HomeMy WebLinkAbout1695-2 CapouillezIn Re: William Capouillez, File Docket: 13 -032
Respondent X -ref: Order No. 1695 -2
Date Decided: 8/10/16
Date Mailed: 8/11/16
Before: Nicholas A. Colafella, Chair
Mark R. Corrigan, Vice Chair
Roger Nick
Melanie DePalma
This is a final adjudication of the State Ethics Commission.
Procedurally, the Investigative Division of the State Ethics Commission conducted
an investigation regarding possible violation(s) of the Public Official and Employee Ethics
Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the
commencement of its investigation, the Investigative Division served upon Respondent
written notice of the specific allegation(s). Upon completion of its investigation, the
Investigative Division issued and served upon Respondent a Findings Report identified as
an "Investigative Complaint." An Answer was filed and a hearing was requested. A
Stipulation of Findings and a Consent Agreement were subsequently submitted by the
parties to the Commission for consideration. The Stipulated Findings are set forth as the
Findings in this Order. The Consent Agreement has been approved.
ALLEGATIONS:
That William A. Capouillez, a public official /public employee in his capacity as the
Director of the Bureau of Wildlife Habitat Management for the Pennsylvania Game
Commission, violated [Section 1103(a)] of the State Ethics Act (Act 93 of 1998) when he
utilized the authority of his public employment, and /or confidential information received
through his holding public employment, for the private pecuniary benefit of himself and /or a
business with which he is associated, namely Geological Assessment and Leasing LLC,
when he organized, negotiated, and /or arranged lease agreements with private industry
representatives for Oil, Gas and Mineral ( "OGM ") exploration on Pennsylvania Game
Commission game lands, while simultaneously performing the same actions for private
landowners within the Commonwealth for a fee.
II. FINDINGS:
CAPOUILLEZ'S EDUCATION AND WORK HISTORY
William A. Capouillez (hereinafter "Mr. Capouillez" or "Capouillez ") was employed
by the Pennsylvania Game Commission (hereinafter "PGC ") as the Director of the
Bureau of Wildlife Habitat Management (hereinafter "BWHM ") from approximately
December 2, 2006, through May 18, 2015.
Mr. Capouillez was hired to provide the PGC with increased knowledge and
experience regarding geology — specifically as it relates to mineral, oil, and
natural gas issues. Additionally, he was hired to build a PGC staff with the
capability to provide maximum protection to the conservation of state lands
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and to maximize Commonwealth income derived from timber, mineral, oil,
and natural gas activity.
b. Mr. Capouillez's original title was Director of the Bureau of Land
Management. (The PGC changed the name from the Bureau of Land
Management to the BWHM in or about June 2006).
2. Mr. Capouillez obtained a degree from Penn State University in 1987 in the field of
Earth and Mineral Science, with an emphasis on geology.
3. In January 1990, Mr. Capouillez began working for the Pennsylvania Department of
Environmental Protection (hereinafter "DEP ") as a Geologist Trainee, and was
subsequently promoted to the position of Hydrogeologist 1, effective January 1991.
4. In April 1993, Mr. Capouillez accepted a lateral transfer to the PGC in his position
of Hydrogeologist 1.
5. In April 1994, Mr. Capouillez, on his own initiative, obtained a Professional
Geologist License (License Number PG000453G) from the Commonwealth of
Pennsylvania, Department of State, Bureau of Professional and Occupational
Affairs. This license is currently inactive.
6. Mr. Capouillez held various positions during his tenure with the PGC, as follows:
Hydrogeologist 1: April 17, 1993 - March 8, 1998
Hydrogeologist 2: March 9, 1998 - January 14, 2000
Licensed Professional Geologist: January 15, 2000 - May 24, 2002
Environmental Planning Manager: May 25, 2002 - December 1, 2006
a. Mr. Capouillez's classification as a Hydrogeologist 1 was reviewed and
upgraded to a Hydrogeologist 2 effective March 9, 1998.
b. Mr. Capouillez's position as a Hydrogeologist 2 was reclassified to Licensed
Professional Geologist effective January 15, 2000.
C. Mr. Capouillez was promoted to Environmental Planning Manager effective
May 25, 2002. As the Environmental Planning Manager, Mr. Capouillez was
the Chief of the PGC Environmental Planning and Habitat Protection
Division.
7. Effective December 2, 2006, Mr. Capouillez was appointed as the Director of the
Bureau of Land Management (currently the BWHM).
8. As a Hydrogeologist 1, and subsequently as a Hydrogeologist 2, Mr. Capouillez had
multiple duties and responsibilities, which included, among others, oil, gas, and
mineral recovery/leasing.
9. As a Licensed Professional Geologist, Mr. Capouillez had no specific written job
description.
10. Capouillez's job description in his position as an Environmental Planning Manager
for the PGC documented multiple duties and responsibilities which included, among
others, oil, gas, and mineral recovery.
a. Capouillez's duties and responsibilities in relation to oil, gas, and mineral
recovery included, among others, the following:
Capouillez, 13 -032
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1. Administering the Commission's oil, gas, and mineral resource
management program as well as directing the work of the
environmental planning and habitat protection unit;
2. Advising the Bureau Director on technical matters related to oil, gas,
and mineral resource management in the Pennsylvania Game Lands
system;
3. Planning, implementing, and monitoring approved oil, gas, and
mineral leasing programs in accordance with agency guidelines and
policies;
4. Preparation of formal agenda items involving leasing of
Commonwealth owned oil, gas, and minerals for Commission
consideration and formal approval;
5. Preparation of leases and agreements involving exploration for, and
recovery of oil, natural gas, coal, and other minerals from lands
owned or controlled by the Game Commission;
6. Receiving development requests for removal of privately owned oil,
gas, and minerals from under Game Lands surface which requires
reviewing and analyzing legal documents and determination of
environmental implications;
7. Monitoring progress of lease development and analyzing technical
aspects of mineral recovery projects for potential adverse
environmental impacts;
8. Preparing advisory memos and briefing reports for regional office and
field staff on recommended courses of action to be implemented at
oil, gas, and mineral recovery sites;
9. Planning and coordination of oil, gas, and mineral recovery projects to
insure compatibility with other Game Land management programs;
10. Planning and conducting internal audit controls to insure full payment
of oil, gas, and mineral production royalties due to the Commission;
and
11. Maintaining liaison with major energy company staffs and negotiating
details of oil, gas, and mineral leasing programs with private company
representatives.
b. Capouillez was responsible for these duties as associated with oil, gas, and
mineral recovery from at least May 25, 2002, through December 1, 2006.
11. Capouillez's most recent job description for the position of Director of the BWHM
sets forth multiple duties and responsibilities regarding the position.
a. The definition of the position as documented on the job description states:
"This is administrative and managerial work in directing the statewide game
land management program."
b. Duties forthe position as documented on thejob description include, in part,
the administrative direction of the statewide land acquisition and leasing
Capouillez, 13 -032
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program, including the oil, gas, and mineral recovery program which is
included within /is a component of the statewide land acquisition and leasing
program.
C. Capouillez has been responsible for the administrative direction of the
statewide land acquisition and leasing program since December 2, 2006.
No specific duties, responsibilities, actions, etc., to be completed are
identified in the job description in association with "administrative
direction."
ORGANIZATIONAL FRAMEWORK OF THE PGC AND THE PROCEDURES FOR
LEASING OIL AND GAS RIGHTS OF STATE GAME LANDS
12. The PGC was established by the State Legislature in 1895 as an independent
public wildlife protection agency. The PGC is governed by an eight Member Board
of Commissioners that are selected by the Governor and confirmed by a majority
vote of the Senate. The Board of Game Commissioners is responsible for the
protection and preservation of state game, birds, and mammals, and enforcement of
Commonwealth laws relating thereto.
13. The BWHM is responsible for multiple facets of operations forthe PGC including, in
part, the following:
a. Management of PGC lands purchased as well as those obtained through
cooperative lease arrangements;
b. Comprehensive planning for the development of the lands for wildlife
habitats, timber harvests, and removal of oil, gas, and /or minerals; and
C. Direct management of approximately 1.4 million acres of State Game Lands
(hereinafter "SGL ") and assisting with an additional approximate 3 million
acres of private land enrolled in the agency's Public Access Program.
14. All oil, gas, and mineral (hereinafter "OGM ") leasing of assets owned and managed
by the PGC must adhere to specific PGC policy and state regulations requiring that
such leasing be based on sound wildlife management principles and will not involve
any long term impact on wildlife or the wildlife development program. See PGC
Policy Section 6211.211 -214; see also Title 34, Chapter Seven of the Game and
Wildlife Code (short title).
15. The leasing of OGM rights on PGC SGL for the OGM rights contained therein may
be accomplished via a "public bid" or "sole source" process.
16. The leasing of PGC SGL for the OGM rights con�ained therein via public bid
process generally follows the steps identified below:
a. OGM section of the Environmental Planning and Habitat Protection Division
prepares the lease map, lease, and bid package.
b. BWHM Director reviews the applicable bid package to determine if any
corrections /changes are needed.
1 However, the origination, negotiation, and completion of leases of PGC lands typically began with and was
administered by PGC personnel not within the BWHM. Some lease activities were handled outside the BWHM
entirely, including those relating to trespass and wrongful taking of OGM resources.
Capouillez, 13 -032
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C. If no corrections /changes are required, the PGC Commissioners are formally
notified of the potential bid and forwarded a copy of the lease map and site
specific drilling or mining restrictions.
d. If the Commissioners approve moving forward with the process, the OGM
Section prepares public notice of the potential bid area to be advertised in at
least two local newspapers for three consecutive weeks with all requests,
comments or concerns, to be fully addressed.
e. The OGM Section subsequently sends personal written bid invitations and
bid packages to probable bidders.
f. Interested bidders prepare and submit bids which are opened by
representatives of OGM Section with the highest bidder recommended for
award of the lease.
g. The OGM Section prepares the commentary regarding the potential lease as
an agenda item which is then scheduled for review and approval of the
Executive Office, to be placed in the final agenda for a meeting of the PGC
Board of Commissioners, which entity alone has the authority to approve or
reject any lease of Game Lands.
If the lease receives Board approval, the OGM Section prepares the
lease and forwards the successful bidder the finalized agreement for
signature.
2. If the Board does not approve the lease, the process is terminated.
h. Upon signature by the successful bidder, the OGM Section, which was
supervised by Mr. Capouillez, forwards the lease to the Chief Counsel of the
PGC for review, signature, and approval, then to the PGC Executive Director
for review, signature, and approval, then to the Commonwealth's Attorney
General, for review, signature, and approval.
PGC Harrisburg personnel and regional personnel must conduct a meeting
with the oil /gas or mining company to review all lease terms and conditions
with fully executed lease copies to be given to all appropriate parties to
include: lessee, PGC regional personnel, and PGC Harrisburg personnel.
Periodic field reviews are conducted by PGC personnel and Department of
Environmental Protection personnel (Bureau of Oil and Gas or Mining) to
ensure compliance with all applicable state and federal regulations
governing oil /gas or mining operations.
17. The leasing of OGM rights on PGC SGL pursuant to a sole source process
generally follows the steps identified below:
a. PGC section of the Environmental Planning and Habitat Protection Division
calculates and negotiates lease language, terms, fees, and bonding.
b. If the applicant agrees with the terms as presented by the OGM Section, the
lease is presented to the BWHM Director for review.
C. If the form of the lease is found appropriate by the BWHM Director, the OGM
Section prepares and sends a conditioned commitment letterto the applicant
for signature.
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d. Upon receipt of the signed commitment letter from the applicant, the OGM
Section prepares the lease commentary as an agenda item which is then
scheduled for review and approval of the Executive Office, to be placed in
the final agenda for a meeting of the PGC Board of Commissioners for fund
approval.
If the lease receives Board approval, the OGM Section forwards the
successful bidder the finalized agreement for signature.
2. If the Board does not approve, the leasing process is terminated and
no OGM lease is entered.
e. Upon signature by the successful bidder, the OGM Section, supervised by
Mr. Capouillez, forwards the lease to the Chief Counsel of the PGC for
review, signature, and approval, then to the PGC Executive Director for
review, signature, and approval, then to the Commonwealth's Attorney
General, for review, signature, and approval.
f. Once approved for legality by the PGC's Chief Counsel and signed by the
Executive Director, the lease terms and conditions are to be approved for
legality by the Office of Attorney General.
g. PGC Harrisburg personnel and regional personnel are to conduct a meeting
with the oil /gas or mining company to review all lease terms and conditions
with fully executed lease copies to be given to all appropriate parties to
include: lessee, PGC regional personnel, and PGC Harrisburg personnel.
h. Periodic field reviews are to be conducted by PGC personnel and
Department of Environmental Protection personnel (Bureau of Oil and Gas
or Mining) to ensure compliance with all applicable state and federal
regulations governing oil /gas or mining operations.
18. Mr. Capouillez's position as BWHM Director included responsibilities and authority
in the leasing processes, specifically:
a. In the public bid process, the BWHM Director is responsible for determining
if OGM standard operating procedures and OGM policy have been met or if
corrections to the bid package are required.
1. If corrections are required, the package is sent to the OGM Section
for changes.
b. In the sole source process, the BWHM Director is responsible for
determining if OGM standard operating procedures and OGM policy have
been met, if the potential lease should be considered for further processing,
or if the terms of the lease should be modified through the PGC chain of
command.
The BWHM Director has the authority to approve, modify orterminate
the lease process.
2. Mr. Capouillez asserts that such leases represented less than 1 % of
all OGM leases.
C. Leases could also be entered without BWHM input via negotiations with the
Chief Counsel and Executive Office.
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Such leases did not typically occur.
