New York Policy Forum Panel Transcript: "Hydrofracking in the Marcellus Shale: Poison or Panacea?"

8/3/2019 New York Policy Forum Panel Transcript: "Hydrofracking in the Marcellus Shale: Poison or Panacea?"

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New York Policy Forum

Hydrofracking in the Marcellus Shale: Poison or Panacea

October 6, 2011

The Cornell Club

New York City

Albert F. Appleton, Cooper Union

Dr. Terry Engelder, Penn State University

Jonathan Cohen, New York Policy Forum

John Giardino, New York Policy Forum

Stuart Gruskin, Gruskin Gordon, LLP

Jamie Kitman, Automobile Magazine

Hon. Matthew T. Ryan, City of Binghamton

Jonathan Cohen:

Ladies and gentlemen, thank you for taking time away from your busy day at Occupy

Wall Street to join us for our movement here at the Cornell Club. This is Occupy the

Cornell Club. Were here to prove that there is such a thing as a free lunch. [Laughter] I

guess its coming out of the kitchen now.

On behalf of my partner John Giardino and our colleagues Tina Bonifacio and Aaron

Izakowitz, let me welcome you to our discussion about the proposal to allow drilling for

natural gas in New York State by a technique known by the rather unlovely name of

hydrofracking - or the even less lovely fracking.

We have some notable guests in the audience. I want to acknowledge Mayor Koch,

[Applause] the kingmaker of the Congressional 9th District and the scourge of the state

assembly and the legislature particularly on the redistricting issue. All power to you,

Mayor Koch. You are an inspiration to us, and we thank you.

Pete Grannis is here. The first deputy comptroller [Applause] for the State of New York

and the former commissioner of the states Department of Environmental Conservation.


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New York Policy Forum * Hydrofracking in New Yorks Marcellus Shale * October 6, 2011

New York Policy Forum 2011

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Once again, were indebted -- and happily so --to our friends and partners Ilan Lieman

and Byron Speight. Theyre our design and media partners at IB Creative. They made this

beautiful acrylic banner. They helped create our website. They do our video. If you like

what theyve done for us, they can do it for you. [Laughter]

I also want to thank George Arzt for providing counsel, which is always right on the

money. And Ray Bunanno for his indispensible help in assembling this great panel.

A number of people today have asked

me what our purpose is; do we take a

position on this issue? Let me try and

describe briefly our aim. It is simply

to bring interesting and lively policy

discussions to a wider audience. Our

format is structured discussion as opposed to debate or formal presentation. Our panels

feature notable experts and moderators. We encourage questions from the audience.

John Giardino will lead us in the Q&A session later today. I hope all of you will

participate and are thinking of some great questions to ask this great panel.

Now when it comes to the hydrofracking issue, it seems to me anyway, the competing

interests are pretty clear. On the one hand, drilling for natural gas in New York State

represents the opportunity to create tens of thousands of jobs, and literally billions of

dollars in new economic activity. There are wonderful reports that are actually fairly easy

to read on this topic. The DEC of the state has issued in its proposal some economic

findings. The Manhattan Institute has a study that was issued in June, which as usual with

the Manhattan Institute is quite clear, and good, and sensible. I urge you all to read it.

Our format is structured discussion as opposed to debate

or formal presentation. Our panels feature notable

experts and moderators. We encourage questions from the

audience.


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In addition to the economic benefits that might accrue to our state, there are other

important benefits. Natural gas is said to be cleaner than coal and oil and could serve as a

transition to a broader use of cleaner fuels generally. Hydrofracking along with other

energy technologies can help us, it is said, achieve energy independence from foreign

suppliers. This is a worthy goal for the economy and for national security and, indeed,

has been a national policy goal for 40 or 50 years and, apparently, is near at hand.

On the other hand, hydrofracking poses some very serious risks. They are risks to the

public water supply and risks to public

health. Hydrofracking on a large scale

will strain waste disposal systems in the

state. It will place a burden on roadways

and transportation infrastructure. Then

there is the question of the relationship of

private landowners, and drilling companies, and the leases that they sign together, and

whether those leases are clear, and whether they are fair, and whether they are lawful.

This is the issue before us, really, isnt it? This is the issue, not only for our panel, but for

us in this room, and indeed, everybody in New York State. After all, we are the

successors of generations that were not afraid or fearful of industrial processes. We are

the successors of generations that built the Brooklyn Bridge, tunneled under the Hudson

River, built a great harbor here in New York, dug the Erie Canal and harnessed the power

of Niagara Falls. Is it really not within our power as a polity, as a citizenry and a people

to figure out how to marshal an industrial process called hydrofracking; to draw this

valuable resource from the ground beneath our very feet but do it in a safe manner in a

way that respects peoples rights and is lawful?

Maybe its not within our possibilities to do that. If thats the case, weve got a really

interesting discussion ahead of us.

Is it really not within our power as a polity, as a citizenr

and a people to figure out how to marshal an industrial

process called hydrofracking?


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Well, youve heard a bit from me. But why dont we see what the experts have to say?

Im going to go in alphabetical order.

Al Appleton is an international expert in water resource and water utility management.

Hes a lecturer at Cooper Union. He served as commissioner of the Department of

Environmental Protection here in New York City; and also as the director of the New

York City Water and Sewer Systems. Al is acknowledged as having developed and

implemented groundbreaking innovations that saved New York City billions of dollars in

protecting and perfecting its water supply. He holds degrees from Gonzaga University

and Yale Law School.

Dr. Terry Engelder isperhaps the leading authority on the Marcellus Shale. Hes a

professor of Geosciences at Penn State University. He holds degrees from Penn State,

Yale, Texas A&M, and other notable distinctions. Dr. Engelder also has served on the

staffs of the US Geological Survey, at Texaco, and Columbia University. Hes written

extensively about the Appalachian Region, and has worked internationally as a consultant

on exploration and production issues for Saudi Aramco, Royal Dutch Shell and numerous

other companies. Im very pleased to tell you that just yesterday Dr. Engelder was named

one of the top global thinkers of 2011 by Foreign Policy Magazine, a very impressive,

very prestigious acknowledgement of his work, some of which will be featured in a

special issue of Foreign Policy in December.

Stuart Gruskin is a partner in the consulting firm of Gruskin Gordon. From 2007 to 2010,

Stu served as executive deputy commissioner of the New York State Department of

Environmental Conservation. There, he oversaw the states environmental quality and

natural resource policies and regulations including the moratorium on drilling in the

Marcellus Shale in New York State. Stu also served as chair of the Board of Directors of

the Environmental Facilities Corporation known as the EFC. Hes an expert in water


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management and water issues in municipalities and localities throughout the state. Before

joining state government, Stu had a 25-year legal and business career here in the city.

Hes a graduate of the State University of New York at Albany, and of Albany Law

School at Union College.

Matthew T. Ryan is the mayor of Binghamton, New York. Binghamton, the seat of

Broome County in New Yorks Southern Tier, is situated at the center of a prime drilling

zone. Mayor Ryan hails from his city. He grew up there; went to high school there;

graduated from Binghamton University where for many years he taught environmental

law. He has a degree from CUNY Law School; and served for many years as the public

defender first of Broome County and then of the city of Binghamton. Mayor Ryan was

elected in 2005 and reelected in 2009.

