Coincidence or collusion? NC Oil and Gas Commission receives curious requests to frack.

By: - May 23, 2018 5:00 am

Jim Womack, chairman of the state’s Oil and Gas Commission, refused to answer questions about his role in drafting petitioners’ letters requesting a pre-emption of Lee County’s fracking ordinance.

Friends, neighbors, colleagues of commission chairman Jim Womack submit nearly identical letters claiming Lee County drilling moratorium violates their rights

Earlier this month at a meeting of the state Oil and Gas Commission, Jim Womack, the agency’s controversial chairman, seemed agitated, frantic even, to attend to what he deemed as Very Important Business: to hear from disgruntled people who want the commission to overturn Lee County’s fracking moratorium.

“I’m a little bit motivated,” said Womack, a long-time fracking proponent, as he pressed the commission’s attorney for more legal leeway on hearing the complaints. “There’s a sword of Damocles dangling over my neck to get back to the petitioners.”

But as has become routine with Womack, he is telling only part of the story. Last August, five people had written to to the commission, alleging that they had been unfairly prohibited from applying for drilling permits in Lee County because of a local ordinance establishing a temporary moratorium on fracking. In their petition, the complainants asked the commission to essentially overrule Lee County government and allow them to frack for natural gas on their land.

Yet all of the complainants holding the metaphorical sword over Womack’s head are his friends, neighbors or professional colleagues — relationships that could jeopardize his impartiality in granting a hearing or voting on whether to undermine Lee County’s authority. And questions about Womack’s potential role in the drafting the individual complaints raises further concerns about the depth of his involvement in promoting fracking in his home county.

All of the complaints were filed on Aug. 23 or 24, 2017, by five people:

  • Tony Craig lives next door to Womack on Boone Trail Road in Sanford. He operates a grading company a mile away, on 49 acres.
  • Frank Del Palazzo, a retirement planner, served as Womack’s campaign treasurer during the 2010 Lee County Commissioners race. In turn, Womack’s Founding Fathers blog endorsed Del Palazzo when he ran for commissioner in 2012. Del Palazzo owns nearly 20 acres northwest of Sanford.
  • Jay Anderson owns Pocket Creek Ranch, a 19-acre horse boarding stable on Carbonton Road, also northwest of Sanford. Womack is featured and tagged in a photograph from an October 2017 “pig pickin’” event hosted by the ranch on its Facebook page.
  • J. Daniel Butler, is a lumberman and real estate investor. He owns mineral rights under more than 3,100 acres of land, deeded to him by Peabody Coal and Weyerhaeuser Paper. Butler and Womack have mutual acquaintances, Dan Fisher, a Salisbury real estate developer with energy contacts; and Ken Taylor, the state geologist, who advises the oil and gas commission.
  • The fifth letter, sent by Patterson Exploration Services, was the only petition that appeared to be independently written. Owned by Russ Patterson, the company provides professional geological services. The company worked with Taylor on a 2011 report estimating the natural gas potential of the Sanford sub-basin. (See below for the petitions.)

Annotated Petitions to Oil and Gas Commission1 by Lisa Sorg on Scribd

All five letters, which are public record, were directed to Womack in his capacity as commission chairman. With the exception of Patterson’s letter, the other four contain nearly uniform language, as if prepared by the same person. The body of the correspondence is written using the same typeface — Times — an exact match with the one used to print Womack’s name and address on the envelopes. Each is signed by the complainant.

Although it is a different one than used in the body of the letter or for Womack’s name and address, the complainants’ return addresses on the envelopes also appear in the same typeface — Calibri.

Four of them were postmarked from a Greensboro post office on Aug. 24, using Forever stamps. Patterson’s letter was also sent on Aug. 24, but it was delivered by certified mail and postmarked at a Sanford post office.

[Tweet ” I don’t want to be accused of being too slow or inept”]

Policy Watch contacted the petitioners whose letters were identical. Del Palazzo spoke briefly by phone but did not respond to detailed questions via email. Anderson declined to comment, telling Policy Watch that he “only responds to media inquiries from people who are sympathetic to and fully support my desire to ‘enjoy the fruits of my labors’ as guaranteed by the North Carolina constitution.”

The other two petitioners did not respond to inquiries from Policy Watch.

Womack, a former Lee County commissioner, refused to answer repeated questions about whether he helped write the letters or encouraged the complainants to write them. He did acknowledge having “had the occasion to meet all of these gentlemen, as well as hundreds more landowners and taxpayers in Lee and Chatham counties.”

Womack said he also knows “a good many environmental activists who take an opposing view to oil and gas development,” and that his relationships with supporters and opponents would not bias his judgment.

As chairman of the Oil and Gas Commission, Womack would have the authority to deem the complainants’ petitions complete, and thus be the gatekeeper for the hearings of his associates to proceed.

“I would reverse the logic for you to consider,” he wrote to Policy Watch in an email. “How could I be fair and impartial given my close relationships with several of my friends who strongly oppose oil and gas development, some of whom no doubt will present arguments against drilling at any future hearings?  I imagine we all have friends that favor the one position or the other.”