19. The Division of Environmental Planning and Habitat Protection, BWHM, is primarily
responsible for determining the SGL tracts to be leased, when the tracts are offered
for lease, the method by which the lease is awarded, and negotiation of lease terms
including payments, but the Commissioners have final sole authority to enter into
OGM leases.
a. Mr. Capouillez interacted with oil and natural gas exploration and /or
production companies and their representatives through his PGC
employment.
b. Mr. Capouillez has been involved in the leasing process of SGL to varying
extents throughout his tenure with the PGC.
C. As Director of BWHM, Mr. Capouillez had the authority to review leasing
actions within the Bureau as to their compliance with OGM standard
operating procedures and OGM policy and make recommendations to the
PGC chain of command regarding whetherto approve, modify, orterminate
the OGM lease process, although Mr. Capouillez was not the final authority.
d. Even if approved by PGC staff, all lease processes were subject to formal
approval by PGC Chief Counsel, PGC Deputy Executive Director, PGC
Executive Director, PGC Board of Commissioners, and reviewed by the
Commonwealth's Office of Attorney General.
e. Final approval of leases made by PGC chain of command above Capouillez
relied primarily on recommendations made by Capouillez and his staff.
1. There is no record of any of Capouillez's recommendations not being
approved.
20. During Capouillez's employment with the PGC, Capouillez's formal job
responsibilities in his various positions held have included involvement/participation
in the potential leasing of SGL to oil and natural gas entities to some extent.
a. In his position of Director of the BWHM, Capouillez's formal leasing
responsibilities included:
1. Directing the statewide land acquisition and leasing program.
2. Preparing, recommending, and explaining land management activities
and programs to the PGC for consideration.
3. Training subordinates in all aspects of the land management
program.
b. From approximately January 2003 through May 2015, Capouillez was
responsible for the oversight of the oil, gas, and mineral leasing program as
it related to SGL.
BACKGROUND REGARDING THE MARCELLUS SHALE FORMATION
21. Marcellus Shale is a geologic formation that covers approximately sixty percent of
Pennsylvania and is estimated to contain over 500 trillion cubic feet of natural gas.
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a. Geologists and petroleum engineers have known of the Marcellus Shale
formation and its natural gas potential for an extended period of time.
Although cost prohibitive at one time, improvements in technology such as
horizontal drilling, hydraulic fracturing, and three - dimensional imaging have
made natural gas production from the Marcellus and other shale formations
economically feasible.
22. In order to conduct drilling activity, companies must acquire the subsurface oil
and /or natural gas rights from the owner of such rights.
23. Leasing of property from landowners by oil and /or natural gas companies routinely
follows the general process as outlined below:
a. Company identification of an area of geological interest;
b. Soliciting and obtaining landowner interest;
C. Negotiating and developing a lease;
d. Executing the lease;
e. Running title on the land; and
Running title on the land consists of researching the property to
confirm the identity of the property owner(s) and to ensure the oil
and /or natural gas rights are still available for lease.
Issuing payment to the property owner.
24. Companies interested in oil and /or natural gas exploration routinely utilize the
services of geologists to identify prospective areas in which drilling is expected to
be productive.
a. Once an area is identified, companies may attempt to consolidate lease
acreage via solicitation of property owners within the desired area regarding
interest in leasing the property's subsurface oil and /or natural gas rights.
25. Negotiation of oil and /or natural gas leases primarily occurs between a
representative or representatives of the potential leasing company and the property
owner or an individual /company retained by the property owner to represent
him /her.
a. Multiple terms included within an oil and /or natural gas lease may be
negotiated including, but not limited to, the following:
Bonus payments, shut -in payments, delay payments, and royalty
payment percentage;
2. Although royalty payment percentages are negotiable, a minimum
royalty percentage of 1/8 or 12.5% is mandated by Pennsylvania law.
3. The primary lease term (which identifies the length of time that the
leasing company may hold a lease before commencing drilling
operations on the leased property);
4. Means of ingress and egress;
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5. Reclamation and environmental requirements; and
6. Other work and operational commitments.
26. Property owners with large tracts of land and /or groups of property owners often
have more leverage and negotiating power than do individual property owners with
smaller acreage. Similarly, large tracts of SGL afford the PGC more leverage and
negotiating power than smaller tracts of land.
ESTABLISHMENT OF CAPOUILLEZ'S PRIVATE CONSULTING BUSINESS
GEOLOGICAL ASSESSMENT & LEASING
27. While employed as a Hydrogeologist 1 for the PGC, Mr. Capouillez sought approval
to perform geologic consulting services for private landowners as a form of
supplementary employment, which approval was granted on July 23, 1996.
28. On or about July 23, 1996, Mr. Capouillez created Geological Assessment &
Leasing. Mr. Capouillez is the sole proprietor and sole interest holder of Geological
Assessment & Leasing /Geological Assessment & Leasing, LLC2 (both entities are
hereinafter referenced as "GAL ").
29. GAL is an entity that provides consulting services to landowners regarding
geological assessment of their property and negotiation and development of oil
and /or natural gas leases.
30. Individuals employed with GAL have included Capouillez, members of Capouillez's
immediate family and other individuals, some of whom served as contractors/sub-
contracted /professional employees.
31. Mr. Capouillez's business model for GAL was unique in comparison to other
individuals /entities that provided similar services.
a. Mr. Capouillez marketed his consulting services through GAL as
performance- based.
b. Mr. Capouillez solicited oil /natural gas companies regarding interest in
potential acreage available for lease through a competitive bid process.
C. Mr. Capouillez worked under a private landowner contract, as a part -owner
of leases to be performed, in leases competitively bid.
d. Mr. Capouillez contractually, and as a practical matter, acted under the
direction and the final authority of the landowners whom he advised.
e. These contracts contained a clause that indicated Mr. Capouillez would
refuse any compensation he was due as a result of any private leases that
were affected in any way by activity on neighboring SGL. In these
circumstances, the portion of funds potentially due to Mr. Capouillez would
revert back to the private landowner.
32. Mr. Capouillez utilized normal print and intereet advertising to market his services,
as well as word -of- mouth.
2 GAL is registered as a Domestic Limited Liability Company with the Pennsylvania Department of State
Corporation Bureau. GAL's certificate of organization was filed with the Pennsylvania Department of State on
March 21, 2008. GAL's application for Registration of Fictitious Name was filed on July 9, 1997.
Capouillez, 13 -032
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a. Mr. Capouillez at times provided marketing material at seminars and /or
conferences in the form of a self- created document outlining his
qualifications and experience, his potential fees and business model, and his
leasing strategy /services. The material explained Mr. Capouillez's potential
fee and business model as follows-
1 . GAL's service contract was strictly performance- based.
2. GAL received compensation only if Mr. Capouillez /GAL was able to
achieve more in lease rents and /or royalty than the property owner(s)
had already been offered.
b. The material explained Mr. Capouillez's leasing strategy /services as follows-
1 . Negotiation and solicitation of all potential oil /gas developers in the
area.
2. Recommending drafting of far more protective lease provisions for the
property owner.
3. Bidding out of the parcel(s) available in an attempt to obtain a better
lease and value rate for the property.
4. Continued oversight management by GAL of the property owner's
lease for the duration of the lease.
33. The landowner often directed that Mr. Capouillez's /GAL's compensation was to be
issued directly from the oil and natural gas companies. This arrangement was
memorialized in the terms and conditions in the contract between the landowner
and Mr. Capouillez /GAL.
34. Once having secured groups of property owners as clients and bids from interested
oil /natural gas companies, Mr. Capouillez organized meetings with the groups to
discuss bids received and to award a lease to the successful bidder.
35. Upon selection of an oil /gas company's bid, Capouillez organized a date or dates
on which the property owners could meet with the oil /gas company
representative(s) to sign their individual leases.
a. Capouillez and /or another representative for GAL were often present at the
lease signings.
36. Mr. Capouillez routinely signed the leases or addendums that were attached to the
leases as an interested party in the leases. As an interested party, Capouillez
retained the right to approve any proposed revisions to the lease which affected
Capouillez's delay rental and /or royalty payments, as well as the obligations of
Lessor /Lessee to Capouillez as contained within the lease.
37. The PGC's Policy Manual directs that employees are not permitted to hold an
elective orappointed office, orto engage in secondary employment without specific
approval of the Executive Director.
38. In addition to the PGC Policy Manual, the PGC adheres to Commonwealth
Management Directive 515.18, Supplementary Employment, Section 5, which
requires that all employees who work for compensation or remuneration in any
capacity, including self - employment, outside of their Commonwealth employment
are required to file supplementary employment requests with their agency head or
Capouillez, 13 -032
Page 11
designated official who will either approve or disapprove the requests. Employees
are also required to resubmit requests when changing supplementary employment
or whenever the duties of either their Commonwealth or supplementary employment
position change substantially.
a. The PGC is an independent agency and not directly under the Governor's
jurisdiction.
39. Capouillez completed and submitted a Supplementary Employment Request for
approval on or about July 23, 1996, to the PGC in relation to his potential self -
employment through GAL.
40. Capouillez provided information pertaining to his PGC job duties, as well as
information related to duties associated with his potential self - employment, on his
July 23, 1996, Supplemental Employment Request.
a. Capouillez outlined his job duties as a Hydrogeologist 1 as:
"[to] act as advisor to hydrologic impacts from mining /construction and
oversee oil /gas & mineral development of PA Game Lands through leasing
program."
b. Capouillez identified the following as being included in his departmental job
duties:
1. Participation in the negotiation of or decision to award contracts, or
otherwise take or recommend official action of a discretionary nature
with regard to contracting or procurement;
2. Participation in the settlement of claims or charges in a contract;
3. Participation in the fixing of rates;
4. Participation in the issuance of permits, certificates, guarantees or
other things of value; and
5. The taking or recommending [of] official action of a discretionary
nature with regard to inspecting, licensing, regulating, or auditing any
business, individual, corporation, union, association, firm,
partnership, committee, club or other organization or group of
persons.
C. Capouillez documented on the Supplemental Employment Request that all of
the duties were derived from his direct involvement in leasing of PGC owned
oil /gas & minerals, and on occasion recommending actions on previously
awarded lease compliance.
d. Capouillez documented the type of business as self - employment consulting
as a licensed geologist in relation to his potential supplementary
employment.
1. Capouillez documented the date he expected to begin the
supplementary employment, "[As] soon as possible."
aa. The information supplied by Capouillez indicated that
Capouillez had not yet performed any services through GAL as
of July 23, 1996.
Capouillez, 13 -032
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Capouillez identified his duties as a geology consultant to include acting as
a consultant/advisor to private property owners as to potential liability from
existing /probable hydrologic impacts from construction and development and
advising potential real estate owners as to potential oil /gas and mineral
development of lands.
41. Capouillez acknowledged on the July 23, 1996, Supplementary Employment
Request that his self - employment would involve him in a business or an activity
which could possibly be related to his departmental duties, or which could possibly
create an actual or apparent conflict with his departmental duties.
Capouillez's Supplementary Employment Request required that a written
explanation of this potential conflict be provided.
Capouillez's explanation declared, "If I was to utilize my position
within the Commonwealth and knowledge from such said position to
directly influence others to buy, sell, or trade properties. Knowing
such potential, I must be able to discern and consistently check on
any potential conflict of interest with the Commission priorto initiating
employment."
42. Capouillez's July 23, 1996, Supplementary Employment Requestwas reviewed and
approved by PGC Chief Counsel Pouss and Harry Benion, then Chief of the PGC
Personnel Services Division. The request was approved subject to the following
conditions:
a. The supplemental employment would not interfere with regularwork hours or
job performance or violate the provisions of the Governor's Code of Conduct
or the Ethics Act.
b. Mr. Capouillez could not utilize Commonwealth equipment, supplies,
property, information, ideas, or data derived from his Commonwealth
employment in the course of his supplemental employment.
C. Mr. Capouillez could not participate through the supplemental employment in
any matter that presented a conflict with his responsibilities as an employee
of the PGC.
d. Mr. Capouillez could not participate through the supplemental employment in
any transaction in which the Commonwealth had a direct and substantial
interest.
e. Mr. Capouillez could not use his position as an employee of the PGC or any
confidential information gained through his position as Hydrogeologist in the
Bureau of Land Management in the course of his supplemental employment.
43. On or about May 14, 2001, Mr. Capouillez submitted a Supplementary Employment
Request seeking a PGC legal opinion and potential approval regarding a specific
potential GAL client: the Washington County Planning Commission.
In the request, Mr. Capouillez identified possible and /or apparent conflicts
with his departmental duties at the PGC.
Mr. Capouillez explained that he had been consulting and representing
private landowners whose properties were adjacent to this particular area.
The Planning Commission requested that he represent their interests, since
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Page 13
he had indirectly influenced the solicitation of oil /gas interest in the park
area. Mr. Capouillez noted that the information he would utilize and /or
develop through the representation of the Planning Commission was either
public or information he gathered by representing private interests near the
park.
C. On June 13, 2001, after hearing the results of the PGC legal opinion, Mr.
Capouillez withdrew this supplemental employment request because it was
apparent that a potential for a conflict of interest existed. Upon request of
Chief Counsel Pouss, Mr. Capouillez sent the following email to Chief
Counsel Pouss and Harry Benion:
Harry:
Please be advised, 1 have recently received two separate contracts from Washington
County, Planning Commission, regarding oil /gas potential on SGL 117. Up until this point 1
have never had an official contact from the Washington County Office, because 1 can see a
potential conflict with future oil /gas development on SGL 117 and now the Allegheny Power
Exchange Parcel. 1 wish to withdraw my supplemental employment approval (only with regard
to the Planning Commission). 1 have offered to assist them both on an official basis and if
needed without compensation on my own time as the prepare and oil /gas bid packet. If you
have any questions, please feel free to contact me d rectly.
Thank you.
d. Mr. Capouillez thus elected to avoid potential conflicts of interestwith regard
to Washington County Planning Commission.