Our moderator today is Jamie Kitman. Jamie is the New York bureau chief at

Automobile Magazine where hes been a long-time columnist. He is the automotive

editor of GQ; a featured blogger on NPRs Car Talk; and a contributor to The Nation,

The Washington Post, Harpers, Foreign Policy, Top Gear, CAR Magazine, and The New

York Times. Jamie has won numerous awards, including the National Magazine Award

for commentary and an IRE Award for investigative magazine reporting on the use of

lead gasoline. Mr. Kitman is an avid car collector and a major carbon consumer. His

carbon footprint, Im sure, rivals Al Gores, at least. He owns a fleet of very cool cars

that are garaged across the Metro Region and possibly all over the world. He serves as a

judge at numerous classic car shows. Given the evident internal conflict between Jamies

dedication to cars and car culture and his obvious and very sincere commitment to social

justice, Jamie seems like the ideal person to help us talk about balancing energy

production, public safety, and environmental stewardship today.

So, panelists, were thrilled to have you here and, guests, too. Jamie, youre in the

drivers seat. Whenever youre ready, theres a green flag. Go to it. [Applause]


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Does the water system become so

polluted that taps produce flames?

Jamie Kitman:

Thanks, Jon, and everyone for helping to set this event up. It seems like its a really good

time to start talking about this stuff. Maybe it would have been a good time to start

talking about it sooner, but here we are.

So, Im going to put my first question to you, Al Appleton. I recently saw the film

Gasland and there are actually a couple of scenes where people turn on their faucets and

their running water seems to light on fire when a match is held to them. I think a lot of

people want to know, is this an inevitable result of fracking? Does the water system

become so polluted that taps produce flames? Why is that?

How is that? If this is an extreme example of what happens,

what would be some less extreme but also serious results?

In short, what do you see as the major threats that fracking

poses to the public health and safety, and environment in New York?

Albert Appleton:

In the interest of disclosure, Im also in Gasland but Im not a flame. [Laughter] I think

if you want to understand that scene, you need to understand the back story. The back

story is that Josh and a number of other of his neighbors in Wayne and adjacent counties

were approached by drilling representatives who basically promised them the world and

that this stuff was totally harmless. Josh, who was deeply emotionally invested in land

that his parents had pioneered in the 70s, decided to take a look for himself and see if that

was true. Josh does not pretend that every farm adjacent to fracking is going to have

water that goes on fire. The scenes of flaming taps were designed to do something much

more specific; to establish that the claims of the industry that this was harmless, that


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nothing but good and benign results would come from it, were simply not true; that they

were PR and not reality and from then on we had to go forward.

I want to take issue with the

way the issue is presented by

our gracious host. The

suggestion that fracking has

inherently good economic and

even foreign policy objectives is one that actually, I hope we get a chance to explore a

little more carefully. Thats kind of a classic 20th century spin on the issue: pollution

versus progress. In the 21stCentury, what were trying to do is put the environment and

the economy together in that awkward and clumsy word sustainability.Its from that

context that I am going to be addressing many of the comments Im going to have on gas

fracking.

Gas fracking really raises three sets of issues. Assuming for a second its benefits were as

presented. The first sets of issues are classic pollution issues: the discharge of fracking

materials into waterways, the associated runoff and air pollution. Wyoming, where they

do gas fracking, is actually in and out of ozone compliance, believe it or not, from gas

fracking. So theres a whole set of gas fracking pollution issues that go beyond the kind

of thing you saw from Josh. They go to the quality and integrity of the water systems.

One of the things I dont like in the industry presentation on this is when they kind of talk

about, Well, fracking fluid is less than 1% toxins. Well, thats true but most of the

toxins in fracking fluid have toxicities expressed in parts per million, or in a few cases,

even billions. So fracking fluid thats of 1% of these materials is a very toxic substance

indeed.

Gas fracking shale is essentially designed to open up fissures so the shale will flow into a

collection lateral and can be taken to the surface. Now, the sand is the critical component

What were trying to do is put the environment and the

economy together in that awkward and clumsy word

sustainability.


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The biggest single thing that mostpeople worry about is pollution to

surface water supplies.

in doing this. Because driving the sand into the shale creates miniature fissures that

enable people to collect the gas. As we all know, if you put sand in water, it just sinks to

the bottom. There has to be some component in this mixture that keeps the sand in

solution in terms of its specific gravity long enough for the sand to do its work and

liberate the gas.

Thats the reason, essentially, why this is a toxics issue. When fracking first developed

100 years ago, it was essentially using water to stimulate the flows of worn out vertical

wells. It is the need to keep the sand in the solution where it will do some good that is at

the heart of the use of all of these toxic materials. Whether or not you could develop a

green fracking material that had the same specific

gravities and would do the same work, there are people

who are trying to do that. So far, it does not seem to

have had a lot of traction with the industry. This biggest

single thing that most people worry about is pollution to surface water supplies.

Now, most of what Josh showed in Gasland was rural farms that were close to fracking

activity and had their well fields contaminated. These are generally, though not always,

caused by poor well casing

creation. That is poor concrete

work, poor grounding, lack of

quality control and then it goes

through to the particular bottom.

So that while this is an

enormous concern if youre a rural or suburban person relying on well water, the longer

range concern is what happens to surface water if these materials are discharged into

watersheds and streams. There are many ways they can get into them. Lots of the

fracking fluid comes back to the surface and somebodys got to put it someplace.

The longer range concern is what happens to surface water

if these materials are discharged into watersheds and

streams.


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Fracking materials can spill. Floods can overrun the lagoon, ponds, and areas that are not

using enclosed areas. There are natural eruptions sometimes from deep underground that

bring these materials to the surface. So there are many pathways in which these things

can get into surface water. If they get in the surface water, the current filtration

technologies we use to protect municipal water supplies will be largely ineffectual against

them. These systems are designed to deal with microbes, bacteria, pathogens, and

sediment.

The sand or the medium probably takes some of the toxic materials out depending on

their composition and a number of other things. But this will not give you the 100%

reliability we expect from a safe drinking water system. If these materials get into the

environment, whats going to happen is there may be some public health emergencies,

but more likely, the various regulators will force municipalities like Binghamton to spend

hundreds of millions, if not billions, of extra dollars on new filtration trains, as we call

them in the water business, to take this material out of the public drinking water.

I mentioned the problems with ozone. Will fracking fluid through any one of a number of

mediums get into surface drinking water supplies? Then there is the question of what

fracking does to the rural landscape.

ost of us think that your grandfathers natural gas, as

wed like to call it, was a very good idea. The industry

kind of counts on this confusion.


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It is the fear of these kinds of consequences being replicated in New York that has driven

many of the community groups that have sprung up like mushrooms to oppose gas

fracking. Now these groups have some trouble distinguishing opposing shale gas fracking

from natural gas. Most of us think that your grandfathers natural gas, as we like to call it,

was a very good idea. Its a byproduct of oil production or it comes from underground

cavities so you basically just stick a straw in. The industry kind of counts on I dont know

how many of you remember clean burning natural gas ads from the time we all grew up.

The industry likes to put forward this clean burning natural gas as kind of its mantra. You

have to understand that gas fracking means the clearing of tens of thousands of acres of

land, stress on roads; new pipelines; compressor stations; storage facilities, and that these

will tend to dramatically change the land use pattern of these rural areas.

