson.

So we filed a violation of civil rights suit against William Anderson in Federal Court, in the Western District of Oklahoma Federal Court....

...[When] Judge Meyers was appointed, then we had the right to go ahead and start subpoenaing people and taking depositions.

...[We] subpoenaed Corporation Commissioners, past and present. We subpoenaed attorneys and corporate officers, and all kinds of people. There were about 28 or 35, something like that, different depositions.