COLUMBUS - The Ohio Ethics Commission warned a member of the state's oil and gas commission on Monday that his consulting work with energy companies and landowners could present a conflict of interest.
Besides being a professor of petroleum engineering at Marietta College, Commissioner Robert Chase operates a private consulting firm, Chaseland LLC, that links individual landowners and landowner associations with energy companies seeking drilling leases.
The firm has dealt with some of the biggest players in the state's developing shale drilling industry, including Chesapeake Energy, Anadarko, Marathon, Exxon and Chevron, according to information he submitted to the ethics panel.
In its advisory opinion, the Ethics Commission said state ethics law prohibits Chase from participating in any commission decision involving a group he's negotiated with or a company that's paid him for his services.
Chase told The Associated Press that he saw nothing unexpected in the advisory opinion.
"I know what my ethical responsibilities are, and if an issue arises involving one of these entities, I would be the first to recuse myself," he said.
Fact Box
New rules approved for Ohio gas wells, drilling
By Julie Carr Smyth
The Associated Press
COLUMBUS- An Ohio legislative panel approved new rules Monday for the construction of oil and gas drilling wells, amid an underground shale exploration boom in the state.
The state's rule-setting committee also cleared new guidelines for drilling permits and set certain industry standards, primarily affecting wells in the Utica and Marcellus shale formations.
Larry Wolpert, executive director of the Joint Committee on Agency Rule Review, said the panel must clear or reject rules based on technical criteria not policy. He said no one objected to the rules, which conform regulations to a bill passed two years ago. The new rules are expected to take effect Aug. 1.
The panel did not take up any of the environmental or public health concerns debated at public forums in Ohio, Pennsylvania, New York and other states involving hydraulic fracturing, or fracking. And a Sierra Club spokesman said the group considers the committee action as procedural.
In the rush to release new deposits as a result of advances in horizontal drilling, Ohio has issued 207 new permits for wells in the Utica Shale in eastern Ohio over a year's period that ended in March. Monthly permits rose tenfold over that time. Fracking involves blasting millions of gallons of water, mixed with chemicals and sand, at the underground shale to create fissures in the rock and release gas and oil deposits. Environmentalists and people living near drilling sites say the risks include contaminated water wells and air pollution. The industry says those fears are exaggerated.
Jack Shaner, a spokesman for the Ohio Environmental Council, said Monday the organization was generally supportive of the new well construction rules.
"We are satisfied that DNR has done a good job on these rules," he said. "However, Ohio needs to put many more protections in place and that's the center of the debate right now in the Legislature. Well construction is a critical part of this, but it's not the only part."
Shaner said environmentalists are still fighting for strong public notice requirements, full disclosure of the chemicals used in the drilling process, and tough fines, among other things.
In a letter Friday to nearly 1,400 oil and gas producers, state natural resources director James Zehringer said the new rules would be both environmentally safe and business-friendly. Zehringer also pitched smaller oil and gas producers on the fact that a severance tax increase on high-volume wells, proposed by Gov. John Kasich, would not apply to them. The tax hike is opposed by the Ohio Oil and Gas Association.
as an unfair burden on the industry.
Department spokesman Carlo LoParo said the letter was not an attempt to muster support among smaller drillers for the governor's proposal, which has stalled at the Statehouse.
He said regulatory updates are sent routinely to affected businesses.
Copyright 2012 The Associated Press.
He noted that he sought the commission's opinion and that other members of the commission have had to recuse themselves in decisions directly related to their own companies.
"The commission did what it's supposed to do. They reviewed what I submitted and issued an opinion," Chase told The Marietta Times Monday night.
"I'm fine serving on the commission as long as I stick to hearings that don't have anything to do with my business," he added. "The commission only meets three times a year, and I've never had any of my companies come before the board."
Chase said he hasn't received any payments for his consulting work with major shale drilling companies.
However, he said he plans to reevaluate his role on the board when his term expires at the end of the year.
Jennifer Hardin, the commission's chief advisory attorney, said it is outside the commission's role to advise Chase to step down.
"The commission does not feel that it has the authority to say that he has to step down," she said. "They certainly saw that there was a significant potential for conflict of interest for him due to the nature of his public service."
The five-member Oil and Gas Commission receives and hears appeals involving orders issued by state regulators at the Ohio Department of Natural Resources' Division of Mineral Resources Management. Its members are appointed by the governor.
The commission meets as needed, usually two or three times a year.
Chase said the panel has just one case currently scheduled, and it doesn't involve any of the entities for which he's done consulting.
He added that he has not received any pay for his work with the major energy companies.
"I feel perfectly fine being on the commission and interpreting the state's regulations as they apply to that case," he said.
