August 2, 2014

Prominent Conservation Society to Take $30 Million from Chesapeake Energy?

So we have two environmental conservation agencies going to the coffers of the natural gas industry?
By Sean Kitchen, Raging Chicken Press, Sept. 10, 2012

Suppose you are a leader of a nationally prominent environmental conservation society or even a local conversation society.  Let’s say the society is the Audubon Society or the Ruffed Grouse Society, whose missions, respectively, are: “To conserve and restore natural ecosystems, focusing on birds, other wildlife, and their habitats for the benefit of humanity and the earth’s biological diversity,” and “the one international wildlife conservation organization dedicated to promoting conditions suitable for ruffed grouse, American woodcock and related wildlife to sustain our sport hunting tradition and outdoor heritage.”  Suppose you’re a leader of one of these organizations in a state like Pennsylvania, where the government has made it a mission to maximize the profits and socialize the inherent risks associated with fracking and natural gas exploration.  Now let’s suppose you, the executive of that society, was approached by Brian Grove, the Senior Director of Corporate Development for Chesapeake Energy, and made you an offer you couldn’t refuse – a $30 million proposition – to help generate restoration projects in the Marcellus Region.  Will you accept that money or will you deny that money – especially given the difficult economic times we are facing as a country?

Now, let’s throw these assumptions out of the window and jump right into reality. Earlier this year, Chesapeake Energy was burned when their relationship with the Sierra Club was made public and criticized.  Chesapeake Energy donated $26 million to the Sierra Club from 2007 through 2010 as a public relations campaign to tout natural gas as a cleaner alternative to coal. When local Sierra Club members found out what those at the top of the organization were doing with the gas industry, Sierra Club faced massive blow-back from local members who were fighting against the gas industry.  Chesapeake Energy has a history of using or working with environmental organizations to tout their form of energy as “clean” and as a “viable option” to coal, and are now leaning on other environmental organizations to help them “offset” the environmental impact that is created when roughly 9 acres of trees and surrounding environment are clear-cut for a natural gas pad.

Before we get talk about the $30 million dollar proposition Brian Grove made to executives from the Audubon Society and the Ruffed Grouse Society, let’s look at how we got to this point.

The Meeting and The Proposition.

Don Williams, a Montgomery county native, blogger and environmentalist, caught wind of a series of meetings with the Audubon Society and the Ruffed Grouse Society, but found it odd that the meetings were being co-sponsored by another party: the Marcellus Shale Coalition – the lobbying arm for the natural gas industry in Pennsylvania.  The meetings were held on August 27th and 28th at Audubon Centers in Audubon, Montgomery County, Hamburg, Berks County, Lancaster City, Lancaster County and the state capitol.  The email Mr. Williams received about the event targeted outdoors enthusiasts in South Central and Southeastern Pennsylvania.  The email started out with the following:

Are you a hunter, angler, hiker, or other outdoors-person living in South-central or Southeast Pennsylvania?
Do you have something to say to Marcellus shale gas drilling  companies about their operations in the state?
Audubon Pennsylvania and the Ruffed Grouse Society have partnered with the Marcellus Shale Coalition to sponsor four “Listening Sessions” to bring conservation group representatives together to ask questions, discuss concerns, and partner on habitat restoration opportunities.

The letter goes on to explain that there are inherent risks and environmental alterations caused by gas drilling. The letter concludes by calling for a in a kind of “kumbaya moment” with the industry:

given that habitat changes will occur in much of the state due to Marcellus gas drilling and pipeline construction, we have an opportunity to be pro-active regarding what happens to these sites once gas extraction is completed. Can we create early successional (young) forests  to reverse the downward trend of bird populations that depend on this habitat — such as ruffed grouse, American woodcock, and golden-winged warbler?  How can the natural gas drilling industry be a partner in this effort?

Before we get into what happened at the meeting, it’s worthwhile to scrutinize the locations of these meetings.  The locations of the meetings, with the exception of  Harrisburg, were political hotbeds over the summer when Senator Charles McIlhinney quietly inserted a drilling moratorium into the state budget that prohibited gas drilling in the South Newark Basin.  The basin is one of the largest untapped shale plays left in the country, and happens to stretch from Northern New Jersey, through Southeastern and into South Central Pennsylvania – going right through Montgomery, Bucks, and parts of Berks and Lancaster counties.

