(from the Oklahoma Watch)
Gov. Kevin Stitt’s pick to head the Commissioners of the Land Office lacks the advanced degree needed to become permanent secretary and has owned a company involved in legal disputes over oil and gas leases.
The Legislature would have to change the job’s qualifications to allow acting secretary Brandt Vawter to become secretary.
Vawter was appointed in June to lead the Land Office, which manages a $2.4 billion portfolio of oil and gas assets, agricultural land and commercial property to benefit Oklahoma education. Vawter formerly worked as a landman at Chesapeake Energy Corp. and XTO Energy Inc. before forming his own oil and gas development company, Monticello Investments LLC.
Vawter replaced Harry Birdwell, who retired as Land Office secretary in June after eight years with the agency. Stitt nominated Vawter to the job in June, and the commission voted 4-0 to hire him as acting secretary for $130,000 a year. He started July 1.
The secretary of the Land Office should have an advanced degree, according to state law, but Vawter has a bachelor’s degree in economics from Texas Christian University. Questions have also arisen about some recent lawsuits against Monticello Investments, alleging the company failed to pay bonuses for oil and gas leases and inaccurately recorded leases at county offices.
Vawter declined to give an interview and said through a Land Office spokeswoman that he had no comment on the lawsuits because they were settled.
A spokeswoman for Stitt said the governor wanted a Land Office secretary who had extensive experience in managing and developing minerals “to ensure the agency delivers the strongest return for Oklahoma’s public schools.”
“The governor’s legal team did extensive outreach and research on Mr. Vawter’s business record and company, and they found no evidence of wrongdoing in past cases and also ensured there were no current conflicts of interest and no CLO leases in the portfolio of Monticello Investments LLC,” Stitt spokeswoman Donelle Harder said in a statement.
Vawter “stepped away” from Monticello when he took the job as acting secretary, according to a news release announcing his appointment. The governor’s office did not give details on how Vawter separated himself from his business. Previous secretaries of the Land Office, including Birdwell and now-Attorney General Mike Hunter, put their assets in trusts or blind trusts while in office.
Vawter’s wife, Amber Vawter, is also a managing member of Monticello. The Ethics Commission stopped requiring agency heads to file financial disclosure forms in 2016.
The land commissioners have held just one regular meeting, in August, since Vawter took over July 1. Aside from Stitt, the commission has four other members: Lt. Gov. Matt Pinnell; Superintendent of Public Instruction Joy Hofmeister; State Auditor and Inspector Cindy Byrd; and Secretary of Agriculture Blayne Arthur.
A horizontal well drilling rig lights up the night sky in Kingfisher County in 2017.
Revising Qualifications
Harder said if the agency continues to run smoothly, Stitt plans to work with lawmakers to change the law to allow a person’s professional tenure to be equal to an advanced degree in qualifying for Land Office secretary.
The Land Office was rocked by a scandal a decade ago when Roger Q. Melson Jr., a former director of audits for the royalty division, was accused of embezzling about $1.2 million in royalty checks and lease payments meant for the agency. Melson, who said he had a gambling problem, was sentenced to 10 years in prison and was released in 2014.
In response, the Legislature in 2010 tightened up the agency’s internal processes and added requirements for the secretary position.
With Vawter, House Minority Leader Emily Virgin, D-Norman, said she was concerned Stitt was ignoring or didn’t know the law when it came to the qualifications for secretary. She said the 2010 updates were bipartisan, gaining approval by a Republican-controlled Legislature and then Gov. Brad Henry, a Democrat. She cited the Land Office’s role in funding public schools
“It seems clear that they made the judgment that when you are going to be in charge of this huge amount of assets and that it’s going to something as important as funding public schools in Oklahoma, that you need to have not just experience in the field but also an advanced degree,” Virgin said.
Lawmakers have changed qualifications for heads of other agencies. In 2016, the law was changed to allow Joe Allbaugh to take over the Department of Corrections without the required five years of corrections experience. Lawmakers also removed the requirement for a master’s degree for Steve Buck to become director of the Office of Juvenile Affairs.
Details of Lawsuits
Two companies sued Vawter’s Monticello Investments over lease bonuses and document filing in recent years. In the lawsuits, the parties accused each other of withholding information or failing to meet terms of deals, but ultimately settled.
Osage Land Co. sued Monticello in 2016 over the sale to Osage of $1.2 million in oil and gas leases in Canadian and Grady counties. Monticello told Osage it had secured all of the leases, but Osage discovered Monticello only owned about 25 percent of the leases. Osage tried to cancel the deal, but Monticello did not return more than $119,000 held in escrow, according to the Osage petition.
“Monticello represented to Osage it had actually paid for the leases to be sold to Osage, and in fact even gave to Osage executed checks made out to lessors which Osage later discovered were never delivered to the lessors,” Osage said in a March 2017 filing.
In reply, Monticello said Osage waited too long to begin its title examination of the leases and asked for an extension in exchange for a nonrefundable deposit equal to the escrow amount. Monticello said the deal fell apart after Osage tried to lower the per-acre price of the leases.
“Monticello had a contract with Osage. Osage unilaterally concluded that Monticello was making too much, and then tried to chisel Monticello out of $300/acre,” the company said. in its response.
The case was settled in October 2017, five months after an Oklahoma County district judge issued a split decision on a motion for summary judgment. The judge said Osage breached the terms of the original deal but left whether it should get the escrow money back as an issue for trial.
In another case, Monticello was sued in 2017 by Equitable Royalty Corp. for not paying lease bonuses, the payments for executing on a valid lease, for minerals leased in Custer and Grady counties and recording uncertified copies of leases with the county clerk. Equitable said Monticello’s business model amounted to a “lease and release scheme.”
“The lease and release scheme enables the defendants to speculate on oil and gas leases without making any capital outlay to mineral owners like plaintiff,” Equitable said in an August 2017 court filing.
As part of the lawsuit, Equitable’s attorneys issued subpoenas to 15 mineral owners they believed had been affected by Monticello in the same way as Equitable.
Monticello responded that Equitable didn’t disclose that some of the leases were only for oil and gas at certain depths and therefore those leases had no value. Monticello also accused Equitable and its attorneys of disrupting its business by getting others to file unwarranted lawsuits against the company, court records show. Both companies dismissed their claims when the case was settled in November 2017.
Attorneys for Osage and Equitable did not return calls seeking comment.
Reach reporter Paul Monies at pmonies@oklahomawatch.org and (571) 319-3289.