Monday, February 27, 2012

Hydraulic fracturing policy battle waged along local fronts New York, Pa. apply contrasting approaches to home rule

A Marcellus well drilled in Susquehanna County

For almost four years, officials in the legislative and executive branches of New York state government have been engaged in the conflict over shale gas development. Last week, the public focus turned to the judicial branch, with two high-profile rulings in test cases before the state Supreme Court. In both cases, New York's low court upheld local bans on shale gas development –first in Dryden then in Middlefield. As these landmark cases work their way through the appeals process, governor Andrew Cuomo’s staff will be attempting to finalize the SGIES, the policy document intended to provide guidelines for DEC officials to begin issuing permits for high volume hydraulic fracturing. Meanwhile, lawmakers will continue to consider (pending the SGEIS outcome) a host of options and proposals of their own offered over the years to regulate high volume hydraulic fracturing in the state.

While the shale gas controversy spreads across the three branches of state government, there are dozens of low profile but equally important developments shaping up in town halls, from Albany to Buffalo. The outcome of the local governing process will have a critical role in defining the impact on shale gas development in decades to come in the northern sections of the Marcellus and Utica shales, which extend under Appalachia and well into upstate New York. While not all towns are pursuing outright bans, they are raising sticky questions about who will pay to regulate gas development. These questions are at the heart of substantial resistance to drilling in a state that has become a national example of the influence of the anti-fracking movement.

Earlier this month, Yates County legislators unanimously agreed to request state funding for increased workloads of local public health officials expected with gas well oversight. As reported by The Chronicle Express, local health officials will be the primary point of contact for health and water-related complaints related to drilling activities. Their duties will also involve educating the public about drilling, and overseeing testing and mitigation measures necessary to protect local water resources. Legislators told reporter Gwen Chamberlain that they expected additional resolutions to fund other costs in the planning and transportation departments related to shale gas.

The complaints about unfunded mandates related to the state’s developing policy are not new, and Penn Yan officials are not the only ones raising them. Municipal officials from all over the state documented similar complaints in comments and testimony submitted on the latest draft of the SGEIS. A person that knows this all to well is Stuart Gruskin. Gruskin, who works as an environmental policy consultant, was assistant DEC Commissioner under governor David Paterson’s administration. In that role, he was largely in charge of the initial two years of the policy review that brought about the first draft of the SGEIS. In his view, the state is in a good position to address the issues of local government control and funding before the final guidelines are issued.  “If there was ever a time to dedicate the resources to address these issues it's now,” Gruskin wrote me in a recent email. “It would be a good launching point to start talking about alternatives to the state being responsible.” Ideally, funding and solutions to problems, would come from “collaboration among local governments, industry, and stakeholders -- without the risk of the funding getting high-jacked for other state purposes.” That, he concluded, “will take some creative thinking as well as agreement” and success is dependent on “a high level of collaboration.”

Collaboration of stakeholders with diverse and sometimes competing interests to regulate a process as controversial as high volume fracturing in New York would indeed be an achievement; but then, that’s how our government is supposed to work. Some towns are dead against it, and others are for it. On this level, leaving the matter in the hands of local officials makes sense. But there are issue, including waste disposal and water consumption, that reach beyond any given locality and even state lines. Fracking waste – including brine and large volumes of chemical solutions -- produced in New York state, for example, would become another state’s problem, as New York lacks treatment plants, injection wells and policy to dispose of it.

Meanwhile Pennsylvania, with a history and culture of mineral extraction antithetical to New York's, continues to follow a much different path regarding shale gas policy.  Earlier this month, both houses of the Pennsylvania legislature restricted municipal zoning authority on drilling operations. Under the new law, municipalities have no control over well citing or hours of operation, and only limited control over setbacks. Most oil and gas operations, including wells, pipelines, and waste pits will be permitted uses in all districts. In return, lawmakers have allowed an impact fee for each well, roughly equivalent to a 1 percent to 3 percent tax on natural gas extraction. True to governor Tom Corbett’s policy, this keeps Pennsylvania as one of the least restrictive states in which to drill.

New York and Pennsylvania straddle some of the largest gas reserves in the world. While the geology is similar, their political and policy approaches could not differ more. In the context of history, future generations will surely be able to measure one against the other in terms of successes and failures.

Friday, February 24, 2012

BREAKING NEWS: Middlefield ruling favors anti-frackers Second State Supreme Court ruling upholds local ban

The anti-fracking movement won a second major legal battle today when the New York State Supreme Court ruled on rights and restrictions concerning shale gas development.

Acting Supreme Court Justice Donald F. Cerio, Jr. ruled in favor of the Town of Middlefield’s ban on hydrofracking,. The ban, issued by the Otsego County town in September, prompted a claim by Cooperstown Holstein Corp. that the ordinance denied rights of parties to reap economic benefits of a lease to develop mineral rights on 400 acres within the town. The plaintiff also argued that the state’s authority to permit wells supersedes a local municipality’s authority to ban it.

