Va. inspector general probes AG office actions

Cuccinelli refused to answer questions about the investigation at a news conference on his education platform Tuesday, but he issued a written statement a few minutes later predicting his office would be cleared.

“We’re glad the Inspector General’s Office has been looking into this case because they’re going to find that our office acted appropriately,” the Republican said.

The investigation was prompted by a judge’s criticism of Assistant Attorney General Sharon Pigeon’s emails to attorneys for EQT Production Co. and CNX, which are being sued by southwest Virginia landowners seeking nearly $30 million in natural gas royalties tied up in state-mandated escrow accounts. U.S. Magistrate Pamela Meade Sargent said in court papers in early June that she was shocked that Pigeon seemed to offer the Pittsburgh-based energy companies’ attorneys advice on how to fight the lawsuits.

“We’re looking into it,” Inspector General Michael Morehart said in a telephone interview Tuesday. “Our job is to make sure, as best we can, that the resources of the commonwealth are utilized effectively and appropriately for their intended purpose.”

The dispute dating back more than a decade involves thousands of wells the companies drilled in southwest Virginia to remove methane gas from coal seams. The landowners argue they were cheated out of millions in royalties, which the Virginia Gas and Oil Board placed in an escrow account until the matter is settled.

Democratic state Sen. Phillip Puckett, whose district includes the counties where the coalbed methane has been drilled, asked the inspector general to investigate whether the attorney general’s office acted properly. However, Morehart said he launched the investigation on his own after receiving information about “alleged inappropriate utilization of commonwealth resources.”

He emphasized that he is not specifically investigating Cuccinelli. The IG’s office was created in 2011 to investigate allegations of waste, fraud, abuse or corruption in state agencies, but it lacks authority under state law to investigate elected officials.

That didn’t stop Cuccinelli’s Democratic opponent, Terry McAuliffe, from criticizing his opponent over the issue. McAuliffe, whose electric car company is under investigation by the Securities and Exchange Commission, called on the attorney general to recuse his office from the natural gas royalties case.

“It is completely inappropriate that Cuccinelli continues his role in the case despite being under investigation for his conduct,” McAuliffe said in a written statement.

Cuccinelli previously recused his office from defending the state in a tax dispute with nutritional supplement maker Star Scientific because he had owned stock in the company and had accepted lake house vacations and private plane rides form its chief executive.

Even before Tuesday’s development, McAuliffe used the gas royalties dispute for campaign fodder. His campaign is running a television commercial featuring a southwest Virginia resident complaining about the attorney general’s actions in the case and saying she doesn’t trust Cuccinelli.

The attorney general has defended the actions of Pigeon, who advises the Virginia Oil and Gas Board. He said earlier this summer that she had a narrow interest in the case — defending the Virginia Gas and Oil Act, which he said attorneys for the landowners were trying to strike down as unconstitutional.

He also rejected “in the strongest possible terms” any suggestion that campaign donations from Consol Energy, the parent company of CNX, have influenced his office’s handing of the case.

In her June opinion recommending that the landowners’ claims be certified as a class action, Sargent said Pigeon’s counsel went beyond constitutional issues.

“Shockingly, these emails show that the Board, or at least Pigeon, has been actively involved in assisting EQT and CNX with the defense of these cases, including offering advice on and providing information for use on the Motions before the court,” she wrote.

In court papers, an attorney for EQT called Pigeon’s comment “a gratuitous personal observation” that is irrelevant to the case.

Don Barrett, an attorney for the landowners, has accused the Gas and Oil Board and Pigeon of being “stooges” for the gas companies.

Republicans have criticized Puckett because he is an officer in an Abingdon bank that holds the royalties in escrow.

– By Larry O’Dell