Marcellus Shale Parallel Universe

March 13, 2012

Do you believe in a parallel universe – a place where alternative realities co-exist in time?  Until recently, the sci-fi genre was the only place to find a narrative like this. But now, all you have to do is look at the divergence in the ways states deal with natural gas — alternative realities that seems to define the Marcellus Shale region. Below are two first hand accounts from residents in New York, trapped in a state divide.  They are forced to watch as Pennsylvania embraces economic growth, prosperity and the preservation of property rights.  Meanwhile, their own governments seem intent on systematically suspending property rights, capping economic growth and empowering local officials to impose their will without regard to the interests of landowners.

Scott R. Kurkoski of Levene Gouldin & Thompson recently wrote an op-ed titled Tale of Two Cities Shows Benefits of Gas, which offers superb insights on this economic, legal and political divide.

At first glance, Williamsport, Pa., and Ithaca seem similar. The cities are alike in size and population with about 30,000 residents each. In both communities, per capita income is slightly above $19,000. They also both sit on vast reserves of a natural gas resource, the Marcellus Shale.

Unfortunately, that’s where the similarities end.

Welcome to Williamsport Sign

Welcome to Williamsport Sign

Williamsport’s economy is larger and more stable than Ithaca’s, thanks in large part to its decision to develop shale gas. In 2010, when it started developing shale gas, Williamsport’s local economy grew 7.8 percent — three times the national average — compared to Ithaca’s 1 percent. The same year, Williamsport ranked seventh in the nation for GDP growth, while Ithaca grew at barely two-fifths of the national rate. The Williamsport/Lycoming Chamber of Commerce estimates that up to 3,000 local jobs have been created in just two years.

This same economic potential is being realized in cities all across Pennsylvania, and it is possible both in Ithaca and many other communities in upstate New York. The New York Department of Environmental Conservation estimates that shale gas development could create 54,000 new jobs and $2.5 billion in economic activity annually throughout the state.

Simply put, shale gas could be an economic game-changer all across New York, and we’re missing out. Our failure to quickly create a path for the safe and responsible development of shale gas resources has delayed economic recovery and prevented the creation of precious jobs that would put New Yorkers back to work.

As a legal advocate for the Joint Landowners Coalition of New York, which represents more than 70,000 individuals, I’m well aware of the hardships and frustrations of many who can no longer afford to live on their land. Some in our state legislature have proposed legislation that would delay shale gas development until 2013, but struggling New Yorkers cannot afford additional delay.

Our slow progress has been due in large part to widespread misinformation about shale gas development and hydraulic fracturing, which has caused concern and confusion among the general public. Critics claim that the process can lead to groundwater contamination, negative health effects and environmental damage — allegations that are often unsubstantiated and untrue when examined thoughtfully.

Hydraulic fracturing is not new to New York. There are more than 14,000 active wells in our state that have been developed using hydraulic fracturing technologies. Now, the DEC is working to make New York’s regulations on hydraulic fracturing the toughest in the nation.

If we all work together to support these efforts, New York can lead the nation in responsible energy development. Policymakers are doing their part to enact rules that will keep our families, communities and environment safe. Now it’s up to us to see through the misinformation, consider what’s at stake and responsibly take natural gas across the finish line.

Interestingly, at about the same time as Attorney Kurkoski offered his observations, the Dryden Safe Energy Coalition, a group of landowners living only an hour from the Pennsylvania border, issued a press release that parallels much of what Kurkoski said.  That release details the completely different approaches Pennsylvanian and New York have taken with Marcellus Shale development.

Dryden Safe Energy Coalition (DSEC)
Press Release – Pennsylvania Repeals Home Rule for Gas

On February 14, Pennsylvania abolished natural gas local home rule and substituted a new statute, 58 PA C.S. 3301 through 3309, effective April 14. It expressly preempts local home rule of natural gas development across the state. The new statute covers all existing and future local ordinances regulating oil and gas and mandates that all local ordinances, including zoning, permit reasonable development of oil and gas.

The gas industry has consistently sought uniform regulation throughout Pennsylvania, finding it difficult to work within the patchwork quilt of local regulations. On April 14, local governments will be prohibited from imposing requirements or limitations on gas operations more restrictive than those placed generally on industrial activities (not just on “heavy” industry). Section 3304 mandates localities allow, as permitted zoning uses, oil and gas activities, (other than those at impoundment areas, compressor stations and processing plants).

The new statute has teeth to prevent evasion and protect minority interests that have been trampled by runaway activist local governments. Pennsylvania’s Public Utility Commission is the designated arbiter of disputes alleging failure of local governments to comply with the new rules. Courts will be able to award attorney fees and costs to plaintiffs when it is determined that a municipality enacted an ordinance with willful disregard for the new statute’s requirements. Local governments violating the statute will also be stripped of certain tax revenues until they repeal or alter the improper ordinances.

Dryden Safe Energy Coalition (DSEC) co-founder Tom Reynolds said, “Home rule in such a complex field as gas development has proven impractical in Pennsylvania, a state with far more energy development experience than New York. The repeal shows how inconsistent local regulation and selective zoning are with state and national economies and markets. DSEC has previously pointed out that a patchwork quilt of local regulations impedes the creation of high paying jobs and limits large scale economic development, while substituting the not in my back yard (NIMBY) syndrome.”

“In New York, runaway local governments pass laws in violation of state laws and the only option for local opponents is to spend $100,000 or more to sue the town. By awarding court costs and attorneys fees in such cases, Pennsylvania has given minorities, whose rights have been trampled, an option that New Yorkers do not have available to affordably obtain justice.”

DSEC co-founder Henry S. Kramer noted, “The change of direction in Pennsylvania’s law, in a state where energy development is far more advanced than in New York, should give New York pause about local home rule on this issue. If local home rule does not work in Pennsylvania, it is clear it will not be workable in New York. The Pennsylvania legislature left no room for doubt, gas development laws by local government, including zoning ordinances, cannot single out the gas industry and are entirely preempted by state statute. It is interesting that this major course change in Pennsylvania went largely unremarked in this area.”

DSEC co-founder Tracy Marisa said, “The new Pennsylvania law will restore individual rights to Pennsylvania landowners to choose for themselves whether or not to lease their land, in contrast to some New York localities that have been moving to expropriate the rights of landowners, without compensation. The transfer of choices from individual to locality as in Dryden is a slippery slope. If we allow it to happen, how far will local governments go to enforce conformity with a local majority’s biases? When they come for whatever rights you value, who will be left to defend those rights, the laws protecting individuals being down?”

Tellingly, the differences between Pennsylvania and New York all revolve around one thing — the ability of special interest groups to influence policy.  When organizations with extreme and/or anti-growth views capture the attention of elected officials who are rue to oppose them, all individual property rights go out the window.  Because New York has more urban voters relative to rural than Pennsylvania, many are removed from the difficulties of what it means to be a rural landowner.  It doesn’t mean one side is purer than the other but, rather, that it’s hard to empathize with the plight of someone whose shoes you’ve not walked in.

That is upstate New York’s problem in a nutshell and special interest groups such as the Park Foundation and Natural Resources Defense Council are just manipulating the situation.  Nonetheless,  more and more urban energy consumers are beginning to experience the benefits of natural gas in lower heating costs.  This is slowly but surely closing the divide.  A parallel universe, after all, is only science fiction, isn’t it?

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