Naked Capitalism: Fracking and Corruption

Abigail Field: The Government Corruption Case Against Fracking and Keystone

Posted on April 28, 2014 by

Yves here. Although this intense focus on fracking may seem a bit wide of Naked Capitalism’s usual beat, you’ll see how the approaches used to cover up environmental damage, via lobbying and by weakening oversight to the point of near non-existence are similar to those used in finance. One of the bizarre assumptions that Abigail Field mentions is that chemicals “that are not expected to be consumed” are considered “innocent” as in safe, until proven guilty. Thus if all sort of industrial nasties that were never meant to be foodstuffs wind up in your water, the onus is on the victim to establish that it is hazardous. It’s hard to find strong enough language to decry this sort of reasoning; “corruption” doesn’t seem adequate.

By Abigail Caplovitz Field, an attorney and a freelance writer. She writes news for Benzinga.com and others, and posts a new blog every Sunday morning at Reality Check. Jointly posted with Reality Check

America is struggling with at least three major environmental policies: fracking, Keystone, and climate change. Climate change needs its own post. This one focuses just on the first two, which are so critical because of their potentially devastating impact on our water (again, setting climate change aside.)

The debate on whether to frack or not, whether to build the Keystone pipeline or not, focuses on jobs v. environment. The claims are two: the jobs will be many and good paying (and implicitly, there’s no alternative source of such jobs) and the environmental consequences are overblown because both fracking and oil pipelines are safe (or could be done safely.)

Both are flawed. Sure, these projects will create large numbers of good paying jobs, and we desperately need such. However, they are not the only way to get such jobs.

Building and restoring decrepit infrastructure is an easy way to generate good jobs. And we could invest in cleaning up contaminated soil and water too–the Superfund list is quite long.

Second, the track record of contamination and secrecy shows that both fracking and pipelines are currently done in ways that produce large amounts of contamination and have very high contamination risk profiles. (See below, after the corruption examples)

Let’s assume, however, that it is possible to frack and pipe oil in a way that poses very very little risk to our water supply. Do we have any reason to believe that is what will happen as fracking expands?

The answer is no, because of the corrupt relationship between industry and government at all levels. Americans cannot trust industry to act safely on its own; Americans cannot trust the government to ensure industry acts safely.

In such a situation: catastrophic risk profile, and inability to manage risk effectively, the only sane option is to not run the risk at all.

In short, unless and until Americans can trust that state and federal environmental regulators have the rules, culture and budget to ensure industry is operating safely, we must stop fracking’s expansion and we must reject Keystone.

Seeing the Corruption

An encyclopedic recitation of all evidence of government corruption in the environmental context would require a book. Below I highlight two recent examples from the coal industry, to illustrate what and how it happens.

First a housekeeping note: what I mean by “corruption.” I mean both something personal and something policy.

On the personal level, I mean people gaining money or power in exchange for enacting and enforcing public health policies that prioritize industry profits over clean water (or clean air and clean soil) and the health impacts dirty water, dirty air and dirty soil have.

On the policy level I mean the fact that such policy exists is a res ipsa loquitur case that the personal corruption is occurring.

Last, I’m not suggesting that industry’s viability is irrelevant to policy making; just that the pro-industry skew is so extreme it cannot be explained except through underlying corruption.

West Virginia and the Freedom Industries Spill

Freedom Industry’s January 2014 spill of a chemical into the drinking water used by about a third of West Virginians shocked locals and will have unknown but possibly quite serious consequences overtime.

Evan Osnos documented the back story to the spill for the New Yorker, a tale big coal’s cementing of power in West Virginia. The article is a compelling read, but here are the key bits for this post’s purposes:

MCHM—[the primary chemical leaked]—is part of a chemical bath that the mining industry uses to wash clay and rock from coal before it is burned.

Doesn’t sound like something I’d want to drink.

There are more than eighty thousand chemicals available for use in America, but, unless they are expected to be consumed, their effects on humans are not often tested, a principle known in the industry as “innocent until proven guilty.

