March 23, 2012

FRACKING: Corruption a Part of Pennsylvania's Heritage

... by Walter Brasch

(part 3 of 3)

The history of energy exploration, mining, and delivery is best understood in a range from benevolent exploitation to worker and public oppression. A company comes into an area, leases land in rural and agricultural areas for mineral rights, increases employment, usually in a depressed economy, strips the land of its resources, creates health problems for its workers and those in the immediate area, and then leaves.

It makes no difference if it's timber, oil, or coal. In the 1970s and 1980s, the nuclear energy industry promised well-paying jobs, clean energy, and a safe health and work environment. Chernobyl, Three Mile Island, Fukushima Daiichi, and thousands of violations issued by the Nuclear Regulatory Agency, have shown that even with strict operating guidelines, nuclear energy isn't as clean and safe as claimed. Like all other energy industries, nuclear power isn't infinite. Most plants have a 40-50 year life cycle. After that, the plant becomes so radioactive hot that it must be sealed.

In the early 21st century, the natural gas industry follows the model of the other energy corporations, and uses the same rhetoric. James M. Taylor, senior fellow at the Heartland Institute, claims on the Institute's website, "The newfound abundance of domestic gas reserves promises unprecedented energy prosperity and security."

The energy policy during the eight years of the George W. Bush-Dick Cheney administration was to give favored status to the industry, often at the expense of the environment. In addition to negating Bill Clinton's strong support for the Kyoto Protocol, signed by 191 countries, to reduce greenhouse-gas emissions, former oil company executives Bush and Cheney pushed to open significant federal land, including the 19 million acre Arctic National Wildlife Refuge (ANWR), to drilling that would disrupt the ecological balance in one of the nation's most pristine areas.

A study by the Environmental Protection Agency (EPA), published in 2004 concluded that fracking was of little or no risk to human health. However, Wes Wilson, a 30-year EPA environmental engineer, in a letter to members of Congress and the EPA inspector general, called that study "scientifically unsound," and questioned the bias of the panel, noting that five of the seven members had significant ties to the industry. "EPA's failure to regulate [fracking] appears to be improper under the Safe Water Drinking Act and may result in danger to public health and safety."

The following year, the Energy Policy Act of 2005-on a 249-183 vote in the House and an 85-12 vote in the Senate-exempted the oil and natural gas industry from the Safe Water Drinking Act. That exemption applied to the "construction of new well pads and the accompanying new roads and pipelines." The National Defense Resource Council noted that the EPA interpreted the exemption "as allowing unlimited discharges of sediment into the nation's streams, even where those discharges contribute to a violation of state water quality standards." The exemption became known derisively as the Halliburton Loophole, named for one of the nation's major energy companies, of which Cheney, whose promotion of Big Business and opposition to environmental policies is well-documented, had once been the CEO.

Bills introduced in the U.S. House (H.R. 2766) and U.S. Senate (S. 1215) in June 2009 to give federal regulatory oversight under the Safe Water Drinking Act to hydraulic fracturing languished. New bills (H.R. 1084 and S. 587), introduced in March 2011 in the 112th Congress, are also expected to die without a vote.

The natural gas industry has a long history of effective lobbying at the state and national level. America's Natural Gas Alliance has four former Congressmen as lobbyists, according to research by the Center for Responsive Politics (CRP). Through various political action committees (PACs), the industry has contributed about $238.7 million in campaign contributions, about three-fourths of it to Republican candidates, since 1990, according to the CRP. For the 2008 election, the gas and oil industry contributed $27.4 million, including contributions from individuals, PACs, and soft money, according to CRP data. Total contributions for the current election cycle, as of mid-March, are $20.6 million, with almost 90 percent of it going to Republicans.

At the federal level, the top recipients of oil and gas contributions during the current election cycle, according to the CRP, are former presidential hopeful Gov. Rick Perry of Texas ($833,674), Lt. Gov. David Dewhurst of Texas ($650,850), presidential hopeful Mitt Romney ($597,950), Senate Majority Leader Mitch McConnell ($264,700), and Sen. John Barasso of Wyoming ($225,400), a member of the Energy and Natural Resources Committee. Every one of the top 20 recipients is a Republican.