44. In the mid to late 1990s and early 2000s, private industry interest in natural gas
exploration and recovery efforts began to increase significantly within the
Commonwealth.
a. Farmers and other property owners were routinely solicited by
representatives of and /or contractors on behalf of the companies regarding
oil and gas leasing.
b. Limited outside resources existed at that time to assist property owners in
relation to deciding to lease or not, negotiation with private industry, lease
terms and restrictions, etc.
45. In or about 1999 -2000 the Pennsylvania Farm Bureau (hereinafter "PFB ") was
working with several County Farm Bureaus and farmers within the Commonwealth
regarding leasing property for natural gas exploration and recovery. In 2001, PFB
requested the PLC's assistance in providing a guest speakerfor PFB members at a
PFB Region 5 Rally Day Program in relation to oil and natural gas leasing.
Capouillez was assigned to attend the program as the PGC's expert speaker on oil
and natural gas leases.
46. Capouillez disclosed /identified his Commonwealth employment, the specific agency
he was employed with, and his specific position within the agency at the top of the
first page of the outline Capouillez presented at the program as shown below:
Speaker: William A. Capouillez, PA Game Commission
Chief, Section of Oil /Gas & Mineral Development
Bureau of Land Management (717) 783 -4919 EXT. 3626
a. During his portion of the program, Capouillez presented information
regarding landowner deeds, mining leases, oil /gas leases, and existing
regulations and protection standards.
Capouillez, 13 -032
Page 14
Capouillez did not specifically identify or market his private consulting
business during his presentation.
Chris Sweger, who was the Washington County Farm Bureau President at
the time, was present at the presentation and approached Capouillez during
the lunch portion of the event to ask if Capouillez knew of anyone who could
help a group of landowners from Washington County in negotiating a lease
with private industry.
Capouillez informed Sweger that he did private consulting relating to oil and
natural gas leasing.
47. Subsequent to that program, Mr. Capouillez solicited bids from multiple oil and
natural gas companies on behalf of clients of the Washington County, Hopewell
Township group. The bid for the Washington County, Hopewell Township group
was ultimately awarded to Great Lakes Energy Partners, LLC (now Range
Resources).
48. Publicity of the success of the Hopewell Township group spread after the leases
were signed. The success of this group followed by Capouillez's work with a
number of other farmers, veterans, and similar social groups in the next few years
spurred additional business for Mr. Capouillez /GAL.
49. On December 15, 2010, Barbara Adams, General Counsel for the Office of the
Governor, directed correspondence to Carl G. Roe, then Executive Director of the
Pennsylvania Game Commission, concerning an actual and /or perceived conflict of
interest regarding Capouillez and his activities regarding GAL. The December 15,
2010, correspondence further directed that Capouillez submit a new supplemental
employment application on a yearly basis, and that the PGC conduct a full
examination into this matter, specifically addressing Capouillez's actions pursuant
to the Ethics Act, the Governor's Code of Conduct, and the State Adverse Interest
Act.
50. In response to the December 15, 2010 correspondence from the Office of General
Counsel, Bradley C. Bechtel, Assistant Counsel to the Pennsylvania Game
Commission, drafted a multipage, interoffice memorandum to Carl Roe, then
Executive Director of the PGC, outlining his (Bechtel's) opinion that no conflict of
interest existed as to Mr. Capouillez's actions, including his then - current
employment with the PGC and his supplemental employment with GAL.
a. Although Bechtel's memorandum was not addressed to him, Capouillez
indicates that he was otherwise aware of its (the memorandum's) existence,
and continued operating GAL in reliance on Bechtel's opinion.
51. On January 11, 2011, Attorney Bechtel forwarded an unsigned correspondence to
Barbara Adams, Chief Counsel, in response to her initial correspondence dated
January 15, 2010, wherein Mr. Bechtel indicated that "the Pennsylvania Game
Commission (PGC) has conducted a review of the supplemental employment of
William A. Capouillez in connection with his work with Geological Assessment
Leasing (GAL)." Mr. Bechtel continues to indicate that "[o]ur review does not find
[Mr. Capouillez] privy to confidential information that would give him an advantage
or which he could use to make a profit in the private sector.... Essentially, short of
some type of specific facts, we cannot find any conflict of interest with Mr.
Capouillez' Supplemental Employment." The correspondence concludes with "as
with your office, we can only take action based on the information before us. If you
Capouillez, 13 -032
Page 15
believe we have failed to take into account some information to which you are privy,
we would like to review that information before we take any further action."
52. Although Mr. Bechtel's January 11, 2011, correspondence indicates that he
reviewed Mr. Capouillez's employment under the Ethics Act, at no time prior to, or
after January 11, 2011, did Mr. Capouillez make contact with the Pennsylvania
State Ethics Commission to specifically seek any Advice of Counsel and /or Opinion
of the Commission as is provided for pursuant to the Pennsylvania Public Official
and Employee Ethics Act.
53. In summary, Mr. Capouillez's /GAL's representation of landowner groups in lease
negotiations with oil and natural gas entities remained consistent from 2001 through
2013 and generally included solicitation of interest from oil and natural gas
companies regarding acreage available for leasing in specific areas. Following the
acceptance of a bid, the landowners authorized Mr. Capouillez to provide company
representatives with information regarding property locations, ownership
information, surrender documents, etc. Mr. Capouillez would notify the landowners
of the scheduling of lease signings between the landowners groups and the leasing
oil and natural gas entities.
THE FOLLOWING FINDINGS RELATE TO CAPOUILLEZ'S INTERACTION WITH
VARIOUS OIL /GAS COMPANIES IN A PRIVATE CAPACITY THROUGH GAL WHILE AT
THE SAME TIME SERVING AS THE DIRECTOR OF THE BWHM.
CAPOUILLEZ'S INTERACTION WITH EXCO RESOURCES
54. EXCO Resources, Inc. (hereinafter "EXCO ") is a natural gas and oil company.
EXCO Resources (PA), LLC, (hereinafter "EXCO PA") is a 50/50 joint venture
between EXCO and BG Group, a liquefied natural gas company.
55. EXCO /EXCO PA has entered into six 86) contracts /agreements for the leasing of oil
and natural gas rights from under S L from at least 1994 through the present.
56. Mr. Capouillez was in contact with various EXCO and /or EXCO PA representatives
regarding SGL leasing during his employment with the PGC. For example:
a. While employed as the Director of the BWHM, Mr. Capouillez attended
various meetings with EXCO PA representatives and other PGC employees
in relation to the leasing of SGL.
b. While employed as the Director of the BWHM, Mr. Capouillez was courtesy
copied by EXCO PA representatives on various emalls to PGC
representatives regarding leasing of SGL.
C. While employed as the Director of the BWHM, Mr. Capouillez was courtesy
copied on various correspondences from the PGC to EXCO PA in relation to
the leasing of SGL.
57. Capouillez, in his private capacity with GAL, solicited interest from EXCO PA on
multiple occasions during the relevant time period of the investigation of this matter,
in relation to GAL clients and the potential lease acreage available through his
clients as documented via email messages referenced below:
Date
To
I From
I Sub'ect
1/19/10
J Heiser
I Capouillez
I Clinton Cty Gr s
Capouillez, 13 -032
Page 16
2/16/10
F Rotunda
Capouillez
Tioga Cty Acreage
2/16/10
F Rotunda
Capouillez
Tioga Cty Acreage
4/08/10
J Heiser
Capouillez
Bradford Cty Grp
4/08/10
F Rotunda
Capouillez
Bradford Cty Oil /Gas Lease Bid
4/12/10
F Rotunda
Capouillez
Bradford Cty Oil /Gas Lease Bid
5/17/10
J Heiser
Capouillez
Potter & McKean Cty Grps
5/17/10
F Rotunda
Capouillez
Potter & McKean Cty Acreage
12/28/10
F Rotunda
Capouillez
Lycoming Cty
12/29/10
F Rotunda
Capouillez
Lycoming Cty
4/13/11
F Rotunda
Capouillez
Lycoming Cty
4/14/11
F Rotunda
Capouillez
Lycoming Cty
4/20/11
F Rotunda
Capouillez
Lycoming Cty
6/16/11
F Rotunda
Capouillez
Lycoming Cty Potential Lease Tracts
Date
To
From
Sub'ect
6/22/11
F Rotunda
Capouillez
Updated Schedule, Lycoming Leases
8/15/11
F Rotunda
Capouillez
Lycoming Cty Leases
8/17/11
F Rotunda
Capouillez
Lease
8/22/11
F Rotunda
Capouillez
Lycoming Lease Offer
8/23/11
E Buddenbohn
Capouillez
Lycoming Cty Revised Oil /Gas Lease
8/28/11
E Buddenbohn
Capouillez
Lycoming Cty Revised Oil /Gas Lease
8/29/11
E Buddenbohn
Capouillez
Additional Lycoming Lease Tract
8/30/11
E Buddenbohn
Capouillez
Lycoming Cty Revised Oil /Gas Lease
9/09/11
E Buddenbohn
Capouillez
Lease & Addendum Info
9/11/11
E Buddenbohn
Capouillez
EXCO Lease Signing Updates
9/21/11
E Buddenbohn
Capouillez
EXCO Lease mistakes
9/21/11
E Buddenbohn
Capouillez
Capouillez OGL Final
9/22/11
E Buddenbohn
Capouillez
Chris Metzger
10/10/11
E Buddenbohn
Capouillez
Leasing Updates
10/16/11
E Buddenbohn
Capouillez
Henne Leasing Opportunity
10/20/11
E Buddenbohn
Capouillez
Dale Henne Lease Lycoming Cty
12/30/11
E Buddenbohn
Capouillez
Lycoming Potential Lease
2/27/12
E Buddenbohn
Capouillez
Next Steps in Leasing Process
3/10/12
E Buddenbohn
Capouillez
Next Steps in Leasing Process
8/31/12
E Buddenbohn
Capouillez
Additional Lycoming Lease Tract
1/14/14
E Buddenbohn
Capouillez
Gregory Brown Lease Amend & Ratif.
58. EXCO PA representatives who received email communications from Mr. Capouillez
in relation to services provided through GAL and /or property owners represented by
GAL included:
Robert Crissinger, Senior GM of Operations
Frank Rotunda, Director of Business Development
Adam Vincent, Senior Landman
Judith Erickson, Senior Landman
Joel Heiser, Vice - President of Legal
Eric Buddenbohn, Landman
Capouillez, 13 -032
Page 17
59. Capouillez, in his private capacity through GAL, actively solicited and
communicated with EXCO PA representatives in relation to EXCO PA's potential
interest in acquiring private landowner leases at a time when EXCO PA was
negotiating for and /or engaged in active leasing of SGL with the PGC.
60. Specifically, Mr. Capouillez contacted Frank Rotunda ( "Rotunda "), the EXCO PA
Director of Development, via email on or around December 28, 2010, inquiring
about EXCO PA's interest in approximately 10,000 acres of GAL client property
located in Lycoming County. Mr. Capouillez informed Rotunda that he /GAL was in
the process of soliciting bids at that time and planned to schedule a meeting of the
landowner group in January 2011. Rotunda responded to Mr. Capouillez via email
that same day requesting to see the available property. Mr. Capouillez responded
to Rotunda on December 29, 2010, and included an attachment of a register of
available properties in Lycoming County.
61. Approximately a month later, on or about January 24, 2011, EXCO representative
Troy Robertson spoke with Michael DiMatteo, of the BWHM, regarding EXCO PA's
potential lease interest in SGL #114.
a. DiMatteo also began communicating with Rotunda on or about February 4,
2011, in relation to EXCO's interest in acreage within SGL #114.
b. Mr. Capouillez was Mr. DiMatteo's immediate Supervisor at the PGC at that
time and was ultimately responsible for Mr. DiMatteo's activities in relation to
any leasing of PGC lands.
C. Mr. DiMatteo routinely informed Mr. Capouillez of an entity's interest in
leasing SGL once negotiations had become established to a significant
extent.
62. Efforts by the PGC and EXCO PA to negotiate a sole- source lease award for SGL
Tract 114B -11 culminated with approval of the proposed lease by the PGC Board of
Commissioners at the April 12, 2011, PGC public meeting.
63. One day after the PGC's public lease approval for SGL 114B -11, Mr. Capouillez
emailed Rotunda to follow -up on EXCO PA's potential interest in the GAL client
acreage identified in December 2010.
a. Mr. Capouillez advised that he was finishing up the competitive bid process,
and requested a response as soon as possible if EXCO PA had an interest
in entering a competitive bid.
b. Mr. Capouillez provided Rotunda with an updated client register.
C. Rotunda responded to Mr. Capouillez via email on April 14, 2011, stating
that the potential lease acreage previously forwarded by Mr. Capouillez had
been lost. Rotunda asked if Mr. Capouillez could resubmit the acreage that
was still available, and if it was limited to the acreage documented in Mr.
Capouillez's April 13, 2011, email attachment.
d. Mr. Capouillez responded via email that same day (April 14 2011) and
resubmitted the available acreage as well as a copy of the Lycoming County
bid prospectus supplied to interested entities. The prospectus identified that
bids were to have been received by March 9, 2011, 5:00 p.m. Eastern Time.
Capouillez, 13 -032
Page 18
e. Mr. Capouillez informed Rotunda that he was meeting with the group during
the next week (April 21, 2011). Mr. Capouillez instructed Rotunda to inform
him "ASAP" if EXCO PA was interested in any or all of the tracts.
f. Mr. Capouillez repeated his inquiry in a private email to Rotunda dated April
20, 2011. Mr. Capouillez directly questioned, in part, as follows:
Frank ... is Exco interested. 1 am meeting tomorrow
night with the group and will be presented all offers and
requests. Do you need more time?
g. Rotunda replied to Mr. Capouillez via private email dated April 21, 2011, and
indicated that EXCO PA needed more time. Rotunda indicated that EXCO
PA "obviously" was interested in the area as EXCO PA's drilling focus atthat
time was Lycoming County.
h. In multiple private email transmissions between Rotunda and Mr. Capouillez,
spanning from May 6, 2011, through June 23, 2011, Rotunda expressed
interest in pursuit of the majority of the available acreage presented by Mr.