I link to the ruling is available here.

Cerio ruled that state law “does not serve to preempt a local municipality  … from enacting land use regulation within the confines of its geographical jurisdiction.” Additionally, “local municipalities are permitted to permit or prohibit oil, gas and solution mining or drilling in conformity with such constitutional and statutory authority.”

The ruling is likely to encourage restrictions in upstate New York communities with populations disinclined to accept risks associated with high volume hydraulic fracturing. The process, commonly known as fracking, extracts gas from rock by injecting pressurized chemical solutions into the ground. Resistance, based principally on concerns over water contamonation, has been especially strong in New York’s major cities, including New York City, Buffalo, Binghamton and Syracuse, as well as in rural communities in the Finger Lakes and Catskills.

On Tuesday Supreme Court justice Phillip R. Rumsey upheld the right of the Town of Dryden, in the Finger Lakes region, to ban mineral extraction activities. The case stemmed from a complaint filed by Anschutz Exploration Corporation, which argued that state permitting laws regulating oil, gas, and mineral extraction superseded local ordinances.

Both the the Middlefield and Dryden cases are among the first in New York to test the issue known as home rule, or the right of local governments to make their own decisions about regulating the drilling industry. As reported in a post earlier this week, lawyers involved with home rule cases told me that the Middlefield decision – decided by the state’s lower court -- would likely be appealed regardless of the outcome because of the high stakes. Oneonta and other places in upstate New York sit over massive shale mantels, including the Marcellus and the Utica, which are thought to hold some of the richest natural gas reserves in the world.

Drilling, spilling, testing: Is this “routine” for Pa.?

Officials test near a spill at s drilling site in Franklin Forks
I toured northern Pennsylvania countryside this week with photographer James Pitarresi to get some current shots of drilling operations in the context of local communities they impact. I’ve made this trip to the Endless Mountains region dozens of times in recent years, and every time I find it enlightening.

First stop: Lockhart’s Lunch Counter and Gas Mart. I wanted to get some shots of Don Lockhart, one of the many people featured in Under the Surface. Don, who has run the lunch counter for 30 years, represents a pro-drilling position, and he points to his business as a reason why. Since 2008 his store is frequented by truckers, landmen, equipment operators, roughnecks, and industry people and locals who fill up on gasoline and food, and sales have been booming. The addition of a photographer and a journalist made for an interesting mix of people in the solitary store on the cross roads of South Montrose. It got even more interesting upon the arrival of Vera Scroggins, an anti-fracking activist. Vera, a Long Island native who moved to Susquehanna County decades ago, keeps a close and critical eye on drilling operations in the Endless Mountains fields and woods, and she agreed to guide a roadside tour for me and James. As in old-time westerns, the conversation at Lockhart’s counter stopped as Vera – a well-known figure in this small town -- passed through the door, her small frame backlit against the light passing through the storefront glass.  I was within earshot of one person who uttered, under his breath, “Uh-oh. Here’s trouble.”

James and I excused ourselves and headed out the door with Vera for the next leg of our trip. She led us to several active sites visible from public roads. As we approached the final one on a hill off Route 29 in Franklin Forks, we pulled over to allow several oncoming flatbeds hauling oversized hardware to squeeze past. At the site, a plume of flaming gas shot from a ground. There were various tanks assembled around the pad. To New Yorkers, from a state where shale gas development is on hold pending an environmental review, this might to be a compelling scene, but it’s nothing extraordinary by Susquehanna County standards.

As James framed the shot, I looked around and noticed men in bright blue jump suits and hard hats, coolers in hand, walking down the dirt road. Just above the pad, they stepped off the road into a rocky streambed. It was impossible for me to ignore the men, or the large DEP letters on the back of insulated one-piece suits. Upon questioning, I learned that this, apparently, is also becoming a more commonplace occurrence. I asked whether their activity was related to the EPA investigation of water pollution in 60 homes in the Dimock, a township to the south. They said no. This was a “routine” sampling. They declined to answer the obvious questions this raised. For that information, I later dialed up the DEP press office, where spokeswoman Colleen Connolly reiterated that the testing I inquired about was “routine,” and, upon further questioning, explained it was in connection with a “minor” spill. They were testing for, among other things, arsenic, bromide, magnesium, zinc, and lithium. Results were not yet available. She referred me to the DEP data base for more information.

From that online resource, I learned that the site, operated by WPX Energy, had in the last six months been written up for nine violations (with one enforcement action) ranging from lack of erosion control to “failure to properly store, transport, process or dispose of a residual waste.” The violation that caught my eye, however, was related to a spill of an undisclosed volume of diesel, and a faulty liner that allowed the pollution to seep into the ground. This, I deduced, was behind the “routine” testing, although the data base didn’t go into that level of detail.

