At least since 2009, some Dallas residents have been seeking the truth about what transpired between Dallas City Manager Mary Suhm, along with other city officials, and Trinity East Energy LLC regarding leases of city-owned property for potential natural gas exploration and production. In 2007, the City Manager was facing significant budget shortfalls and looking for revenues to plug the gap of about $35 million. At that time she published a Request for Proposal (RFP) seeking companies interested in leasing city-owned land for natural gas exploration and production based upon the money being made by Fort Worth, Mansfield, Arlington, Grand Prairie and other cities in the Barnett Shale of North Texas. Responses were slow in coming because nobody really believed there is any gas of a viable quantity to be found in Dallas. As famed oilam T. Boone Pickens stated many years ago, "Nobody will ever make any money drilling for oil and gas in Dallas." Somebody forgot to send the memo to City Manager Mary Suhm.
In 2008, the City of Dallas entered into lease agreements with XTO Energy, Inc. (prior to its acquisition by ExxonMobil) and Trinity East Energy LLC for a sum totaling $34,551,314.07, of which about $19 million came from Trinity East. The leases entered into specifically stipulated that the monies received were for leases of city-owned land, that some of that land was located on city park land and in the floodplain of the Trinity River, and that the Dallas Development Code prohibited drilling on park land or in the floodplain, and that the City Council would have to amend the current applicable ordinances to allow drilling in parks and the floodplain before Specific Use Permits (SUPs) could be authorized to change zoning classifications to allow a heavy industrial activity on land not already zoned for such activity. Further, the leases specified that drilling permit would be required for each well, and that the SUPs had to be acquired before the drilling permits could be requested. There was never a quid pro quo for a right to drill in exchange for the monies paid to the City of Dallas, contrary to what representatives for Trinity East, Dallas Mayor Rawlings and others keep saying. There is no threat of a lawsuit if Trinity East is denied the SUPs and drilling permits.
Referring to Page 14 of the Presentation to City Council on February 6, 2008, below, in the section entitled "Lease Details" is the stipulation, "Trinity East Energy will also have a 3-year extension option, but they must pay the lease bonus again." The original lease was for a three year period, and just as that period was about to expire the City Council voted to extend the lease by 30 months at no additional cost to Trinity East (see second document below.) That agreement was in direct violation with the provision stipulated for extending the lease. Dallas citizens got cheated out of the bonus momey for the land lease because the City Council voted to give a 30 month extension without charge to Trinity East, which had waited until just before their lease was about to expire to request SUPs, and then were blocked from getting them while the City Council toyed with the idea of re-writing the gas drilling ordinance when any revisions would not have been applicable to an already existing agreement. The free extension was done under the false claim of protecting the city from being sued for not allowing Trinity East to drill when no such guarantee was ever made in the original or amended lease agreements, the latter of which is the second document below.
Referring to Page 26 of the Presentation to City Council on February 6, 2008, below, in the section entitled "Drill Sites" is the stipulation, "There will be no drilling on City park land", and below that on the same page it stipulates, "All drill sites will still have to undergo the Special Use Permit (SUP) process as approved by Council in September, 2006 and must comply with all other laws, codes, and regulations." The presentation made to the City Council clearly states that drilling WILL NOT BE ALLOWED in city parks. Yet, Trinity East representatives claim they had "a deal" that would allow them to drill in parks, and they cite the fact that some of their leases are on park property as proof of that when the original leases clearly state that drilling will NOT be allowed in parks or in the floodplain unless and until the City Council amends the Dallas Development Code, specifically Article V, Section 51A-5.103.1(a) which states, "A person commits an offense if he removes or injures any vegetation within a floodplain", Article V, Section 51A-5.104, which stipulates precisely what activities are allowed on city park land, mineral mining NOT being one such authorized activity, and Article XI, Section 42.3.1E (iii) which states, "A Special Use Permit may not be issued for mining on city park land".