Capouillez which was located in the Gamble and Lewis Township area of
Lycoming County.
In a private email to Rotunda dated June 16, 2011, Mr. Capouillez identified
a meeting to be held with his clients on June 18, 2011, and questioned
Rotunda about which specific tracts EXCO PA was interested in leasing.
Rotunda specifically identified leases that EXCO PA was interested in
obtaining in an email and attachment dated June 17, 2011, sent to T.
Capouillez's email address. In the email, Rotunda documented EXCO PA's
offer of 18% royalty and $3,500.00 per net acre regarding royalty and bonus
consideration respectively for a five year paid up term lease.
j. Private email communication between Mr. Capouillez and EXCO PA
representatives regarding lease review, potential additional acreage
available, and lease finalization continued into August 2011.
k. On August 17, 2011, Mr. Capouillez sent a private email to Rotunda that
identified the need to get the revised lease down "asap" so that Mr.
Capouillez could reconvene with the landowner group members involved
and present EXCO PA's offer for consideration.
I. Mr. Capouillez sent the private email to Rotunda the day after receiving a
private email from Karen Brown informing Mr. Capouillez that Rice Energy
had offered an area property owner $5,000.00 per acre. Brown supplied the
information to Mr. Capouillez speculating that Mr. Capouillez may want to
know and /or contact Rice Energy.
M. Eric Buddenbohn became involved in the lease negotiations between EXCO
and Mr. Capouillez /GAL on or about August 19, 2011. Buddenbohn
provided Mr. Capouillez with a lease form for review via private email on this
date.
n. Mr. Capouillez responded to Buddenbohn on August 23, 2011, and
presented his belief that the parties were close in regard to the actual lease
form. Mr. Capouillez expressed surprise regarding adjustments made to the
royalty and bonus consideration offered to private landowners.
Capouillez, 13 -032
Page 19
1. Adjustments proposed by Buddenbohn included a reduction in royalty
percentages from 18% to 17% and a reduction in bonus consideration
from $3,500.00 per net acre to $3,020.00 per net acre.
2. Mr. Capouillez based his surprise on what he identified Seneca
Resources, Rice Energy, and Big Star Energy offering in the area to
private landowners (19% and $4,000.00; $5,000.00; and 18% and
$4,000 respectively).
o. Mr. Capouillez documented in the private email, in part, the following:
There are many reasons why 1 want Exco to be the successful
bidder . . . but at the rate reduction you are proposing, 1
seriously doubt 1 will be able to persuade my group to execute
the lease.
p. The royalty percentage and bonus consideration were subsequently
changed back to the original amounts offered by Rotunda.
64. Through the competitive bid process and with the approval of his landowner clients,
Mr. Capouillez's communications with EXCO PA representatives in relation to lease
acreage available in Lycoming County ultimately resulted in the execution of
eighteen leases between Mr. Capouillez /GAL clients and EXCO PA.
a. Mr. Capouillez, as a representative of GAL, signed all eighteen of the leases
executed between the private landowners and EXCO PA.
b. Steve Area, EXCO Vice President of Land & Business Development, also
signed the leases on behalf of EXCO PA.
C. Per the executed lease terms and conditions, Mr. Capouillez /GAL was due
compensation in the amount of $20.00 per acre in bonus consideration and
0.75% of all royalties for each lease. The portions of which were directly
related to Mr. Capouillez's private landowner contracts [sic].
65. During this time frame, as described in part above, EXCO PA was negotiating
and /or engaged in leasing of SGL with the PGC for the following:
a. EXCO has had existing lease interests in effect for SGL Tracts 100A -00,
100A -01, and 10OB -01 during the time period of November 2, 2004, through
the present.
b. EXCO PA executed a lease for SGL Tract 114B -11 on July 7, 2011, and was
negotiating with the PGC regarding this lease as early as January 2011.
66. Mr. Capouillez participated in and /orwas responsible fordirection and oversightof
the statewide land acquisition and leasing program during the time frames noted
above.
67. While serving as the BWHM Directorforthe PGC, Mr. Capouillez represented GAL
clients in the competitive bid process by negotiating and executing leases with
EXCO, at a time concurrent with PGC lease negotiations with EXCO PA on SGL
properties, which led to a financial gain to Mr. Capouillez /GAL of $31,358.70.
CAPOUILLEZ'S INTERACTION WITH ENDLESS MOUNTAIN ENERGY
Capouillez, 13 -032
Page 20
68. Endless Mountain Energy Partners, LLC (hereinafter "EME "), is a natural gas
exploration and production company focused on development of Marcellus acreage
in the prolific regions of the Marcellus fairway, primarily Clinton and Tioga Counties.
69. EME has had an existing contract/agreement for the leasing of oil and natural gas
rights under SGL 268A -11, located in Tioga County, from August 2011 through the
present.
a. EME had initial interest in SGL 268 as of February 2010.
70. Mr. Capouillez first interacted with representatives of EME sometime before early
2010 in his capacity as the BWHM Director.
71. In or about early 2010, EME representatives became aware of Mr. Capouillez's self -
employment, through means other than Mr. Capouillez, about his consulting work
after attempting to solicit leases from private landowners in Clinton County.
72. Between February 2010 and January 2011, Mr. Capouillez, through GAL, inquired
and communicated with EME representatives regarding acquiring private leases
with GAL clients in Clinton County at the same time that EME expressed interest in
leasing SGL in Tioga County.
73. Mr. Capouillez's inquiries and negotiations with EME representatives ultimately
resulted in the execution of approximately sixty -five leases between GAL clients
and EME.
a. Mr. Capouillez signed the leases executed between GAL clients and EME
b. The leases were also signed by Brian Kaufman, Chief Operating Officer, or
Carol Kaufman, EME Regional Land Manager, as representatives of EME.
C. Per the terms and conditions of the private landowner contracts with GAL,
Mr. Capouillez /GAL was due compensation in the amount of $50.00 peracre
in bonus consideration and 1.75% of all royalties for each lease.
d. All of the leases were located in Clinton County, none were in Tioga County
74. While serving as BWHM Director for the PGC, Mr. Capouillez represented GAL
clients in negotiating and executing leases in Clinton County, at a time when EME
had expressed interest in and /orwas actively involved in negotiations with the PGC
for the leasing of SGL in Tioga County.
a. The respective land and leases were not sufficiently close in time or
geographic proximity to enable the Investigative Division to recommend that
any use of authority of office by Capouillez was in violation of Section
1103(a) of the Ethics Act. See Thuy, Order 1588, pg. 37.
THE FOLLOWING FINDINGS RELATE TO CAPOUILLEZ'S INTERACTIONS WITH
VARIOUS GAS COMPANIES AS A REPRESENTATIVE OF PRIVATE INDIVIDUALS/
GAL, WHILE AT THE SAME TIME MAINTAINING RESPONSIBILITY FOR THE
STATEWIDE LAND ACQUISITION AND LEASING PROGRAM IN HIS CAPACITY AS
THE DIRECTOR OF THE BWHM.
75. The State Ethics Commission has held that it "must observe the five year statute of
limitations at Section 1108(m) of the Ethics Act, 65 Pa.C.S. § 1108(m)" and as such
the Commission "may not consider any alleged violations of the Ethics Act prior to
[the five year statute of limitations.] See Thuy Order 1588 pg 37.
Capouillez, 13 -032
Page 21
76. In applying the five -year statute of limitations of Section 1108(m) of the Ethics Act,
65 Pa.C.S. § 1108(m), the Commission has held that "procedurally, the
investigation [is] commenced . . . when the Investigative Division mailed
[Respondent] a letter via certified mail, informing him of the nature of the alleged
violations of the Ethics Act and that the Investigative Division would be undertaking
an investigation as to such allegations." Seropian Order 1547 pg. 42.
a. Accordingly, for the purposes of the Consent Agreement, the review in the
instant matter is limited to acts which occurred from January 10, 2009,
forward. See Thuy Order 1588; Seropian Order 1547.
CAPOUILLEZ'S INTERACTION WITH TALISMAN ENERGY U.S.A.
77. Talisman Energy U.S.A., Inc. (hereinafter "Talisman ") is an oil and gas production
company [and a] wholly owned subsidiary of Talisman Energy, Inc., based in
Calgary, Alberta.
a. Talisman now holds approximately 217,000 Tier 1 net acres in Pennsylvania.
78. Talisman has entered into contracts /agreements for the leasing of oil and natural
gas rights under SGL or has been a joint operator with an entity leasing SGL for
such from at least 2007 through the present as shown in the chart below.
Capouillez, 13 -032
Page 22
Execution
Date
SGL
Tract
Original
Execution
Award Method
Capouillez
Position
Lease Active w/
Talisman
Description
04/07/2004
123A -03
Columbia
Nat Res
Public Bid
BWHM
Director
No
Talisman had JOAA w /Chesapeake
Appalachia, LLC as of 01/01/07;
however, lease expired 04/14
11/15/2011
219A -13
Talisman
Sole Source
BWHM
Director
Yes
N/A
10/17/2013
140A -13
Talisman
Sole Source
BWHM
Director
Yes
N/A
*Refers to Capouillez's position when Talisman received the leases or became a party to the lease
^J OA = Joint Operating Agreement
79. Talisman representatives specifically contacted the OGM Development Section of
the Environmental Planning and Habitat Division of the BWHM as early as August
2009 regarding SGL 219, November 2009 regarding SGL 66, and June 2010
regarding SGL 140.
a. Capouillez interacted with representatives of Talisman in association with his
position with the PGC as the BWHM Director responsible for oversight of the
PGC statewide leasing program.
Capouillez supervised PGC employees negotiating leases.
b. Capouillez was operating GAL at all times from January 2010 through June
2014.
80. Capouillez had knowledge of Talisman's interest in leasing SGL and /or
communicated with Talisman representatives regarding such on at least six (6)
occasions between January 2010 and February 10, 2012.
a. While employed as the Director of the BWHM, Capouillez participated in
various meetings with Talisman representatives in relation to the leasing of
SGL, was directly addressed or copied by Talisman representatives on email
to PGC representatives regarding leasing of SGL, and was courtesy copied
on email from PGC representatives to Talisman in relation to the leasing of
SGL.
81. Capouillez served as a consultant through GAL for leases executed directly
between GAL clients and Talisman in 2010.
a. The majority of the leases executed between Talisman and GAL clients were
executed in June 2010.
82. Between August 29, 2009, and October 2010, multiple communications occurred
between Capouillez and Talisman representatives David Whedbee and Jonathan
Woods regarding leases forwhich Capouillez /GAL served as the private landowner
consultant.
83. Capouillez actively communicated in 2009 and 2010 with Talisman representatives
regarding Talisman's interest in acquiring private leases with GAL clients at a time
when Talisman was negotiating for and /or engaged in active leasing of SGL with
the PGC at the time when Capouillez had complete oversight of the statewide land
acquisition and leasing program.
a. Talisman had existing lease interests in effect for SGL Tract 123A -03 during
the time period of August 2009 until at least April 2014.
Capouillez, 13 -032
Page 23
b. Talisman was pursuing its interest in the potential leasing of SGL 66, 140,
and /or 219 via communication with multiple PGC representatives, including
Capouillez in 2010.
Herrick provided Talisman's sole source request for SGL 219 to
Capouillez via email on June 4, 2010, approximately one week prior
to the execution of at least seventy leases between Talisman and
GAL clients.
C. Talisman has had existing lease interests in effect for SGL Tract 219A -13
and 140A -13 from the time period of November 15, 2011, through the
present and October 17, 2013, through the present respectively.
84. Capouillez's 2009 and 2010 negotiations with Talisman representatives in relation
to lease acreage available from clients represented by Capouillez /GAL ultimately
resulted in the execution of approximately seventy -three leases directly between
Capouillez /GAL clients and Talisman.
a. Capouillez, as a representative of GAL, signed all seventy -three of the
leases executed between the private landowners and Talisman.
b. The leases signed directly with Talisman were signed by Darin Zanovich,
Attorney in Fact, on behalf of Talisman.
C. Per the executed lease terms and conditions, Capouillez /GAL was due
compensation in an amount range of $50.00 per acre in bonus consideration
and 1.75% of all royalties for each lease.
85. In addition to the seventy -three leases executed directly between Talisman and
clients represented by GAL, an additional two hundred twenty -one leases involving
Capouillez /GAL clients were assigned to Talisman from Range Resources and /or
EOG Resources.
a. Capouillez played no role in the assignment of the leases from Range
Resources to Talisman or EOG Resources to Talisman.
86. Capouillez actively represented clients through GAL, his private consulting
business, before Talisman representatives for the leasing of private lands and had
also originally served as a consultant for GAL clients which were ultimately
assigned to Talisman, while simultaneously serving in the position of the BWHM
Director for the PGC resulting in payment to Capouillez /GAL of an undeterminable
amount during the same time period Talisman was engaged in an existing business
relationship with the PGC regarding the leasing of SGL and was actively involved in
negotiations with PGC representatives supervised by Capouillez for the leasing of
additional SGL.
a. Capouillez was responsible for direction and oversight of the PGC statewide
land acquisition and leasing program at all times during the negotiations
between Talisman and the PGC for SGL Tract 219A -13 and 140A -13 and
during the negotiations between Talisman and private landowners
represented by Capouillez /GAL.
CAPOUILLEZ'S INTERACTION WITH EQT CORPORATION
87. EQT Corporation is an integrated energy company involved in natural gas
production, gathering, and transmission.