It is very hard, if not impossible, to run other economic activity in an area where there is

an intense amount of gas fracking. There are numerous instances documented in

Pennsylvania and elsewhere of farmers who can no longer sell their product because

theyve been tainted by gas fracking.

The question of property values is important: people who have sunk their savings into

retirement homes, farmers who do not want to get under the gas fracking express train,

but find that they can no longer get

mortgages. The FHA actually has

specific guidelines that say if you were

within X distance of a gas well, you

cannot get a mortgage. So, the impact

on the landscape and the impact on the landscapes hydrological and natural resource-

based industries is a very big thing. Lastly, we cannotand Im just going to mention

this because its time for me to get off the podium for a second, except to acknowledge

Mayor Koch. I think of him talking about the champagne of drinking water, even though

Gas fracking is the mortal enemy of green energy.


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we all love his redistricting initiative, too. We, as a country, have to make a choice about

pursuing green energy. Gas fracking is the mortal enemy of green energy. We can come

back to that later.

Jamie Kitman:

Terry Engelder, my understanding is that frackers are not required to disclose the

chemicals that they often use in the process, but Im sure with your expertise youd be

familiar with those. Could you just sort of share what are the chemicals most commonly

used in fracking?

Terry Engelder:

If you want to see an industrial endeavor that has

backfired nothing, at least in my lifetime, has

backfired to the extent to which thats backfired. So,

what the industry is doing right now is theyve formed

a website called FracFocus. While this is not enforced

by either state or federal law, a number of the

operators have recognized the extent to which

transparency is going to be incredibly important as we move forward. They have started

posting on their website exactly what

they use. I think in the State of

Pennsylvania what you will eventually

see is that there will be a listing of all

chemistry of frack fluid, well by well

by well, posted on the DEP websites so that if someone owns a farm in Bradford County

and they know of a Chesapeake well thats next door, they can actually go onto the

website and see exactly what was used in the well.

The business of not sharing the

knowledge of the chemistry of

frack fluid, I think, was a

tremendously poor choice on the

part of industry.

The State of Pennsylvania eventually will be listing all

chemistry of frack fluid, well by well by well.


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To answer the question What are the chemicals that are placed in the fluid? Basically

there is a distribution by volume percent of the fluids that are addedthe additives to

frack fluid. Youll see that its on the order of of 1%. Then, the various individual

components are broken down, first of all, by the compound lard gum, for example, which

Al has mentioned as the thickener, is the same as the stuff thats put in your toothpaste to

thicken it, and cosmetics, ice cream, a number of other things. Of course, Al has already

indicated the importance of that is to support the sand thats put into the water, so that on

a vertical well or on a vertical fracture, the sand doesnt fall to the bottom of the fracture.

There are fifteen different additives.

Each has a function in order to enhance

gas recovery. Youll recognize some of

these: potassium chloride, for example.

You all use sodium chloride on your

potatoes and meat for example.

Potassium is little different than sodium

chloride. It is the sand itself that holds

the fractures open.

Now, one of the things that I will remind you is that underneath your kitchen sink, you

have a set of chemicals that are not unlike the chemicals that are here. I will remind you

also that these are highly toxic. If you were to take that jar of Mr. Clean, for example, and

just chug it right down, I suspect you wouldnt survive if you did that. So we have to put

a lot of this in perspective. It is true that these chemicals that are shipped to the frack sites

in their concentrated forms would also have the same effect.

The question really boils down to, I think, one that goes beyond fracking and that is our

lifestyle. America uses about 100 quadrillion BTUs of energy a year. Natural gas

America uses about 100 quadrillion BTUs of energy a

ear. Natural gas accounts for 25% of that. Of that 25%,

more than 50% is obtained by fracking. If we ban

racking tomorrow, for six minutes of every hour we have

to turn the lights out. We should be crystal clear about

that.


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accounts for 25% of that. Of that 25%, more than 50% is obtained by fracking. So you

can think in terms of the total energy consumption of America, in terms of gas alone as

being somewhere on the order of 12% of the entire portfolio. If we ban fracking

tomorrow, for six minutes of every hour, we have to turn the lights out. We should be

crystal clear about that.

Jamie Kitman:

Dr. Engelder, youre the geologist whos mapped the Marcellus Shale and studied its

composition. You probably know more about it than anyone. Can you give us a two-

minute primer on what the Marcellus Shale is and whats in it. I might hazard a guess, but

tell us, in short, your thought about how safely that can be extracted.

Terry Engelder:

The question is: What is shale gas?

Gas resides in the ground in what is called pore space. The thing that makes gas shale

somewhat unique is the fact that the pore space, the little holes in the rock, are somewhat

smaller than found in conventional reservoir sandstones. There are just an incredibly

large number of these little porespore spaces in the rock so that the problem, of course,

is that with these pore spaces, the size they are, the rock is very impermeable. Thats the

reason that fracking is so important.

Jamie Kitman:


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Dr. Engelder, let me just ask you just very quickly. Can you describe the scope of the

Marcellus Shale just in a few sentences?

Terry Engelder:

The Marcellus is found under New York, Pennsylvania, Ohio, Maryland, and West

Virginia.

Jamie Kitman:

How does that compare to other plots that have been discovered?

Terry Engelder:

It turns out that the Marcellus alone amounts to the second largest gas field in the world.

The largest being the South Pars field in the Persian Gulf between Iran and Saudi Arabia.

Jamie Kitman:

Stuart Grusnik, you were New York States deputy commissioner of the Department of

Environmental Conservation, and youre responsible, in part, for the current moratorium

on hydrofracking. Youre out of government now, in a successful consulting business. I

The Marcellus amounts to the second largest gas field in

the world after the South Pars field in the Persian Gulf

between Iran and Saudi Arabia.


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wonder if you could tell us what you were thinking at the time, how you felt about that in

retrospect, and how you feel now. Was the moratorium a good idea? What did it achieve?

Do you support the call to lift it, at least partially, now, and if so, why?

Stuart Gruskin:

I think what I need to do is really explain the context in which the decisions were made in

2008. Its been called a moratorium popularly, but there really isnt a moratorium. What

happened is that in 2008, DEC began to get some permit applications for high-volume

hydrofracking using horizontal drilling. There had been, for quite a while, hydraulic

fracturing in New York and also for quite a while, horizontal drilling. They havent been

used together. Because it was going to be

done at a much greater scale, there were

going to be environmental impacts that had

not previously been considered. So we had

to make a choice at that time: We could

start issuing permits in 2008 for this and

require the operators to do a site-specific environmental impact studies to supplement the

generic study that was already out there; or we could do what we opted to do, which is to

say that were going to supplement the existing generic study which applies to all gas

drilling to account for what we felt were going to be some significant and potentially very

harmful environmental impacts.

As I sit here today, three and a half years later, I think this is probably the only place in

the US where we can have a discussion about whether or not fracking is good or bad

where fracking has not actually already been taking place at high volume.

So theres no misunderstanding, this is still a work in process. In 2008 we initiated a

formal administrative process. We wanted to make sure that there was a comprehensive,

From a policy standpoint, New York States position wa

to think first and drill later. really does separate us

rom just about every other jurisdiction.