The site -- the Hollenbeck well -- is about 15 miles north the Dimock Township and Carter Road, where the EPA technicians continue to sample water in 60 homes, after the federal agency determined that pollution is creating health hazards in at least four residential water supplies in the middle of a gas field, and operations related to drilling are a primary suspect. The DEP began the investigation in 2009 under governor’s Ed Rendell’s administration, which found Cabot Oil & Gas responsible for methane pollution that caused one well to explode and posed hazards in others. Governor Tom Corbett’s DEP declared the matter to be resolved in 2011, before the federal EPA took over as the lead agency early this year. The reason, according to  EPA Regional Administrator Shawn M. Garvin, is to “fill information gaps” about drilling’s impact on water supplies.

As a reporter trying to answer persistent questions about the safety of shale gas development, I hope these information gaps don’t become routine.

Wednesday, February 22, 2012

Fracking ban tests Constitutional rights from the ground up Lawyers reflect on Dryden ruling, pending Middlefield case

The New York State Supreme Court’s decision Tuesday on the Dryden Home Rule case favoring opponents of hydraulic fracturing sets the stage for critical legal battles to come.

The decision by justice Phillip R. Rumsey, upheld the Town of Dryden’s right to ban mineral extraction activities. The case stemmed from a complaint filed by Anschutz Exploration Corporation, which argued that state permitting laws regulating oil, gas and mineral extraction superseded local ordinances. (New York's Supreme Court is at low court in the state's judicial sytem.) 

How important is this? Attorneys with stakes on both sides of the fracking fight in New York state told me that the decision is the first block on which a body of case law will be assembled. That’s relevant because the Rumsey ruling will be a consideration in subsequent rulings. But it also leaves room for additional interpretation and arguments that may come with an appeal, or with counter suits.

Elmira attorney Chris Denton, who represents landowners seeking mineral leases, explained that the ruling involved “issues of first impression.” In this regard, lower court arguments “tend, on both sides, to need more time to develop and flesh out.  There is little or no time for vetting. On the appellate level, more parties will weigh-in and more points of view will be discussed. The issues in this case have statewide and national significance and will therefore generate many articles and panel discussions prior to the filing of appellate briefs.”

Deborah Goldberg, attorney for the environmental advocacy organization, Earthjustice, agreed with Denton’s assessment that this was the first of multiple cases testing the home rule issue, but she also sees it as a milestone. “As the first decision on the issue, it’s definitely helpful” to parties arguing that municipalities have the right to control land use within their borders. This argument leaves regulation of the technical aspects of drilling to the state, but not land-use decisions. “Towns see this as a matter of local aesthetics. They want to protect their rights for a community to determine its own character, rather than having a company decide that.”

Industry attorneys have the options of appealing the case, or filing a suit against the town for impeding the rights of town residents to develop their mineral resources. This type of litigation, known as a “takings” suit, was filed in September by Cooperstown Holstein Corp. against Otsego County’s Town of Middlefield, after the town passed a drilling ban similar to Dryden’s. According to the suit, the plaintiff leased nearly 400 acres to a gas drilling company, and the ban would prohibit the parties from reaping the economic benefits of that lease. Drilling opponents argue that the rights of property owners and gas companies to profit from gas lease arrangements are not unlimited.

The outcome of the Middlefield case, which is pending, will serve as another critical test that could also apply to New York state’s permitting policy, now under final revision and review in the form of a document called the SGEIS, that would ban drilling anywhere within the New York City and Syracuse watersheds, and other sensitive places.

Tom West, the attorney for Anschutz, said today he thought the Rumsey ruling should be contested on principal. He added that he was unsure whether Anschutz would appeal the decision, however, because the industry is becoming discouraged by regulatory road blocks in New York, and its leases are nearing expiration in Dryden. Regardless, West fully expects the outcome of the pending Middlefield case to be appealed by the losing side because of the stakes involved. "They will list every reason they can for this to go to the Court of Appeals," he said. "This needs to work its way through the system."

This legal fight is relevant to anybody living over the vast footprint of the gas-rich Marcellus and Utica shales, extending north from Pennsylvania into upstate New York, and west into Ohio. The Dryden ruling, Denton said, “will galvanize the landowners who want to develop their natural resources.” Goldberg, likewise, sees a growing number of elected officials taking up the fight representing towns in upstate New York where hydraulic fracking is seen as a dangerous intruder.

Tuesday, February 21, 2012

BREAKING NEWS: Small town wins big fracking case Home Rule decision allows ban of shale gas exploration

With a landmark decision issued today by the New York State Supreme Court, local governments suddenly gained a significant measure of control over the hydraulic fracturing debate.

While the New York state DEC continues it’s multi-year task to figure out how to permit shale gas wells, the court issued a summary judgment in the matter of Anschutz Exploration Corporation versus Town of Dryden. Dryden won, and one word explains why that ruling is a big headache for the industry and a huge victory for anti-fracking activists. Precedent.