Barack Obama, although significantly more environmental friendly than his predecessor, had opened up off-shore drilling just prior to the BP oil spill in the Gulf Coast in April 2010. He has repeatedly spoken against the heavy use and dependence upon fossil fuels, and sees the expanded use of natural gas as a transition fuel to expanded use of wind and solar energy. Nevertheless, he has still received funding from the natural gas industry. During the 2008 presidential campaign, he received $920,922 from the oil and gas industry, according to data compiled by the CRP. His opponent, Sen. John McCain, according to CRP, accepted $2,543,154.

In contrast, the 1.4 million member Sierra Club, since August 2010, has refused to accept any donations from the natural gas industry. The Sierra Club, which has actively opposed the development of coal as an energy source, had received $27 million since 2007 from Chesapeake Energy. By 2010, "our view of natural gas [and fracking] had changed [and we] stopped the funding relationship between the Club and the gas industry, and all fossil fuel companies or executives," says Michael Brune, Sierra's executive director.

Mixed into Pennsylvania's energy production is not only a symbiotic relationship of business and government, but a history of corruption and influence-peddling. Between 1859, when an economical method to drill for oil was developed near Titusville, Pa., and 1933, the beginning of Franklin D. Roosevelt's "New Deal," Pennsylvania, under almost continual Republican administration, was among the nation's most corrupt states. The robber barons of the timber, oil, coal, steel, and transportation industries essentially bought their right to be unregulated. In addition to widespread bribery, the energy industries, especially coal, assured the election of preferred candidates by giving pre-marked ballots to workers, many of whom didn't read English.

In a letter to the editor of The New York Times in March 2011, John Wilmer, a former attorney for the Pennsylvania Department of Environmental Protection (DEP), explained that "Pennsylvania's shameful legacy of corruption and mismanagement caused 2,500 miles of streams to be totally dead from acid mine drainage; left many miles of scarred landscape; enriched the coal barons; and impoverished the local citizens." His words serve as a warning about what is happening in the natural gas fields.

Pennsylvania's new law that regulates and gives favorable treatment to the natural gas industry was initiated and passed by the Republican-controlled General Assembly and signed by Republican Gov. Tom Corbett. The House voted 101–90 for passage; the Senate voted, 31–19. Both votes were mostly along party lines.

In addition to forbidding physicians and health care professionals from disclosing what the industry believes are "trade secrets" in what it uses in fracking that may cause air and water pollution, there are other industry-favorable provisions. The new law guts local governments' rights of zoning and long-term planning, doesn't allow for local health and environmental regulation, forbids municipalities to appeal state decisions about well permits, and provides subsidies to the natural gas industry and payments for out-of-state workers to get housing but provides for no incentives or tax credits to companies to hire Pennsylvania workers. It also requires companies to provide fresh water, which can be bottled water, to areas in which they contaminate the water supply, but doesn't require the companies to clean up the pollution or even to track transportation and deposit of contaminated wastewater. The law allows companies to place wells 300 feet from houses, streams and wetlands. The law also allows compressor stations to be placed 750 feet from houses, and gives natural gas companies authority to operate these stations continuously at up to 60 decibels, the equivalent of continuous conversation in restaurants. The noise level and constant artificial lighting has adverse effects upon wildlife. As a result of all the concessions, the natural gas industry is given special considerations not given any other business or industry in Pennsylvania.

Each well is expected to generate about $16 million during its lifetime, which can be as few as ten years, according to the Pennsylvania Budget and Policy Center (PBPC). The effective tax and impact fee is about 2 percent. Corbett had originally wanted no tax or impact fees placed upon natural gas drilling; as public discontent increased, he suggested a 1 percent tax, which was in the original House bill. In contrast, other states that allow natural gas fracking have tax rates as high as 7.5 percent of market value (Texas) and 25–50 percent of net income (Alaska). The Pennsylvania rate can vary, based upon the price of natural gas and inflation, but will still be among the five lowest of the 32 states that allow natural gas drilling. Over the lifetime of a well, Pennsylvania will collect about $190,000–$350,000, while West Virginia will collect about $993,700, Texas will collect about $878,500, and Arkansas will collect about $555,700, according to PBPC data and analyses.

Go to Page 2

Posted by Walter Brasch at March 23, 2012 02:04 PM | Corruption & Graft | Technorati links |


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