Mirabito: No conflict of interest in drilling vote

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February 13, 2012

By Jake Palmateer Staff Writer The Daily Star Mon Feb 13, 2012, 02:30 AM EST

The town board may not vote on two competing gas drilling moratoriums scheduled for public hearings tonight to allow time for an ethics inquiry.

In recent months, Town Councilman William Mirabito has come under fire from members of the public who have questioned his ties to the energy industry.

But Mirabito said Sunday he has consulted with his own attorney, David Merzig, town attorney Richard Harlem, and a corporate attorney, and they have determined there is no conflict of interest.

"If someone told me there was a conflict, I would recuse myself," he said. "I don't have any conflict."

In a letter sent to fellow board members Friday, Mirabito requested not only his background, but also other members' backgrounds be reviewed by the Town of Oneonta Ethics Board.

Public hearings are slated for 7 p.m. tonight at the Oneonta Town Hall in West Oneonta on two proposed moratoriums that would be established through local laws.

The town has 30 days to vote on a proposed local law after a public hearing is held, Town Supervisor Robert Wood said.

One moratorium, brought forth by Wood, is an amalgamation of earlier moratorium drafts by Harlem and one by anti-gas drilling lawyer David Slottje. The 12-month moratorium proposal focuses on all forms of drilling and associated activities, such as the storage of drilling-related materials.

A competing moratorium was drafted by Harlem and brought forth by Mirabito. It would impose a five-month moratorium on hydraulic fracturing and horizontal drilling only. Vertical drilling would still be allowed.

Wood said he had received about 50 letters, including 35 from town residents, questioning Mirabito's suitability to vote on issues related to gas drilling.

"I'd like to see it referred (to the Ethics Board)," Wood said Sunday, noting that he had put that board on notice its services may be needed. "The public doesn't always get things right, but there is that appearance (of a conflict)."

Wood said he expects the town board to make a determination on the referral at tonight's meeting.

Mirabito said he is a 21 percent shareholder of Mirabito Holdings, which owns 10 percent of Corning Natural Gas. Because of that 10 percent stake in that company, Mirabito said, he sits on the board of directors for Corning Natural Gas.

Mirabito Holdings and Corning Natural Gas each have a 50 percent share in Leatherstocking LLC, which Mirabito said is pursing pipeline franchises in Chenango County. None of the companies is involved in gas leasing or gas drilling, he said.

The purpose of obtaining the franchises is to get gas from well sites in Coventry and Guilford to the Amphenol plant in Sidney, according to Mirabito.

Gas pipeline franchises are similar to cable television franchises in that they give the company the right to operate in a town, according to Mirabito

In the town of Oneonta, New York State Electric & Gas holds a franchise, meaning Corning couldn't do business in the town if it wanted to, according to Mirabito.

"You have to apply for a franchise in the town and NYSEG has the franchise," he said.

The town's ethics code reads in part, "No town employee shall have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature which is in substantial conflict with the proper discharge of his duties in the public interest."

But Mirabito said the code, which dates to 1974, is lacking in definition and if expansive definitions are applied, it could mean several members of the town board have a conflict of interest. He said this could include any member who has mutual funds or who participates directly or indirectly in pension plans that hold securities of publicly traded companies that engage in the drilling industry.

The Ethics Board members -- Glenn Mayer, Leon Kalmus, Rudolph Schuster and Benjamin Nesbitt -- were all appointees before Wood took office.

"I am not sure that they have met in the last 18 years," Wood said. "They have an advisory capacity. They don't have any real power to do anything."

Although he said he would like to see the matter referred to that board, Wood also said the clock is ticking.

"I feel very strongly that we need to take action very soon," Wood said.

Wood said the town board will also be implementing special rules for tonight's public hearing. All who wish to speak must sign in before the meeting starts, and their comments will be limited to three minutes, he said.

The state has its own moratorium on hydraulic fracturing, which will expire this June, although efforts are under way in the Legislature to extend it.

The town has a ban on mining without special approval. Gas drilling is defined as a mining operation under that law, which was passed in 2004 and was driven by a concern over gravel mines, rather than gas drilling. But many members of the public have questioned if that ban is strong enough.

Both proposed moratoriums can be found at www.townofoneonta.org.