Many officials hold leases with shale drillers


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During a contentious meeting in South Fayette last week, the township's zoning hearing board delayed a decision about a challenge mounted by gas driller Range Resources after calls for several members of the board to recuse themselves from discussions because they have signed gas leases with the Texas-based driller.

"It cannot be more clear to me that it's a conflict of interest," said South Fayette solicitor Jonathan Kamin, who wants zoning board members to recuse themselves so supervisors can appoint alternate members to hear Range's response to a recently approved gas well drilling ordinance.

"I can't imagine that they're voting in the best interest of the community and that's what they're supposed to do," said Keith McDonough, a spokesman for the Friends of South Fayette citizens group. "They should be avoiding even the appearance of impropriety."


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A review undertaken by the Post-Gazette shows that the circumstances in South Fayette are far from unusual.

In Washington County, which has seen heavy gas well drilling in recent years, 27 percent of local elected officials have signed drill leases.

Of the 349 elected officials representing 66 municipalities countywide, 94 hold leases that were signed during the past four years, county records show.

There are 15 municipalities in which the majority of council members and supervisors have leases.

Another six municipalities are governed entirely by leaseholders, including mostly rural and sparsely populated areas such as Carroll, Blaine, Donegal, Morris, Green Hills and South Franklin.

In Carroll, near Monongahela, each of the three township supervisors has a gas lease, along with township solicitor Herman Bigi, tax collector Timothy A. Matesich, code enforcement officer Dennis Butler and three of five planning commission members.

While it may seem that the deck is stacked in favor of gas well drillers, Mr. Bigi says that's not the case.

"What are you going to do?" he said. "Everyone in these rural areas has leases."

Mr. Bigi points out that many elected officials in the region have been major property owners, in some cases, for generations.

He also represents officials in West Pike Run, where two of the three township supervisors have gas leases, along with four of five planning commission members.

In Carroll, each of the public officials has a lease with Oklahoma City-based Chesapeake Energy, but that wouldn't stop the township from defending a drilling ordinance that supervisors expect to pass in early November, Mr. Bigi said.

He said the gas leases were "irrelevant" to a decision about the proposed ordinance, which officials have been researching for a year. It's fashioned after a model ordinance suggested by the Pennsylvania State Association of Township Supervisors.

"There will be substantial drilling in Carroll Township," he said. "But that won't interfere with any of our municipal actions."

The township would have no problem taking on any drilling company, Mr. Bigi said, including Chesapeake.

"There's no doubt in my mind that these officials will work on behalf of their constituents," Mr. Bigi said. "We would fight against Chesapeake if they challenged our ordinance in Carroll."

Though federal and state laws preempt municipalities in regulating drilling operations, local governments still have control over certain issues, such as siting well pads, establishing zoning guidelines and regulating noise.

Local ordinances -- though they cannot prohibit drilling -- still play a large role in determining whether a drilling company will invest in a certain area, said Matt Pitzarella, spokesman for Range of Fort Worth, the preeminent driller in Washington County.

"It's our No. 1 issue easily," Mr. Pitzarella said.

"Hypersensitive regulations" from local governments, whether inadvertent or intentional, throw up roadblocks to natural gas development because they create uncertainty, he said.

In an industry that plans drill rig schedules three to five years in advance, that's unacceptable.

"It's like having to get a driver's license in every different town and they all have different laws," Mr. Pitzarella said.

The state Ethics Commission has weighed in on several inquiries from officials regarding potential conflicts of interest due to personal gas leases, leases that have been signed with immediate family members, and officials who are employed within the industry.

In general, the commission has stated that because there is a financial impact at stake, there is a conflict for officials with leases. Those people are generally advised not to vote on or discuss issues involving gas well regulations.

However, exceptions are made for boards in which the majority -- or all -- of the members have a conflict. In such cases, officials have been advised that they can vote on and discuss the conflicted issues, though they are not to advocate or lobby for a certain outcome.

The conflict-of-interest issue at the local government level could begin to impact how regulations are crafted as more people sign gas well leases, said Chartiers supervisor Harlan Shober.

Mr. Shober, a Democratic nominee for Washington County commissioner in the Nov. 8 general election, said he believes the state needs to issue a blanket ruling regarding such conflicts.

"I think they are going to stymie government at all levels," he said of prohibitions against lease-holding officials.

Mr. Shober and his wife signed a gas lease in July 2010 with Range for their 2.4-acre homestead, meaning that if he is elected commissioner, he may face an ethical dilemma.

"I don't have an answer on that," he said when asked if he would recuse himself from discussing matters involving gas companies. "I would request an Ethics Commission opinion. ... I will abide by any rules they set down."

The county leases property it owns for gas wells, and the commissioners might also be faced with establishing drilling impact fees if a proposal from Gov. Tom Corbett moves forward.

Mr. Corbett recently recommended legislation that would require county governments to decide whether to implement impact fees for drillers.

Chartiers was the first local municipality to pass a gas well ordinance three years ago. At that time, Mr. Shober had no lease, and therefore no conflict, though he now wishes that the courts or the commission would give local officials some guidance.

"Someone is going to have to make a generic ruling on this," he said.

Mr. McDonough said it's "a farce" to believe that local officials can totally disregard their own pocketbooks while safeguarding the public interest.

"There are a lot of communities that are just waking up to these possibilities," he said. "There are just so many people who don't realize the impact of what's going on around them."


Janice Crompton: jcrompton@post-gazette.com or 412-851-1867


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