Following the political disposition of the small town in the Finger Lakes Region, Dryden leaders passed an ordinance last August banning the controversial process – fracking -- to extract gas from shale by injecting high volumes of pressurized solution into the ground. The zoning ordinance was swiftly challenged by the oil and gas industry. The industry, specifically the West Law Firm representing Anschutz, argued that the state had the sole authority to regulate the industry as stated in the Oil, Gas and Solution Mining Law. To do this, the state must follow policy outlined in the Generic Environmental Impact Statement, which applies general guidelines to the approval of gas drilling within the state’s border, without taking into account many localized variables and the dispositions and circumstances of individual town governments.

This process is rooted in law last amended in 1981, long before high volume fracking made shale gas development feasible. In 2008, the state began updating its permitting guidelines to account for shale gas by drafting an amendment to the GIES --  a supplemental, or SGEIS. While Pennsylvania pushed ahead with shale gas development, New York stopped permitting until the new guideline could be finalized, a process mired in dissention and yet to be completed. The anti-fracking backlash grew – especially in the Catskills and Finger Lakes regions with a history of land preservation over mineral extraction; and the moratorium gave Dryden – one of the most active anti-fracking towns --  a chance to pass a zoning ordinance that was quickly challenged by Anschutz, which holds leases for mineral rights on more than 22,000 acres in the town.

Supreme Court Justice Phillip R. Rumsey in Tompkins County ruled today that the language of the original state law was too vague to expressly prohibit Dryden from making its own laws to control drilling, a concept known as home rule.  “There remains an absence from the OGSML [Oil, Gas and Solution Mining Law] of clear expression of legislative intent to preempt local zoning control over land use concerning oil and gas production." The ruling also noted that the OGSML was “last amended more than thirty years ago. Long before the potential use of hydrofracking to recover natural gas from the Marcellus Shale in New York could have been anticipated. “

Some of the richest parts of the Marcellus and Utica shales extend from Pennsylvania into southern and central New York, where the gas industry has not been uniformly welcomed by towns as it has in Pennsylvania. Given what’s at stake – the likelyhood that one ban could lead to another, and another -- the industry is likely to appeal the Dryden decision, or possibly pursue other legal options. One of those options is a "takings claim", which seeks compensation for landowners unable to capitalize on their mineral rights due to government restrictions. 

Friday, February 17, 2012

Montrose officials try to curtail public speech at meetings

Tensions rose at a Montrose Borough Council meeting Tuesday when
council members voted to limit public comments and refused interviews.
Add another fracture line in Susquehanna County, Pa, the epicenter of the shale gas controversy.

As reported in a previous post, the remote countryside, 30 minutes south of New York state’s border with Pennsylvania, continues to be a decisive front in a landmark battle over the role of hydraulic fracturing in the energy future of the United States. The conflict began in Dimock in 2009, when a group of residents attempted to hold Cabot Oil and Gas accountable for pollution of residential water wells as the company began drilling into the Marcellus Shale. Eventually the Pennsylvania Department of Environmental Protection sided with the residents, and in late 2010 the agency ordered Cabot to build a pipeline to deliver fresh water to affected homes around the Carter Road area. With this, a group called Enough Already organized against the DEP and the pipeline plan. Enough Already, representing residents and businesses dependent on incomes from drilling, sided with Cabot. They argued that complaints about water problems were self-serving and bad for business. After Tom Corbett won the gubernatorial election, the DEP changed its position and sided with Cabot. The pipeline proposal was rejected, and drilling continued. Finally, officials at the federal EPA uncovered evidence suggesting the water problem could extend far beyond the homes experiencing problems on Carter Road; and with that the federal agency took over the investigation from the DEP earlier this year.

Now, in addition to EPA versus the DEP, Cabot versus residents, and neighbors versus neighbors, a fight has broken out between local elected officials and the Fourth Estate. The unfolding events in the Cabot gas field -- including the Montrose Borough just north of Dimock -- have drawn attention of national news outlets off and on, but the area is geographically too remote for daily coverage by national outlets. Regional media, however, have been making the trip to attend public meetings to chronicle the issues dividing the community. Some of the most committed coverage has come from PaHomepage, including WBRE-TV and WYOU -TV, serving Northeastern and Central Pennsylvania, the Scranton Times Tribune, and Sue Havenrich, a journalist and author in upstate New York who writes The Marcellus Effect blog.

Montrose Borough Council members are apparently uncomfortable with this coverage, aided by cameras and tape recorders as allowed by law. On February 8, after citizen reporter Vera Scoggins came to a council meeting with a video recorder, all the council members abruptly got up and left, refusing to answer questions from the press or anybody else in attendance. On Tuesday, things got more bizarre. Without opportunity for public comment, as required by law, the council passed a “code of conduct measure to restrict comments and the use of cameras and recording devices during meetings. 