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Industry has done a terrible job of

competing with the groups that are

against fracking in capturing the

hearts and minds of people in New

York.

substantive and objective review. I personally conducted the public hearings on the first

draft. Ive travelled around the state speaking on this. I do

think that the public debate has grown extraordinarily

divisive and philosophical and really has lost sight of the

objective aspect of this.

We have a situation where we know there could be some

very serious adverse impacts from hydrofracking. The fact

that there can be those impacts doesnt mean that there will be those impacts. The

regulators responsibility is to do an objective and comprehensive review to assess the

impacts and figure out Can they be avoided? Can they be mitigated? What are the

alternatives? So that was sort of the first goal.

Industry has done a terrible job of competing with the groups that are against fracking in

capturing the hearts and minds of people in New York, at least, so far as the media

coverage is concerned, and at least when I go to dinner parties and people yell at me

about this.

From DECs perspective, it was an objective study to try to figure out Can this be done

without the horrific environmental consequences that are real because you just have to

look at some other states and see what potentially has happened? We also had the goal

of engaging with the public and we embarked on a very transparent process. We went out

and we did public scoping. We got some 3,000 odd comments. The first round of

hearings on the first draft of the environmental impact statement generated over 13,000

comments. Now, a lot of them were postcards saying, Frackings terrible. Dont do it.

Others were saying, Frackings great. Youve got to do it. But there were many, many

various substantive comments and they came from across the board. The environmental

groups did a great job putting in substantive comments, as did industry, as did the

landowners, as did the public officials: the mayors, the county executives, and so on. We


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wanted to engage with the public because at the end of this process, we knew that we

would need to have public confidence. You cant have a successful regulatory regime

without public confidence.

Jamie Kitman:

How is that going, the public confidence part?

Stuart Gruskin:

Well, it depends on where youre sitting. In New York City, I would say, leaving out this

crowd, but in many places in New York City, you would have out of 100 people in a

room, 99% of them would be opposed to it because they think that fracking is going to

contaminate the drinking water, which is one of the myths thats perpetuated about this.

Because while there are serious issues with New York Drinking water, potentially,

contamination is not actually the issue. However, if youre sitting in Binghamton and

having the discussion, its going to be more of a mixed response. We often forget,

because these are the voices that arent heard as loudly as the others.

So if youre in a room where there are people who might be entering into these leases,

theyre the ones who are saying, I value my land more than anything else. I need my

water to be clean. I need the air to be clean. I need my land to be healthy so I can grow

things. So my crops will grow. So my animals will thrive. So I dont want an

environmental contamination. But I also want to benefit if I can do it safely.

Jamie Kitman:

Speaking of Binghamton, we have the mayor of Binghamton here, Matt Ryan. Mayor

Ryan, Broome County is potentially hydrofracking central once the moratorium is lifted.


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There have been promises of jobs and revenue in terms of new economic activity, and

obviously that has an appeal to you and your constituents. Then again there are the

health and environmental risks. You have spent much time studying the law of the

environment. How do you come down on these issues?

Mayor Matthew Ryan:

First of all, thank you for having this forum. I think its a great opportunity for people to

get together and understand a very complex issue facing our state.

I live in a city that used to have a population of 88,000. Its down to less than 50,000. We

lost most of IBM, which was started in Binghamton. Stimulation for space travel was

developed in our city; weve lost that and other industries just like other Northeast cities.

You would think that I would be clamoring for these kinds of promises of 50,000 jobs

and $2 billion of revenue. I studied environmental law for quite a while and Ive taught it

for ten years. I have to come down on the side of that we are woefully unprepared for this

intrusion into our environment.

First of all, I would question the promise of jobs. Certainly, theres good economic

impact if youre just talking about dollars only. But the costs have not been quantified. I

know the Manhattan Institute tried to do that. Ive talked to a lot of economists who

disagree with their theory and how they did that study. [Hydrofracking] will cost so much

in residual costs for our roads, for instance.

You would think that I would be clamoring for these kinds

of promises of 50,000 jobs and $2 billion of revenue we

are woefully unprepared for this intrusion into our

environment.


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Were going down this fossil fuelpath and if we dont stop it soon, ifwe dont stop it as a planet, were

in real trouble.

Yet theres $160 billion from other industries upstate that can be achieved in the next

twenty years: fishing, hunting, the wineries versus $16 billion for hydrofracking over

the next 6 years. The reality is the tradeoffs. How much of that $160 billion is going to be

influenced by this $16 billion? I would suggest a lot.

A lot of people upstate are clamoring for jobs,but I would suggest theres other ways to

do it. Lets consider the economic development councils that Gov. Cuomo started. We

just put out a proposal that that will create thousands of jobs to retrofit buildings which

will save so much energy and which will clean up our

environment. Were going down this fossil fuel path and if

we dontstop it soon, if we dont stop it as a planet, were

in real trouble. Just to say that because theres all this

wealth under our feet, well, if there were big streams of

coal [in] upstate New York, do you think wed be talking

about tearing up our beautiful countryside?

Jamie Kitman:

Possibly.

Let me ask you just a specific question. Broome County, we know that hydrofracking

uses enormous amounts of water. And with that theres the responsibility on the part of

the drillers and the municipalities and the county and state to process all that water, to

clean it up. What obligations do you know about that will be created for the county, and

the city, and what is their ability to deal with that?

There is no scheme in place to deal with fracking water.


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All the problems are on the surfac

and all the problems are with the

chemicals.

Mayor Ryan:

Well right now, if you look at whats coming so far, there is no scheme in place to deal

with fracking water. Theres no place othermaybe one in Buffalo that can process the

fluids that come back up. Nobody is certified to do that. That means trucking many, many

miles. Thats one problem. Then there is the fuel needed for trucks and the traffic

congestion they will cause. And then there is the problem of sufficient transportation

infrastructure. Right now its crumbling. There arejust so many downsides to this.

But Al brought up a good point. We in the Chesapeake River BasinThe Susquehanna

River is the longest un-navigable river in the world; it goes all the way from

Cooperstown to the Chesapeake Bay. Every time that something goes wrong with the

water, we are forced by the federal to pay to clean it up. Were going to have to find $60

million (so far) to upgrade the main treatment plant. This is

going to be an economic calamity.

Theres another problem. Already the DEC has allowed trucks

to spread brine on our roads. They have a special permit for this. The trees are dying

[because they're] spreading this stuff on the roads. This is dangerous stuff that nobody

knows what to do with. And it's part of the cost. I agree with the professor, that fracking

itself way down below the water table is not that serious of an environmental problem.

All the problems are on the surface and all the problems are with the chemicals. By the

way, it may have gum in it, but I won't be brushing my teeth with that stuff anytime soon.

Jamie Kitman:


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Okay. Let me get back to Al Appleton. I'm gathering from your drift that you're not

excited about the moratorium being lifted. I'm wondering, is there any circumstance

where you could see fracking being an acceptable alternative and even if not, what would

you like to see happen, what would be the best case scenario and the worst case scenario

where it becomes prevalent?

