Saturday, July 19, 2014

Depantsing the Perryman Report about Denton’s Fracking Ban


On November 4th, Denton could ban fracking, forever ridding its neighborhoods of a poisonous specter. Ever since we got the signatures to put the ban on the ballot, support has been growing like a tidal wave.



This has the oil and gas industry scared. They are getting desperate.  


They’ve taken out full page color ads in the local paper accusing us of being unpatriotic. The head of the Texas Railroad Commission, a man whose campaigns are 80% funded by the very industry he supposedly oversees, insinuated that Russia is behind the ban (I’m still waiting for my check from the Kremlin, but when it arrives, the first round of vodka is on me).


The industry even spent an estimated $50,000 on a counter-petition campaign in support of fracking. For two weeks, out-of-state petitioners, being paid $4/signature (plus hotel and travel expenses), flooded the city. It was a shamelessly dishonest stunt. I was stopped by one petitioner (from St. Louis) in the Kroger parking lot who actually told me that his petition was for a fracking ban. Texas Sharon Wilson caught another petitioner lying on video and several others attested to their annoying and mendacious tactics.


The industry also did what they do best: fund a report about how great they are. They hired the Perryman Group to write a report about how much the proposed fracking ban would cost Denton. Of course, what they ‘found’ were some big scary numbers. A ban would cripple the city!


They timed the release of the report to coincide with last week’s epic City Council meeting about the ban that brought in 600 people (sitting in three overflow rooms) and stretched on until 3 a.m. To parrot the findings of the report at that meeting, several industry representatives drove in to Denton, including the former Chief Justice of the Texas Supreme Court (surprisingly, he now works for the oil and gas industry).

Their strategy worked. Media coverage cited the report’s figures, making it sound like the people of Denton would be committing economic suicide if they adopted the fracking ban. And the industry trolls keep shouting the report’s conclusions into their echo chambers.

Now, usually, I find it best to ignore this kind of overt bias. But the stakes are too high. Someone has to call bulls**t. So, here goes:

1.     The report is completely one-sided. It is not a cost-benefit analysis of the fracking ban. It is only a cost analysis. The benefits of taking the oh-so-radical move to ban a toxic industry from neighborhoods are not even considered. Yet City Councilmember Kevin Roden is right that a fracking ban will create a local economic boom. More on this later.

 

2.     It is a black box that does not include the data or the model used. Their model relies heavily on economic multipliers, which are easy to abuse to get the findings you want.

 

3.     The Perryman Group is notorious for exaggerating figures to fit their clients’ preferred reality. When TransCanada hired them, the Perryman Group said that the Keystone XL Pipeline would create as many as 550,000 jobs. Even analysts who support the pipeline called their figures “dead wrong” and ‘meaningless.’ An independent analysis by Cornell University found that the pipeline would create only 500 to 1,400 jobs.

 

4.     Don’t forget the rule of the one percent (or less). We know that fracking is a miniscule part of Denton’s economy. Mineral values are just 1.1% of total property values in the city. Minerals contribute just 1% of total property tax revenues, meaning fracking accounts for 0.5% of the city’s General Fund. The mining sector accounts for just 0.27% of the local workforce.

 

5.     OK, set aside the report’s one-sidedness and hidden assumptions. Set aside the Perryman Group’s track record of hyperbolic industry cheerleading. Let’s take the giant leap to assume the report is not a gross exaggeration. Even then, the report actually confirms the rule of the one percent (or less). It concludes that the ban will cost the city about $500,000 in tax revenues annually, which is 0.06% of the city’s total revenues (gosh, isn't that even less than what we have been saying?).

 

6.     The report confirms the rule of the one percent (or less) again. It claims that the ban will cost 2,077 person years of employment over ten years. Yet ‘person-years’ is a flow that accumulates over the ten year period, so the figure actually amounts to 207 jobs. The total workforce for Denton is 67,316, so the impact of the ban is 0.3%. Surprise! That’s about the same number posted by the city, which we have been using, of 0.27%.