Capouillez, 13 -032
Page 24
a. In or about December 2009, EQT entered into a joint venture with EME for
the purpose of securing oil and gas leases in northeastern Pennsylvania,
including private as well as SGL leases.
88. In 2010, as the BWHM Director, Capouillez had interactions and communications
with various EQT representatives regarding potential SGL leasing.
a. Specifically, as the Director of the BWHM, Capouillez attended meetings
with EQT representatives in relation to the potential leasing of SGL during
the week of April 26, 2010.
b. As the Director of the BWHM, Capouillez authored correspondence dated
May 26, 2010, to Timothy Matthews, Senior Vice President of American
Exploration Company, regarding the assignment of SGL Lease 014A -01 to
EQT and the PGC's intent to approve the assignment to EQT was pre-
conditioned on American Exploration Company fully complying with the
terms and conditions set forth in Capouillez's and Matthews's most recent
telephone conversation.
C. Capouillez, as the Director of the BWHM, was the specific addressee
relating to correspondence authored by Hodges dated June 4, 2010,
reggarding potential lease amendments upon assignment of the lease for
SGL014A -01 from American Exploration Company to EQT, which referenced
discussion that had occurred the morning of June 4, 2010, between
Capouillez and Hodges, including the potential lease amendments.
d. In 2010, as the Director of the BWHM, Capouillez was also copied on all
correspondence from the PGC to EQT in relation to the leasing of SGL.
89. Capouillez's employment as Director of the BWHM Bureau for the PGC, and his
private consulting business GAL, was the subject of emailed discussions among
EQT representatives in February 2011.
a. The email conversation was initiated as a result of a 2008 newspaper article
which outlined Capouillez's simultaneous service as Director of the BWHM
and his outside business interests with GAL.
b. EQT officials had concerns of a potential conflict of interest for Capouillez at
the Commonwealth, if Capouillez would get cited for "moonlighting" and that
although Capouillez had been helpful to EQT, he may not be able to do so in
the future.
90. Capouillez's involvement with the assignment of SGL leases with American
Exploration Company to EQT occurred during the same time that he was
representing GAL clients whose leases with EME were assigned to EQT.
a. All of the leases initially executed between private landowners represented
by Capouillez /GAL and EME were assigned to EQT in June 2010.
b. Capouillez did not, either as an individual and /or as a representative of GAL,
play any role in the assignment of EME leases to EQT.
C. Capouillez received payment totaling $56,301.34 from EQT as a result of the
assignment of those leases from EME, at a time when he was also serving
as Director of the BWHM.
RANGE RESOURCES (PREVIOUSLY KNOWN AS GREAT LAKES ENERGY PARTNERS)
Capouillez, 13 -032
Page 25
91. Range Resources Corporation was created as a result of the merger of Lomak
Petroleum Inc. and Domain Energy in 1998.
a. In 2007, Range Resources Corporation opened an office in Pittsburgh,
Pennsylvania, to focus on the Marcellus Shale drilling.
92. Since at least 1994, Mr. Capouillez interacted with representatives of Range
Resources ( "Range ") in relation to Range's leasing of SGL, situated in various
municipalities of Venango County.
a. Range entered into at least eight (8) contracts for the leasing of oil and gas
rights from SGL beginning in 1994 with the most recent lease effective on
April 29, 2008.
93. Between 2001 and 2008, Mr. Capouillez, in his private capacity through GAL,
inquired of and communicated with Range representatives in relation to Range's
potential interest in securing private landowner leases at a time or times when
Range was engaged in existing leases with the PGC and /or had expressed an
interest in additional SGL leases.
94. Mr. Capouillez's inquiries, negotiations, and communications with Range
representatives ultimately resulted in the execution of a number of leases between
Range and GAL clients, none of which leases were located in Vanango, Crawford,
or Fayette County where Range subsequently entered into leases with the PGC, or
were finalized within the applicable limitation period.
95. Capouillez did not, either as an individual and /or as a representative of GAL,
execute any contracts on behalf of private clients with Range and /or its affiliates
after calendar [year] 2008.
a. Any actions of Capouillez resulting in a private pecuniary benefit occurred
prior to January 10, 2009, and per prior consistent rulings of the State Ethics
Commission, are outside of the applicable Statute of Limitations as
delineated within 65 Pa.C.S. § 1108(m). See Thuy Order 1588; Seropian
Order 1547.
b. In light of prior rulings of the State Ethics Commission, and for purposes of
this Consent Agreement, the receipt of contractually pre -fixed payments,
negotiated outside of the applicable statute of limitations of the Ethics Act,
does not give rise to a violation of same.
EOG RESOURCES
96. EOG Resources (hereafter "EOG "), an independent (non- integrated) crude oil and
natural gas company, has maintained a business contract/agreementforthe leasing
of oil and natural gas rights under SGL from at least 2008 through the present.
a. EOG was formerly known as Enron Oil & Gas Company.
97. Capouillez developed a business relationship with EOG beginning in or about July
2009 through GAL as a result of the assignment of forty -two leases from Range (31)
and Talisman (11) to EOG from 2009 into 2013.
a. Of the forty -one leases originally executed with Range, one was executed in
2002, two were executed in 2003, and thirty -eight were executed in
April /June 2008.
Capouillez, 13 -032
Page 26
b. Ten of the leases originally executed with Range were later assigned to
Talisman.
98. Mr. Capouillez had no specific negotiation with EOG representatives in relation to
the assignment of these leases, but Mr. Capouillez was in contact with EOG
representatives in 2007 and 2008 at a time when EOG was engaged in active
leasing of SGL with the PGC.
99. Mr. Capouillez did not, either as an individual and /or as a representative of GAL,
play any role in the assignment to EOG of previously executed contracts between
clients of GAL and Range /Talisman. Because Range lost a number of original
leases, its records regarding these assignments and related leases lack details of
time and specific lease identification.
100. Mr. Capouillez's simultaneous contact with EOG and /or its representatives /affiliates
as a representative of GAL and as Director of the BWHM did not result in additional
pecuniary benefit beyond that contained within the original /assigned contracts
negotiated between 2003 and 2008.
a. Any actions of Capouillez resulting in a private pecuniary benefit occurred
prior to January 10, 2009, and per prior consistent rulings of the State Ethics
Commission, are outside of the applicable Statute of Limitations as
delineated within 65 Pa.C.S. § 1108(m). See Thuy Order 1588; Seropian
Order 1547.
CONSOL ENERGY, INC.
101. Consol Energy, Inc. /CNX Gas (hereinafter "Consol ") is a publicly owned producerof
natural gas and coal that has entered into no less than three 3)
contracts /agreements for the leasing of oil and natural gas rights from under SGL
from at least 2010 through the present.
102. In April and May 2010, Mr. Capouillez inquired of Consol regarding Consol's
interest in leasing property from GAL clients. However, Consol did not execute any
leases as a result of this inquiry.
103. Mr. Capouillez also had exposure to Consol through GAL as a result of a partial
assignment of one lease from Range Resources to Consol in December 2011, but
was not specifically involved in the negotiations of this partial assignment.
a. Consol did make payments to Capouillez totaling $643.88 during the
relevant time period as a result of a lease assignment from Range to Consol.
104. At the time Capouillez sought interest from Consol regarding the potential leasing of
property from GAL clients, he was involved as Director of BWHM with actions
relating to the assignment of the lease for SGL 195B from Dominion Transmission
to Consol.
a. The assignment of the lease for SGL 195B from Dominion Transmission to
Consol was granted by the PGC effective May 18, 2010.
Capouillez signed the PGC Consent to Assignment of Oil and Gas
Lease on behalf of the PGC in his position of BWHM Director.
105. In light of prior rulings of the State Ethics Commission, for the purposes of this
Consent Agreement, $643.88 is de minimis, as well as the result of a contractually
Capouillez, 13 -032
Page 27
pre -fixed payment, negotiated outside of the applicable statute of limitations of the
Ethics Act, and does not otherwise give rise to a violation of same.
XTO ENERGY
106. XTO Energy, Inc. (hereinafter "XTO ") is a natural gas and oil entity that has entered
into no less than three (3) contracts /agreements for the leasing of oil, natural gas,
and mineral rights under SGL from May 2008 through the present.
107. Mr. Capouillez was aware of and /or gained knowledge of XTO's interest in SGL
leasing around May 2008 as a result of the assignment of existing SGL leases from
Linn Energy to XTO.
108. In August 2010, while the XTO leases for SGL were still in place, one of the leases
previously executed between a GAL client and Range Resources was assigned to
XTO.
a. Capouillez did not play any role in the assignment of GAL leases from
Range to XTO.
109. Mr. Capouillez's simultaneous contact with XTO and /or its representatives /affiliates
as a representative of GAL and as Director of the BWHM did not result in additional
pecuniary benefit beyond that contained within the original /assigned contracts.
a. Any actions of Capouillez resulting in a private pecuniary benefit occurred
prior to January 10, 2009, and per prior consistent rulings of the State Ethics
Commission, for the purposes of this Consent Agreement, are outside of the
applicable Statute of Limitations as delineated within 65 Pa.C.S. § 1108(m).
See Thuy Order 1588; Seropian Order 1547.
ANADARKO PETROLEUM
110. Anadarko Petroleum Corporation (hereinafter "Anadarko ") is the largest
independent oil and gas exploration and production company within the Unites
States.
111. Anadarko has entered into no less than nine (9) contracts /agreements for the
leasing of oil and natural gas rights from SGL or has held a joint interest with an
entity /entities leasing SGL since approximately 2008.
112. Mr. Capouillez's interaction with representatives from Anadarko while representing
GAL clients resulted in the execution of at least ten leases between calendar years
2006 and 2008.
113. During 2006 -2008 Anadarko was involved in negotiating a sole source lease with
the PGC for SGL 114A -10.
114. Capouillez did not, either as an individual and /or as a representative of GAL,
execute any contracts on behalf of private clients with Anadarko and /or its affiliates
after calendar [year] 2008.
a. Any actions of Capouillez resulting in a private pecuniary benefit occurred
prior to January 10, 2009, and per prior consistent rulings of the State Ethics
Commission, for the purposes of this Consent Agreement, are outside of the
applicable Statute of Limitations as delineated within 65 Pa.C.S. § 1108(m).
See Thuy Order 1588; Seropian Order 1547.
Capouillez, 13 -032
Page 28
CHESAPEAKE ENERGY
115. Chesapeake Energy Corporation (hereinafter "Chesapeake ") is a company
engaged in the exploration, development, and acquisition of properties for the
production of natural gas and oil.
116. Chesapeake has entered into no less than eleven (11) contracts /agreements for the
leasing of oil and natural gas rights from under SGL, and has held joint interest(s)
with an entity /entities leasing SGL from May 2008 through the present.
117. Mr. Capouillez had knowledge of Chesapeake's potential interest in leasing SGL as
early as August 2007, as a result of an email received from Chesapeake's landman
on or about August 13, 2007.
118. Between May 2007 and July 2010, Mr. Capouillez, in his private capacity through
GAL, inquired of Chesapeake representatives in relation to Chesapeake's potential
interest in acquiring GAL client leases contemporaneous to times when
Chesapeake was negotiating for and /or actively involved in leasing of SGL with the
PGC.
119. Mr. Capouillez's inquiries and negotiations with Chesapeake representatives
ultimately resulted in the execution of thirty leases between GAL clients and
Chesapeake, between 2007 and 2008.
Any actions of Capouillez resulting in a private pecuniary benefit occurred
prior to January 10, 2009, and per prior consistent rulings of the State Ethics
Commission, for the purposes of this Consent Agreement, are outside of the
applicable Statute of Limitations as delineated within 65 Pa.C.S. § 1108(m).
See Thuy Order 1588; Seropian Order 1547.
PENNSYLVANIA GENERAL ENERGY COMPANY, LLC
120. Pennsylvania General Energy Company, LLC (hereinafter "PGE ") is a privately
owned, independent oil and natural gas exploration and production company that
has entered into no less than two (2) contracts /agreements for the leasing of oil and
natural gas rights under SGL or has become a party to such a lease through
assignment from another entity from May 2002 to March 2007, and from February 5,
2013, through the present.
121. Mr. Capouillez was aware of PGE's interest in leasing through an operating
agreement with another entity since approximately April 5, 2002.
122. In October 2009, ten GAL client leases were assigned from Range and Anadarko to
PGE.
Capouillez served as a consultant through GAL for nine leases initially
executed between GAL clients and Range in 2006 -2007, which were
ultimately assigned to PGE on October 13, 2009.
Capouillez /GAL served as a consultant for one lease initially executed
between private landowners and Anadarko in 2007, which was ultimately
assigned to PGE on July 9, 2013.
123. Between November 2002 and May 2011, Mr. Capouillez inquired of PGE in relation
to PGE's potential interest in obtaining GAL client acreage during the time frame
that PGE had an active lease relationship with the PGC for SGL 049A -01. These
inquiries did not lead to any contracts between PGE and GAL clients.
Capouillez, 13 -032
Page 29
124. Mr. Capouillez did not, either as an individual and /or as a representative of GAL,
play any role in the assignment to PGE of previously executed contracts between
clients of GAL and Range /Anadarko.
125. Mr. Capouillez's simultaneous contact with PGE and /or its representatives /affiliates
as a representative of GAL and as Director of the BWHM did not result in private
leases for GAL clients nor in additional pecuniary benefit to them or Mr. Capouillez
beyond that contained within the original /assigned contracts.
a. Any actions of Capouillez resulting in a private pecuniary benefit occurred
prior to January 10, 2009, and per prior consistent rulings of the State Ethics
Commission, for the purposes of this Consent Agreement, are outside of the
applicable Statute of Limitations as delineated within 65 Pa.C.S. § 1108(m).
