N.Y. Senate Fracking Backer Tied to Firm With Gas Lease

Source: Official Senate Photo

Libous represents Southern Tier counties that sit atop the Marcellus Shale, a formation stretching to West Virginia that may hold enough natural gas to supply the U.S. for about six years, according to the U.S. Energy Department. Close

Libous represents Southern Tier counties that sit atop the Marcellus Shale, a formation... Read More

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Source: Official Senate Photo

Libous represents Southern Tier counties that sit atop the Marcellus Shale, a formation stretching to West Virginia that may hold enough natural gas to supply the U.S. for about six years, according to the U.S. Energy Department.

Senator Tom Libous, a champion of fracking in the New York Legislature, is blocking a bill that would delay drilling for natural gas for at least two more years. Passage of the measure would harm the prospects of a real-estate company founded by Libous’s wife and run by a business partner and campaign donor.

The donor, Luciano Piccirilli, operates Da Vinci II LLC, which owns 230 acres near Oneonta, west of Albany. Da Vinci II’s rights to underground natural gas are leased to a drilling company, property and corporate records show.

Piccirilli’s company stands to gain if the 60-year-old Binghamton Republican senator stymies opponents of fracking, in which water, sand and chemicals are injected into rock to free gas. Da Vinci II would get a share of the revenue stream from any well, and the value of the land could rise.

Owners of mineral rights typically receive royalty payments of at least 12.5 percent of gas revenue, according to a 2011 report to the state by Ecology and Environment Inc. (EEI) of Lancaster, New York. Development would “substantially increase” the value of land, according to the study.

Deep Ties

Piccirilli and Libous share deep ties. Da Vinci II was formed by Frances Libous in 2005. Piccirilli also co-owns two Florida properties with Libous and was general contractor for the senator’s $415,000 lakeside house, according to property records and a building permit. Raymond Rolston, a subcontractor who oversaw paving at the home, said in an interview this week that the FBI asked him about his work there.

Bonnie Mariano, a Federal Bureau of Investigation spokeswoman in Albany, declined to comment on the questioning.

Libous said in a radio interview today on Binghamton’s WNBF-AM that he isn’t aware of any FBI investigation and said he supports gas drilling to benefit the region.

“I stand to gain nothing personal from fracking, and I mean that,” Libous said. “I’m doing what I think is right.”

Fracking is one of the most contentious issues before the state legislature. The body in the past two years has legalized gay marriage, approved a measure limiting bullets carried in gun magazines and closed more than $12 billion in budget gaps, all at the behest of Governor Andrew Cuomo, a 55-year-old Democrat.

Yet Cuomo has been calling for lawmakers to better police their ethics after two senators and an assemblyman, all Democrats from the New York City area, have been accused in federal corruption cases since April. Another Democratic senator, Shirley Huntley of Queens, pleaded guilty in January to conspiring to commit mail fraud.

Ban Blocker

It is against that backdrop of triumph and scandal that lawmakers must decide on the fracking ban, a decision that could mean billions for state coffers -- and for investors. The battle pits landowners seeking the type of economic growth seen in Pennsylvania, where thousands of fracking wells have been drilled since 2007, against environmental groups and residents who say it will damage drinking water, render farmland unusable and ruin the quality of life.

Since 2008, New York has had a moratorium on fracking as it studies its environmental effects and develops regulations.

Fracking ‘Mouthpiece’

In March, the Democratic-led assembly passed a bill that would extend the ban for two years. In the Senate, Libous, who as head of the Republican campaign committee oversaw the raising of $10.4 million in the 2012 election cycle, said he would stop a similar measure from coming to a vote.

“I’m going to make sure that it doesn’t,” Libous said in a March interview in Albany.

“Tom Libous is one of the only mouthpieces we have in Albany that has been in support of this from the beginning,” said Dan Fitzsimmons, the president of the Joint Landowners Coalition of New York, a group that supports fracking. “He’s very interested in helping his area.”

Libous represents Southern Tier counties that sit atop the Marcellus Shale, a formation stretching to West Virginia that may hold enough natural gas to supply the U.S. for about six years, according to the federal Energy Department.

The fortunes of his supporter’s company could be boosted by what that shale holds.

Land prices just across the border in Pennsylvania have climbed by as much as 100 percent per acre because of fracking, said Thad DeMulder, a Binghamton-based vice president with RealtyUSA who also runs an office in Pennsylvania.

“We take that as an indication of what would happen in the Southern Tier,” DeMulder said in a telephone interview. “We expect to see a similar price increase.”

Longtime Partners

Piccirilli and Libous have done business together for years. Piccirilli runs a plumbing and heating company in Libous’s hometown of Binghamton, about 180 miles (290 kilometers) northwest of New York City. He has donated at least $28,000 to the senator’s campaigns over the past decade, including $20,000 since 2008, either directly or through companies in his name, according to state records.

