Feb. 19 (Bloomberg) -- When a Texas landowner took his fear that a gas driller had poisoned his well to federal regulators, the company, Range Resources Corp., turned around and sued him for conspiring “to harm Range.”
In Pennsylvania, a state lawmaker who criticized the company was dubbed “completely unhinged” by a Range representative and had his fundraising e-mails to its executives leaked to the local newspaper.
Critics say the Fort Worth-based company, which pioneered the use of hydraulic fracturing in Pennsylvania’s Marcellus shale, has taken a hard line with residents, local officials and activists. In one case it threatened a former EPA official with legal action; in another it stopped participating in town hearings to review its own applications to drill, because local officials were asking too many questions and taking too long.
“Range Resources is different from its peers in that it chooses to severely punish its critics,” said Calvin Tillman, the former mayor of Dish, Texas, and an activist who has been subpoenaed and issued legal warnings by Range. “Most companies avoid the perception of the big-bad-bully oil company, while Range Resources embraces it.”
The company counters that it enjoys a great working relationship with lease holders, residents and officials in the overwhelming majority of the 250 municipalities where it operates, but faces determined opponents in a few.
Matt Pitzarella, a company spokesman, said Range faces two intractable foes in western Pennsylvania: the local state representative, Jesse White, who had pressed Range executives to raise more money for his campaign before souring on the company and its practices; and John Smith, an attorney who represents townships that have had contentious relationships with Range and homeowners who say their water was contaminated.
“Range wants nothing more than to have positive working relationships in the places we work,” Pitzarella said. “It’s fair to say that we may take a different approach from others from time to time, but no different than a lot of individuals or businesses.”
“It’s just in a different light given the work we do. We accept that and embrace it,” he said.
Range’s fights with residents, local officials and anti-drilling activists highlight the increasingly contentious ties between the booming gas industry and landowners and officials who say greater local oversight is necessary.
It’s an approach that may backfire, as Range is reliant on regulatory approvals, which require support from local officials and citizens.
“When companies get in this serve-and-volley game, it doesn’t serve them well,” John Patterson, a senior adviser at the Reputation Institute in New York, said in an interview. In general, gas and oil producers have a worse reputation with the public than consumer companies, and so, “you are really playing from behind,” he said.
Hydraulic fracturing or fracking, in which water, sand and chemicals are shot underground to break apart rock and free trapped natural gas, has brought a boom in energy production to Pennsylvania, Texas and Colorado, and lowered natural gas costs. That’s lured chemical and other manufacturers to invest in the U.S.
It’s also brought complaints from some nearby landowners and farmers, who say leaks from holding ponds, spills and underground ruptures have led to contamination of their water. There are more mundane worries as well.
“I don’t like the gas flaring, the traffic, the pollution or the noise,” Carl Zeno, a resident of Robinson Township, Pennsylvania, who lives near a site where Range wants to drill.
Range says it has moved to deal with the concerns. It was the first company to disclose fracturing fluids for each well, pioneered water recycling and helped pass stronger rules for cementing and casing of wells, Pitzarella said. It also is a large supporter of agricultural youth scholarships, the United Way and other area charitable causes, he said.
“We’re ready and willing to listen, adapt and do whatever is technically and legally allowable to ensure our work is done in the most harmonious manner with the community,” he said in an e-mail.
Harmony is not always possible.
White, whose district is based in Cecil Township where Range has its Marcellus headquarters, was once a legislative ally of the company. Range circulates a video of him praising the company for bringing jobs and development to his district, which is south of Pittsburgh.
In just August 2010, White e-mailed Pitzarella to tell him he offered to speak with lawmakers who were coming to his area to meet with Stephanie Hallowich, a homeowner who had sued Range over water contamination.
“I believe the words ‘diffusing any potential misinformation’ may have been used in my e-mail,” White wrote, according to the communications, which were provided to Bloomberg by Pitzarella. In June of that year, White also complained to company officials that a recent event raised campaign funds “considerably short of the intended target.”
This isn’t the first time these e-mails are showing up in public. Late last year they were leaked to a reporter at the Pittsburgh Tribune-Review, and were used as the basis of a front-page story.
For Pitzarella, who said he confirmed the authenticity of the e-mails to the reporter but didn’t leak them, they paint a clear picture: White didn’t get the fundraising he wanted from Range, and so turned against the company. “It was never enough,” he said in an interview.
It was after a radio call-in show to discuss these e-mails that Pitzarella sent the e-mail to White and to Range colleague Scott Roy with a picture of that day’s Tribune-Review story and a one-line commentary: “He’s completely unhinged.”
Pitzarella confirmed that he was referring to White, and said it was in response to White “coming unraveled” in the radio interview.
White said the leaks and the “head games” in sending him that e-mail, are all part of an attempt to “shut me up.”
“Range wants people to believe that I am this wild-eyed crazy person,” White said. “Their thought is to intimidate me.”