See Thuy Order 1588; Seropian Order 1547.
THE FOLLOWING FINDINGS RELATE TO ACTIONS TAKEN BY THE PGC TO REVOKE
WILLIAM CAPOUILLEZ'S SUPPLEMENTAL EMPLOYMENT AUTHORIZATION.
126. Capouillez operated GAL at all times from July 23, 1996, through March 17, 2014,
with the approval of the PGC as provided in Capouillez's July 23, 1996,
Supplementary Employment Request.
a. Commonwealth employees wishing to engage in supplemental employment
must receive approval prior to engaging in such.
127. Capouillez's July 23, 1996, supplementary employment request never disclosed to
the PGC that he would be simultaneously representing private landowners in oil
and gas lease negotiations with the same companies that were negotiating oil and
gas leases with the PGC.
a. Capouillez identified his duties as a Geology Consultant, which would
include acting as a consultant/advisor to property owners as to potential
liability from existing /probable hydrologic impacts from construction and
development and advising potential real estate owners as to potential oil /gas
and mineral development of lands.
128. Although Capouillez had sought supplemental employment authorization, his
continued role as the Director of the BWHM and his representation of GAL clients
was the subject of speculation amongst some members of the OGM community, and
was discussed privately in email transmission between Jake Stransky
(representative of Ultra Resources) and Marc Dunn (representative of Edgewood
Energy, Inc.)
In an email to Dunn dated April 12, 2010, regarding an SGL update,
Stransky authored the following:
"Thank you for the update. I am curious to see if the folks at State
Games have any helpful information. The word is Ultra has asked
them several times to provide us with information on what they own
and have never been able to do so."
2. Dunn responded to Stransky via email on April 12, 2010, stating that:
"I hear you on the Game Lands issue. One of the problems with the
Game Lands stuff is that a key player in the admin., Bill Capouillez,
the agency's director of Wildlife Habitat Management, also deals on
the side with OGM and frequently puts landowner groups together
Capouillez, 13 -032
Page 30
and then sells the pkg. of ac. to operators. So I think the agency is a
little `slow' in coming up with any info."
129. In or about March 2014, recommendations were made by Governor Corbett and
legislative leaders to the PGC regarding Mr. Capouillez's employment, including
revocation of any supplemental employment [authorization].
130. Capouillez was informed via correspondence dated April 1, 2014, from R. Matthew
Hough, Executive Director at that time, that his approval for supplementary
employment with /through GAL had been rescinded effective March 18, 2014.
a. Hough documented that the March 18, 2014, rescinding of Capouillez's
supplementary employment with GAL was in accordance with "our
discussion of that date."
131. Capouillez is known to have continued to participate inactions associated with GAL
and the private client he represented, particularly EXCO, through at least June 17,
2014.
132. Capouillez's actions in contacting Buddenbohn /EXCO PA in relation to clients
represented by Capouillez /GAL were in direct violation of Management Directive
515.18.
a. Capouillez's supplementary employment with /through GAL had been
revoked effective March 18, 2014.
1. Capouillez was issued documentation dated April 1, 2014, confirming
such revocation and its effective date as March 18, 2014.
b. Management Directive 515.18 is specifically documented as being
applicable to not only supplementary employment but volunteer activities as
well.
C. Capouillez realized no financial gain in this activity, as it was an
accommodation to a GAL client with a pre- existing lease.
CAPOUILLEZ'S DECEMBER 2014 INTERVIEW WITH INVESTIGATIVE DIVISION STAFF
133. On December 12, 2014, Mr. Capouillez participated in an interview with
representatives of the Investigative Division.
134. The interview was conducted at the office of and in the presence of Attorney Robert
Davis, Jr., Mr. Capouillez's attorney.
135. During the interview Mr. Capouillez asserted, in part, the following:
a. Mr. Capouillez worked in the private sector prior to his Commonwealth
employment. Mr. Capouillez performed consulting services for property
owners related to oil and natural gas prior to his employment with the
Commonwealth, although not under an actual fictitious name until the mid -
1990s. Mr. Capouillez obtained his clients primarily through word of mouth,
his exposure to other consultants while employed with MineTech, his military
contacts, and his Free Mason contacts.
b. Mr. Capouillez was initially solicited by PGC representatives to work for the
PGC in a newly created Hydrogeologist position.
Capouillez, 13 -032
Page 31
C. Mr. Capouillez became involved in the leasing aspect of oil, gas, and mineral
rights under SGL shortly after being hired by the PGC.
d. Mr. Capouillez developed the concept of publicly bidding the SGL OGM
leases through a competitive bid process. No formal leasing program
existed prior to his involvement.
e. Prior to 2002, while employed as the Section Chief of OGM Development,
Mr. Capouillez was responsible for the facilitation of bids for the leasing of
SGL, processing of said bids, obtaining required approvals through the chain
of command, and coordination efforts between the Harrisburg office and
regional offices.
Between 2002 and 2006, while employed as the Division Chief of the
EPHPD, Mr. Capouillez was cognizant of leasing SGL for OGM
development; however, he was not involved to the same degree as when he
was the Section Chief of OGM Development.
g. From 2006 to 2014, Mr. Capouillez had no responsibility in his position as
Director of the BWHM regarding the leasing of SGL for oil and natural gas;
rather, his involvement was limited to that of a management perspective.
h. Mr. Capouillez submitted his GAL supplementary employment request in
order to obtain supervisory experience to qualify for potential promotion to
Division Chief.
i. Mr. Capouillez's /GAL's client base from mid -1996 until early 2001 was
dwindling /limited. In 2001 Mr. Capouillez's client base through GAL grew
and significantly increased over the next several years.
j. Mr. Capouillez had not represented any large landowner groups (more than
two to three people) prior to working with the Hopewell Township group.
k. Mr. Capouillez made no specific reference to his position with the PGC
during any presentations before private landowners until the landowners
were ready to sign the landowner contract with Mr. Capouillez /GAL. Priorto
entering into the contract with the landowners, Mr. Capouillez disclosed his
employment with the Commonwealth, avoiding identification of his specific
position, and informed the landowners that he could not take or make private
business calls during the day, that he could not travel to meetings in a
Commonwealth vehicle, etc.
I. Mr. Capouillez's landowner contract identified constraints he had to follow,
and contained a clause that indicated that he would refuse any
compensation he was due as a result of private leases that were affected in
any way by activity on neighboring SGL. The portion of funds potentially due
to Mr. Capouillez would revert back to the private landowner.
M. Mr. Capouillez had no specific knowledge or recollection of soliciting any
private entity /entities at the same time that the entity /entities were also
attempting to lease SGL.
n. Mr. Capouillez understood the concerns raised and could see the
appearance of a problem with his dual positions.
III. DISCUSSION:
Capouillez, 13 -032
Page 32
As the Director of the Bureau of Wildlife Habitat Management ( "BWHM ") for the
Pennsylvania Game Commission ( "PGC ") from approximately December 2, 2006, through
May 18, 2015, Respondent William Capouillez, also referred to herein as "Respondent,"
"Respondent Capouillez," and "Capouillez," was a public official /public employee subject to
the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §
1101 et seq.
The allegations are that Capouillez violated Section 1103(a) of the Ethics Actwhen
he utilized the authority of his public employment, and /or confidential information received
through his holding public employment, for the private pecuniary benefit of himself and /or a
business with which he is associated, namely Geological Assessment and Leasing LLC,
when he organized, negotiated and /or arranged lease agreements with private industry
representatives for oil, gas and mineral ( "OGM ") exploration on PGC game lands, while
simultaneously performing the same actions for private landowners within the
Commonwealth for a fee.
Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is
prohibited from engaging in conduct that constitutes a conflict of interest:
§ 1103. Restricted activities
(a) Conflict of interest. —No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
65 Pa.C.S. § 1103(a).
The following terms are defined in the Ethics Act as follows:
§ 1102. Definitions
"Conflict" or "conflict of interest." Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate family
or a business with which he or a member of his immediate
family is associated. The term does not include an action
having a de minimis economic impact or which affects to the
same degree a class consisting of the general public or a
subclass consisting of an industry, occupation or other group
which includes the public official or public employee, a
member of his immediate family or a business with which he or
a member of his immediate family is associated.
"Authority of office or employment." The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
"Business." Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self - employed individual, holding company, joint
stock company, receivership, trust or any legal entity
organized for profit.
"Business with which he is associated." Any
Capouillez, 13 -032
Page 33
business in which the person or a member of the person's
immediate family is a director, officer, owner, employee or has
a financial interest.
"Financial interest." Any financial interest in a legal
entity engaged in business for profit which comprises more
than 5% of the equity of the business or more than 5% of the
assets of the economic interest in indebtedness.
65 Pa.C.S. § 1102
Section 1103(a) of the Ethics Act prohibits a public official /public employee from
using the authority of public office /employment or confidential information received by
holding such a public position for the private pecuniary benefit of the public official /public
employee himself, any member of his immediate family, or a business with which he or a
member of his immediate family is associated.
As noted above, the parties have submitted a Consent Agreement and Stipulation of
Findings. The parties' Stipulated Findings are set forth above as the Findings of this
Commission. We shall now summarize the relevant facts as contained therein.
The PGC is an independent agency governed by an eight Member Board of
Commissioners.
From 1993 through May 18, 2015, Capouillez was employed by the PGC in various
positions that involved leasing of State Game Lands ( "SGL ") to oil and natural gas entities.
From approximately January 2003 through May 2015, Capouillez was responsible for the
oversight of the PGC oil, gas, and mineral leasing program as it related to SGL.
Capouillez interacted with oil and natural gas exploration and /or production companies and
their representatives through his PGC employment.
As PGC's Environmental Planning Manager from May 25, 2002, to December 1,
2006, Capouillez's duties and responsibilities in relation to oil, gas, and mineral recovery
included, inter alia, administering the PGC's oil, gas, and mineral resource management
program, maintaining liaison with major energy company staffs, negotiating details of oil,
gas, and mineral leasing programs with private company representatives, and preparing
leases and agreements.
From approximately December 2, 2006, through May 18, 2015, Capouillez was
Director of the BWHM. The BWHM directly manages approximately 1.4 million acres of
SGL and assists with approximately 3 million more acres of private land enrolled in PGC's
Public Access Program. The BWHM performs comprehensive planning for the
development of lands for wildlife habitats, timber harvests, and removal of oil, gas, and /or
minerals.
Due to the five -year statute of limitations set forth at Section 1108(m) of the Ethics
Act, 65 Pa.C.S. § 1108(m) our review in this matter is limited to the time period from
January 10, 2009, forward. Capouillez served as Director of the BWHM during the time
period under review.
3 See, Stipulated Finding 76 a. Section 1108(m) of the Ethics Act provides:
§ 1108. Investigations by commission
(m) Limitation of time. —The commission may conduct an investigation within
five years after the alleged occurrence of any violation of [the Ethics Act].
65 Pa.C.S. § 1108(m).
Capouillez, 13 -032
Page 34
As Director of the BWHM, Capouillez's duties included directing the statewide land
acquisition and leasing program, which included the oil, gas, and mineral recovery
program. The BWHM's Division of Environmental Planning and Habitat Protection is
primarily responsible for determining the SGL tracts to be leased, when the tracts are
offered for lease, the method by which the lease is awarded, and negotiation of lease
terms including payments. Capouillez's position as BWHM Director included
responsibilities and authority in the leasing processes.
The leasing of OGM rights on PGC SGL may be accomplished via a "public bid" or
"sole source" process. In the public bid process, the BWHM Director is responsible for
determining if OGM standard operating procedures and OGM policy have been met or if
corrections to the bid package are required. If corrections are required, the package is
sent to the OGM Section for changes. In the sole source process, the BWHM Director is
responsible for determining if OGM standard operating procedures and OGM policy have
been met, if the potential lease should be considered for further processing, or if the terms
of the lease should be modified through the PGC chain of command.
As BWHM Director, Capouillez had the authority to make recommendations to the
PGC chain of command regarding whether to approve, modify, orterminate the OGM lease
process. Final approval of leases was made by PGC chain of command above Capouillez
and relied primarily on recommendations made by Capouillez and his staff. There is no
record of any of Capouillez's recommendations not being approved.
Negotiation of oil and /or natural gas leases primarily occurs between
representative(s) of the potential leasing company and the property owner or an
individual /company retained by the property owner to represent him /her. Multiple terms
included within an oil and /or natural gas lease may be negotiated including, but not limited
to, bonus payments, shut -in payments, delay payments, and royalty payment percentage.
As a PGC employee, Capouillez was subject to requirements to file a
Supplementary Employment Request with PGC official(s) and to obtain approval of same
prior to working for compensation or remuneration outside of Commonwealth employment.
Capouillez also was required to resubmit such a request when changing supplementary
employment or whenever the duties of either his Commonwealth or supplementary
employment position would change substantially.
Capouillez is the sole proprietor and sole interest holder of business entities named
Geological Assessment & Leasing /Geological Assessment & Leasing, LLC (both entities
are also referred to herein as "GAL "). On or about July 23, 1996, Capouillez completed
This Commission's Regulations provide, in part:
§ 11.3. Statute of limitations.
The Commission may investigate a violation of the act within 5 years of its occurrence.
The occurrence transpires when an act is complete or requires no further action....
51 Pa. Code § 11.3.
Section 1108(c) of the Ethics Act provides that "M o investigation may be commenced until the person
who is the subject of the investigation has been notifie and provided a general statement of the alleged
violation or violations of this chapter and other applicable statutes with respect to such investigation. Service of
notice is complete upon mailing which shall be by certified or registered mail...." 65 Pa.C.S. § 1108(c).
The Regulations of this Commission provide that an investigation is considered commenced when the
respondent is notified of the matter as required (51 Pa. Code 21.3(c)) and that service of the requisite notice
to a respondent is complete upon mailing of the notice by certified or registered mail (51 Pa. Code § 21.5(b)).
