|Idaho State Senate
Senate Minority Caucus
P.O. Box 83720
Boise, Idaho 83720-0081
March 19, 2012
Senator Dean Mortimer, Chairman
Senate Ethics Committee
On March 15, 2012, the Senate Minority Office filed a complaint requesting the impaneling of an ethics committee to investigate any violations by Senator Monty Pearce with respect to Senate Rule 39(H).
That letter cited numerous occasions in committee and on the Senate floor where Senator Pearce neglected to disclose any conflict of interest while chairing the Senate Resources and Environment Committee and while voting on issues pertaining to oil and gas industry regulations and state law.
Today you requested that the complaint be narrowed to specifically identify the “alleged private, pecuniary benefit” that Senator Pearce might enjoy as the result of his failure to disclose. Given that our concerns arose following Senator Pearce’s March 14, 2012 disclosure of a conflict of interest in his final vote on H464 resulting from his ownership of oil and gas leases, the scope of this investigation would logically fall within the particulars of H464. Senator Pearce voted once in committee and twice on the Senate floor before disclosing a conflict of interest with respect to H464.
As a preliminary matter, note that the definition of conflicts of interest pursuant to the Rules of the Senate (“Rules”) is not limited to “pecuniary” interests. Although neither Rule 39(H) of the Rules (“Right to Vote”) nor Rule 53 (pursuant to which this committee on ethics is formed and functions) contain such a definition. Rule 48, however, states that with respect to matters not covered by the Rules, Mason’s Manual of Legislative Procedure (“Masons Manual”) shall govern the proceedings of the Senate.” Masons Sec. 522 states “[i]t is the general rule that no members can vote on a question in which they have a direct personal or pecuniary interest” (emphasis added). Accordingly, the suggested limitation of the term “conflicts of interest” to pecuniary interests is incorrect. The term “conflicts of interest” includes both personal and pecuniary interests.
In order to fulfill your request, we have identified the following specifics that address some, but by no means all, of the issues that warrant further investigation in order for the ethics committee to fulfill its duties:
- Payette County, where Senator Pearce’s lease is held, employed conditional-use permitting to restrict oil and gas drilling. Such local provisions will be superseded by state regulations as a result of the passage of H464 (see amendments to 47-317). Senator Pearce made a motion to send H464 from the 14th Order, where amendments impacting local control were anticipated, back to the 13th Order thus prompting passage of the bill without amendments. The state’s supersession of county-level controls will provide Senator Pearce with a personal and pecuniary benefit, the full scope of which can only be determined through additional investigation.
- In his conflict of interest disclosure on March 14th, Senator Pearce cited drilling leases dating back to the 1980s (but made no mention of the leases signed November 4, 2011). Any older leases now have the potential to become much more valuable as a result of hydraulic fracturing technologies and state laws favorable to fracking regulations. To ensure unfettered use of fracking technology in Idaho, H464 excludes the act of injection used in fracking in the definition of “injection” (see amendments to 42-3902 (8-9)). The language in H464 clears a path for fracking and therefore increases the value of Senator Pearce’s lease(s) which are likely to produce higher natural gas yields resulting in a more attractive investment environment and longer well productivity. Both of these will result in an enhanced pecuniary benefit to Senator Pearce. The actual personal and financial benefits of this to Senator Pearce cannot be accurately determined without further technical investigation by a qualified expert.
- Questions remain regarding the particulars of Senator Pearce’s lease agreement and whether any variance from the norm exists. Does his lease contain a production-cost clause as is commonplace among such leases? Does he enjoy a provision pertaining to cost at well vs. meter that distinguishes his lease(s) from others in Payette County? The committee is charged with conducting a thorough investigation of any personal and pecuniary benefit directly enjoyed by Senator Pearce as a result of the passage of H464 with respect to the details of his lease(s) with Snake River Oil & Gas, LLC.
With less than 24-hours-notice and the disadvantage of limited investigatory authority, we have done our best to comply with your request in the interest of advancing established laws and rules. However, as set forth in Senate Rule 53(B), it is the duty and authority of the ethics committee (not the claimants) to conduct a preliminary investigation using the vast resources at your disposal including the power to take testimony under oath and to issue subpoenas/subpoenas duces tecum as provided by Section 67-407, Idaho Code. This duty to investigate relates not only to possible pecuniary benefits enjoyed by Senator Pearce, but also to any personal benefits that he may enjoy.
We appreciate the work of the committee and its members and are very grateful to each of you for taking time to investigate this matter within the scope of your authority as required by Senate Rule 53(B).
Senator Edgar J. Malepeai Senator Les Bock Senator Michelle Stennett