The turnout for the Southeast PA “Listening Session” held on August 27-28 was small – maybe a maximum of 20 people – but that did not stop Chesapeake Energy from making a $30 million proposition to the two organizations.  When Mr. Williams reported the incident, he thought he was hearing things. But what he heard was clearly stated in the meeting’s minutes.  On page 4 of the minutes, they note:

Is the industry willing to create a pool of funds within either the National Fish & wildlife Foundation or another credible foundation that would be used to fund competitive grants to conservation groups in Pennsylvania interested in identifying opportunities to benefit fish and wildlife in partnership with the industry? Suggestion was made that a minimum of $30 Million be set aside to establish an endowment to generate earnings-only project funds. Those funds would be available to conservation groups on a competitive grant basis.

The minutes also make reference to how other gas companies have been working on rehabilitation projects. An attendee of the meeting who did not want to be identified, claimed that it was representatives from the Audubon Society and the Ruffed Grouse Society who initially solicited Chesapeake for the money.  The attendee stated that Brian Grove from Chesapeake Energy was concerned about setting up a direct fund with the two organizations because of the blow-back they received from the controversy with the Sierra Club.  They would rather do it through a third-party or a fund.  It was also reported that the executive from the Ruffed Grouse society was pushing hard for the deal because the financial situation with the Ruffed Grouse society is not in the best health and such a significant influx of funds would help the organization tremendously. I called the two organizations several times for comment about these claims, but as of this writing they have yet to response.

Who is to blame?

So we have two environmental conservation agencies going to the coffers of the natural gas industry?  Should the blame be placed on the environmental organizations for accepting this money, which  those who left the Sierra Club would think of as “blood money”?  Should we place the blame on Chesapeake Energy for using these groups as part of a public relation ploy?  Or should we place the blame on our failed institutions that are supposed to regulate and govern this industry?

This isn’t the first time that the Audubon Society has kicked the tires on aligning themselves with the oil and gas industries.  In an article titled “Audubon Society Considers allowing Oil and Gas Drilling,” the history between the conservation society and the resource extraction industries date back to Louisiana in the 1940’s, when the society opened up the Paul J Rainey Sanctuary – a migratory destination for thousands of birds during the winter time – to oil companies.  The society “allowed prospectors to dredge oilfield access canals across the property” and “production continued until 1999, when the last of Audubon’s energy leases expired.” A couple of years after the society banned oil drilling on their sites, former Chief Operating Officer Daniel Beard went on the record explaining that the oil production caused “irreparable, long-term damage”

Jump ahead to 2009, the Audubon Society found themselves behind the eight-ball once again when Paul Kemp, director of Audubon’s Gulf Coast Initiative, wanted to open up the sanctuary to oil and gas companies so the profits generated from the wells can fund “multimillion-dollar land-building projects” that the society couldn’t afford.  But different Audubon Societies throughout the country have issued statements going against the oil and gas industry.  In one letter published by the Florida Audubon Society, the group is advocating keeping offshore and nearshore drilling away from environmentally sensitive areas, and the letter even acknowledges the in-house debate about opening up the Paul Rainey Sanctuary to gas drilling.  Around the same time-period as the two examples mentioned, another newsletter came out from the Presque Isle Audubon chapter condemning natural gas drilling in Pennsylvania.  Go Erie, a local newspaper from Erie, PA, quoted the document, which said: “We have already seen environmental damage in this area thanks to oil and gas operations. Tapping into the Marcellus will only increase the pressure on a stressed environment.”

The next culprit in this three ringed circus is Chesapeake Energy themselves.  On the company’s website, they tout their environmental excellence and philosophies on the environment, but their environmental stewardship is barely mediocre.  In Pennsylvania, the company has 1,335 gas wells and has received 380 violations and accumulated 1.15 million in environmental fines. But this isn’t the first time the company has thrown their money around environmental organizations in order to boost their own public relations.  As mentioned above, Chesapeake Energy threw 26 million in the faces of the Sierra Club executives to promote natural gas as a “clean bridge energy,” and we all remember the blow-back Sierra Club executives received as members were turning in their members as protest.