Capouillez, 13 -032
Page 35
and submitted to the PGC a Supplementary Employment Request for approval in relation
to his potential self - employment through GAL. The information supplied by Capouillez
indicated that Capouillez had not yet performed any services through GAL as of July 23,
1996. Capouillez documented the type of business as self - employment consulting as a
licensed geologist. Capouillez identified his duties as a geology consultant as including
acting as a consultant/advisor to private property owners as to potential liability from
existing /probable hydrologic impacts from construction and development and advising
potential real estate owners as to potential oil /gas and mineral development of lands.
Capouillez acknowledged on the July 23, 1996, Supplementary Employment Request that
his self - employment would involve him in a business or an activity which could possibly be
related to his departmental duties, or which could possibly create an actual or apparent
conflict with his departmental duties. Capouillez's July 23, 1996, Supplementary
Employment Request did not disclose to the PGC that he would be simultaneously
representing private landowners in oil and gas lease negotiations with the same
companies that were negotiating oil and gas leases with the PGC.
On July 23, 1996, Capouillez's July 23, 1996, Supplementary Employment Request
was approved subject to the following conditions: (1) the supplemental employment would
not interfere with regular work hours or job performance or violate the provisions of the
Governor's Code of Conduct or the Ethics Act; (2) Capouillez could not utilize
Commonwealth equipment, supplies, property, information, ideas, or data derived from his
Commonwealth employment in the course of his supplemental employment; (3) Capouillez
could not participate through the supplemental employment in any matter that presented a
conflict with his responsibilities as an employee of the PGC; (4) Capouillez could not
participate through the supplemental employment in any transaction in which the
Commonwealth had a direct and substantial interest; and (5) Capouillez could not use his
position as an employee of the PGC or any confidential information gained through his
PGC position in the course of his supplemental employment.
From July 23, 1996, through March 17, 2014, Capouillez operated GAL with the
approval of the PGC.
During the time period under review, GAL provided consulting services to
landowners regarding negotiation and development of oil and /or natural gas leases.
Capouillez performed such work under a private landowner contract, as a part -owner of
leases to be performed. The landowner contracts contained a clause that Capouillez
would refuse any compensation he was due as a result of any private leases that were
affected in any way by activity on neighboring SGL. In such circumstances, the portion of
funds potentially due to Capouillez would revert to the private landowner.
Capouillez secured groups of property owners as clients and solicited bids from
interested oil /natural gas companies. Capouillez organized meetings with the groups to
discuss bids received and to award a lease to the successful bidder. Upon selection of an
oil /gas company's bid, Capouillez organized a date or dates on which the property owners
could meet with the oil /gas company representative(s) to sign their individual leases.
Capouillez and /or another representative of GAL were often present at the lease signings.
Capouillez routinely signed the leases or addendums that were attached to the leases as
an interested party in the leases. As an interested party, Capouillez retained the right to
approve any proposed lease revisions which affected Capouillez's delay rental and /or
royalty payments, as well as the obligations of the Lessor /Lessee to Capouillez.
The landowner often directed that Capouillez's /GAL's compensation was to be
issued directly from the oil and natural gas companies. This arrangement was
memorialized in the terms and conditions in the contract between the landowner and
Capouillez /GAL.
CAPOUILLEZ'S INTERACTION WITH EXCO RESOURCES
Capouillez, 13 -032
Page 36
EXCO Resources, Inc. (hereinafter "EXCO ") is a natural gas and oil company.
EXCO Resources (PA), LLC, (hereinafter "EXCO PA") is a 50/50 joint venture between
EXCO and BG Group, a liquefied natural gas company.
EXCO /EXCO PA has entered into six contracts /agreements forthe leasing of oil and
natural gas rights from under SGL from at least 1994 through the present.
While employed as the Director of the BWHM, Capouillez attended various
meetings with EXCO PA representatives and other PGC employees in relation to the
leasing of SGL and was courtesy copied on various emails from EXCO PA representatives
to PGC representatives and on various correspondences from the PGC to EXCO PA in
relation to the leasing of SGL.
During the relevant time period, in his private capacity with GAL, Capouillez
solicited interest from EXCO PA on multiple occasions in relation to GAL clients and the
potential lease acreage available through his clients. See, Fact Finding 57.
EXCO PA representatives who received email communications from Capouillez in
relation to services pprovided through GAL and /or property owners represented by GAL
included: Robert Crissinger, Senior GM of Operations; Frank Rotunda ( "Rotunda "),
Director of Business Development; Adam Vincent, Senior Landman; Judith Erickson,
Senior Landman; Joel Heiser, Vice - President of Legal; and Eric Buddenbohn
( "Buddenbohn "), Landman.
Capouillez, in his private capacity through GAL, actively solicited and
communicated with EXCO PA representatives in relation to EXCO PA's potential interest in
acquiring private landowner leases at a time when EXCO PA was negotiating for and /or
engaged in active leasing of SGL with the PGC.
Capouillez contacted Rotunda via email on or around December28, 2010, inquiring
about EXCO PA's interest in approximately 10,000 acres of GAL client property located in
Lycoming County. Capouillez informed Rotunda that he /GAL was in the process of
soliciting bids at that time and planned to schedule a meeting of the landowner group in
January 2011. Rotunda responded to Capouillez via email that same day requesting to
see the available property. Capouillez responded to Rotunda on December29, 2010, and
included an attachment of a register of available properties in Lycoming County.
On or about January 24, 2011, EXCO representative Troy Robertson spoke with
Michael DiMatteo ( "DiMatteo ") of the BWHM regarding EXCO PA's potential lease interest
in SGL #114. DiMatteo also began communicating with Rotunda on or about February 4,
2011, in relation to EXCO's interest in acreage within SGL #114. Capouillez was
DiMatteo's immediate Supervisor at the PGC at that time and was ultimately responsible
for DiMatteo's activities in relation to any leasing of PGC lands. DiMatteo routinely
informed Capouillez of an entity's interest in leasing SGL once negotiations had become
established to a significant extent.
Efforts by the PGC and EXCO PA to negotiate a sole- source lease award for SGL
Tract 11413-11 culminated with approval of the proposed lease by the PGC Board of
Commissioners at the April 12, 2011, PGC public meeting.
One day after the PGC's public lease approval for SGL 11413-11, Capouillez
emailed Rotunda to follow -up on EXCO PA's potential interest in the GAL client acreage
identified in December 2010. Capouillez advised that he was finishing up the competitive
bid process, and requested a response as soon as possible if EXCO PA had an interest in
entering a competitive bid. Capouillez provided Rotunda with an updated client register.
Capouillez, 13 -032
Page 37
Rotunda responded to Capouillez via email on April 14, 2011, stating that the
potential lease acreage previously forwarded by Capouillez had been lost. Rotunda asked
if Capouillez could resubmit the acreage that was still available, and if it was limited to the
acreage documented in Capouillez's April 13, 2011, email attachment.
Capouillez responded via email that same day (April 14, 2011) and resubmitted the
available acreage as well as a copy of the Lycoming County bid prospectus supplied to
interested entities. The prospectus identified that bids were to have been received by
March 9, 2011, 5:00 p.m. Eastern Time.
Capouillez informed Rotunda that he was meeting with the group during the next
week (April 21, 2011). Capouillez instructed Rotunda to inform him "ASAP" if EXCO PA
was interested in any or all of the tracts.
Capouillez repeated his inquiry in a private email to Rotunda dated April 20, 2011.
Fact Finding 63 f. Rotunda replied to Capouillez via private email dated April 21, 2011,
and indicated that EXCO PA needed more time. Rotunda indicated that EXCO PA
"obviously" was interested in the area as EXCO PA's drilling focus at that time was
Lycoming County.
In multiple private email transmissions between Rotunda and Capouillez from May
6, 2011, through June 23, 2011, Rotunda expressed interest in pursuit of the majority of
the available acreage presented by Capouillez which was located in the Gamble and Lewis
Township area of Lycoming County.
In a private email to Rotunda dated June 16, 2011, Capouillez identified a meeting
to be held with his clients on June 18, 2011, and questioned Rotunda aboutwhich specific
tracts EXCO PA was interested in leasing. Rotunda specifically identified leases that
EXCO PA was interested in obtaining in an email and attachment dated June 17, 2011. In
the email, Rotunda documented EXCO PA's offer of 18% royalty and $3,500.00 per net
acre regarding royalty and bonus consideration respectively for a five year paid up term
lease.
Private email communication between Capouillez and EXCO PA representatives
regarding lease review, potential additional acreage available, and lease finalization
continued into August 2011. On August 17, 2011, Capouillez sent a private email to
Rotunda that identified the need to get the revised lease down "asap" so that Capouillez
could reconvene with the landowner group members involved and present EXCO PA's
offer for consideration. Capouillez sent the private email to Rotunda the day after
Capouillez was informed that Rice Energy had offered an area property owner $5,000.00
per acre.
Buddenbohn became involved in the lease negotiations between EXCO and
Capouillez /GAL on or about August 19, 2011. On that date, Buddenbohn provided
Capouillez with a lease form for review via private email. Capouillez responded to
Buddenbohn on August 23, 2011, and presented his belief that the parties were close in
regard to the actual lease form. Capouillez expressed surprise regarding adjustments
made to the royalty and bonus consideration offered to private landowners. Adjustments
proposed by Buddenbohn included a reduction in royalty percentages from 18% to 17%
and a reduction in bonus consideration from $3,500.00 per net acre to $3,020.00 per net
acre. Capouillez based his surprise on what he identified Seneca Resources, Rice
Energy, and Big Star Energy offering in the area to private landowners (19% and
$4,000.00; $5,000.00; and 18% and $4,000 respectively).
Capouillez stated in the private email, in part, the following
Capouillez, 13 -032
Page 38
There are many reasons why 1 want Exco to be the successful
bidder . . . but at the rate reduction you are proposing, 1
seriously doubt 1 will be able to persuade my group to execute
the lease.
Fact Finding 63 o. The royalty percentage and bonus consideration were subsequently
changed back to the original amounts offered by Rotunda.
Through the competitive bid process and with the approval of his landowner clients,
Capouillez's communications with EXCO PA representatives in relation to lease acreage
available in Lycoming County ultimately resulted in the execution of eighteen leases
between Capouillez /GAL clients and EXCO PA. Capouillez, as a representative of GAL,
signed all eighteen of the leases executed between the private landowners and EXCO PA.
Per the executed lease terms and conditions, Capouillez /GAL was due compensation in
the amount of $20.00 per acre in bonus consideration and 0.75% of all royalties for each
lease.
During this time frame, as described in part above, EXCO PA was negotiating
and /or engaged in leasing of SGL with the PGC. EXCO has had existing lease interests in
effect for SGL Tracts 100A -00, 100A -01, and 100B -01 during the time period of November
2, 2004, through the present. EXCO PA executed a lease for SGL Tract 11413-11 on July
7, 2011, and was negotiating with the PGC regarding this lease as early as January 2011.
Capouillez participated in and /orwas responsible for direction and oversight of the
statewide land acquisition and leasing program during the time frames noted above.
The parties have stipulated that while serving as the BWHM Director for the PGC,
Capouillez represented GAL clients in the competitive bid process by negotiating and
executing leases with EXCO, at a time concurrent with PGC lease negotiations with EXCO
PA on SGL properties, which led to a financial gain to Capouillez /GAL of $31,358.70.
CAPOUILLEZ'S INTERACTION WITH ENDLESS MOUNTAIN ENERGY
Endless Mountain Energy Partners, LLC (also referred to herein as "EME "), is a
natural gas exploration and production company that develops Marcellus acreage in
Clinton and Tioga Counties. While serving as BWHM Director for the PGC, Capouillez
represented GAL clients in negotiating and executing leases in Clinton County at a time
when EME had expressed interest in and /or was actively involved in negotiations with the
PGC for the leasing of SGL in Tioga County. Per the Stipulated Findings, the respective
land and leases were not sufficiently close in time or geographic proximity to enable the
Investigative Division to recommend the finding of a violation of Section 1103(a) of the
Ethics Act in this regard. Stipulated Finding 74 a.
CAPOUILLEZ'S INTERACTION WITH TALISMAN ENERGY U.S.A.
Talisman Energy U.S.A., Inc. (also referred to herein as "Talisman ") is an oil and
gas production company and a wholly owned subsidiary of Talisman Energy, Inc., based in
Calgary, Alberta. Talisman has entered into contracts /agreements for the leasing of oil
and natural gas rights under SGL or has been a joint operator with an entity leasing SGL
for such from at least 2007 through the present. See, Stipulated Finding 78.
Talisman representatives specifically contacted the OGM Development Section of
the Environmental Planning and Habitat Division of the BWHM as early as August 2009
regarding SGL 219, November 2009 regarding SGL 66, and June 2010 regarding SGL
140. Talisman was pursuing its interest in the potential leasing of SGL 66, 140, and /or219
via communication with multiple PGC representatives, including Capouillez in 2010.
Capouillez, 13 -032
Page 39
In his public capacity as the BWHM Director responsible for oversight of the PGC
statewide leasing program, Capouillez interacted with representatives of Talisman and
supervised PGC employees negotiating leases. Capouillez had knowledge of Talisman's
interest in leasing SGL and /or communicated with Talisman representatives regarding
such on at least six occasions between January 2010 and February 10, 2012. While
employed as the Director of the BWHM, Capouillez participated in various meetings with
Talisman representatives in relation to the leasing of SGL, was directly addressed or
copied by Talisman representatives on email to PGC representatives regarding leasing of
SGL, and was courtesy copied on email from PGC representatives to Talisman In relation
to the leasing of SGL.