Apparently the role of a free press in government affairs is not something these public officials are comfortable with. Council President Tom LaMont refused to answer questions, and justified his position by stating he hasn’t talked to reporters, as a matter of policy, for the 15 years he has been elected. Unaccustomed to the spotlight, and possibly unfamiliar with the notion of a country built on the foundation of open government, where elected are held accountable by the public and a free media, LaMont and other council members are attemptimg to shut down the public debate on drilling, water contamination and other issues that have been the source of unwelcome dissonance at their meetings.

When PaHompage reporter Joe Holden stood outside the meeting hall with a microphone and camera Tuesday in an attempt to get council members to elaborate on their policy, he reported he was pushed and shoved from behind by councilmen Sean Granahan and Craig Reimel -- a claim supported by shaky footage of the incident. “It raises the hair on my neck,” Holden – a 10 year veteran of broadcast journalism -  told me this week. “It raises red flags when somebody puts their hands on a reporter or member of the public who is attending a public meeting to pay attention to the process.“

While the station maintains a neutral position on the hydraulic fracturing issue, it will clearly embrace the fight to uphold Pennsylvania’s open government laws and free speech in general. “There should be no gray area here with the First Amendment,” Holden said. “We are going to stand up to our rights to take this on. We will push our First Amendment rights, and see how far they want to push back.

It's hard to know what council members think, because they refuse to comment. If the intention of the council is to try to control the spin of the monumental fracking controversy, they are going about it the wrong way. On principal, the council’s strategy – to attempt to shut down dissenting voices – is illegal and an affront to basic constitutional freedoms. From a public relations standpoint, it simply builds credibility of critics who claim elected officials in Pennsylvania are too often covering for the gas industry. Whether that claim is true of not, the council’s handling of the controversy simply reinforces public suspicion that institutional cronyism and self-serving interests flourish in the absence of public discussion and out of the media’s reach.

Thursday, February 16, 2012

Shale gas subset of broader on-shore drilling movement

Open storage pits used to store drilling waste are part of a national debate
over the impact of on-shore drilling for oil and gas. This photo is from a report
 by the USGS outlining a study to exame brine contamination to aquatic
 resources from petroleum development in the Williston Basin

A brief trip to Naples, Fla. this week reinforced a point about the hydraulic fracturing debate: It’s not all about natural gas, and it’s not all about the northeast.

If you live in upstate New York, as I do, it’s easy to get the impression that the epicenter of the debate is here, where the state's delivery of new energy policy is experiencing a painful labor owing to the intensity of the controversy over fracking. But keep in mind that the fight over the fate of the Marcellus and Utica shales is a subset of a national debate over the role of on-shore drilling as a primary source of the nation’s energy. Hydraulic fracturing is an effective way to extract not only gas, but oil; and the controversy is relevant to anyplace that sits over “tight” carbon formations that have gone unexplored because, until now, they were thought to be inaccessibly trapped in rock.

A story in Sunday’s Bloomberg News by reporter Peter Orszag, quotes Jim Mulva, chief executive officer of ConocoPhillips: "The (hydraulic fracturing) revolution has spread to domestic oil production. And it may track the path it followed with natural gas. We just don't know yet. But it looks promising." The Bakken Shale in North Dakota and the Eagle Ford play in Texas are two examples of hydraulically fractured rock bearing lucrative flows of oil; and there is potential for oil production from many other tight formations yet to be discovered under the lower 48. So it was that, while eating breakfast in Naples a day after reading the Bloomberg story, I was greeted with a familiar headline: Florida Bills: Drill in State Parks. The article, by Mary Wozniak of the New-Press, detailed legislation to open Florida parks for drilling. This would mean “areas such as the 70,000-acre Fakahatchee Strand Preserve State Park could eventually be home to oil wells as well as endangered orchids and other species such as the endangered Florida panther, and drilling in the 23,000 Corkscrew Regional Ecosystem Watershed could be allowed as well as hiking.”

Wozniak's story did not specifically mention hydraulic fracturing. But it is central to the broader on-shore drilling issue. Partly because hydraulic fracturing is unregulated by the federal government, domestic carbon reserves that were once unworthy of necessary capital investment are now desirable for big oil companies, who can exploit them without the hindrance of having to comply to the Safe Drinking Water Act. There is still economic risks in playing the future markets of gas and oil, of course, and environmental risk in developing them on an unprecedented scale. Staking entrepreneurial risks on new frontiers is the American way, but seldom, if ever (when factoring in global warming) have the ramifications of the outcome, both positive and negative, spread so far. 

Increasing domestic petroleum reserves will tend to lower prices. That may be good for the economy in the short run, but bad for a country and a world trying to wean itself from fossil fuel and develop a sustainable future. Put another way, the use of high volume hydraulic fracturing will help ensure that Carbon remains King in the search for cheap energy. Inertia of developing renewable energy sources will increase as political and financial capital is committed to exploiting tight oil and gas reserves. High volume fracturing has been labeled by drilling industry proponents as a bridge to the future. The slogan implies that the future will hold renewable energy, but it really holds more fossil fuel.