Albert Appleton:

I do not support a ban on all fracking. Although if you want to ask me to predict the

future, well, this is an industry that hasbeen an advocates dream. I've consulted in six

continents and I've had somewhat of a reputation for negotiating with difficult people

starting with the farmers and I've never seen an industry that's so tone deaf. They are

absolutely clueless and the fact that they're now beginning to change that is only because

having had their head put into a meat grinder and learning that it's costing them an awful

lot of money, they're beginning to try to change.

Here's what I believe should happen. Jumping to the chase, I believe that all significant

surface watersheds, not just New York City and Syracuse but places like Binghamton,

places like Elmira, places like the Finger Lakes, should be off limits to fracking not only

because of the pollution but because of the landscape disruption. Its going to impose

huge costs on the local areas.

I do not support a ban on all fracking.

Lets also protect the watersheds and other significant

landscapes such as, for example, the vineyards of theFinger Lakes.


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New York State regulations do recognize the principle of keeping significant landscapes

such as state forests off the map for fracking.

But lets also protect the watersheds and other significant landscapes such as, for

example, the vineyards of the Finger Lakes. It's very difficult for me to see in any way

that fracking can be made compatible with them because of the combination of pollution

and landscape damage.

There are other areas where there's strong local support for fracking, but I dont want to

suggest that every landowner is for fracking. My files are full of information thats also

available on the web featuring hundreds of stories that will tear at your heart. Stories of

landowners who have had their livelihood destroyed, their way of life compromised

because of fracking. It's civil war in some of those counties upstate and it's not just

between the environmentalists and the landowners.

If there's solid public support for it and reasonable zoning, this is a democracy and we

should allow fracking to go forward in these areas. But it must be carefully monitored to

see if the industry will step up to the plate or if a ban is the only possible choice.

Jamie Kitman:

Do you have any sense of what type of costs or what the order of cost magnitude would

be to actually effectively regulate the process? It seems that the story in the states where

there has been fracking has been sometimes sketchy regulations to start with for

compliance, lack of regulators and people in the field. It seems further that it could be

hugely expensive to do it. I'm curious if you have any notions of properly doing it in your

view what that would cost and if there's any mechanism to pay for that besides raising

peoples taxes?


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The issue, however, and this is

where it will really costs money, isthe industry culture.

Albert Appleton:

I have a very clear notion on the answer to both of those questions. On the regulatory

side, when the City of New York in the early 1990s did its watershed protection plan,

which remains the worldwide model for watershed protection, we hired 450 people. We

hired scientists, we hired regulators, we hired community outreach. We made

supplements to the farming industry. Marcellus Shale is eight times as large and a more

difficult question. It's difficult for me to think you'll ever stop the well problems without

having onsite inspectors and as many civil engineers

overseeing all of your concrete and drill casing work.

The issue, however, and this is where it will really costs

money, is the industry culture. Most of us who have had

experience with very large scale of regulations know that you really can't regulate an

industry that has not made peace with the fact that it's going to be regulated. Otherwise,

it's just political war after political war and you have to break people over the head. I

have friends in the real estate industry who can testify that together we learned that the

hard way when protecting the watershed. So the industry is going to have to significantly

change its culture. The industry is going to have to prepare to pay $1.00 to $2.00 per TCF

(trillion cubic feet) to essentially do good housekeeping.

Jamie Kitman:

Dr. Engleder, I assume that you're in favor of regulation of this industry. In your

estimation, which jurisdictions are doing the best job of regulating the industry now?

What lessons might New York draw from them?


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Terry Engelder:

Lets compare Colorado and Pennsylvania and ask the question, do these two parts of

America look like they should be subject to the same regulatory code? Of course you're

supposed to say no and that leads us to state regulation rather than federal regulation.

One of the things that New York State is blessed with of course is being able to sit across

the border and watch the way that Pennsylvania is regulating the Marcellus, watch the

way that industry is interacting with the regulators in terms of trying to get everything to

the point where the public can accept the presence of gas shale production particularly in

areas that have never seen oil and gas production before.

In Pennsylvania, we've gone through a series of three secretaries of the Department of

Environmental Protection. Weve learned how to keep the industry under wraps.

Regulation is very much like

the need for state policemen.

Without the state policemen

out there, I'm liable to drive

five miles an hour faster than

the law permits. How that applies to the industry of course is that industry without

regulation will cut some corners. With regulation, the regulators will make sure that the

rules are enforced and everyone operates by the best possible practice. Now we all

recognize still there's a risk. No one is going to get this perfectly, but the idea is to

mitigate to the point where the risk reaches a level that the public can live with.

Jamie Kitman:

Where do you see that happening now? Wheres the best regulation going on?

In Pennsylvania weve learned how to keep the industry

under wraps.


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There probably can never be

enough regulators particularly if

you're on the side of really making

sure that this is done right.

Terry Engelder:

Well, I think in Pennsylvania we got it right, now. I think that the adjustments that had

been made by the recent Marcellus Shale Advisory Commission, of which I was a

member, has been very successful.

Jamie Kitman:

Are you satisfied with the number of regulators that are out

in the field there?

Terry Engelder:

No. The secretary is not at this point as well. I think that what he would like to do is add

to that particular staff. Now the trick is to add to the staff, to train the staff. I think that it's

just as important to make sure that the people that are out in the field really understand a

number of things to look for. A lot of the issues are associated with casing and cement

regarding gas migration. This is a somewhat tricky business and what Pennsylvania

found itself doing was spending a lot of time bringing regulators -- that is the site

inspectors -- the people on the ground up to snuff in terms of what they were looking for

and Pennsylvania is getting there. I think in answer to your question, there probably can

never be enough regulators particularly if you're on the side of really making sure that

this is done right. So that you have this conflict between budget, the amount of money

that's available to hire these people, and the number of regulators.

Jamie Kitman:


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Another question. The EPA hasnt gotten very involved to-date in setting regulations, as

people alluded to, there's no national standard. Would it make sense to you to have sort of

well, Colorado and Pennsylvania are different, would it make sense to you to have sort

of a national baseline standard that might be upgraded or stricter in certain areas that are

more populous or more sensitive environmentally?

Terry Engelder:

Well, there are a number of different issues that face the surface area of these two places.

Now in terms of regulation, the standard regulations for example, can be a requirement

for the quality of cement.

Jamie Kitman:

True.

Terry Engelder:

It can be a requirement for the number of casing strings that are run. So that in a sense,

what happens in the subsurface of Colorado and what happens in the subsurface in New

York and Pennsylvania will be the same. Those regulations can be uniform nationally.

What's happening now in the surface however is quite of a bit different issue. New York

is going to have different landscape problems.

Jamie Kitman:

So would it be safe to say that you would be in favor of a national standard that could be

modified state to state?


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Terry Engelder:

Yes.

Jamie Kitman:

To litigate the thickness of the concrete in the wells 50 different times doesnt seem very

efficient.

Terry Engelder:

Absolutely not. As long as the regulations apply to the subsurface, there really is in effect

no difference.

Jamie Kitman:

It's the same thing.

Terry Engelder:

Between one location and the next.

The operators will tell you, get a set of regulations in place and dont be a moving target

with time. Of course even in Pennsylvania, that target in terms of regulations has moved

with time. The operators will live with a set of regulations as long as they really know

ahead of time, This is it, this is what we're going to do.

Jamie Kitman:


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When we look at the Pennsylvania

experience, I think industry got

ahead of regulations there.

