RICHMOND, Va. (AP) — An assistant state attorney general improperly advised two energy companies on how to defend themselves against class-action lawsuits filed by southwest Virginia landowners, but she did so without her bosses' knowledge, according to a report issued Tuesday by the Inspector General's Office.
Inspector General Michael F. A. Morehart wrote that the attorney "inappropriately used commonwealth resources in support" of private litigation and provided legal strategy to the two companies.
The attorney, whose name was redacted in the report, claimed she was involved in the litigation to defend the constitutionality of a law that is at the center of the case.
The class actions have been filed by attorneys representing landowners who say they were cheated out of tens of millions of dollars in royalties by the companies, which had drilled for coalbed methane gas on their properties.
The inspector general's report said it uncovered no evidence that the assistant AG received instructions from her bosses at the Attorney General's Office and that she acted alone.
A spokesman for Attorney General Ken Cuccinelli, the Republican candidate for governor, said the report backs what Cuccinelli has said all along.
"Attorney General Cuccinelli had no prior knowledge of the content of these emails and he did not authorize them," spokesman Brian Gottstein said. "The attorney general has, however, taken steps to ensure this doesn't happen again."
The investigation was sparked by the assistant attorney general's email correspondence with EQT Production Co. and CNX Gas Co., which prompted a federal magistrate to write in June that she was shocked by the advice to the companies on how to fight the lawsuits. U.S. Magistrate Pamela Meade Sargent identified the assistant state attorney in court papers as Sharon Pigeon, counsel for the Virginia Gas and Oil Board.
Morehart examined dozens of emails from Pigeon to the companies and found that while some pertained to the constitutionality of a state law, others offered advice to the energy companies on how to defend themselves in the class actions.
In one of the emails, for instance, she "provided advice to the defense counsel on how to defeat a claim to coalbed methane against the energy companies ... based on procedural challenges that (she) believed could be filed in a state court proceeding."
The report also cited other instances which Pigeon provided "litigation strategy" to attorneys for the energy companies when she claimed to be defending the constitutionality of a state law, the report concluded.
The report quoted Pigeon as saying "you don't intervene and stand over the corner somewhere. You intervene on one side or the other."
Some of Pigeon's emails, however, were dated after the court affirmed the constitutionality of the Virginia Gas and Oil Act.
Cuccinelli's office said Pigeon continued to be involved in the case after the law had been upheld because attorneys for the landowners continued to challenge it.
The inspector general's report said it interviewed the chairman of the Gas and Oil Board and he did not request that Pigeon provide any counsel to the companies beyond "the constitutionality of the Virginia statute."
The board, the report said, did not request that Pigeon support the companies "in any litigation or discussions dealing with potential class action by the plaintiffs."
Morehart said Pigeon's superiors became aware of her emails only after attorneys filed a discovery motion in the case, which led to Sargent's criticism. She was removed from the case.
Democrats had seized on the disclosure because Cuccinelli has received more than $100,000 from CONSOL Energy, the parent company of CNX. Cuccinelli rejected "in the strongest possible terms" any suggestion that campaign donations from CONSOL had influenced his office's handling of the case.
"The innuendo and outright accusations by some that the attorney general was working against landowners have been proven to be patently false," Gottstein said in a statement.
Despite the report, a spokesman for Democratic gubernatorial candidate Terry McAuliffe said Cuccinelli's office "improperly used taxpayer dollars to help out-of-state energy companies in their efforts to avoid paying Southwest Virginians natural gas royalties. "
Spokesman Josh Schwerin said Cuccinelli should return CONSOL's campaign contributions.
Steve Szkotak can be reached on Twitter at http://twitter.com/sszkotakap