Local officials are likely to profit from fracking in Southern Tier

• Originally published in “The Legislative Gazette” on  July 02, 2012. Due to a website re-design this seems to have been taken off its website, which is why I re-published it here.

By ANDREW WYRICH, JULIE MANSMANN, CAT TACOPINA, MARIA JAYNE,
PETE SPENGEMAN, BRIAN COLEMAN and BETH CURRAN

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Dennis Fagan, chairman of the Schuyler County Legislature, believes New York state should allow the controversial drilling method of hydraulic fracturing. Fracking is the controversial process of blasting a mixture of water, chemicals and sand into the ground horizontally to break up rock and release natural gas deposits.

Fagan lives and works in the state’s Southern Tier, which sits atop vast natural gas reserves. In a region where many towns are struggling, the shale below could be a windfall. Despite many who adamantly oppose the drilling for fear of environmental dangers, companies just over the border in Pennsylvania are already fracking, and have been since 2005.

Fagan believes local officials, like himself, should decide what is best for their communities and has made his opinions known about drilling to the media and state regulators.

“I’m confident adequate regulations can be developed. It’s a question of when,” he told The Ithaca Times in January. “But when it occurs, I would want to be in a position to take advantage of it.”

Though Fagan has been public in his support, one detail is often left out: Fagan may also profit personally if fracking is allowed in New York – a position that, to some critics, raises questions about conflicts of interest.

Along with being an elected county legislator, he is an owner of Fagan Engineering in Elmira, a company involved in fracking to extract gas in Pennsylvania. In fact, Pennsylvania regulators have cited Fagan’s company for involvement in drilling-related work that violated environmental laws.

Fagan, when testifying before state regulators, has not mentioned he stands to make money from state approval of the controversial drilling process.

As part of a months-long project, SUNY New Paltz students in conjunction with The Legislative Gazette reviewed thousands of comments submitted to the state Department of Environmental Conservation. Also examined were attendance logs for DEC hearings, archived videos of state proceedings, news clippings and websites.

The investigation found more than 30 locally elected officials who have been outspoken proponents for fracking. Public records and additional examinations identified about 20 percent of those with more than political philosophy at stake — potential profits are as well.

To open government advocates such as Common Cause, these instances raise concerns about transparency and conflicts of interest among locally elected officials.

Common Cause has issued its own report highlighting concerns about campaign contributions to locally elected officials from the drilling industry. The group is worried companies are attempting to wield influence should fracking decisions be left to local governments.

“New Yorkers need to be assured that such a controversial issue will be decided based on merit not money,” said Susan Lerner, the Executive Director of Common Cause/NY when her group issued the final installment of its “Deep Drilling, Deep Pockets” report earlier this year. “The public should not have to rely primarily on analyses of political spending by advocacy groups and the press to be able to hold their elected officials accountable.”

Fagan has long spoke publicly about the benefits of fracking, even intimating the practice will inevitably come to New York.

The county official told “The Review & Express” of Watkins Glen in September of 2011, despite his overall support, he is against hydraulic fracturing in Schuyler County because of the strain it would place on the county’s infrastructure. Fagan said he’s “quite sure that heavy traffic would adversely affect tourism.”

However, Fagan said he believes neighboring counties like Chemung would be good locations.

“I have said I am against fracking in my county because the overburden on top of the shale is insufficient to adequately horizontally frack,” he said in an interview with The Legislative Gazette. “Other counties… would work.”

Overburden is the depth of soil and rock between the surface and the gas-laden shale. Fagan told “The Review & Express” while 3,000 feet of overburden is ideal for fracking, Schuyler County only has about 1,400 feet, but counties in the Southern Tier have more ideal overburden projections.

What remains seemingly unmentioned is that his business, Fagan Engineering, sits square in the middle of Chemung County, in the city of Elmira.

In October 2009, Fagan Engineering was sent a notice of violation from the Pennsylvania Department of Environmental Protection.