Capouillez actively communicated in 2009 and 2010 with Talisman representatives
regarding Talisman's interest in acquiring private leases with GAL clients at a time when
Talisman was negotiating for and /or engaged in active leasing of SGL with the PGC and
Capouillez had complete oversight of the statewide land acquisition and leasing program.
Capouillez was responsible for direction and oversight of the PGC statewide land
acquisition and leasing program at all times during the negotiations between Talisman and
the PGC for SGL Tract 219A -13 and 140A -13 and during the negotiations between
Talisman and private landowners represented by Capouillez /GAL.
Talisman's sole source request for SGL 219 was provided to Capouillez via email
on June 4, 2010, approximately one week prior to the execution of at least seventy leases
between Talisman and GAL clients.
Capouillez's 2009 and 2010 negotiations with Talisman representatives in relation
to lease acreage available from clients represented by Capouillez /GAL ultimately resulted
in the execution of approximately 73 leases directly between Capouillez /GAL clients and
Talisman. Capouillez, as a representative of GAL, signed all 73 of the leases executed
between the private landowners and Talisman. Per the executed lease terms and
conditions, Capouillez /GAL was due compensation in an amount range of $50.00 peracre
in bonus consideration and 1.75% of all royalties for each lease.
In addition to the 73 leases executed directly between Talisman and clients
represented by GAL, an additional 221 leases involving Capouillez /GAL clients were
assigned to Talisman from Range Resources and /or EOG Resources. Capouillez played
no role in the assignment of the leases from Range Resources to Talisman or EOG
Resources to Talisman.
Talisman has had existing lease interests in effect for SGL Tract 219A -13 and
140A -13 from November 15, 2011, through the present and October 17, 2013, through the
present respectively.
The parties have stipulated that Capouillez actively represented clients through
GAL, his private consulting business, before Talisman representatives for the leasing of
private lands and had also originally served as a consultant for GAL clients which were
ultimately assigned to Talisman, while simultaneously serving in the position of the BWHM
Director for the PGC, resulting in payment to Capouillez/GAL of an undeterminable amount
during the same time period Talisman was engaged in an existing business relationship
with the PGC regarding the leasing of SGL and was actively involved in negotiations with
PGC representatives supervised by Capouillez for the leasing of additional SGL.
CAPOUILLEZ'S INTERACTION WITH EQT CORPORATION
EQT Corporation is an integrated energy company involved in natural gas
production, gathering, and transmission. In or about December 2009, EQT entered into a
joint venture with EME for the purpose of securing oil and gas leases in northeastern
Pennsylvania, including private as well as SGL leases.
Capouillez, 13 -032
Page 40
In 2010, as the BWHM Director, Capouillez was copied on all correspondence from
the PGC to EQT in relation to the leasing of SGL and had interactions and
communications with various EQT representatives regarding potential SGL leasing.
Specifically, as the Director of the BWHM, Capouillez attended meetings with EQT
representatives in relation to the potential leasing of SGL during the week of April 26,
2010. Capouillez authored correspondence dated May 26, 2010, to Timothy Matthews,
Senior Vice President of American Exploration Company, regarding PGC's intent to
approve the assignment of SGL Lease 014A -01 to EQT subject to certain conditions.
Capouillez, as BWHM Director, also was the specific addressee on correspondence dated
June 4, 2010, regarding potential lease amendments upon assignment of the lease for
SGL014A -01 from American Exploration Company to EQT.
Capouillez's involvement with the assignment of SGL leases with American
Exploration Company to EQT occurred during the same time that he was representing GAL
clients whose leases with EME were assigned to EQT. All of the leases initially executed
between private landowners represented by Capouillez /GAL and EME were assigned to
EQT in June 2010. Capouillez did not, either as an individual and /or as a representative of
GAL, play any role in the assignment of EME leases to EQT.
Capouillez received payment totaling $56,301.34 from EQT as a result of the
assignment of those leases from EME, at a time when he was also serving as Director of
the BWHM.
CONSOL ENERGY, INC.
Consol Energy, Inc. /CNX Gas (hereinafter "Consol ") is a publicly owned producerof
natural gas and coal that has entered into no less than three contracts /agreements forthe
leasing of oil and natural gas rights from under SGL from at least 2010 through the
present.
In April and May 2010, Capouillez inquired of Consol regarding Consol's interest in
leasing property from GAL clients. However, Consol did not execute any leases as a result
of this inquiry.
At the time Capouillez sought interest from Consol regarding the potential leasing of
property from GAL clients, he was involved as Director of BWHM with actions relating to
the assignment of the lease for SGL 195B from Dominion Transmission to Consol. The
assignment of the lease for SGL 195B from Dominion Transmission to Consol was granted
by the PGC effective May 18, 2010. Capouillez signed the PGC Consent to Assignment of
Oil and Gas Lease on behalf of the PGC in his position as BWHM Director.
Consol made payments to Capouillez totaling $643.88 during the relevant time
period as a result of a different lease assignment from Range Resources to Consol in
December 2011. Capouillez was not specifically involved in the negotiations of that partial
assignment, and the parties are in agreement that the amount Capouillez received was de
minimis.
The parties have stipulated that the actions of Capouillez as to Consol do not give
rise to a violation of the Ethics Act. See, Stipulated Finding 105.
As to other oil and gas companies referenced in the Stipulated Findings, the parties
have stipulated that any actions of Capouillez resulting in a private pecuniary benefit
occurred prior to January 10, 2009, and are outside of the applicable limitations period. 65
Pa.C.S. § 1108(m).
Capouillez, 13 -032
Page 41
Effective March 18, 2014, PGC rescinded its approval for Capouillez's
supplementary employment with /through GAL, after receiving recommendations from then
Governor Corbett and legislative leaders for the revocation of Capouillez's supplemental
employment authorization.
Having highlighted the Stipulated Findings and issues before us, we shall now apply
the Ethics Act to determine the proper disposition of this case.
The parties' Consent Agreement sets forth a proposed resolution of the allegations
as follows:
As part of a negotiated settlement agreement, the Investigative
Division will recommend the following in relation to the above
allegations:
That a violation of Section 1103(a) of the Public Official
and Employee Ethics Act, 65 Pa.C.S. § 1103(a),
occurred when Mr. Capouillez, while serving as the
Director of the Bureau of Wildlife [Habitat]
Management, represented clients through his private
consulting business, GAL, in negotiating and executing
leases with gas companies, at a time concurrent to
PGC lease negotiations with the same gas companies
on unrelated State Game Land parcels, which led to a
pecuniary benefit to Mr. Capouillez /GAL.
The Investigative Division has conducted a
comprehensive investigation and review of the
allegations as contained above in paragraph two (2) [of
the Consent Agreement]. After said investigation and
review, and upon a careful review of its investigative
files, the parties, both Investigative Division and
Respondent, have agreed to submit the instant Consent
Agreement and Stipulation of Findings in settlement of
the matter.
In full and final settlement of the alleged violations, Mr.
Capouillez agrees to make payment in the total sum of
$75,000.00 (the "Settlement Amount ") as provided in this
paragraph.
$75,000.00 payable to the Commonwealth of
Pennsylvania and forwarded to the Pennsylvania State
Ethics Commission within thirty (30) days of the
issuance of the final adjudication in this matter.
Following the issuance of a Final Order, and upon
payment of the Settlement Amount, Mr. Capouillez shall
have no further financial obligations under this Consent
Agreement or otherwise arising out of the alleged
violations.
The Investigative Division shall recommend that the
Pennsylvania State Ethics Commission take no further action
in this matter and shall make no referral or recommendations
to any law enforcement or other authority to take action
regarding the Allegations as set forth in the Investigative
Complaint/Findings Report. However, nothing shall prohibit
Capouillez, 13 -032
Page 42
the Investigative Division from seeking to enforce this Consent
Agreement or the Commission's Final Order.
Consent Agreement, at 2.
In considering the Consent Agreement, we agree that a violation of Section 1103(a)
of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when Capouillez, while serving as the
Director of the BWHM, represented clients through his private consulting business, GAL,
in negotiating and executing leases with gas companies, at a time concurrent to PGC
lease negotiations with the same gas companies on unrelated SGL parcels, which led to a
pecuniary benefit to Capouillez /GAL.
As Director of the BWHM, Capouillez's duties included directing the statewide land
acquisition and leasing program, which included the oil, gas, and mineral recovery
program. The BWHM's Division of Environmental Planning and Habitat Protection is
primarily responsible for determining the SGL tracts to be leased, when the tracts are
offered for lease, the method by which the lease is awarded, and negotiation of lease
terms including payments. Capouillez's position as BWHM Director included
responsibilities and authority in the leasing processes.
Capouillez used the authority of his public position as Director of the BWHM in
performing responsibilities and exercising authority as to PGC lease negotiations for SGL
parcels with the very oil /gas companies with which he concurrently negotiated and
executed leases for private clients through his private consulting business, GAL.
During the time period under review, while serving as the BWHM Director for the
PGC, Capouillez represented GAL clients in the competitive bid process by negotiating
and executing leases with EXCO, at a time concurrent with PGC lease negotiations with
EXCO PA on SGL properties, which led to a financial gain to Capouillez /GAL of
$31,358.70.
Capouillez actively represented clients through GAL before Talisman
representatives for the leasing of private lands and had also originally served as a
consultant for GAL clients which were ultimately assigned to Talisman, while
simultaneously serving in the position of the BWHM Director for the PGC, resulting in
payment to Capouillez /GAL of an undeterminable amount during the same time period
Talisman was engaged in an existing business relationship with the PGC regarding the
leasing of SGL and was actively involved in negotiations with PGC representatives
supervised by Capouillez for the leasing of additional SGL.
Capouillez's involvement with the assignment of SGL leases with American
Exploration Company to EQT occurred during the same time that he was representing GAL
clients whose leases with EME were assigned to EQT. All of the leases initially executed
between private landowners represented by Capouillez /GAL and EME were assigned to
EQT in June 2010. Capouillez received payment totaling $56,301.34 from EQT as a result
of the assignment of those leases from EME, at a time when he was also serving as
Director of the BWHM.
Based upon the Stipulated Findings and Consent Agreement, we hold that a
violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when
Capouillez, while serving as the Director of the BWHM, represented clients through his
private consulting business, GAL, in negotiating and executing leases with gas companies,
at a time concurrent to PGC lease negotiations with the same gas companies on unrelated
SGL parcels, which led to a pecuniary benefit to Capouillez /GAL.
As part of the Consent Agreement, Capouillez has agreed to make payment in the
amount of $75,000.00 payable to the Commonwealth of Pennsylvania and forwarded to
Capouillez, 13 -032
Page 43
this Commission within thirty (30) days of the issuance of the final adjudication in this
matter.
At this juncture, we note that there are times, such as in this case, where the legally
correct result is not particularly satisfying. We recognize that the recommended settlement
amount is a fraction of the gain Respondent/GAL is alleged to have received over the
years Respondent was employed by the PGC. However, we are duty bound to observe
the law and to apply the law in a fair and objective manner. The statute of limitations issue
is a critical factor in this case; it impacts not only the conduct that may be reviewed in this
case, but also, as a direct consequence, the amount of the financial penalty that may be
ordered. Based upon a fair and objective application of the law, and in light of the totality of
the facts and circumstances, we determine that the Consent Agreement submitted by the
parties sets forth a proper disposition for this case.
Accordingly, per the Consent Agreement of the parties, Respondent Capouillez is
directed to make payment in the amount of $75,000.00 payable to the Commonweplth of
Pennsylvania and forwarded to this Commission by no later than the thirtieth (30t ) day
after the mailing date of this adjudication and Order.
Compliance with the foregoing will result in the closing of this case with no further
action by this Commission. Noncompliance will result in the institution of an order
enforcement action.
IV. CONCLUSIONS OF LAW:
As the Director of the Bureau of Wildlife Habitat Management ( "BWHM ") for the
Pennsylvania Game Commission ( "PGC ") from approximately December 2, 2006,
through May 18, 2015, Respondent William Capouillez ( "Capouillez ") was a public
official /public employee subject to the provisions of the Public Official and
Employee Ethics Act ( "Ethics Act "), 65 Pa. C.S. § 1101 et seg.
A violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred
when Capouillez, while serving as the Director of the BWHM, represented clients
through his private consulting business, Geological Assessment &
Leasing /Geological Assessment & Leasing, LLC ( "GAL "), in negotiating and
executing leases with gas companies, at a time concurrent to PGC lease
negotiations with the same gas companies on unrelated State Game Land parcels,
which led to a pecuniary benefit to Capouillez /GAL.
In Re: William Capouillez, File Docket: 13 -032
Respondent Date Decided: 8/10/16
Date Mailed: 8/11/16
ORDER NO. 1695 -2
A violation of Section 1103(a) of the Public Official and Employee Ethics Act
( "Ethics Act "), 65 Pa.C.S. § 1103(a), occurred when William Capouillez
( "Capouillez "), while serving as the Director of the Bureau of Wildlife Habitat
Management for the Pennsylvania Game Commission ( "PGC "), represented clients
through his private consulting business, Geological Assessment &
Leasing /Geological Assessment & Leasing, LLC ( "GAL "), in negotiating and
executing leases with gas companies, at a time concurrent to PGC lease
negotiations with the same gas companies on unrelated State Game Land parcels,
which led to a pecuniary benefit to Capouillez /GAL.
Per the Consent Agreement of the parties, Capouillez is directed to make payment
in the amount of $75,000.00 payable to the Commonwealth of Pennsylvania and
forwarded to the Pennsylvania State Ethics Commission by no later than the
thirtieth (30th) day after the mailing date of this Order.
3. Compliance with paragraph 2 of this Order will result in the closing of this case with
no further action by this Commission.
Non - compliance will result in the institution of an order enforcement action.
BY THE COMMISSION,
Nicholas A. Colafella, Chair