WRAL Investigates

Critics: Sanford businessman doesn't belong on fracking board

Posted July 25, 2012 6:02 p.m. EDT
Updated July 27, 2012 5:18 p.m. EDT

— A state government watchdog and a Lee County resident are calling for an appointee to a new board that oversees natural gas exploration in North Carolina to be replaced.

House Speaker Thom Tillis recently named Ray Covington as one of his four appointments to the 15-member Energy and Mining Commission. Covington is co-founder of North Carolina Oil and Gas, which manages mineral rights leases for landowners in return for a share of future profits.

"The first rule of ethics and being part of government is that you shouldn't be in a position to benefit personally financially from what you do," said Jane Pinsky, director of the North Carolina Coalition for Lobbying and Government Reform.

Covington was appointed to a seat meant for conservationists. Although he has done some conservation work, Pinsky said he has a glaring conflict of interest in serving on the energy commission.

"He may be one of the most honorable people in the world. He may have an open mind," she said, "but as always, it's the appearance to citizens that there is somebody being taken care of."

Covington declined to comment, but he previously told WRAL News that he doesn't see any conflict.

"Help me out a little bit. Where do you see the conflict of interest?" he said. "I'm a landowner. Are you saying that we should exclude all landowners (from the commission)?"

In fact, Covington manages a family real estate partnership that owns 54 parcels of Lee County land totaling more than 1,000 acres. Lee County is in the heart of the area that proponents say is ripe for gas drilling, meaning that the Covington family could earn money off mineral rights leases if the commission starts issuing drilling permits.

"Flat out, I don't think he has a place on the board," Lee County resident Laura Johnson said.

Johnson said she had never met Covington until he wandered past large "No Trespassing" signs and up the half-mile-long driveway on her 40-acre spread last spring.

"He pretended he was lost, and he said, 'Hey, you know, I have land around here. I've always wondered what was back here,'" she said. "Through the course of the conversation, he got to the point, which was he wanted to lease our property through his company."

Johnson called him out about the encounter at a public hearing on drilling that the state Department of Environment and Natural Resources held in Chapel Hill in March.

"He first tried to deny it, and so I just kept saying, 'No, it was you. You were there. I have your card. I know it was you,'" she said.

Covington said in an email to WRAL News that he didn't realize he was on private property when he met Johnson and called the incident a "misunderstanding." He said he was just trying to warn Johnson about unscrupulous agents who might offer her a mineral rights contract that gave her "essentially no protections."

"Truthfully, I just felt like it was really dishonest," Johnson said. "I felt like it was a pretty dishonest way to go about it."

Tillis said he appointed Covington on the recommendation of Rep. Mike Stone, R-Lee.

Stone couldn't be reached for comment, but his campaign finance reports show he received $1,000 from the Covington family in the last couple of years.

"It's crony capitalism," Pinsky said. "You know, we're taking care of our buddies."

"The fact is, he's going to make a direct profit from this activity," Johnson said. "If he owns a company that's going to be making money on it, then in my opinion, he has no business being on a board that's supposed to regulate it."

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