Right. Notwithstanding the fact that they often fight the regulations before they get put in

place.

Stuart, let me ask you the same question or a variation of that. It's a relatively recent

debate in New York but we've had hydro-fracking in many jurisdictions. In terms of the

regulatory scheme, what are you taking away from what's been done before?

Stuart Gruskin:

Well, it's true that New York has had the benefit of studying the experience in other states

inherent in taking the approach of saying, Let's try to figure

out what all the potential issues are and how to address them.

It means going out and looking at what happened. The

professional staff at DEC has been very involved in carefully

looking at the problems that have occurred in other places, of

determining whether it's likely that those are going to happen to New York, how to deal

with those kinds of things in New York. As I said before, I think it's worth bearing in

mind, this remains a work in process.

Jamie Kitman:

Right. Let me refine my question, what's working and what's not?

Stuart Gruskin: 7

Well, when we looked at the Pennsylvania experience, I think in a general sense and

what's been borne out by the facts, is that industry got ahead of regulations there. That's


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why they're making adjustments now and even this past week as a result of some of the

work in the Advisory Council, they're changing buffers and so on. I would make the

argument that those are the kind of things that you want to be deciding before the drilling

starts as opposed to changing after the drilling starts when you're looking at the potential

for contamination of water supplies or other environmental impacts.

Jamie Kitman:

Okay. Let me just jump over to Mayor Ryan. As an environmental lawyer and as

somebody in a place which is likely to be very affected by this, what is your sense of the

regulatory scheme as it comes down? I mean is it valid to think that perhaps if fracking

started pretty soon in New York, we would be ahead of the regulations again?

Mayor Ryan:

Absolutely.

Everybody keeps

talking about

Pennsylvania. It's

clear that there are still a lot of problems in Pennsylvania. Before we start, we should

develop regulations based on sound science only after a very careful environmental

impact study has been made of this high volume hydro-fracking. The other thing is,

yesterday 250 doctors and healthcare professionals presented a letter to Governor Cuomo

about the fact that there is not one thing in this new draft that deals with health impacts of

this industry. There are so many anecdotal things that need to be addressed

systematically. Good science takes those anecdotes and says, What is this? We know

there are all sorts of cancer clusters all over the country. I would suggest that's one of the

reasons IBM left Binghamton, because they polluted it so badly that they wanted to get

We know there are all sorts of cancer clusters all over the

country. I would suggest that's one of the reasons IBM left

Binghamton, because they polluted it so badly that they

want to get away from it.


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away from it. [Laughter] There's all sort of flumes there. So there are so many issues and

we dont want to go back to those kinds of situations.

How many toxic sites are there in the country that haven't been cleaned up from

before the environmental regulation? Let's just take a really close look at the history of

this. 2005, Dick Cheney,

George Bush; they go in a

room, close doors, come up

with an energy policy; a new

energy policy for the country.

What's that energy policy?

They're the ones that knew. I

live right by the Millennium pipeline. Why are they building this pipeline? I didn't know

anything about the Marcellus Shale. Nobody was talking about it. I live right on top of it.

Nobody knew anything about it. It was a well kept secret. These guys were in the

backroom making deals that are going to make them richer and richer and richer. There's

nothing wrong with making money. And some people laugh at the people down in Wall

Street. Now I think the uniform thing is that people are getting sick of their government

not being honest with them about what's going on in this country right now. If you look at

the kinds of things that are going on in this industry - it's only six years old, that's why

we're having problems. We never took the time to do this right. If you're going to do it in

New York State, we want it done right. The regulatory scheme right now as it's being

filed is not sufficient in my opinion. The DEC recently published a draft regulation and

expects them to be reviewed and commented concurrently with the DEIS draft (Draft

Environmental Impact Study). In other words, before we really know what we're dealing

with. It seems that the fix is in and it really isit's kind of the idea of fire, ready, aim

Jonathan Cohen

Let's just take a really close look at the history of this.

2005, Dick Cheney, George Bush; they go in a room,

close doors, come up with an energy policy; a new energy

policy for the country.


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Whatever influence the industry

might have been able to exert in

other jurisdictions, it never trickled

into the substance of review at

DEC.

Great, thank you. Panelists thank you. I think we want to open up the floor to questions.

I'm going to ask John Giardino to lead our question period. So John, I want you to come

up.

Question and Answer Session

Diana Barrett

I'm just amazed that no one on the panel has mentioned the word lobbyist [laughter]

because the fact is the lobbyist in this particular industry has an inordinate amount of

money to influence everything from the way environmental impact is gauged to how the

composition of the fracking fluid. Would you please comment on lobbyist influence?

Mayor Ryan:

Well, first of all, if the gas industry really thought this could be done safely, why won't

they take the hundreds of millions of dollars that they put into slick Madison Ave.

advertising campaigns and put it in a trust fund to make sure that if anything goes wrong,

regular people will be covered. You look at what those people in Dimock, PA live with.

You look at what they have to go up against. They fought a battle for two years to get

their water cleaned up and it's always a nondisclosure agreement because that's the way it

is with big business. Individual people are going to be affected by this pollution and most

wont have the money to fight these big corporations.

Stuart Gruskin:


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You may not believe me when I sat this, but I can tell you that during the time I was at

DEC, the review that was being done was strictly based upon the engineering and the

science by a professional staff that was not being influenced by lobbyists or frankly by

lobbyists for any part of this debate. DEC went down a path of saying there's one chance

to get this right and we're going to do it based upon the engineering and the science.

That's frankly probably why it's taking so long. I can't speak for DEC today; but I can tell

you that whatever influence the industry might have been able to exert in other

jurisdictions, it never trickled into the substance of review at DEC.

Mayor Ed Koch:

Mr. Appleton, I thought your

summation was magnificent. I mean I

really came here not knowing very

much. I do believe I have an

appreciation for what is involved.

My question to you is, if you were in charge, could you come up with a regulatory system

that would permit the drillings to take place and in a way that would be safe and also

profitable? Is there such a system that you currently believe could be imposed?

Albert Appleton:

Could you come up with a regulatory system that would

permit the drillings to take place and in a way that would

be safe and also profitable?


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There is as long as you accept the obligation to zero out much of the landscape from ever

doing fracking. If you're willing to accept that and you're willing to say to the industry

you can make lots of money in the remaining landscapes, then if you're willing to spend

that money and that time, you can design such a system. Of course there's one other

question I'd like to add to that Mr. Mayor, do I really think the industry would adhere to it

without me pointing a gun at them every day of every year?

David Cohen

I'd like to get back to a comment by Mayor Ryan and address it to Dr. Engleder. Dr.

Engleder, you wrote a seminal paper on the Marcellus Shale. I forget the year it was

2003 or something, 2001.

Did President Bush and

Cheney get a peek at that

paper before you released

it to the public?

Terry Engelder:

No.

Fracking has been going on since the Roosevelt Administration; that's a fact. It is a fact

that fracking and gas shale started under the Carter Administration when Carter

reconstituted the old Department of Energy. This happened in the gas shales of Kentucky.