How safe does innocent until proven guilty make you feel? How do you like the idea of being confronted with a chemical in your drinking water and not knowing just how bad it is?

…the [leak] site posed an immediate problem: it was a mile upriver from the largest water-treatment plant in West Virginia. The plant served sixteen per cent of the state’s population, some three hundred thousand people—a figure that had risen in the past decade, because coal mining has reduced the availability and quality of other water sources, prompting West Virginians to board up their wells and tap into the public system.

Note: an industry leak threatened the public water supply West Virginians had turned to because prior pollution wrecked their well water.

Does the “expected to be consumed” part of “innocent until proven guilty” consider the risk of consumption via pollution? If it does, why didn’t we know the risk profile of a chemical stored in tanks next to a river just upstream from a major drinking water treatment plant?

[West Virginia] has become a standard-bearer for pro-business, limited-government conservatism. The day before the chemical spill, the governor, Earl Ray Tomblin, delivered his State of the State address, criticizing federal environmental regulators… Tomblin, a conservative Democrat elected in 2011, cut corporate taxes … For the second consecutive year, West Virginia’s Department of Environmental Protection would take a 7.5-per-cent cut in state funds, dropping to its lowest level since 2008.

It’s very hard to protect the public without the money to do the job.

Things have been so poorly regulated in West Virginia that:

In 2008, the Charleston Gazette discovered that in a nearly five-year period coal companies had self-reported around twenty-five thousand violations of the Clean Water Act, but the D.E.P. had not reviewed the reports or issued a fine.

Can you imagine admitting you violated the law 25,000 times and never getting in trouble for it? Can you imagine relying on an agency like that to protect your drinking water from fracking or oil pipeline leaks? Indeed, it’s so bad that

In 2009, four environmental organizations petitioned the federal government to take over enforcement of parts of the Clean Water Act in West Virginia; they described the state’s regulatory system as approaching a “nearly complete breakdown.”

Also in 2009

… federal investigators from the Office of Surface Mining wrote that West Virginia had become so lax in its enforcement of coal-mining pollution regulations that “the consequences for violating the law, even when the violations are intentional, willful and blatant, are not significant enough to be a deterrent.

Nonetheless, nothing came of the petition to have the feds take over enforcing the Clean Water Act. How safe does that make you feel? Think the feds have your back if your state doesn’t?

This lax enforcement is not accidental; it is a direct result of policy set by Governors and legislators who directly benefited from, or were threatened by, the industry:

…Joe Manchin, the governor from 2005 to 2010, “said that when the industries see the D.E.P. coming onto their property he wanted them to feel comfortable.” Manchin, a Democrat, had prospered as a middleman who helped coal mines sell to power plants and other users. Once in office, he repeatedly advised the department to shift its emphasis from enforcement to “compliance assistance.” …

In 2010, Manchin left the Governor’s Mansion and ran for the U.S. Senate. …The American Chemistry Council, the leading industry group, spent two hundred and twenty-five thousand dollars on advertisements praising Manchin as the “Senator for Our Future.”…On his Senate financial disclosures, he has reported income of more than three million dollars between 2009 and 2012 from Enersystems, a coal brokerage that he owned. (It is now run by his son.)

“Senator for Our Future” of undrinkable water, perhaps.

But it’s not just Manchin.

The West Virginia legislature has proved vulnerable to the forces of outside influence. In the nineteen-eighties, coal companies converted part of the top floor of a hotel into a Coal Suite, where lawmakers could enjoy an open bar, a buffet, card tables, and private areas.

Sounds fun!

Today, the Coal Suite is gone, but, unlike in a majority of states, West Virginia industry groups and their clients don’t have to report how much they spend. In 2010, the Pacific Research Institute compared state laws on transparency in politics—the requirement, for instance, that a lobbyist disclose its spending on behalf of a client. West Virginia tied with Nevada as the least transparent in America.

Heck, who cares how much lobbyists spend on behalf of their clients?

The Democrat John Unger, a pastor and former Rhodes Scholar who serves as the majority leader in the state Senate, told [Osnos] that he has identified three steps by which lobbyists win the coöperation of his peers. “First, they try to wine and dine you. Then they try to set you up. And then they try to threaten you.”