 

7.     And again… The report estimates a loss of roughly $25 million per year in the city’s gross product. Now, as far as I know, no one bothers to count the total gross product for cities – only nations and states. So, we will have to use a proxy to estimate Denton’s gross product. One way to do this is to divide Texas’ $1.5 trillion gross product by 215 (as Denton’s population is 1/215th of the state’s population). That yields a gross product for Denton of $6.98 billion, which means Perryman’s estimated cost of the ban is a whopping 0.36% of Denton’s gross product. There’s another way to estimate local gross product. Texas’ gross product = the state’s population X the state’s per capita income X 1.36. If we do this calculation for Denton (121,000 population X $22,000 per capita income X 1.36), we get a gross product of $3.62 billion. That would make Perryman’s estimated ban cost 0.69% of local gross product.

 

8.     To conclude, let’s return to the benefits of a fracking ban (the costs of not banning fracking). Many of these benefits are hard to measure, but very real. Indeed, they may not be easy to count but in the end they are what really counts: health, quality of life, and your right to feel safe in your home and peacefully enjoy your property:

 

a.      A ban will reduce health care costs (and lost worker productivity) by cutting fracking’s outsized contribution to smog-forming ozone in an area with alarmingly high rates of childhood asthma.

b.     A ban will eliminate the waste of hundreds of millions of gallons of city water, in a drought-prone area, and the risks posed to our groundwater resources.

c.      A ban will reduce the costs of development. A fracking ban means dozens or hundreds fewer gas well pad sites, thus fewer impediments to development and lower taxes to finance it.

d.     A ban will open up more land for more profitable land uses. Gas well sites (often more than an acre in size) chew into residential and commercial development, which produce larger and more sustained revenues.

e.      A ban will protect home values. Fracking reduces nearby residential property values, thus depleting tax revenues.

f.      A ban will protect quality of life. Fracking brings with it: overwhelming truck traffic (it takes more than 1,000 diesel trucks to bring a single well into production), noise and light pollution, and fumes and odors. It takes away your right and ability to enjoy your home.

g.     A ban will attract the workforce of the future. Fracking is a deterrent for the people Denton needs to recruit to fill the high-tech, high-paying jobs that can propel its economy forward. The millenials who are hitting the workforce now want cities with a high quality of life. Poisonous fracking 200 feet from homes doesn’t quite fit that bill. They’ll find jobs, and take their dollars, elsewhere.  

h.     A ban will provide peace of mind. Parents won’t have to worry – like Denton resident Maile Bush worries – about the health of their children. How much of a benefit is it to not have a carcinogen-emitting industrial site outside your child’s or your grandchild’s bedroom window?

The industry wants to frame the vote on the ban in terms of a cost-benefit calculation. But they just shot themselves in the foot with this report. When we really look at the numbers (which they doubtlessly exaggerated in their black box) in the context of the local economy, we find that they are miniscule. They are far outweighed by the benefits of safeguarding property rights, water, air, home values, and the health, livability, and safety of our community.  

Thursday, June 26, 2014

Yes, We Can Say No

The industry-sponsored North Texans for Natural Gasthinks that because we use natural gas we should not be concerned about the negative impacts of fracking in Denton.
Here’s their logic: if you use plastics and electricity or grill steaks, then you must accept the cancer-causing air emissions, waste of clean water, and noise of fracking in your neighborhood.
Frack Free Denton is not a movement against natural gas. Rather, it is against the permitting of toxic industrial activities near homes, schools, and parks. It is a movement for safe and healthy communities and people’s rights to peacefully enjoy their property.
With the ban on fracking, the citizens of Denton are taking a stand for safe and healthy neighborhoods. And the frackers’ response is to tell us that we have to accept their poisonous activities because natural gas is used to make lacrosse sticks!?
That’s how out of touch they are. They just want us to be meek and compliant consumers, not active citizens protecting our children, our property, and the future of our town.
According to their absurd logic, as long as we use natural gas we cannot reject any part of its development (even one process in one town) no matter how dangerous it is. If that was the way we did things, we’d still be insulating our schools with asbestos.
Frack Free Denton is all about local self-determination: the people bearing the negative impacts of hydraulic fracturing should be the ones to decide. We get to choose what Denton will be. And we’ve chosen to cultivate the nation’s largest community garden and to get a nation-leading 40% of our energy portfolio from renewable, wind-generated electricity.
Denton has long been shaped by thoughtful citizens. Thanks to their leadership, we are already walking down a path toward independence from the industry’s unsustainable and harmful products.