The state’s DEP revoked three erosion and sedimentation control permits issued to Ultra Resources Inc. and Fortuna Energy Inc., two drilling companies that have numerous drilling sites throughout the state, and according to the state agency, Fagan Engineering was one of the consultants charged with adequately overseeing their work.

When reached by phone, Fagan said “The citation was a minor issue regarding erosion sediment control. It was readily resolved and there haven’t been any problems since.”

Fagan dismissed any conflict with his work and his duties as a county official when it comes to speaking in favor of fracking.

“As it relates to being a local official, I have publicly stated I am not in favor of fracking in my county,” he said. “I think being familiar with fracking and the technical aspects of fracking, I am well suited to make those types of decisions. If it came to any local decision where I thought there would be a conflict of interest, I would obviously recuse myself, but there has been no such matters in Schuyler County.”

‘Believe the science’

One area likely to become a drilling boomtown if fracking is allowed is Broome County, located along New York’s Southern Tier.

Last November, when the DEC held a hearing in Binghamton to gather public comments about fracking, four Broome County legislators spoke in favor of drilling proposals.

They all belong to advocacy groups backing drilling and none mentioned possible personal financial gains.

For instance, at that DEC hearing, Broome County District 7 legislator Marchie Diffendorf said the area he represents would likely be an epicenter for gas development. Diffendorf, chairman of the Kirkwood Gas Coalition, a business group favoring fracking, said the state had taken “long enough” to evaluate fracking and that delays were hurting the state economy and those who would benefit from drilling.

“While we have been waiting for the New York state DEC to complete its study on hydrofracking, we have had over 10 members of our coalition die,” she said. “They will never get to see their land leased, never get to take that vacation of a lifetime, never to buy that gold necklace for his wife or maybe do some remodeling.”

Diffendorf, who represents the town of Kirkwood and portions of Conklin, Colesville and Windsor, said in a phone interview it would not have been a conflict of interest for him and other landowning lawmakers intent on obtaining drilling royalties to speak in favor of fracking at state hearings.

Ironically though, Diffendorf and three other lawmakers have been charged with conflicts of interest before.

In 2010, the Broome officials were considering a $16 million gas lease for county property. Then-Broome County Attorney Joseph Sluzar said Diffendorf, Gorman Messina, Stephen Herz and Ronald Keibel should be recused from voting on the proposed deal because they were landowners who could have financial stake in gas drilling in the area.

Sluzar chastised them for conflicts of interest and said they should not publicly support or vote on matters involving fracking.

Diffendorf owns 107 acres of land in Broome County and is a member of Joint Landowners Coalition of New York.  He said he supports natural gas drilling because he feels the residents of New York could benefit financially from technology he feels has been proven safe in Pennsylvania and Oklahoma.

“Drilling is something I feel strongly about and I don’t see any conflict in talking about it,” he said. “Its proven safe and it’s unfortunate that the media got a hold of some bad information and everyone got scared.”

For the record, advocates up and down the state would debate Diffendorf on his claims of safety.

While Diffendorf said his advocacy presents no conflict, one of his fellow legislators said the questions about conflicts of interest are valid concerns.

When asked in an interview, Herz said the county attorney was correct to rule that he and the other legislators should have recused themselves from voting on the proposed gas lease for county property in 2010.

“I thought it was more than reasonable,” Herz said. “Joe [Sluzar] explained everything very clearly and I respected that then and respect it to this day.”

Herz and his wife, who are both part of the Windsor-Colesville Oil and Gas Coalition, own 125 acres of land in his district. He said if a lease for gas drilling had been drawn up, he had “fully anticipated” his land would have been used.

Herz said District 9, the largest in Broome County, is “mostly favorable” towards natural gas drilling. He believes natural gas drilling is a decision to be made by the counties, but it must be done responsibly and that “it has to be done right.”