“Set you up?” [Osnos] asked.

“Set you up in the sense of getting something on you so that you become beholden to them,” he said.

Industry punishes those who dare buck them:

In 2012, a coal-industry lobbyist asked Larry Barker, who was the chair of the House Energy, Industry, and Labor Committee, to advance an industry-backed bill out of his committee. Barker declined, and the meeting adjourned.

Afterward, Barker told me, a lobbyist “walks over and crowded me with his shoulder, kind of back to the corner, where there was nobody there but me and him. And I’m looking up at him, and I said, ‘What is it?’ And he said, ‘What’s it going to take for you to run our bill?’ And I said, ‘I want to look it over. I want to let the attorney look at it, I want the union to look it over.’”

“He said, ‘This is the last meeting. You can call a special meeting and put this bill on there.’ And I said, ‘Well, now, why do you think I would do that?’ He said, ‘Because we want it.’ We, meaning the coal industry. ‘We want it. Period.’”

“I said, ‘Well, we’ve reached a deadline. If I’m still here next year in this same position, if this is a good bill, I promise you I’ll run it in the first meeting next year.’ He looked me in the eye and he said, ‘That will be too late for you.’” […]

That fall, a first-time candidate backed by the coal industry challenged Barker and defeated him.

Don’t you feel safe and secure now, knowing that people who dare defy industry can be pushed out of office by industry’s deep pockets? Aren’t you confident that fracking and the Keystone pipeline will be pursued safely, with tremendous focus on potential public health impacts?

And although much is not known about the safety of the leaked chemical, note:

The company that made MCHM, Eastman Chemical, of Tennessee, had tested it on laboratory animals and given it a U.S. Occupational Safety and Health Administration rating of “hazardous.”

Sounds super safe to me!

Dr. Gupta, the head of the [local] health department [said that he and his family were not drinking tap water]. The water at their house still had an odor….[Osnos] asked if there were any outstanding scientific questions, and he laughed. Then he said, “What is the metabolism and excretion of this compound in humans? Does it accumulate? Where does it accumulate? What is the carcinogenic potential? What is the teratogenic potential? What does it do to home pipes? How does it interact, if at all, with other compounds in water, such as chlorine? Does it form harmful or harmless products?”

Good ol’ innocent until proven guilty at work!

There’s much more in the article, read it when you can.

Coal Rules

New rules designed to protect coal miners from black lung, which has been sharply rising, were announced April 23, 2014. As the Center for Public Integrity reported, the new safety standard was lower than labor and environmentalists wanted, but the Secretary of Labor Tom Perez, and Joe Main, the head of the Mine Safety Administration, touted the the new rules’ closure of existing loopholes.

What loopholes?

From the Center for Public Integrity report:

Under existing rules, miners wear pumps that collect samples of the amount of dust in the air, but coal companies get to average five samples, meaning some miners could be exposed to dangerously high dust levels as long as they are balanced by lower exposures to other miners. Samples are taken over an eight-hour period, even though many miners now work 10- or 12-hour shifts.

Nice–assess safety based on an 8 hour average that didn’t reflect actual worker exposure. But it gets worse:

When an inspector is conducting sampling, companies are allowed to operate at half of normal production levels, generating less dust than likely would be present at full production.

So the average based on a short shift is further low-balled by cutting production in half. And this counts as a test?

When MSHA does issue a citation, companies often have been allowed to avoid fixing the underlying problems for weeks or even months, potentially leaving miners exposed to high dust levels.

Wait–even with the test rigged to be an artificially short sampling of artificially low dust production and averaged to minimize the chance of a high test result, the companies still fail tests and MSHA issues a citation?

The new rule allows MSHA to issue a citation if any individual miner’s sample is too high, mandates sampling over a full shift, requires companies to operate at 80 percent of normal production levels during sampling and gives the agency authority to order quick fixes of violations and step up enforcement efforts at mines that appear to be cutting corners.

Much better, but why operating at 80 of normal production levels? Why not a real world test?