Tuesday, June 3, 2014

Mineral Ownership

Folks should know that only 2% of profits from fracking belongs to Denton families, while they get 100% of the pollution.

 

Friday, May 2, 2014

Why do Denton residents have to spend thousands to detect benzene in their backyards?


There are two things I want to address in this blog.

First, I have asked Dalton Gregory to remove my endorsement statement for his election from his blog and he will do so on Sunday when he returns from a trip. It was inappropriate for me to issue political endorsements like that when I am working as a member of a non-profit educational group.

Second, air quality tests that Denton DAG recently released show benzene at dangerous levels in a Denton neighborhood near gas wells.

Air monitoring is so important because in the backwards Texas regulatory system, fracking is treated as innocent until proven guilty. Even though we know the industry is using carcinogenic and toxic chemicals, the burden of proof falls on the residents to establish that those chemicals are trespassing into their neighborhoods and their bloodstreams.

Who can monitor our air to keep it safe and healthy? State agencies don’t have the funding, personnel, or equipment to even come close to an adequate monitoring program. There are 18,000 gas wells on the Barnett Shale and TCEQ has six air monitors! And when TCEQ responds to complaints, they are going to be taking measurements long after the emissions event and after the industry knows they are coming.

That means it is up to local communities to monitor the industry. Southlake, Grand Prairie, and Hurst all have monitoring programs as part of their drilling ordinances.

For two years, DAG repeatedly recommended a program be built into Denton’s ordinance.

When it came time for the final vote in January, 2013, Denton City Council, including Councilman Gregory, did not include a monitoring program in the ordinance. BUT they promised to make an air monitoring program as a stand-alone requirement. This, they said, would be even better, because it would avoid the vested rights issue so that monitoring would apply to all gas well sites – old and new.

I expected City Council would get to work on this right away. But they didn’t. In fact, in the fifteen months since they made that promise, they have had one meeting about air monitoring. Our elected officials have done nothing to monitor the air and not enough to protect the health and safety of the people who elected them.

I know lots of people pushed the issue, but I’ll just speak for myself. I wrote e-mails and made phone calls. I met with city officials to see how we could start a program. I wrote blogs trying to spur action. DAG brought Jay Olaguer, one of Texas’ leading air quality scientists, to Denton to give a presentation on monitoring. Jay and I tried to work with Denton and other cities to build a regional consortium for monitoring.

There was little cooperation and no action.

The city could have required in the ordinance that operators pay the expense of monitoring. Instead, citizens have to pass the hat to collect the thousands of dollars it takes to get Summa canister samples. They have to wait for months on end to get a few hours with one of the only FLIR cameras in the region (these cameras can cost $40,000 or more).

And when citizen test results confirm the presence of toxic chemicals, industry spouts lies about how the cameras are only seeing heat waves when in fact those cameras are designed to detect and make visible only toxic chemicals, not heat waves. This is the same old stuff out of the tobacco industry’s playbook.

The city’s failure to implement its own monitoring system has given industry the ability to say there is no danger, placing the time and expense and responsibility of proving that there is danger on the backs of the citizens instead of the city.

This is exactly why the citizens have taken the job of writing an adequate fracking ordinance into their own hands.

All of this once again goes to show why we need to ban fracking in Denton. We really, really tried to make it compatible with our city. We tried to internalize costs. We tried to provide safety and monitoring assurances. But at every turn, we met with obstacles.

We need to flip this backwards system. Ban fracking until we have proof that it can be done safely – that it can be done without sending benzene into the homes where our kids are sleeping, into the schools that they attend and playgrounds and parks where they play.

Monday, April 7, 2014

A Fracking Ban Will Not Sink the City

So far, the main argument against a fracking ban – one that I have heard from nearly everyone in city leadership – is not that it is the wrong thing to do. Many of our elected officials agree that fracking is an overall economic loser for our city and is inherently incompatible with our community. Some have even said they really would like to ban fracking…if only we could! You see, that’s their argument: not that we shouldn’t ban fracking, but that we can’t.
 