However, drilling opponents are not asking for a quasi-judicial hearing before the commission, of which Womack has oversight and authority. And if Womack did orchestrate the letter-writing campaign, it’s hard to believe he would have done the same for many fracking opponents, who have often incurred his wrath. For example, in an email to an E&E News reporter last year, Womack wrote, “there is very little these groups will not do to wreck our work and prevent the state from developing its natural resources,”

A longtime proponent of fracking, Womack was appointed by Sen. Phil Berger to the now-defunct Mining and Energy Commission in 2012. When the Oil and Gas Commission replaced the MEC, Berger appointed Womack to a seat in 2015. The commission then lay fallow for nearly a year while a legal case, McCrory vs. Berger, wound through the courts. The case centered on who had the constitutional authority to appoint members to various state commissions; it has since been resolved.

In the meantime, Womack’s term had expired, prompting Berger to reappoint him last October. Womack took the commission seat designated for “nongovernmental conservation interests.” His conservation bona fides, though, are dubious. He is a volunteer advisor to the American Council on Science and Health, a front group for several polluting industries that performs no conservation activities.

Petitioners’ claims to overrule Lee County ordinance are confusing, weak 

An example of one of the letters sent to Commissioner Womack. The underlined text indicates where the letters of four of five complainants are identical. To see all the letters click on the Scribd box above.

When fracking seemed to be the hot ticket to riches in the mid-’00s, many local governments and concerned citizens were nonetheless wary of its environmental and health risks, as well as the potential decrease in adjacent property values.

To usurp local governments’ power to thwart fracking, state legislators passed a controversial law in 2015 prohibiting counties and cities from restricting oil and gas activities.

“The state has prohibited ordinances that interfere with oil and gas exploration,” Womack said at the meeting. “It’s unfortunate that some local governments worked around the issue.”

That workaround is a pre-existing law which allows local officials to establish temporary moratoria on development activities, including fracking, under certain conditions. For example, local officials must clearly state why they are enacting the moratorium. And they must also set a “reasonable” expiration date for it.

With that authority, Lee County Commissioners (as well as Chatham County) passed a fracking moratorium in 2015 because of questions about its environmental and socioeconomic impacts. By a unanimous vote, commissioners renewed it last December for another two years, with an expiration date of Dec. 7,  2019.

The moratorium does not apply to the City of Sanford, the Town of Broadway or their extraterritorial jurisdictions, also known as ETJs, confirmed Lee County Attorney Whitney Parrish.

That means whoever wrote Tony Craig’s petition didn’t understand that he’s likely exempt from the moratorium. Craig’s property on McNeill Road lies within Sanford’s ETJ, according to a map on Lee County’s online GIS system.

In addition, the ordinance applies only to activities that require a county permit, a detail four complainants — or whoever wrote the letters — ignored. They all complained that the moratorium has barred them from completing the requirements to move forward on drilling.

However, a survey does not require a county permit, nor does “building a contract team for drilling and oil field services.” Even the steps for applying to the Oil and Gas Commission for a drilling unit do not require county approval, according to the Lee County attorney: Compiling a list of mineral rights owners, providing a map of property boundaries, submitting a subsurface geological map, can all be done independently.

Anderson’s petition could also have hit a roadblock. In 2010, he and his wife took out a construction mortgage from First Bank for the property on Carbonton Road, according to county records. Wells Fargo also granted them a separate mortgage for the property in 2015.

According to documents filed with the Lee County Register of Deeds, the banks imposed several environmental conditions on the agreements. Neither deed of trust allows Anderson nor any contractor to “use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from the property” without the bank’s permission. And any such activities “must comply with all federal, state, and local laws, regulations, and ordinances.”

Hazardous substances, according to the construction loan documents, include oil and gas.

Since Anderson refused to answer questions from Policy Watch, it’s unclear if the banks have agreed to allow fracking on the land or released him from that deed restriction.

Under state law, the petitioners, or anyone, who wants to challenge a local ordinance can petition the Oil and Gas Commission to hold a hearing. The commission chairperson, in this case, Womack, then has the authority to deem whether their petitions are complete, and if so, to schedule the hearing, with a 60-day public notice.

Even then, the commission can preempt a local ordinance only if four conditions all apply:

  • There is a local ordinance prohibiting the practice;
  • The petitioners have all the required state and federal permits, and only the local ordinance is preventing them from drilling;
  • Local citizens and elected officials have had adequate opportunity to participate in the permitting process; and
  • The exploration, development and production “will not pose an unreasonable health or environmental risk to the surrounding locality.” And the operator “has taken or consented to take reasonable measures to avoid or manage foreseeable risks” and has tried to comply with local ordinances.

None of the petitions submitted to the Oil and Gas Commission appear to comply with the state rules or to be complete, said Phillip Reynolds, general counsel for the commission, at the meeting. (Reynolds could not be reached later to discuss whether Womack’s association with the complainants presented a conflict of interest.)

Womack wanted to quickly set a date for the hearings, although Reynolds reminded him that they couldn’t be scheduled until 60 days after the completed petitions were received.

“I want to ‘fence the time’ in case we have a hearing, like a ‘save the date,'” Womack insisted. “I don’t want to be part of the bureaucracy. I don’t want to be accused of being too slow or inept.”

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Lisa Sorg
Lisa Sorg

Assistant Editor and Environmental Reporter Lisa Sorg helps manage newsroom operations while covering the environment, climate change, agriculture and energy.