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Inside Track

Thursday, June 21, 2012

Inside Track

Cuomo Team Gives Drillers Jump Start to Influence Fracking Rules

New York regulators gave natural gas drilling industry representatives exclusive access to draft regulations for shale gas drilling as early as six weeks before they were made public, according to records obtained by the Environmental Working Group through New York's Freedom of Information Law.

In at least one instance, a representative of one of the nation’s most powerful drilling companies used this exclusive access to try to weaken rules restricting discharges of radioactive wastewater.

The New York State Department of Environmental Conservation, known as the DEC, published a 1,500-page environmental impact statement on horizontal drilling and high-volume hydraulic fracturing on Sept. 7 and corresponding draft regulations on Sept. 28. If adopted, the DEC’s regulatory scheme could allow 50,000 gas wells in New York’s portion of the Marcellus Shale, a vast underground formation that stretches along the Appalachian chain as far south as Kentucky. Gov. Andrew Cuomo, D, told an Albany radio station WGDJ Friday he will decide “shortly” whether to proceed with this plan.

What state officials have not disclosed — and documents obtained by EWG reveal — is that drilling companies have received favorable treatment as the state plan has made its way to Cuomo’s desk. A series of emails shows that regulators shared detailed summaries of the DEC plan with drilling representatives between Aug. 15 and Aug. 17 as part of a one-sided “stakeholder outreach.” Only drilling industry representatives received these documents in advance. Other stakeholders, including local communities and public health and environmental groups were kept in the dark.

Having inside information gave drilling industry representatives a unique opportunity to try to influence the state’s plan behind closed doors, before others could weigh in.

On Sept. 26, two days before the DEC went public with its proposed regulations, Thomas West, a prominent Albany attorney for drilling companies including Oklahoma-based Chesapeake Energy Corp., the nation's second-leading natural gas producer, wrote regulators to make “one last pitch” to “reduce or eliminate radionuclide testing” of fluids that storms could wash away from drilling sites.

Wastewater produced by shale gas drilling can contain extremely high concentrations of naturally occurring radionuclides, a type of carcinogenic radioactive pollution. Previous studies by the DEC conducted on wastewater from vertical Marcellus shale gas wells in New York found concentrations that exceeded safe drinking water standards by hundreds of times or more.1 The drilling industry disclosed data to federal regulators showing similarly dangerous levels of radioactive pollution produced from shale gas wells in Pennsylvania.2

West’s efforts just before the draft regulations went public aimed to water down the DEC stormwater permit process, particularly language requiring testing of water runoff from drilling sites for radioactive contaminants. The strictness or laxity of the stormwater permitting process is critical to New York’s water supplies because drilling for shale gas could occur near communities devastated by flooding several times in the past decade. Heavy rain in these areas could channel radioactive contaminants and other drilling pollution into public water sources.

The oil and gas industry expects to profit handsomely from shale gas drilling operations in New York — but if source waters are contaminated, communities across the state could end up paying billions of dollars. Property values could decline, as well.

The DEC is reviewing the nearly 70,000 comments submitted by the public after its plan was published last September. Many of these comments highlight numerous flaws in the state’s drilling regulations and corresponding environmental analysis. EWG and New York-based Physicians, Scientists and Engineers for Healthy Energy recently identified ten of the plan’s most serious problems. Among them, regulators underestimated the distance toxic pollutants could migrate underground from gas wells, the rate at which gas wells could develop cracks compromising their safety and the risk of radioactive contamination from gas drilling.

Because drilling industry representatives were the only stakeholders to see the draft regulatory language before it was published on Sept. 28, EWG cannot determine whether West’s “pitch” caused the DEC to soften its approach to the issue of radioactive pollution.

This much is clear: the Sept. 28 version of the stormwater general permit requires testing for radioactive contaminants but, importantly, does not propose penalties for drilling companies whose runoff shows radioactivity at a level of concern for public health. In fact, the permit does not even specify what level the DEC considers unsafe.

In short, the DEC’s permitting process is toothless when it comes to radioactive pollution. Without penalties, drilling companies have few incentives to reduce radioactive pollution discharged into ground and surface waters near drilling sites.

Provisions of the DEC plan that tilt in favor of the drilling industry raise serious questions about the degree to which industry representatives were able to use their exclusive access to influence the draft regulations before publication.

Indeed, some evidence suggests that the drilling industry may have had even greater access to inside information, and more opportunities to shape the state’s drilling plan, than the state has conceded so far. The records obtained by EWG through its Freedom of Information Law request contain glaring gaps that indicate the existence of more extensive pre-publication communications between the DEC and drilling representatives. DEC officials insist that no documents have been withheld.

For instance, on Aug. 17, Steven Russo, DEC general counsel, wrote West and his partner Yvonne Hennessey, “We are going to send you a DRAFT (with an emphasis on draft) of the GP [general permit] for purpose of developing costs of compliance.” This email is one of several that referred to the DEC’s intent to show drilling industry representatives the wording of the stormwater general permit regulators were contemplating. The DEC did not provide EWG with a record showing that the draft permit was sent. But other evidence establishes that the drilling industry offered detailed feedback on the permit language before regulators released it to the public.