Miners have long described what they viewed as rampant cheating of dust samples. Documents and interviews with current and former miners have revealed practices such as supervisors placing pumps in clean air or tampering with pumps after sampling.

Wow, nothing says ‘we don’t give a s–t about our workers’ more than stuff like that. The new rules require continuous monitors, which “should make such practices much more difficult, Main said Wednesday.”

No wonder black lung has been increasing. And again, we’re supposed to have faith that industry, unregulated, will protect us? Or that our governments as currently composed will? Not likely. Seems the best that can happen is closing egregious loopholes after tremendous health impacts have already been documented.

Fracking Risks

1. When the chemicals get in drinking water, people get sick.

Consider the $3 million awarded to a Texas family poisoned by fracking. For a more humorous presentation, see Aasfi Monvi’s Daily Show take.

2. Fracking destablizes the ground by causing earthquakes.

(At this point in the national policy discussion, it’s deeply misleading to say it’s not fracking, it’s the disposal well, that causes the quakes. When people think about fracking–whether to have it or not–they mean the industry as a whole, not the component parts of the process. It doesn’t matter if the fracking industry is causing the quakes at the start or end of the process. Unless and until the industry disposes of its waste in a way that does not cause earthquakes, it is fair to say “fracking” causes quakes.)

Fracking has been found to cause (or at least be strongly correlated with) earthquakes in at least Ohio (see here too), Oklahoma, Texas,and Kansas. Indeed, the injection wells pose enough risk that earthquakes in distant countries have triggered quakes at well locations, as this article explains.

What’s the big deal, given that these quakes are generally small? First, there’s no way of knowing they’ll stay small; each earthquake relieves stress but may build stress elsewhere on a fault. Second, earthquakes can change groundwater flow by producing new cracks in bedrock or changing the compactness of soil.

The ground water flow impacts of earthquakes are normally studied in response to big earthquakes. However, when you consider that source of the quake is pollution-laden water, the risk is clear: how can anyone really know where the dirty water will end up?

3. Only the companies know what’s in fracking chemicals. (One company, Baker Hughes, announced this April that it would voluntarily disclose all ingredients in its fracking fluid. Other companies say they will continue to use the trade secret exceptions.

How safe do you feel now? What’s in the fracking chemicals can make you sick, but we don’t really know what they all are, and we don’t really know where they’ll end up.

4. Home values

People whose properties are impacted by fracking pollution lose a lot of value.

5. NYC’s water supply.

More than 8 million people get water from upstate New York, piped untreated into New York City. Governor Cuomo is considering allowing fracking in NY. Here’s a look at where “initial” fracking is likely to be. Note it shows the key shale is in the watershed and that initial fracking (if approved) is expected to include areas near it.

Do you think that if fracking companies contaminate NYC’s drinking water supply they will pay for the treatment plant to clean it up?

Keystone

This post is already very long, so rather than highlight the risks of the Keystone pipeline, see here for starters, which explains:

Catastrophic spills of tar sands crude in Mayflower, Arkansas and Michigan’s Kalamazoo River illustrate just how risky tar sands pipelines are. The inevitable spills from tar sands pipelines poison waterways, disrupt communities, make residents sick, and decrease property values. The unique chemical makeup of tar sands oil causes it to sink in water, making it particularly difficult to clean-up. The spill that occurred in the Kalamazoo River three years ago still hasn’t been cleaned up, and the total cost of redressing the devastation will top $1 billion.

Given that Keystone XL runs right over the Ogalala aquifer, one of the most important sources of water in the Midwest, the risks of contamination are enormous. Just one spill from the Keystone XL pipeline could destroy a water source on which hundreds of communities and thousands of ranchers and farmers rely.

So. Put aside for the moment the fight over whether or not it is technically possible to frack and pipe tar sands oil in a way that poses very very little risk to drinking water. Assume for the sake of argument that both can be done safely (ex-climate change.)

They won’t be.

Industry, and our governments as currently composed, won’t keep our water safe; they will put our lives, and our ways of life, at risk. In this context, the only way to manage these risks is not to run them.

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