Friday, February 10, 2012

Decision on fracking will mark start of next battle in NY

Demonstrators hold an anti-fracking rally in the Capitol building in Albany
Any decision from the Cuomo administration will face formidable challenges
So when will shale gas caravans rumble into the Empire State?

Gov. Andrew Cuomo told an editorial board at the Syracuse Post Standard this week that he expected a “decision” in “a couple of months” on shale gas policy in New York. I credit political convenience in keeping the governor from adding this crucial point: A decision does not equal resolution. Even if an administrative decision is finally reached, it will be merely the starting point for a series of legislative and legal battles that must be resolved before full-scale shale gas development comes to New York State. 

The Post Standard report of the editorial board meeting, by Glenn Coin and Mike McAndrew, paraphrases Cuomo explaining that “if the state decides to go forward with hydraulic fracturing” it would impose a fee structure to pay for regulatory oversight. It then quoted Cuomo: "Whatever we decide here on hydrofracking, I want people to have confidence in that statement."

Implicit in these remarks is the notion that the Cuomo administration could also decide against allowing the type of high-volume hydraulic fracturing necessary for shale gas development. But it must be added that, from a legal standpoint, a ban is a long shot. As one source close to the process in Albany told me, the DEC “has a statutory obligation to address permitting in New York. A decision not to would be legally complicated.” In short, it’s a tricky thing to deny rights of a particular industry or person to exploit natural resources on private land, especially given the longstanding tradition of that practice in this country.  It’s also far from a sure thing that the state will issue, in coming months, a final version of the SGEIS, the long-awaited policy guideline for permitting shale gas wells. Uncertainty stems from the amount of work that has to be completed to review and respond to tens of thousands of comments, and satisfy due diligence in a process under close public scrutiny and bound to face challengers looking to exploit technical flaws. A more likely scenario is that the state will issue its final draft in the third quarter at the earliest, possibly later. This will serve as a baseline for the legislative and legal battles to begin.

Meanwhile, the low price of gas is discouraging the industry from exploring and developing new regions. If and when the price of gas rises, it will drive incentives -- legal, capital, and scientific -- to pry open the doors to yet unexplored reserves under New York. These reserves are attracting a lot of interest. The Marcellus has already been proven along the Pennsylvania border, and the geology suggests that it will bare the same results in upstate New York. International companies, including Talisman and Exxon Mobile, have already paid hundreds of millions of dollars for mineral rights to land in the Southern Tier. The exploitable part of the Utica shale, which is under the Marcellus, extends much further north, well into Central New York.

The Millennium Pipeline bisecting the southern part of the state and the Dominion Pipeline through Central New York (including Madison County) provide the backbone of the necessary infrastructure to move the gas. Another incentive: The Utica and Marcellus are near major metropolitan markets in the northeast. They also collectively provide what is known in the industry as “stacked horizons,” meaning that one drilling platform can yield production form more than one pay zone.

The shale gas reserves have been there for 400 million years and are not going anywhere, at least before the next ice age. But I’m guessing the political and economic wild cards on which the future of shale gas development rests will continue to offer surprises. It’s hard to know how those will play out, but I can safely offer this prediction: In coming years, policy and the economy – two dynamic variables on which the future of shale gas development in New York rests– will likely be different from today.  


Wednesday, February 8, 2012

Signals from Albany indicate no rush for shale gas in NY Low prices ease pressure, but pause may be temporary

Contractors for the EPA test water at a Dimock, Pa home. The federal
investigation is one of many factors influencing policy in New York
Those holding hopes that shale gas development will soon flourish in New York should take note of recent signals from Albany that suggest the rush is off north of the Pennsylvania border --- at least for now.

Rather than a can-do attitude and ambitious deadlines that have previously marked New York's approach to developing policy for the development of the Marcellus and Utica shales, we are now routinely reminded by administrators and politicians of the amount of work that has to be done before effective policy can be produced and uncertainties regarding environmental impacts can be settled. One of those politicians in Senator Tom Libous, representing residents in Broome County who live over a potentially lucrative drilling fairway for both the Marcellus and Utica shale’s. Libous, a ranking Republican, sits on the New York DEC’s advisory panel for shale gas, and his public stance can be read as a barometer of the mood in Albany toward high volume hydraulic fracturing. Until recently, Libous was bullish on shale gas development. To fully appreciate his change of heart, it’s worth comparing his remarks at a pro-drilling rally in Bainbridge, which I covered as a reporter for the Press & Sun Bulletin in the summer of 2008, with his public remarks this week.

Libous then: “It’s time for the DEC to move this forward. We cannot afford to have this put on the shelf.”

Libous now (as reported by the Press & Sun Bulletin and the New York Times): “I wouldn’t say it’s a given ... Economically, we need it desperately. But at the end of the day, if the scientists and geologists at the DEC say ‘this is not a good thing to do,’ I’m not going to challenge it …  We need to wait for the DEC’s final recommendations, regulations and permitting guidelines.”