For example, the Independent Oil and Gas Association of New York, a group that represents oil and gas drillers, sent a letter on Sept. 2 to DEC Commissioner Joe Martens, with West and Cuomo copied. The letter critiques specific language in the draft stormwater permit, several weeks before the department published the document. According to the letter, “The benchmarking requirements in Part X are excessive” given the purpose of stormwater testing “in section 3.e.”

EWG plans to file additional Freedom of Information Law requests with the Cuomo administration to shed more light on the state’s collaboration with the drilling industry.

The following is a timeline depicting when regulators and drilling industry representatives sent key emails seeking or transmitting draft documents, with links to the emails and attachments. EWG also has links to the Freedom of Information Law requests it filed on Mar. 6, 2012; all documents released to EWG by the DEC and the New York Executive Chamber; and subsequent appeals submitted by EWG alleging that the Cuomo administration failed to release all responsive documents.

Timeline of events

JUL 2011
08th

The DEC releases its preliminary draft supplemental generic environmental impact statement, a lengthy document detailing how high-volume hydraulic fracturing and horizontal drilling for shale gas would be allowed in New York and how they would affect the state. The document does not include draft regulations that would govern the drilling industry. The DEC does not publicly release the draft regulations and general stormwater permit to prevent toxic runoff from drilling sites until Sept. 28.

 
AUG 2011
15th

12:58 pm
Alison Crocker, DEC deputy counsel, sends an email with detailed summaries of regulatory revisions to Yvonne Hennessey, a partner at the West Firm, an Albany-based law firm that represents natural gas drilling companies Chesapeake and Anschutz Exploration Corp., based in Denver. (Anschutz has sued the New York town of Dryden to overturn its ban on natural gas drilling.) Copied on the email are DEC attorneys Carin Spreitzer, Jennifer Maglienti, Scott Crisafulli, and Sandra Garlick; and DEC General Counsel Steven Russo. Thomas Berkman also is copied, but EWG cannot determine his title at the DEC. The detailed summaries are attached. As noted below, the DEC did not release its draft rules to the public until Sept. 28, indicating that the drilling industry had an opportunity to review and comment on them weeks in advance. Click here to see more.

 
AUG 2011
15th

12:12 pm
The DEC's Maglienti sends an email to Thomas West, managing partner at the West Firm, and copies West's partner Hennessey. The subject line reads "Draft Oil and Gas Regulations." The body of the email says, "Tom – as requested, attached is a more detailed summary of the proposed Part 560," an apparent reference to a new section of drilling regulations that is summarized in the attachment to Crocker's previous email. This email shows that the drilling industry is receiving a more complete look at what will be in the proposed regulations. The "more detailed summary" is not attached to the email received by EWG. Click here to see more.

 
AUG 2011
17th

12:38 pm
Drilling industry attorney West emails the DEC's Maglienti, Russo and Crocker, thanking Maglienti for the more detailed summary and saying that "we will also need to see a similar list of proposals from any other Divisions or Bureaus in the DEC that will be proposing regulations. We are particularly concerned about some of the proposals that are being developed in the Division of Water, which seem to overlap some of the functions at Minerals [the Division of Minerals]." This email provides additional evidence that the drilling industry had close access to the rulemaking process before the public could comment on the DEC's draft rules. Click here to see more.

 
aug 2011
17th

12:43 pm
DEC General Counsel Russo emails drilling industry attorney West, and the DEC's Crocker and Maglienti, and tells West that the DEC is going to send him a draft of the "GP," or general stormwater permit, a document designed to address levels of toxic runoff from drilling sites. West's partner Hennessey is copied. This email shows that regulators intended to send the drilling industry a copy of the permit prior to its public release. Receiving the language in advance would give the drilling industry an opportunity to push for favorable changes ahead of other stakeholders, including concerned citizens and public health and environmental groups.Click here to see more.

 
aug 2011
17th

12:49 pm
Drilling industry attorney West emails the DEC's Russo, Crocker and Maglienti, noting that "if they [the Division of Water] are going to propose additional regulatory requirements in the regulations, which seemed evident from the discussion on Monday, then we will need an outline of those requirements, similar to what Minerals [the Division of Minerals] has provided, to get you a meaningful analysis." West's partner Hennessey is copied. This email shows that the drilling industry is seeking even more information about the rules before the DEC shared them with the public. Click here to see more.

 
aug 2011
17th

1:35 pm
DEC General Counsel Russo sends an email to drilling industry attorney West, and the DEC's Crocker and Maglienti, informing West that "you may not get the GP [general permit] until tomorrow." West's partner Hennessey is copied. This email shows that state regulators still intend to share the general stormwater permit with the drilling industry before giving the public an opportunity to see it. Click here to see more.