Instead of fundraising issues, it was growing complaints from local residents and seeing what he views as Range’s actions strong-arming local townships that turned him against the company, White said in an interview. It was only after White questioned state regulators’ testing of water where residents say gas-drilling contaminated their supplies that his e-mails to Range showed up in the newspaper, he said. Around that same time a pro-drilling group also sponsored robo-calls to his constituents, urging them to call White’s office and complain that he opposes the gas industry.
“It’s a non-stop onslaught,” he said. “This has taken over my life.”
The problems are not just with White.
Range filed two applications to drill in Pennsylvania’s Robinson Township last year. As the town moved to review those bids, Range said it faced a series of hurdles to get clearance to drill, and it filed a letter with the town saying the delay “violates Range’s due-process rights.”
Range’s lawyer declined to answer questions at a town hearing in December to discuss its own application. Robinson was unfairly dragging out the process, and should just approve its application, the company said in documents filed with the town. Pitzarella blamed the delays on town attorney John Smith, who has a private practice taking on drillers, including Range.
“I don’t know where that comes from,” Brian Coppola, the town supervisor, said in an interview. “If anything, he is the guy who tries to smooth things over.”
After local residents raised questions about the health impact of fracking, Smith recused himself from the decision last month. In general “my role is very limited to advising the board to what the regulations are,” Smith said. “They overstate my role.”
Robinson, which already has cleared other Range wells, was just doing its appropriate due diligence, according to Coppola. After Range refused to answer the board’s follow-up questions, it voted down their applications on Feb. 11.
Even before that decision, Range filed a lawsuit against the town, arguing that the town had unfairly delayed approval.
In nearby Cecil Township friction between the town and company got so bad that the two sides had a public meeting in December aimed at resolving their differences.
Dating back to 2011, relations had been tense. After the town reworked a pending zoning rule to appease Range, the company sued it, contesting the legality of those changes because they were done too quickly, said Andrew Schrader, vice chairman of the board of supervisors there.
Despite the meeting in December, Range sent the board a legal notice in January that it may face another lawsuit from the company soon.
“I hoped Range would abide by the statements of December and not use lawyers and lawsuits. This is a matter of credibility,” Schrader said. “Actions speak louder than words.”
Last year it countersued a Texas landowner, Steven Lipsky, who said Range’s drilling practices contaminated his water well with explosive methane. It argued in local court that Lipsky conspired to defame the company by getting his air and water tested by Alisa Rich, president of Wolf Eagle Environmental consultants, and taking that complaint to the U.S. Environmental Protection Agency and to the media.
“The object of the conspiracy was to make false and damaging accusations that Range’s operations had contaminated Lipsky’s water well,” the company said in its suit, filed in July 2011.
While the case is still being fought in court, Lipsky stands by his charge of Range’s culpability: “It’s ludicrous,” he said, referring to the case. “They’re ruthless.”
In December 2010 the EPA determined that Range’s gas drilling near Lipsky’s home had caused “extremely high levels” of methane, which can be explosive, and benzene, a carcinogen, in his water. Fifteen months later, the EPA dropped the matter after the company agreed to test 30 local water wells and turn over relevant testing data to the agency.
Separately, its lawyer issued a cease-and-desist letter to anti-fracking blogger Sharon Wilson, who first published a video of Lipsky holding a hose hooked up to his water well, which had so much methane in it that he could light it on fire. Wilson has blogged about the EPA action against Range, and the Texas court fight between Lipsky and Range.
Wilson’s blog “continued misrepresentations about Range, Range’s actions in the past and its intentions with regard to this lawsuit subject your client to potential liability,” Andrew Sims, a lawyer representing Range wrote to Wilson’s lawyer last June 25.
Sims wrote that Range “respects the rights of citizens to exercise free speech, including Ms. Wilson’s right to promote her anti-oil and gas development agenda.”
Range has also fought the EPA, and its former top official based in Texas, Al Armendariz.
Range’s allies in the oil and gas industry and in Congress seized on a video that surfaced from 2010 in which Armendariz is seen comparing the agency’s actions against polluters to Roman conquerors suppressing Turkish towns by crucifying residents.
As a result of those comments becoming publicized, Armendariz resigned in April. He remained in Range’s sights. In October he was quoted telling reporters that in the Range case with Lipsky, “the best available data I was presented by my staff indicated that the driller’s natural gas was ending up in private drinking water.”
“Your statements are contradicted by facts, science, independent expert analysis,” David Poole, Range’s general counsel, said in a letter to Armendariz on Oct. 23. “You have chosen to publicly make false comments about Range and we must insist that you cease from making further false and disparaging comments against Range.”
Through a spokesman, Armendariz, who now works for the Sierra Club, declined to comment.
While Range may succeed in silencing some critics, that doesn’t mean it will win the war. Its actions could make it harder for the company to get applications approved by town officials, or lead to a popular blowback against the company in the places it is trying to expand, said Brenda Wrigley, a professor of public relations at Syracuse University.
“Public relations is about relationship building and relationship management,” Wrigley said in an interview. From what she was told of the Range case, “it doesn’t seem that they are using reputation management approaches that are advisable.”
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