Those Kentucky gas shales have been produced by fracking and horizontal drilling for

more than 30 years without people raising a fuss. It's been well-regulated. The state of

Michigan for example, the Antrim Gas Shale, which is the same age as the Marcellus,

was produced starting in the 1980s again with the same result. The people of Michigan

have not put up a fuss. Why haven't they put up a fuss? Because the particular process

Hydraulic fracturing and horizontal drilling, simply is not

destroying the landscape and not raising the kind of

specter that Gasland has raised.


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The fact that there is an exemption

to the Safe Drinking Water Act is

not binding on New York State.

used, hydraulic fracturing and horizontal drilling, simply is not destroying the landscape

and not raising the kind of specter that Gasland has raised.

Gasland, I have to point out is filled with innuendo and there's a good reason that the gas

industry is pushing back. The well for example of a tap that you saw lighted at the end of

this, that guy drilled a well through a coal bed. Of course coal bed methane is going to

come up into his drinking water. That had nothing to do with fracking.

But concerning the history of this fracking. Massive slick water fracking was developed

in Texas in the late 1990s. I'm reminded of a comment by a Philadelphia City councilman

at a panel like this about a year and a half ago which is, Ban fracking in the Delaware

water basin. We'll bring our gas from Texas. They're selling it to us. Of course let me

remind you that that gas from Texas is being produced right in between the buildings and

within the city limits of Fort Worth. Basically what this guy was saying is, Let the

Texans ruin their landscape so we can benefit from the energy that they're sending up

here. Somehow or another, that doesnt seem fair.

Stuart Gruskin:

Just another quick point because there's a question

that's often asked about the impact of the Halliburton

loophole.iI always try to point out that as far New

York State is concerned, it's absolutely immaterial.

The fact that there is an exemption to the Safe Drinking Water Act is not binding on New

York State. The state can't take steps to protect the waters within New York State. In fact,

if you take a look at the draft regulations, you'll see that buried in the 1,500 or so pages,

there are many, many practices that really are not governed whatsoever by what might be

in the federal law.


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Audience Member:

I'm concerned with the economic aspect of this undertaking. I've been to conferences

where industry representatives admitted that getting up a quantity of gas, a unit of gas,

presently costs considerably more than the $3.50 than you can get for a unit of gas on the

market.No one has asked, How they're going to bridge that gap?

Ed Koch: Raise the price.

Terry Engelder:

Remember, gas is a commodity and one of the things that industry cannot control is the

price of a commodity. So these gas wells will produce for a tremendously long period of

time and what that really means is that Wall Street investors will profit. It's Wall Street,

not the industry that is really paying for this, right? Wall Street will just see a longer

period of time pass before they start making money off of this. There are a lot of

economic models out there and no one can really tell for sure where all of these are

going. You're absolutely right, if gas stays at $3.50 or collapses heaven forbid to $2.00,

what you're going to see is a lot of the companies fail, you're going to see a lot of gas rigs

go home until the demand for gas returns which it surely will over time.

Jamie Kitman:

A related question I wanted to ask is that I just read yesterday that in North Dakota,

they're flaring off natural gas, so apparently it's not even worth collecting. I'm just

curious, why then the rush to establish this here when it would appear that there's excess

amounts of natural gas in North Dakota?

Why the rush to establish hydrofracking here when it

would appear that there's excess amounts of natural gas

in North Dakota?


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Terry Engelder:

One of the things that is very characteristic of this industry is that it does require a very

large infrastructure and very expensive infrastructure. The reason gas is being flared in

North Dakota is of course the product that they're after in North Dakotathis is from the

Bakken shale-- is oil. You can put it in trucks and drive to the nearest tank terminal or

whatnot. But if you dont have a pipeline, and they dont have one in North Dakota,

basically you're stuck with that gas as a waste product.

Over the last two years America has for the first time in three decades increased oil

production. Largely because of fracking allowed access to this type of oil like the

Bakken oil that had never been obtained before. Then again there's some price to be paid

for that increase of oil.

Incidentally, increase in production of oil means less money flowing to countries that

dont really like us, and we all agree that that's good. But boy this industry, energy in

general you guys have to realize there's a price to be paid for putting up windmill farms,

solar farms. There is no nuclear industry, there is no energy industry that doesnt come

without a risk. Basically we support our lifestyle off of these economic risks, off of these

environmental risks. Otherwise, we are all going to have to go back to chopping wood.

Albert Appleton:


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Fossil fuel made the world we have

today. But fossil fuel is beginning

to unmake it.

If I had a dime for every time I've been in one of these debates and people who had told

me we're going out and freeze in the dark [laughter] if we dont do some energy industry

policy, I could at least invest in Exxon stock. [Laughter].

I like to remind people when we kind of talk about energy security that back in the

1960s, when we could have imported Saudi Arabian oil for $2.00 a barrel, we didnt

because the energy industry said that in the name of national security, we had to block

imports to promote American domestic production.

I'd like to remind you that in the 1970s,

when I worked on the Trans-Alaskan pipeline

issue, the industry said national security required us to bring it down to the West Coast

even when the preferred alternative in any kind of subsidy was take it down the Trans-

Alaskan pipeline so we would have a gas pipeline as well as an oil pipeline. I've looked at

the number lately: something like 400 billion TCF (trillion cubic feet) of gas has been re-

injected in that field in 40 years in the name of spurious energy security.

Every time the energy industry tells me about energy security, I check my wallet just to

be sure it's there, [laughter]. Then I look at the alternative to that particular policy. From a

purely environmental point of view, I hate to say this, but Saudi Arabia has the best oil in

the world and we have to ship it. Tar sands is basically an industry strategy so they can

control research.


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Professor Engelder is exactly right: fossil fuel made the world we have today. But fossil

fuel is beginning to unmake it. The idea that a hundred years from now, we will still be

burning natural gas is a folly because if we are correct that the world economy will grow

five more times by 2050, which is the official Chinese economic growth goal, then just to

stay even, we're going to have to drop fossil fuel consumption per person by 80% - fossil

fuel emission. This is a statistical impossibility.

We had a great ran as a culture with fossil fuel but fossil fuel days are numbered. Here is

the thing to think about in shale gas, and this is why Freds question about the prices is so

relevant: The industry estimates we might want to spend a trillion dollars on shale gas, if

they get their dreams, which even they in their offering statements admit they're not

going to. Why do we want to spend all of this money on a fuel that is declining when we

could have the energy economy of the future?

People often tend to say to me, How can you be for green energy? It's totally

impractical. It won't happen for twenty years, 50 years. In 1940 United States Army

ranked 19th

in the world. It was ahead of Portugal but behind Bulgaria. At that time, we

had an economy with 10% unemployed, 10% underemployed, only 75% utilization of our

industrial stock. Five years later, we had an army of 11 million men that had so much

equipment that the Germans long ago gave up of keeping statistics on it because it was

too depressing. We were able to do that kind of movement enormously quickly with

focus and money, or as FDR once said, Willpower, manpower and brainpower.

We had a great ran as a culture with fossil fuel but fossil

fuel days are numbered.


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That's the option that I believe lies underneath all of these discussions, underneath all of

these calculations; that's the ultimate assumption that has to be challenged. Even if shale

gas fracking was a good idea, is it the best idea? Or are we going to risk the entire New

York state landscape, the entire Pennsylvania landscape? Is there a better idea? We must

quit debating these things in yes/no terms. We have got to think of them as investment

bankers. What's the best place to spend their money?