Here’s the argument: The city does not have the authority to ban fracking. If we pass a ban, the industry and the state will sue the city. The lawsuit will cost millions of dollars, because Denton will almost certainly lose. This could entail financial ruin and higher taxes. As Dr. Jean Schaake said at a recent Mayoral debate, “a ban will sink the city. This is something to take to Austin and the Railroad Commission,” she continued, “not to City Hall.” In sum: sadly (they will say), the issue of legal jurisdiction trumps the well-grounded ethical objection to fracking.
 
This argument is similar to the way the moderate white clergy reacted to Dr. Martin Luther King Jr. They said his goal was noble, but his means were untimely and misdirected. Dr. King’s Letter from a Birmingham Jail was a reply to those who say “I agree with you in the goal you seek, but I cannot agree with your methods of direct action.”
 
For a long time, I was the moderate voice against a fracking ban, and I respect those in positions of leadership who are making the moderate argument today – indeed I support some of their campaigns for election. Temperance, after all, is a virtue, and their position is a serious one that deserves deep and careful reflection.
 
The problem is that citizens may hear this argument from so many leaders and, rather than reflect on it, automatically assume it is the truth. They may confuse authority for wisdom. People are especially likely to make this snap judgment, because the argument concludes in a costly legal battle, which naturally evokes fear. People hear this and dismiss the ban as some ill-begotten idealism that will bankrupt the city. In this way, even though no one intends this, the moderate argument becomes entangled with a logical fallacy, namely, appeal to fear.
 
I want to brush away the cobwebs of fear that lie atop the moderate argument and cloud our efforts to see it clearly. To do this, I’ll make two kinds of remarks. First, I set some things in perspective. Second, I show why the ban is actually quite reasonable and enforceable.
 
Some Perspective
 
What, really, are we afraid of? I will grant that should the ban pass it will likely face legal challenge. But the mere fact of a lawsuit should not cause us to shudder. When an issue is of vital importance, it is nearly impossible for it to not to end up in court. The courts are forges where we test the mettle of competing claims to justice. Some cases like Brown v. Board of Education come to form part of our collective moral backbone. We can and often do take a different attitude toward lawsuits: not fear, but conviction and even celebration.
 
The City of Denton regularly finds itself in lawsuits. One case in point: the city has been in litigation ever since it passed an ordinance restricting certain aspects of the payday lending business (a year ago). There are strong parallels here: natural gas extraction and short-term lending both threaten citizen well-being, both ordinances prohibit certain aspects of the business that are most harmful (hydraulic fracturing in one case and predatory lending practices in the other), and both ordinances are justified by the jurisdictional authority of municipalities to protect citizen health, safety, and welfare.
 
Recall also that if this, or any other lawsuit, becomes too unwieldy, the city can withdraw or negotiate. There is never an uncontrollable slide into unmanageable legal costs – that’s just a scare tactic.
 
In short, the mere fact of litigation cannot be the problem – this is the daily bread of city politics.
 
Some Legal Defenses of the Ban
 
No, it must be that we are almost certain to lose the lawsuit. That’s the real problem. But is that true?
 
This is the most frustrating thing about the moderate argument – the supposed fact of a near certain loss is bandied about as an article of faith. I have never seen this premise actually accompanied with a reasoned argument grounded in statutory or case law and addressed specifically at the legal merits of the proposed ordinance to ban fracking (the petition). Those who espouse it usually just wave one hand at the colossal bogey man of the oil and gas business and the other hand at the supposed frailty of municipal authority.
 
I’ve even watched this drift into outright lies as was the case at one Planning and Zoning Commission meeting where a Commissioner asked a city lawyer if there had ever been a case where a city actually defeated the oil and gas industry in a lawsuit. The lawyer’s response, after much dithering, was basically ‘no.’ But that is just patently not true – cities have defeated the industry in Texas and around the country dozens if not hundreds of times (see below). The moderate argument holds that there is no legal precedent in this case, which makes it too risky. But there is a long track record of municipalities defeating the oil and gas industry.
 
