STATE IMPACT PENNSYLVANIA – The Pennsylvania Department of General Services is continuing to call on state lawmakers to allow it to audit natural gas companies’ efforts to hire businesses owned by women, minorities and veterans.
As NPR reported last year, the oil and gas industry is among the worst performing for women and African Americans, in terms of both pay gaps and employment representation.
Pennsylvania’s oil and gas law, known as Act 13, directs drillers to provide “maximum practicable contracting opportunities” to companies known as small diverse businesses.
The law doesn’t set quotas, but it does require unconventional gas producers to respond to an annual state survey and use the Department of General Services’ (DGS) database to find certified small diverse businesses.
Most natural gas companies don’t use that database, according to the latest DGS report.
On the annual survey, a majority (57 percent) said they didn’t use the database to search for contractors. Twenty-two percent reported using it. The rest didn’t answer the question.
As StateImpact Pennsylvania reported, many gas companies used to ignore the diversity survey entirely. The first year it was required, fewer than a third of the companies responded.
Since then, the response rate has improved dramatically. This year it was 81 percent. It’s partially because DGS sent second, third, fourth, and fifth email reminders to companies that hadn’t replied. The agency now says most firms are complying with the requirements.
According to the Marcellus Shale Coalition, a trade group, all of its member companies responded.
“The MSC is committed to working closely with local businesses and supply chain partners, which support tens of thousands of family-sustaining jobs throughout the Commonwealth,” coalition president David Spigelmyer said in an email.
Natural gas companies reported awarding subcontracts to 67 small diverse businesses last year, resulting in $128.4 million in payments. However, DGS says it was unable to substantiate those figures.
The agency could verify only 15 contracts to small diverse businesses, resulting in $4.3 million — a fraction of what was reported.
DGS attributes the discrepancy to “subcontractors who may meet the requirements to be considered a [small diverse business], but have not completed DGS’s self-certification and verification,” the report authors write. “Although this is problematic, it also presents DGS with the opportunity to engage and assist these subcontractors to complete the certification and verification process.”
The report calls on the legislature to create sanctions against gas companies that fail to follow the requirements. DGS also wants auditing authority, to ensure drillers maintain policies prohibiting discrimination and provide proper payment to contractors.
DGS made similar recommendations last year.