“I’m a landowner and I take my place in public office very seriously,” Herz said. “I agree with [Sluzar’s objections] because I don’t want any lines to be crossed.”

Regardless, Herz also spoke at the DEC hearings in November. While outlining why he favored fracking, he did not discuss the 2010 controversy about conflicts of interest or his potential financial interests.

“How are we going to continue funding public service? How are we going to create opportunities for the best in our area?” Herz said several months ago. “I submit that with the leases that the landowners have formulated, the natural gas industry will provide the funding to create what we need.”

Keibel also faced questions from the county solicitor about conflicts of interest. He could not be reached for comment despite repeated phone calls and emails.

Last November, Keibel spoke in favor of fracking at DEC hearings and had not mentioned the potential revenues he might gain if fracking was approved.

“With over three years of studying natural gas development, it’s time to believe the science, look at the history, and issue permits to allow drilling,” said Keibel at the hearing. “Let’s permit drilling, staff and support the New York DEC as needed, and allow landowners to develop the resources they own.”

The newest Broome County legislator, Julie Lewis, who replaced Messina in office in 2010, was not in office when the county attorney asked members of the Legislature to recuse themselves.

When asked this spring, Lewis said questions about conflicts of interest should be determined on a case-by-case basis

“I think that there are particular cases where we should recuse ourselves,” said Lewis. “If I own part of a company that my town is signing a lease with, then yes, I would recuse myself in that circumstance.”

Lewis, who supports hydrofracking, owns 33 acres of potentially leased land and is the vice president of the Joint Landowners Coalition. The Coalition discusses educational and environmental issues, most commonly natural-gas drilling.

Lewis provided an analogy to share her views on a potential conflict of interest.

“I look at it this way,” Lewis said. “If we are discussing an engineering issue and there is an engineer on the board, I wouldn’t ask that person to recuse themselves just because they are an engineer.”

Lewis said state officials should consider the mixed messages the state is sending to business owners.

“Is New York really open for business?” she said at the hearing. “Several companies have attempted to set up residences in New York and establish their business. Under the regulatory restrictions under the moratorium, they opted to move their headquarters into Pennsylvania.”

‘Appearance of Conflict’

About a one hour drive northeast of Broome County is Otsego County. Here, fracking opponents have also accused a local legislator of having a conflict of interest in drilling.

James P. Powers, 58, is a dairy farmer from South New Berlin, N.Y. He owns James P. Powers Trucking, an interstate carrier of grain, livestock and farm supplies. Powers is a fracking proponent recently re-elected to represent the town of Butternuts. He is also chairman of Otsego County Natural Gas Advisory Committee, a government advisory agency on fracking.

On Nov. 29, 2011, Powers told “The Daily Star” he was “keeping [his] options open” in regards to the possibility of leasing his land to energy exploration. Town records indicate that Powers owns 136 acres, 74 of which are classified as vacant or unimproved.

At least one fracking opponent is claiming Powers has a conflict of interest.

Nicole Dillingham is the president OF Otsego 2000, a small 501(c)(3) public charity that advocates for the protection of natural resources in the county. She accuses Powers is working with one of the landowners associations who are negotiating to lease their land for drilling at the highest rates and best terms.

“As a landowner who has indicated he plans to lease his own land, he stands to potentially benefit financially if gas drilling is allowed to proceed in the county,” Dillingham said in a May interview. “This presents either an actual conflict or the appearance of a conflict of interest which should be avoided. I believe he should step down from his position as Chair of Soil and Water.”

However, the county attorney found no inherent conflict of interest.

Powers ignored requests from fracking opponents to step down. He has rejected his own panel’s suggestion to give communities the authority to prohibit gas drilling within their boundaries.  He said in a May interview that town boards do not have the expertise, “particularly when it comes to gas drilling.”

This project was overseen by Andrew W. Lehren, an award-winning investigative reporter at The New York Times and the 2012 James H. Ottaway Sr. Professor of Journalism at SUNY New Paltz.