City of Dallas Gas Drilling Presentation, February 6, 2008
In the amended lease agreement below, signed and dated July 1, 2011, the original initial lease period is changed from 36 months to 66 months, which was due to the City Council illegally granting a free 30-month extension (see page 2, item (3) for details), but it further stipulates, "and so long thereafter as oil and gas is produced from the Land in paying quantities. For purposes of this Lease, the phrase "paying quantities" means revenues from a well exceed the well's operating costs by at least fifteen percent (15%) over any given consecutive one (1) year period." It is interesting to note that the agreement specifically states "oil AND gas", not "oil OR gas", which technically means that if the well is not producing BOTH oil AND gas, then it is in default of the lease terms and therefore subject to revocation. Contract law is all about precise meaning, and the wording of the lease agreement binds both parties to the declarations agreed upon when the lease is signed. Acting on behalf of taxpaying citizens of the city, our City Council has a fiduciary responsibility to be good stewards of public trust, which includes lands, properties and mineral rights that are publicly owned, and failure to protect the property of citizens is a crime under state and federal laws.
Amendments to the City of Dallas' Oil and Gas Lease with Trinity East Energy, July 1, 2011
The third document below presents an interesting argument made by Dallas Cothrum and Mark Housewright of Masterplan Consultants in a letter addressed to the Dallas Gas Drilling Task Force on January 10, 2012, as the task force was preparing to wrap up their work and present their recommendations for changes to the existing gas drilling ordinances to the City Council. These comments are especially interesting because the new ordinances would NOT apply to the existing lease agreements which were signed and executed under the current ordinance, and forcing them to operate under more stringent rules would amount to an Ex Post Facto requirement that is clearly un-Constitutional in the United States of America. But, Cothrum and Housewright allege that the proposed recommendations would include "deal killers" that would preclude Trinity East, or anybody else, from exploring for and producing natural gas in Dallas.
In the document below Masterplan argues regarding the section titled "Parks" that "prohibiting drilling and production in public parks is a complete reversal of the City's position when the leases were sold. In fact, two of the pending drill sites are on park lands (one adjacent to L.B. Houston Golf Course and one on the Gun Club). Not only were these sites advertised in the original RFP, but they were also specifically identified by city staff before the leases were purchased. It will result in a breach of agreement."
MasterPlan Letter City of Dallas Gas Drilling Task Force, January 10, 2012
Considering that the original lease agreement and existing Dallas Development Code, as referenced above, stipulates that drilling is prohibited on city-owned park land, that converting that park land to drilling uses requires compliance with Texas Parks and Wildlife Code requiring public notice, a public hearing with public comment and a public vote to make the conversion, and that specific proof has to be offered that "there is no feasible and prudent alternative" to using the park surface as a drill site", the arguments by Cothrum and Housewright appear to fly in the face of fact unless there is some secret, behind-the-scenes deal that was hammered out between somebody employed by the City of Dallas and Trinity East that has not been made public, in which case a criminal offense for corruption and fiduciary malfeasance has been committed by some unidentified person or persons that possibly include the City Manager, the former mayor and/or the current mayor, who was on the Parks Board at the time these leases were executed.
If, in fact, some deal was made that stipulated Trinity East would be allowed to explore for and produce natural gas on the surface of city park land and in the Trinity River floodplain, then documentation of that deal needs to be made public and properly scrutinized by the current City Council and the Office of the City Attorney. If it is found that a secret deal that is contrary to existing laws and ordinances was made, then those parties to that deal should be charged with appropriate criminal offenses and prosecuted for those offenses. Clearly, the public interest will not have been served by backroom deals that contradict provisions of the Dallas Development Code, and citizens have an absolute right to know if our elected, appointed or hired public servants have been committing criminal acts in their roles as public servants.
It is time for the truth to be known. Somebody is lying about these matters. The question is, are the lies coming from the City of Dallas, or are they coming from Trinity East and Masterplan Consultants? Perhaps it is time for an investigation by the FBI and the US Attorney's Office if that is what it takes to reveal the truth.
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