Libous’s change in position, unsurprisingly, raised flags with industry supporters, including the Marcellus Drilling News, a blog that voices issues for coalition groups trying to lease their land to gas companies. “There’s perhaps no stronger supporter among elected politicians in Albany than Tom Libous,” noted a post managed by editor Jim Willis. “It sure sounds like a step back from his previous strong support of drilling. And not a good sign for New York landowners.”

Emmanuel Priest, a spokesman for Libous, told me this week that events unfolding in Pennsylvania have encouraged New York’s cautious approach. Dimock, Pennsylvania, less than a half hour south of New York’s border with Pennsylvania, has become a showcase for problems associated with the industry, including complaints and lawsuits by residents seeking damages related to polluted water wells near drilling operations. The federal EPA has determined that drilling chemicals found in some wells pose a public heath threat, and the agency is expanding its study in Susquehanna County as it updates its assessment of the impact on hydraulic fracturing, an assessment that could serve as a guide for landmark policy decisions in Washington.

Meanwhile, there are many factors that play into the fate of the industry in New York:

Low gas prices = market glut = no incentive to deal or drill. When Libous spoke at the pro-gas rally in the summer of 2008, the price of natural gas was four times what it is now. Gov. David Paterson was destine to become a lame duck and his beleaguered administration served as a political punching bag for adversaries. Those adversaries included Libous, who cast the shale gas debate in terms of upstate landowners rights being compromised by downstate environmental interests. Perhaps coalitions, now resigned to the fact they are in no position to deal effectively with energy companies when gas prices are so low, are less motivated or unable to keep unrelenting pressure on politicians.

Home Rule: Many local cities and town governments are formalizing resistance to shale gas development by passing local bans and ordinances. The industry claims the state has the sole authority to regulate the industry and is challenging home rule ordinances in court. But from a political perspective, taking up the industry’s fight to cede local government control to the state may prove unpopular among some Republican candidates.

A forceful governor.  Governor Andrew Cuomo, unlike his predecessor, is perceived as a leader with firm reigns on the administrative and legislative process. Cuomo has backed off his position of publically pushing for DEC deadlines to resolve the gas issue, and perhaps it is no coincidence  that similar forces are at work as the legislature follows the backroom path of least political resistance.

Today, the gas rush is off in New York. Tomorrow may be different. The story of Marcellus development is dynamic and multi-faceted, and the the Utica and Marcellus shale reserves, extending well into upstate New York, are not going anywhere. Much of the story is driven by economic and market factors, which can shift dramatically and unexpectedly based on supply and demand. Currently, there are no big deals pending for New York landowner coalitions given the absence of market pressures. I expect the mood of Senator Libous and others will shift if the price of gas once again climbs, along with industry pressure to develop New York’s share of shale gas reserves. 

Monday, February 6, 2012

Grade school civic project takes on Dimock controversy Shohola pupils collect clean water as EPA continues probe

Elementary school pupils, apparently ignoring a message delivered by the Dimock Town Board, held a water drive for residents at the center of the nation’s hydraulic fracturing controversy last week.

Deliveries from Shohola Elementary School are expected to arrive on Carter Road this week after “little hands on a big mission,” as PaHome Page reporter Eric Deabill characterized them, staged plastic water jugs on school tables in a class room adorned with bright blue water drops cut out from construction paper. The water represents sympathy of people in Pike County to the plight of residents living in the Carter Road area of Dimock in Susquehanna County, where an analysis by the EPA has raised health concerns about the water. Officials have indentified nearby drilling operations by Cabot Oil & Gas as a suspect cause of arsenic, bar­ium and other hazardous sub­stances in wells that supply four homes. The federal agency determined the chemicals pose a chronic health risk and began investigating 60 others water supplies. In December, 2010, more than a year before the EPA finding, 15 families filed a suit against Cabot for damages related to pollution. Cabot denies that its operations have affected water supplies.

A contractor for EPA delivers water to a Carter Rd. home
The EPA assessment has become emblematic of the national debate on the safety of hydraulic fracturing. Shohola Principal Peg Schaffer told Deabill the school is not taking sides; the effort was "just about reaching out, one community to another, helping them out and it teaches our children that they have to be civic minded right from elementary school." In addition to schooling in community involvement, the students could be getting an education in politics. Not everybody is sympathetic to the Carter Road residents, and one former relief effort degenerated into a political free for all when it was met with open hostility by those who cast Dimock residents as malcontents trying to leverage public opinion against Cabot.  In a meeting attended by 150 people at the Dimock Township municipal building December 5, Matthew Ryan, mayor of Binghamton, New York, was shouted down as he tried to convince Dimock Township supervisors to allow his city, just north of the Pennsylvania border, to provide mutual aide to Dimock residents – a status typically used for relief efforts for natural disasters. Ryan warned the town could be opening itself to a lawsuit in denying water for the people. Not everybody was against Ryan’s offer, but the meeting was dominated by those who were animate that other governments butt out of their town’s affairs.  "Why should we haul them water? They got themselves into this," Supervisor Matthew Neenan yelled at Ryan. "You keep your nose in Binghamton, I'll give you that advice. We'll worry about Dimock Township." The Ryan antagonists included a group called Enough Already -- a pro-drilling grass roots organization with allegiances to Cabot. Enough Already and Cabot also successfully opposed a plan by the state Department of Environmental Protection that would force Cabot to build an $11 million water pipeline from Montrose to provide freshwater to affected homes.