 
aug 2011
17th

3:26 pm
Drilling industry attorney West emails DEC General Counsel Russo, and the DEC's Maglienti and Crocker, writing "the sooner you can get us the draft General Permit, the better." West indicates that he represents the Independent Oil and Gas Association of New York, the trade association that subsequently sends a letter to the DEC, with Cuomo copied, with detailed comments about the permit before it becomes public. Click here to see more.

 
aug 2011
22nd

12:16 pm
Drilling industry attorney West emails the DEC's Russo and Maglienti, and Marc Gerstman, DEC executive deputy commissioner. He copies Robert Rosenthal, an employee in the governor's office; Thomas Congdon, assistant secretary for energy in the governor's office; Paul Hartman, director of New York government relations for Chesapeake; Brad Gill, executive director of the Independent Oil and Gas Association of New York; and Jim Carr, whose job title EWG could not identify. Per West's email, "Given the far-reaching, but vague proposals from the Division of Water that we received on Friday, it remains uncertain whether we will be providing any detailed cost information on an expedited basis." The email shows that the drilling industry received additional materials regarding regulatory proposals on Aug. 19, and suggests that two officials in the governor's office were aware that the industry was receiving information about the DEC's regulatory proposals. EWG did not receive record of the proposals sent on Aug. 19, referred to in the email. Click here to see more.

 
aug 2011
24th

11:45 am
Drilling industry attorney West emails Gerstman, DEC executive deputy commissioner, and copies other DEC staff, West's partner Hennessey and Dave Cornue, a drilling industry consultant. West informs them that the DEC "has provided industry with baseline data for some of the data points that serve as the basis for the prohibitions and setbacks in the proposed SGEIS and regulations," but adds that industry has yet to receive "shape files that include GIS data on how the setbacks and prohibitions appear in map format." This email suggests that the drilling industry received additional information from regulators that may not have been available to the general public. Click here to see more.

 
sep 2011
2nd

3:41 pm
Brad Gill, executive director of the Independent Oil and Gas Association of New York, sends a letter to DEC Commissioner Joe Martens, and copies other DEC staff, drilling industry attorneys West and Hennessey, drilling industry consultants and Cuomo. The letter outlines concerns about the DEC's proposed regulations, among other issues with the state's drilling plan. The letter asks the DEC to substantially scale back reporting requirements for the "Stormwater General Permit for High-Volume Hydraulic Fracturing," the provision designed to address toxic runoff from drilling sites. The letter indicates that the drilling industry received draft permit language well before its release to the public on Sept. 28. Click here to see more.

 
sep 2011
7th

The DEC publicly releases its revised supplemental generic environmental impact statement, a 1,500-page document detailing how shale gas drilling would be allowed in New York. However, the document does not include the proposed regulations that would cover the industry or stormwater general permit, both of which were released several weeks later on Sept. 28.

 
sep 2011
20th

9:39 am
Drilling industry attorney West emails the DEC's Russo, Maglienti and Crocker, and copies Gerstman, DEC executive deputy commissioner, and West's partner Hennessey and the drilling association's Gill. The subject of the email is "Stormwater Meeting," and West mentions "our meeting this afternoon," indicating that drilling industry representatives met with DEC officials to discuss the stormwater general permit. Click here to see more.

 
sep 2011
22nd

10:59 am
Dave Cornue, a drilling industry consultant, emails Kenneth Kosinski, a staff member of the DEC Division of Water. Cornue says, "what we really need is to get a copy of DEC's GIS analytical constraints and resulting map. It is our understanding that Steve Russo of the OGC [DEC Office of General Counsel] had approved of DEC providing this information to IOGA [the Independent Oil and Gas Association of New York]." This email shows that the drilling industry sought additional information from the DEC that may not have been available to the public. Click here to see more.

 
sep 2011
26th

1:30 pm
Drilling industry attorney West emails Gerstman, DEC executive deputy commissioner, and copies DEC General Counsel Russo, and West's partner Hennessey. "Marc and Steve," West writes, "consider this one last pitch before the stormwater permit is released to the public to encourage the Department to reduce or eliminate radionuclide testing." This email suggests that West reviewed the stormwater general permit before its public release and had an opportunity to weaken its testing requirements to favor the drilling industry. Click here to see more.

 
sep 2011
28th

The DEC releases its draft regulations, including the stormwater general permit, finally allowing citizens and public health and environmental groups the opportunity to provide their feedback.

 

Additional Resources

  1. EWG FOIL Requests
  2. EWG FOIL Appeals
  3. Complete Documents Received from N.Y. Department of Environmental Conservation
  4. Complete Documents Received from N.Y. Governor's Office

References

(1) N.Y. State Dep't Envtl. Conservation, Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program, Well Permit Issuance for Horizontal Drilling and High-Volume Hydraulic fracturing to Develop the Marcellus Shale and Other Low-Permeability Gas Reservoirs App. 13 (2011) ("Radiological Data – Production Brine from NYS Marcellus Wells").

(2) Letter from Range Resources – Appalachia, to U.S. Envtl. Prot. Agency Region III (May 25, 2011), at 83, http://www.epa.gov/region3/marcellus_shale/pdf/responses2info-req5-12-11....

Key Issues: