Chesapeake attempt to hide settlement failed

To some people, it might have made little difference on Monday when the Fort Worth school district released documents about its $1 million natural gas royalty settlement with Chesapeake Energy.

Not that anybody would think $1 million for local public schools is a small matter. But the release of those documents might seem humdrum.

But in the context of the public’s right to know what government entities are doing and of the state laws on what those entities must reveal, this was a very big deal.

Chesapeake, which drilled hundreds of wells in Fort Worth and Tarrant County during the Barnett Shale natural gas boom, now faces hundreds of lawsuits over royalties it has paid on gas extracted from those wells.

The school district filed one of those lawsuits in 2014, accusing Chesapeake of subtracting unacceptable post-production costs from the district’s royalty earnings. The suit alleged that Chesapeake drove up those costs through sham transactions with related companies.

Chesapeake settled the lawsuit without admitting any wrongdoing, and the school board approved the settlement in January.

But when the Star-Telegram and the city of Fort Worth wanted to see the settlement agreement, the school district asked the attorney general’s office whether its release was required under the Texas Public Information Act.

Chesapeake objected to any disclosure that might put it at a disadvantage in fighting other lawsuits.

Yet Chesapeake had to prove that its privacy or property interests were endangered. To do that, the company relied on a portion of the law that protects information “that, if released, would give advantage to a competitor or bidder.”

The company cited a June Texas Supreme Court ruling that public information advocates have considered a significant setback to open government.

In that case, the court allowed the Boeing Co. to block detailed disclosure of its lease of property from the Port of San Antonio for a military aircraft maintenance facility.

The court reasoned that military contracts are so strictly detailed and the market for doing that work so competitive that a rival that knew Boeing’s overhead costs would have an advantage.

So, did Chesapeake’s argument on the school district settlement reach that bar? No, the attorney general’s office said last week.

Chesapeake did not show that competitors or bidders would get an advantage, as the law requires.

In the public interest, limits on disclosure of information from government entities must be very narrow. Chesapeake’s claim did not measure up.

This story was originally published April 13, 2016 at 6:00 PM with the headline "Chesapeake attempt to hide settlement failed."