Dimock has become the archetype of the jurisdictional conflicts among local, state and federal government, and grass roots battles dividing communities in New York and Pennsylvania, and the water relief effort by Shohola Elementary School students is just one of many story lines. City governments throughout New York and Pennsylvania, including Binghamton, Syracuse, Buffalo, Pittsburgh, and Philadelphia, have passed ordinance to limit or ban hydraulic fracturing. Local ordinances to regulate the industry, known as “home rule,” are being challenged by drilling proponents, who claims only the state has regulatory jurisdiction. Private trade groups are also taking sides.  While Enough Already represents businesses in Susquehanna County that support the industry, a group of New York restaurateurs, called Chef’s for Marcellus, say waste from hydraulic fracturing threatens produce from suppliers  of ingredients for New York’s culinary industry.

As more and more people living over the Marcellus and Utica shales realize they have a direct stake in their development, these kinds of battles will to continue to spread across more fronts.

Wednesday, February 1, 2012

Fox hunt: Anti-fracking hero’s arrest sure to backfire

Josh Fox
I very much doubt GOP Congressional representatives intended to turbo-charge the anti-fracking movement when they held hearings to call into question the EPA’s review of the controversial process. And maybe they wouldn’t find themselves in the middle of a media storm if they had just given Josh Fox a pass to film the public hearing for his upcoming movie, Gasland II.

As readers of this blog have surely learned in news flashes, tweets, and headlines, something entirely different happened. Fox, an academy award nominee, was attempting to film video at a hearing by the House Subcommittee on Energy and Environment on Capitol Hill on Wednesday morning, when he was denied access. Fox later told the Huffington Post that Andy Harris, chairman of the Subcommittee on Energy and the Environment had denied his application for credentials prior to the hearing, also, adding "This is not transparency. This is a lockout and it's bad.” A tape of Fox’s arrest, obtained by the Huffington Post, shows two uniformed police officers looking toward the GOP leadership for signals on how to deal with Fox, who refused to move his camera mounted on a tri-pod just inside the entrance of the room.  

What did Chairman Harris do? He seized the opportunity Fox laid in front of him for a public relations disaster. Being the people’s champion and advocate for open government, Fox quietly held his ground for a tense minute or two, occasionally attempting to explain to the police that he had a right to be there. After all, it was a public meeting, held in public space, regarding a subject of overwhelming public interest. Moreover, it was a subject that had been characterized and lambasted for its lack of transparency. And then, with a directive uttered by the chairman, Fox, a public personification of free speech, was handcuffed and lead away. He declared flatly: “This is a public hearing. I am within my First Amendment Rights and I am being taken out. “ This image is troubling enough as a 60-second stand alone clip. I’m guessing that Fox, the artist who has mobilized an impressive and committed grass roots force through his work, will make the showdown even more disturbing in the context (and perhaps the climax of) his upcoming feature.

 Letter writing campaigns protesting Fox’s arrest have already begun. Democrats are also using the incident to stir the political pot. According to Associated Press report, Democrats forced two votes, one to allow Fox to film the hearing and a second to recess the hearing for a week so that Fox could obtain credentials. Both motions were defeated on a party line vote. “This is blatant censorship and a shameful stain on this Congress,” said Rep. Maurice Hinchey. “I stand by Josh's right to record this hearing. His arrest was a huge mistake."

The subject of the hearing that was the stage for the controversy is especially relevant. Gasland, a movie that gained critical acclaim and a devoted following that crystallized the anti-fracking movement, brought the phrase “Halliburton Loophole” into the mainstream. The phrase refers to the exception under the 2005 Energy Policy Act that frees hydraulic fracturing companies from federal regulations governing chemicals injected into the ground.  The hearings that Fox tried to film concerned a review of EPA’s research that associated groundwater contamination in Pavillion Wyoming with hydraulic fracturing. The EPA is also looking into pollution associated with shale gas development in Dimock, Pa. as it reassesses the safety of fracking.  Gasland, featured on HBO in 2010, featured reports in both of these areas as it offered viewers the first major rebuttal of the industry’s carefully polished image of natural gas as a clean, abundant, cheap bridge fuel to the future; a rebuttal that made images of flaming tap water iconic.  The image of Fox being lead from a Congressional hearing in hand cuffs might cheer leaders of the industry that Fox had tormented with his filmmaking. In reality, there could be no of a worse a PR blunder, nor more effective reinforcement of critics’ portrayal of the industry image of cronyism and back-room-dealing.