Finally, the last of the parties responsible for this form of bribery is are institutions that are supposed to govern and effectively regulate this industry – the Pennsylvania Department of Environmental Protection and the Pennsylvania Legislature.  In Twilight of the Elites: America after Meritocracy, Chris Hayes explains why – on a federal level – major governmental regulatory institutions are unable to effectively regulate the industries they are supposed to regulate.  He argues that the income inequality between the government regulator and the worker he/she is regulating creates a competitive environment, almost like a minor league system, where those making peanuts want to move up the majors. The only way they can move up is if regulators don’t do their jobs so they can have a shiny resume to present to their future employer – in that particular industry.  It has turned the regulator agencies into breeding grounds for corporate “Yes Men” who move up the ranks from government agency to private industry. In Pennsylvania we are effectively seeing the same relationship between the Pennsylvania Department of Environmental Protection and the Natural Gas Industry.

The Pennsylvania Department of Environmental Protection is headed by Michael Krancer, a former judge on the Environmental Hearing Board. Mr. Krancer has a hard time taking criticism from the Environmental Protection Agency when it comes hydraulic fracturing.  When EPA Region 3 Administrator Lisa Jackson got involved with the Dimock controversy last year, Krancer wrote “We real­ize and rec­og­nize that EPA is very new to all of this and the EPA’s under­stand­ing of the facts and sci­ence behind this activ­ity is rudi­men­tary” and “For­tu­nately, Penn­syl­va­nia is not new to all of this and we have a long his­tory of expe­ri­ence at over­see­ing and reg­u­lat­ing oil and nat­ural gas extrac­tion activ­i­ties in our state, includ­ing hydraulic fracturing.”  But if Krancer has some of the best experts on the planet working for him, then why has the DEP done so little to protect the environment?  A 2011 Clean Water Action report titled “Recurring DEP Budget cuts hinder enforcement against gas drilling violations,” analyzed DEP issued violations against the gas industry, and the article raised concerns on how lax the agency has been.  In 2011, there were 1,192 violations issued against the industry with less than half the resulting in “enforcement actions” and 7% of those violations resulted in a monetary fine.  So if the DEP isn’t doing their job, the Pennsylvania legislature and Governor Corbett can’t be as incompetent as Krancer?

The gutting of the Pennsylvania Department of Environmental Protection by the legislature and by the governor’s office has brought us to the point where environmental organizations have to solicit and get in bed with the natural gas industry.  This should come to no surprise because the legislature and the governor’s office have used this playbook with public education and public higher education.  By slashing public education to the bones, school districts have to look elsewhere to fill the necessary budget gaps.  When Governor Corbett signed his 2011 budget, which cut public education by a billion dollars, the Blackhawk School District – 40 miles northwest of Pittsburgh – leased over 160 acres to – you guessed it – Chesapeake Energy for $300,000 and a 15% royalty on revenue generated by the gas that’s produced on that site.  More recently – in 2012, the Wilimington, Shenango and Mohawk school districts have all considered opening up their land to Shell, Halicorp Energy and REX Energy.  With regards to public higher education, which has seen its fair share of cuts, “The Student Association” at California University of Pennsylvania became the first PASSHE university to lease land to the industry to subsidize their 2011 budget cuts.

By gutting education to the bone – a precedent has been set by the governor – public universities and public schools are being forced to drill for natural gas.  Now the state government is forcing environmental conservation organizations to go beg at the feet of the industry so they can help fix the environment.  But this leaves the question I asked earlier, “who is to blame?”  The Pennsylvania state government with Governor Corbett steering his PA GOP boat, should be blamed for this action since their policies are what set the fracking crisis in motion. It is common knowledge that this administration will not do anything to fix these problems.  The blame also should be shared by the Audubon and Ruffed Grouse Societies for even conjuring up this plan because Chesapeake Energy has no interests in helping to protect our environment.  The gas company is using these conservation societies – just as they used the Sierra Club to sell the idea that natural gas was a clean bridge fuel – to boost their image as an entity that nurtures the environment, not as an entity that clear cuts 9 acres of environment every time a gas pad is installed.