Consider the legal status of home rule municipalities like Denton. One part of the moderate argument is that home rule just doesn’t give cities as much power as we would like. But listen to this from the Texas Municipal League:
 
“…home rule cities have the inherent authority to do just about anything that qualifies as a ‘public purpose’ and is not contrary to the constitution or laws of the state.”
 
That is pretty sweeping legal authority. You can find other strong claims about home rule powers in the Texas Local Government Code, which, for example, grants home-rule municipalities the power to regulate the location of industrial activities and to “define and prohibit any nuisance within the limits of the municipality and within 5,000 feet outside the limits” and the power to “enforce all ordinances necessary to prevent and summarily abate and remove a nuisance” (Sec. 211.003 and Sec. 217.042). 
 
Now consider the legal status of the oil and gas business and how it challenges home rule authority. There are two main issues here. First, the predominance of the mineral estate that supposedly necessitates permitting this incompatible industrial land use in residential areas. If a city refuses to allow access to minerals, then (the argument goes) they will lose a regulatory takings lawsuit. Second, the fact that state agencies like the Railroad Commission have jurisdiction over oil and gas supposedly trumps local rules. If a city bans fracking, then (the argument goes) they will lose a preemption lawsuit. Put these two together and you get the conclusion of the moderate argument that this industry enjoys certain special rights and is managed according to the state’s concern with developing minerals rather than the city’s concern with protecting community integrity and citizen well-being. But how serious are these legal challenges? Let’s consider each in turn briefly.
 
Regulatory Takings
 
One good resource for this is a law article by Terry Welch, “Municipal Regulation of Natural Gas Drilling in Texas.” Though he notes there is an ongoing tension in the law between the industry’s interests to develop minerals and cities’ interest in protecting public health and safety, he chronicles several cases where cities have defeated the industry, including cases of outright prohibition. Courts have a long record of deferring to the judgment of local government and the citizens they represent.
 
Another great resource is a law article by Timothy Riley, “Wrangling with Urban Wildcatters.” I’ll just give you the punch line in two parts. First, “municipalities have many sticks in their regulatory bundle to successfully defend a prudently enacted oil and gas ordinance against both partial and categorical takings claims.” Second, and here’s the kicker, “Texas common law generally favors municipal authority to regulate oil and gas activities…. every direct challenge to a city’s police powers has been soundly defeated(p. 372).
 
In the 1980s, the Fort Worth Court of Appeals ruled that “any deprivation resulting from a lawful ordinance enforced pursuant to the legitimate policing authority of a municipality does not constitute a loss of property without due process under the law” (p. 371). A year later, the same court found the “City’s ordinance was not preempted by state statute, nor was it in conflict with state law, and thus posed no due process or equal protection violation of the Fourteenth Amendment. Moreover, the court stated that the reasonableness of a municipal ordinance is presumed and considered controlling by courts ‘unless the unreasonableness of the ordinance is fairly free from doubt’” (p. 371).
 
Now, look at some of the fracking that is going on just 250 feet away from homes in Denton, remember the dozens of health complaints from nearby residents, and recall that that situation will happen again and again as the city grows despite years of attempts to regulate it at the local level. I don’t see how one could say a ban in such a situation is clearly unreasonable.
 
To be reasonable, local oil and gas ordinances must not arbitrarily discriminate against the industry. The proposed ban does not do that – it treats the industry like any other business and, just like payday lending, it prohibits certain business operations for reasons of health and safety. I guess one could argue that banning hydraulic fracturing is analogous to 'allowing' payday lenders to operate...just without computers, electricity, and internet. But using computers in a workplace is not a public health threat on anywhere near the level that using carcinogenic chemicals is. In the payday lending case, protecting citizens does not require turning off their lights and computers. That would be arbitrary and discriminatory. But in the case of fracking, protecting citizens does require prohibiting the use of the chemicals and the associated process. The measure taken is reasonable and proportionate to the threat at hand.
 