Piccirilli and Libous serve together on the board of Spencer, New York-based Tioga State Bank (3572T), which has more than $360 million in assets, according to its website.

The two men are also linked through Da Vinci II itself. The company was started in 2005 by Frances Libous, the vice chairwoman of the state Workers’ Compensation Board, according to documents filed with the New York Department of State. Though their names don’t appear on the founding documents, Tom Libous and Piccirilli were also part of the original firm, according to interviews with both.

Florida Deals

Piccirilli said in a telephone interview last month that he and the Libouses started the company to invest in Florida real estate, until they learned that their mortgage provider required the properties to be held in the names of individuals. In 2005, Piccirilli, Libous and another man, George Slavik, jointly purchased two homes in Naples on the Gulf Coast for about $475,000 combined, Collier County records show.

Da Vinci II sat idle, Piccirilli said, before he decided to use it to purchase property in upstate New York, beginning in 2008. Both Libous and Piccirilli say that by that time, the senator and his wife had left the company, though they said they couldn’t recall an exact date. The senator said he has documents showing the change, though he didn’t respond to a Bloomberg News request to provide them.

“He was going to invest in gas drilling, and I said I would like to leave the LLC because we don’t want to be involved,” Libous said last month in an interview in Albany.

‘Personal Business’

In the radio interview today, Libous said he wouldn’t make the documents public.

“It’s my personal business,” he said. “I’ve disclosed everything I have to disclose.”

Later in the day, however, Libous released a document to the Press & Sun-Bulletin in Binghamton that shows he and his wife left the company in January 2008.

Piccirilli said in the April interview that he didn’t know why the ownership change wasn’t filed with the state. His lawyer would know, he said, declining to provide the attorney’s name.

“There were three original partners with Da Vinci, and the others terminated their involvement 100 percent,” Piccirilli said.

Frances Libous didn’t respond to telephone messages left at her home.

In 2008, Da Vinci II began buying property within 30 miles of Binghamton.

Mineral Rights

In New York state, where the value of gas locked in shale is uncertain because there’s been little drilling, mineral rights are valued at $300 to $1,000 an acre, according to a person who has invested in such deals in both states. The person couldn’t speak publicly because of company policy.

In Pennsylvania, the rights are valued at between $5,000 and $35,000 an acre, depending on how quickly wells can be developed, the person said.

Da Vinci II first bought almost six acres in Afton, a Chenango County town, then about 20 acres in Lapeer, property records show. In 2011 it acquired another seven in Afton, where a natural-gas well drilled in sandstone was planned, according to property and Environmental Conservation Department records.

In 2010, Da Vinci II bought 230 acres for $329,000 from Peter Hudiburg in Plymouth, including the rights to gas, oil and minerals underground, according to the deed and Hudiburg. A lease allows a company the right to drill there, property records show. Under state law, Da Vinci II must receive at least 12.5 percent of the revenue from gas extracted.

Gas Lease

The current lessee is Erie, Pennsylvania-based EmKey Resources LLC, which owns and operates more than 100 gas wells in central New York, according to property records and its website. Worth Snyder, EmKey’s president, declined to comment on the lease.

Four years before Piccirilli and Libous founded Da Vinci II, they collaborated on another real-estate venture. Piccirilli was general contractor for the construction of Libous’s house on the shore of Oquaga Lake, according to the building permit filed with the town of Sanford, about 30 miles east of Binghamton.

The estimated construction cost was $110,000, according to the permit. Tom and Frances Libous purchased the property in December 2000 for $30,000, property records show. The property is currently assessed at $415,000, said Becky Ottens, Sanford’s assessor.

Rolston, a former partner in the company that did the paving at the lake house, said an FBI agent visited him in early March, asking about the project, including whether his firm was paid. He said he didn’t know whether the firm received money for its work.

‘Wild’ Climate

“With the climate in Albany right now, which is a little wild, I’m not surprised that different folks aren’t looking into anything and everything they’ve been fed,” Libous said today. “I’m sure a lot of us are being looked at in a lot of different ways. It’s disturbing to me.”

Emmanuel Priest, a spokesman for Libous, didn’t respond to a request for comment on Piccirilli’s role in building the senator’s lakeside home or the questioning. Piccirilli didn’t respond to phone messages requesting comment on his role.

The house has balconies off the back of each of its two floors, with views of the lake, which is three miles in circumference. The home has a two-story, two-car garage and the two buildings are clustered around a circular driveway with an angel statue at its center.

Above a garage doorway hangs a sign that reads “Fahgettaboutit.”

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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