Friday, March 27, 2009

Game and Fish Commission sued over use of gas-leasing money

Game, fish agency says plaintiff lacks standing in lawsuit
Posted on Friday, March 27, 2009
The Arkansas Game and Fish Commission is arguing that a lawsuit filed by a Little Rock man who says money from natural gas leases held by the agency should go to the state's general fund should be dismissed because the plaintiff hasn't suffered any harm.

The commission said in a response to James Dockery's lawsuit that, among other things, Dockery has no claim to the mineral leases and does not belong to any class of persons who claim to be hurt by the lease agreement.

Dockery's attorney, Q. Byrum Hurst Jr. of Hurst, Morrissey & Hurst in Hot Springs, said he disagreed.

"I don't believe that's an accurate statement of the law," Hurst said. "He does have an injury because he's a taxpayer in the state of Arkansas. I think we'll prevail on that issue but we'll certainly ask the court to make a ruling."

Hurst described his client as "something of a social activist" and said Dockery filed the suit on behalf of the entire state. Hurst said Dockery wanted a ruling on the issue from the courts opposed to previously issued attorney general opinions.

Jim Goodhart, general counsel for the Game and Fish Commission, said he didn't have much to say about the suit.

"We've essentially responded and we will be defending the agency based on the legal defenses that are outlined in our answer to the lawsuit," Goodhart said.

Game and Fish Commission sued over natural-gas money

Goodhart said Quattlebaum, Grooms, Tull & Burrow PLLC will take the lead during litigation while his office will serve as co-counsel.

"My attorneys here are working on the case as well, but we have a significant number of legal matters pending and we wanted to have some specialized litigation assistance," Goodhart said. "We handle a lot of litigation firsthand in our agency, but we only have three lawyers in our office."

Goodhart said he hopes the case will be over quickly.

"The plaintiff 's asked the court for expedited consideration on the court's docket and when we answered, we responded that we also would appreciate the court's expedited consideration," Goodhart said. "So we're hoping it will move quicker than usual matters."

The Perroni and Koehler law firm in Little Rock is joining Hurst in the suit which also asks the court to prohibit the Game and Fish Commission from us- ing any of the money until a ruling is issued.

Hurst was unavailable for comment, but Sam Perroni said the firm agreed to assist because "we believe in the issue."

"We were asked to assist primarily because he needs some local counsel to help facilitate things," Perroni said. "Also we have had some experience over the years with cases of this nature."

In July 2008, the commission reached a $29.5 million agreement with Chesapeake Energy for the lease of 11,500 acres in the Gulf Mountain and Petit Jean River wildlife management areas.

The Gulf Mountain site in Van Buren County is situated over the Fayetteville Shale, a geologic formation primarily in north-central Arkansas that's proved to be rich in natural gas. The lease is for $28.3 million for 4,000 acres.

The Petit Jean River Wildlife Management Area lease totals $1.2 million. That land is considered part of the Arkoma basin, where Chesapeake Energy has natural gas operations in nonshale formations.

Both leases are for five years and carry a 20 percent royalty payment - well above the 12.5 percent minimum royalty mandated by state law. If the company produces gas on the land, it can automatically renew the leases.

Drilling in the Fayetteville Shale is projected to have a $22 billion effect on the state's economy between 2005 and 2012, according to a study by the University of Arkansas that was partially funded by Chesapeake Energy.

Gov. Mike Beebe had called on the constitutionally independent Game and Fish Commission to share its revenue from leasing wildlife management land, saying the money belonged to "all 2.8 million Arkansans."

However, Goodhart raised concerns that spending the money on nonwildlife causes would risk the Game and Fish Commission's eligibility to receive future federal grants, which total about $20 million a year. The agency submitted a $95.4 million budget for the 2008-09 biennium.

In September 2008, Loren Hitchcock, deputy director of the Game and Fish Commission, reported that the U.S. Fish and Wildlife Service had given the green light for the agency to share the funds with the state's Oil and Gas Commission and the Arkansas Department of Environmental Quality, which is set to get $3.5 million of the lease revenue.

When Beebe was attorney general, he issued an opinion on the issue in 2006, which reads in part:

"In my opinion the funds may not be redirected to purposes other than those listed in Amendment 35. As noted above, the funds may only be expended for 'the control, management, restoration, conservation and regulation of the birds, fish and wildlife resources of the State' and for 'no other purposes.'"

Amendment 35 to the Arkansas Constitution established the commission as a nearly independent state agency.

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