Of course, underneath all of this is the fundamental legal right to private property. But even foundational rights like this, or the right to free speech, are qualified. This is a point that Eagleridge even makes on their website (my emphasis added): “The basic principle of this country and the Constitution is freedom and the unalienable right to enjoy the use of personal and real property. Certainly not at the expense or detriment to others, but the right still remains.”
 
Say that someone owns a pond and they have the right to catch the fish in it, because it’s their property. But they use dynamite to get the fish. This creates loud noises that disturb the neighbors and it also creates chemical runoff that pollutes neighbors’ property. The legal (and ethical) response is to say that person can get the fish, but they can’t use dynamite. His enjoyment of his private property can’t prevent you from enjoying your property. If there is no other reasonable alternative to dynamite, then that property remains inaccessible for the time being. The appropriate response is to push for safer technologies, not to lower the bar on public health and safety regulations in order to accommodate existing technologies.
 
Hydraulic fracturing is like fishing with dynamite. The ban is a recognition that we don’t yet have a reasonable and technologically available way to access the minerals – really what it is saying is that we have never had such an alternative – we have just been trying to pretend that hydraulic fracturing fits that bill.
 
Preemption
 
The moderates contend that only the state has the authority to regulate oil and gas drilling. But they cannot really mean that, because it is so obviously false. On the Barnett Shale alone, there are dozens of municipal ordinances that constitute regulation of the industry by local governments.
 
So what they must mean is that there are certain limits to the city’s jurisdiction over the oil and gas industry. That’s true enough, but by itself it’s a trivial statement. The question is whether this ban as formulated on the petition exceeds those limits. On that question, I have yet to hear anyone in city leadership offer their opinion.
 
Denton’s leadership holds a very conservative view about the limits of municipal authority over the oil and gas business. They did not adopt several of the provisions found in Flower Mound’s ordinance out of fear of a preemption lawsuit. Yet in recent years Flower Mound has faced five lawsuits from the industry, and they have won four with the fifth still pending. Grand Prairie also won in a recent court challenge.
 
More broadly on the issue of preemption, there is a long history of courts upholding municipal regulations on industries that are largely regulated at the state level. The basic rationale is that the purpose of municipal regulations is different from state regulations. It was on this basis that the New York appellate Court upheld the Town of Dryden’s ban on fracking. That ordinance doesn’t really regulate the industry; rather it just establishes permissible and prohibited land uses, which is something that has long been held to be a proper function of local government.
 
In Texas, there is no doctrine of implied preemption under state law (meaning that just because the state enacts legislation does not imply that a city is powerless to address the issue). Furthermore, for any municipal regulation to be preempted by state law, the State Legislature must do so “with unmistakable clarity.” There is nothing in the state rules about fracking that specifically preempts the city from adopting the ordinance as proposed.
 
Just because the state of Texas seeks to foster and promote mineral development does not mean that Texas cities have to capitulate to their interests. The city also has legitimate and legally recognized interests in protecting community integrity and citizen health, safety, and welfare. The proposed ban on hydraulic fracturing is a reasonable exercise of the powers of local government.

Tuesday, March 11, 2014

Video: The Myth of the Local Fracking Boom

More than two dozen homeowners are suing EagleRidge  for damages up to $25 million. The lawsuit, filed by residents at the Meadows at Hickory Creek, claims that two EagleRidge frack sites have diminished property values, trespassed onto their properties by contaminating air, and reduced enjoyment of their property.

The missing piece of this story is mineral rights. No one in this neighborhood is making a dime from the fracking, because they do not own the minerals. So, as the lawsuit makes clear, they are suffering the costs while not getting any of the benefits.
This raises a larger question: How is the mineral wealth produced by gas wells in Denton distributed? How much money actually stays local in the pockets of Denton families?
I created a short video to answer those questions. The Myth of the Local Fracking Boom shows how most of the wealth generated in Denton drains out of town. All too often, the people living near fracking sites pay the costs but do not see any of the benefits.

 
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Monday, March 3, 2014

Video: A Failed Strategy -- Fracking Regulations in Denton

Here is a 6 minute video that explains Denton's regulatory approach to fracking - the compatibility strategy - and why it has been a failure. It shows how it is time for a change...time for a Frack Free Denton.