KCC member’s recusal from injection-well case raises ethical concerns, environmental group says

TOPEKA – An official with the Kansas Sierra Club said Friday that the group was pleased when a member of the Kansas Corporation Commission recused himself from a decision this week because of a potential conflict of interest. However, the environmental group remains concerned about further potential conflicts.

KCC member Dwight Keen, the owner of an oil and gas production company who has served since April on the commission that regulates oil and gas production in Kansas, said in a statement that he had been open with Kansas lawmakers about his business interests and that he was only following through on commitments he made during his confirmation process.

The KCC is a three-member body that regulates oil and gas production and pipelines, public utilities and some aspects of the trucking industry.

“We brought this up several times, and it made no sense,” Joe Spease, chairman of the Sierra Club’s fracking committee, said in an interview. “Any body, any governing regulatory body that is regulating a certain category of business has to come from outside the area that needs regulation. So to put a person in as a commissioner who owns an oil and gas business and then ask him to regulate that industry doesn’t make sense. You can’t get a more blatant conflict of interest.”

The case before the KCC this week concerned an investigation into the fact that the KCC had issued more than 2,000 underground injection-well permits since 2008 to oil and gas companies that failed to provide the federally required 30 days of public notice.

Those wells are used to dispose of waste material that is a byproduct of oil and gas production. Those wells have also been linked to earthquakes in Kansas in recent years, some of which have caused property damage.

The Sierra Club, Douglas County and several individuals had urged the commission to revoke all of those permits and require the companies to submit new applications with adequate public notice.

On Thursday, though, the KCC issued an order saying the short notice period did not violate anyone’s due process rights and that there was no need to revoke any of the permits.

Keen recused himself from that decision, saying he had promised to do so during his confirmation process in cases that presented a potential conflict of interest.

In a written statement, he said the investigation began before he was on the commission but that it concerned 317 operators in the state.

“Some of the licensed operators affected by the outcome of this Docket may fall within the purview of my recusal commitment noted above,” Keen said. “Accordingly, to eliminate the possibility of any potential ethical conflict or even the perception or appearance of a conflict, it is necessary for me to invoke my recusal commitment and recuse from participating in this Docket.”

However, Keen said that does not mean he would recuse himself from all oil and gas cases, which make up a large percentage of cases the KCC handles.

“The circumstances of this Docket should be distinguished from those prospective KCC docketed matters that will generally affect all Kansas licensed oil and gas operators alike or that exclusively affect operators with whom I have no conflict,” he said. “In either of these circumstances, I do not intend to recuse.”

Gov. Jeff Colyer announced on March 30 that he was nominating Keen to an open seat on the KCC. In addition to owning an oil and gas company, Keen is also an attorney and financial analyst who previously worked as a securities attorney with the National Association of Securities Dealers Inc. in Washington, D.C., and he is a former president of the Kansas Independent Oil and Gas Association.

During his confirmation hearing before the Senate Utilities Committee in April, Keen submitted a document in which he made several commitments concerning his business interests. Among those were pledges to give up his management role in his company and to place his financial interests in a blind trust.

He also committed to recusing himself “from rendering any decision or judgment regarding any matter before the KCC that specifically, uniquely, and exclusively pertains to” his oil and gas interests.

For his role on the KCC he is paid $136,576 annually, according to state records.

Sen. Marci Francisco, D-Lawrence, who serves on the Utilities Committee, said in an interview that she recalls the committee being satisfied with those commitments.

The committee endorsed his nomination, and on April 7 the full Senate voted to confirm him, 40-0. His four-year term expires March 15, 2022.

“We’re asking people with experience to step up and take these jobs, and conflict of interest comes with that,” Francisco said in an interview.

She added, however, that if Keen is forced to recuse himself from a large number of cases, lawmakers may have to take action.

“The Legislature still has a role to play in its oversight of the KCC and funding of the KCC budget,” she said. “If they’re not able to take action because of the membership of the KCC, then the Legislature will have to find a way to step up and take action if it’s needed.”

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