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Conflict of interest questions arise on Mars Area drilling vote

| Saturday, March 8, 2014, 9:17 p.m.
Jasmine Goldband | Tribune-Review
A MarkWest Energy natural gas processing plant is 1.5 miles from Seneca Valley High School in Jackson Township, Butler County.
Jasmine Goldband | Tribune-Review
Marcellus Shale activity is visible in the Jackson Township, Butler County landscape in this file photo grom March 2014.
Jasmine Goldband | Tribune-Review
The site of the Bame natural gas well pad along Hartmann Road in Jackson Township, Butler County. The site is directly across the street from Hartmann’s Deep Valley Golf Course.
Jasmine Goldband | Tribune-Review
The site of the Bame natural gas well pad along Hartmann Road in Jackson Township, Butler County. The site is directly across the street from Hartmann’s Deep Valley Golf Course.

Three Mars Area School Board members who are set to vote Tuesday on a lease of oil and gas rights under school property have business ties with energy companies conducting drilling in Butler County.

Residents opposing a proposal from Rex Energy to lease mineral rights from the district for $1 million said that directors with those ties shouldn't vote on any leasing proposals because it would constitute a conflict of interest.

“Those directors should abstain,” said Amy Nassif of Adams.

The head of the state Ethics Commission said he doesn't believe directors have to excuse themselves from a vote as long as they are not receiving any personal gain from the school contract.

“If a public official isn't getting private pecuniary gain or some type of financial benefit from it, I'm not sure there's a conflict,” said Robert Caruso.

He added that board members would not be prohibited from voting as long as their votes didn't affect their personal contracts with the energy companies.

Board member Bonnie L. Weaver of Adams confirmed that she and her husband, William, have agreements with Rex Energy.

On the school board since 1991, Weaver said she could be impartial in deciding any lease of oil and gas rights for the school district.

“You need to be able to learn how to separate yourself,” Weaver said of her time on the board.

Board member John Kennedy also has an agreement with Rex Energy, according to records in the Butler County Recorder of Deeds Office.

He could not be reached for comment.

The proposed five-year school lease promises the district about $4,000 an acre for drilling rights about a mile underneath nearly 175 acres of school property.

Rex Energy said it will pay the district just over $1 million, which includes about $330,000 in advance royalties, for the rights to drill from a site about 4,000 feet from district property.

The district would receive 15 percent of royalties.

Board member Gordon Marburger of Adams said he's had a lease agreement with XTO Energy for nearly eight years, receiving 7 percent of revenues from a well pad in Forward, adjacent to his property.

He said he's hoping to earn from $7,000 to $15,000 annually from natural-gas drilling.

Marburger said that his lease wouldn't affect his vote on the school lease proposal.

He declined to say if he'd approve or reject the lease.

“Put it this way. No matter which way we lean, you're going to have some people say it's harmful,” Marburger said.

“But if you vote it down, then you'll have people saying, ‘Hey, you left this money on the table.' ”

Attorney H. William White III, who is advising the school board on the lease proposal, said the fact that some board members have an oil or gas lease “does not in and of itself create a conflict” as long as their own leases aren't contingent on the district approving a lease.

White added that residents concerned about the influence on board members of personal agreements with Rex Energy “have a valid point.”

He said he expected that those school directors who have personal agreements “will take individual actions” at Tuesday's meetings.

“I think I'm still objective,” Marburger said.

“This well is going in whether we're part of it or not. The school is not the factor for this well being drilled.”

While Sean Fields, deputy general counsel of the Pennsylvania School Board Association, wouldn't talk specifically about the Mars board members, he held the same opinion as White.

“In general, is there an economic benefit to the director? If there's a preexisting lease, it's unlikely there's a conflict,” Fields said.

Mars is not the only public body in the county that has looked at subsurface drilling as a source of revenue.

The Butler Area and Seneca Valley school districts have signed agreements with Rex, while the South Butler School District has an agreement with XTO Energy, according to district officials.

On Monday, Butler Township approved a lease with XTO Energy for drilling underneath two township parks.

Butler City officials are promoting and marketing drilling under the 90-acre Memorial Park.

Bill Vidonic is a staff writer for Trib Total Media. He can be reached at 412-380-5621 or bvidonic@tribweb.com.

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