Audience Member:

I run an environmental group, but frankly what's troubling me about this discussion is

there's been a real failure to discuss drilling in the broader context of New York states

energy agenda right now; not the future, not wishful thinking. The bottom line is that

with virtually every energy source, one could wax poetic about landscape destruction, air

quality. Taking the endpoint on fracking, probably three quarters of the people in this

room are thrilled if the endpoint gets shot down. But bottom line near to midterm, air

quality gets worse, CO2 emission go up. Take offshore wind energy. I know they issued

an RFP off Queens in Long Island. Everyone knows the prices are going to come back

too high and they're going to drop it. So what is the best mix for New York State right

now in terms of costs, reliability and environmental impact? One last thing and I can say

this because I run an environmental group, environmentalists are lobbyists,

environmental organizations are making more money off the Marcellus debate than any

other issues. Why? How do you raise money with an environmental group? You identify

the apocalypse and then you say, Give me money, I'll stop it.

Albert Appleton:

Weasel words like wishful thinking andunrealistic fantasies, impugn the motives of

the environmental groups. Do you really think the people upstate are seeing their property


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values disappear, their water poisonedthat there are people who make money from

this?

Audience Member continuing:

I'm not talking about local groups. I'm talking of the major environmental groups.

Albert Appleton:

Most of the major environmental groups frankly have weaseled on this issue because

manyincluding The Sierra Club -- are afraid of being too far out in the edge. They

always feel they have to appear reasonable. My advice is not to be reasonable, it's to be

right.

Diana Barrett: Bravo!

Mayor Ryan:

Can I weigh in on that as well? There's stillif you readI have a handout that gives

some readings, and I hope you'll go back and look at it. One says that over the past few

decades, if you look at the data, the US and many other countries have shown that the

supposedly iron link between energy growth and economic growth can be reduced and

actually reversed. America enjoys more than double the GDP but consumes one half the

oil, they use two thirds less water and directly uses natural gas and 18% less electricity to

make a dollar of GDP than they did in 1975. That's with no energy policy. Compare that

to Denmark, which has grown their GDP by 56% and their energy costs haven't increased

a dollar.


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You can save so much energy just

by switching to wood pellets. We

have one of the biggest wood pellet

factories in the country in Deposit,

New York.

We are so far behindthere are so many other alternatives that aren't being pursued. You

can do other things, look at the program we put together in upstate. You can save so

much energy just by switching to wood pellets. We have one of the biggest wood pellet

factories in the country in Deposit, New York.

If you combine that with retrofitting all the rural

properties, which is really how you save on greenhouse

gases because buildings are the biggest greenhouse gas

producers -- you'll produce thousands of jobs.

Like Al said, there are other alternatives. We need to start looking at them because we are

so far behind. China by 2020 will produce 80% of its autos as electric powered trucks.

Are we going to buy them from China or are we going to do it ourselves? If we had the

same CAFE standards that Jimmy Carter put in place, which David Stockman dismantled

as soon as Ronald Reagan became president, we wouldn't be having this discussion right

now. We would have saved so much energy.

Stuart Gruskin:

I want to give a word of advice to the audience: if anyone is planning on commenting on

the SGIS draft that's out there, I would counsel leaving out these very important big

picture energy issues, because DEC is not the arbiter of this stuff. DEC is not making

decisions about whether hydro-fracking is going to undermine renewable energy or

whether hydro-fracking is needed because natural gas is better than the other alternatives.

DEC is not engaged in that balancing act. DEC is responsible for regulatory

responsibility only. They are looking at an activity that is legal in New York and trying to

objectively assess what are the serious impacts. So when you comment, talk about things

like the storm water controls and the air impacts and the landscape fragmentation and all

the other environmental consequence. Send your letters about the bigger picture, energy

concerns to the politicians that ought to be dealing with the, it but not to DEC.


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There's no question that Mayor

Ryan was right when he said before

that as we sit here today, New York

State is not equipped to deal with

this.

Jamie Kitman:

Isn't it true that one of the things they should focus on is the fact that they have a memo I

think maybe you wrote [laughter] that has to do with

Stuart Gruskin: I'm doomed.

Jamie Kitman:

I think it was written by you, Stu, pointing out that DEC was going to lose 800 and

something staff members from 2008 to 2010.

Stuart Gruskin: Yes.

Jamie Kitman:

It was a pretty strong argument that we're not going to have

enough people to regulate this industry properly. They're

talking about restoring 260 but that still leaves us down 600

people to do

Stuart Gruskin:

Right. Well, it could not be truer. The fact is that there was a dramatic defunding of

environmental programs in New York State over the last few years. There's no question

that Mayor Ryan was right when he said before that as we sit here today, New York State

is not equipped to deal with this. In order to have a successful regulatory program, first

the process is going to have to be finished which means that the comment period must

conclude; the comments are going to have to be reviewed and DEC is going to have to


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reach some conclusions. But you can't have a successful regulatory program without

enough staff. You need people to analyze the permits, you need people to do

enforcement, you need people to do inspections and that is why I believe this (fracking)

will happen very, very, very slowly in New York State.

Elizabeth Radow:

I'm a practicing attorney in real estate development and construction. I've worked on

leveraged buyouts and company workouts. I chair the Hydraulic Fracturing Committee

for the League of Women Voters. What I want to talk about is economics. The gentleman

here asked about the money. This is an investor driven business. If you were to look at

the 10-Ks for these companies, it'd be obvious that they're speaking to their investors. In

fact the Chesapeake Energy 10-K speaks about the 2006 to 2008 land grab. They're proud

of the fact that they were able to amass a large amount of land from upstate landowners

and keep out the competition which is excellent for investors. This is not so terrific for

the homeowners. I have reviewed many, many leases. I've been doing this for a very long

time. These leases operate more like deeds with homeowner guarantees and the impact

here is going to have a deleterious impact on the secondary mortgage market.

These companies in their own 10-Ks talk about the risks. They also talk about the fact

that they're underinsured. Chesapeake Energy has $400 million in general liability

insurance. The others dont necessarily disclose for the blowout insurance, I think its

$75 million. This is for their tens of thousands of wells across the country. So we have to

ask ourselves as taxpayers now, what are we doing? Are we going to have an impact

again trying to rescue the secondary mortgage market? We have home owners upstate

who can't get mortgages now and this is mounting now.


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If you were to look at a gas lease and look at the fact that the gas companies are reserving

to themselves the right to create surface drilling to store gas from any source whatsoever,

to have ongoing easements after they surrendered the property, to assign the lease to

anyone whatsoever without the homeowner getting a chance to consent. So that someone

who comes on to their property to drill is someone that they've never met before. These

are people who are raising children in our state. Now we look at highly leveraged

companies and we're talking about how rich they are. Frankly, I'm not sure if they have

the money. I had proposed to our government, and Comptroller DiNapoli has very wisely

had said, Let's have an upfront fund to pay for emergencies. Our governor and our

legislature are not supporting it and neither is the industry. Furthermore, even if we have

problems, not all of them can be remediated. If you have well-water contamination, your

property value could sink. If we look at these in the context of drilling in 34 states and we

have a $6.7 trillion secondary mortgage market, what

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New York Policy Forum Panel Transcript: "Hydrofracking in the Marcellus Shale: Poison or Panacea?"

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