Friday, February 22, 2013

My Letter to the Governor

Governor Andrew Cuomo Governor of New York State NYS State Capitol Building Albany, NY 12224 Governor Cuomo, As you may or may not know, I have written to you many times on the benefits of horizontal drilling and high volume-hydraulic fracturing for natural gas in the Marcellus Shale Formation. I have neither received a written response to any of my letters, nor a response through action. This time, I am attempting a different approach in hope of a response. I have noticed that both of us share a common heritage. Both of our paternal grandparents hailed from the same region of Italy, both of us were named after our paternal grandfathers, and both of us have established lives that our grandparents would be proud of. Therefore, in this letter, I will use the expressions of our grandparents to articulate my feelings on the very important issue of hydraulic fracturing. I am always disturbed by the influence that the anti-fossil fuel movement, spear-headed by a few Hollywood elitist zealots, seems to have over Albany. A phrase that my grandfather would have used to describe this very situation is “Guardatevi dai falsi profeti.”(Beware of false prophets). The phrase, “Come la cosa indugia, piglia vizio.” (There is danger in delay.) This expression of our grandparents really nails this issue. How much revenue has New York lost for education, pension funds, and infrastructural repairs while Albany delays a response to the hydraulic fracturing issue? Two more phrases, one we use often on the farm, “Chi ha fatto il male, faccia la penitenza.” (You reap what you sow.), and “I topi abbandonano la nave che affonda. (Rats desert a sinking ship.) describe Albany’s indecision. Your favorable poll numbers will continue to fall as more New York cities and towns become insolvent. We just have to visit Pennsylvania, Ohio, North Dakota, and twenty-eight other states that are allowing horizontal drilling and hydraulic fracturing to take place, to see the prosperity that this technology brings. Governor Cuomo, lift the moratorium. “Perdere il totto per l'ambiadurs.” (Don’t kill the goose that lays the golden egg.) Mr. Governor, New York continues to wait for your decision on this very important issue. Sincerely, Neil C. Vitale

Friday, February 8, 2013

Latest Court Case- John Holko of Lenape Resources vs Town of Avon

LATEST COURT CASE : Last Monday in the Livingston County Courthouse in Geneseo, New York, John Holko of Lenape Resources brought a lawsuit against the Town of Avon to invalidate their recent Moratorium on Natural Gas Development or, if the Moratorium stands, for $50 million for lost assets and earnings. This case joins three other cases already in various State courts that are focused on the issue of whether local towns or the State determine where drilling occurs. Five news vans were parked in front of the courthouse to cover about 20 students from the nearby college demonstrating outside with signs and props. Seated inside were about an equal number of their older counterparts. Also seated in the audience were several Lenape employees and leaseholders. Lenape operates about 20 wells in Avon. It has been a good corporate citizen for close to 30 years without incident. It is suing the Town of Avon because the recent action prevents Lenape from expanding its operations to fulfill its contracts. Without guarantees for possible expansion, Lenape goes out of business. It loses its current assets (leases, pipelines, offices, other fixed property, etc.) and the value of its business gong forward. The Town of Avon asserts that the moratorium still allows Lenape to extract gas from existing wells through a grandfather clause. It just bars further expansion temporarily. Michael Joy of ReedSmith represented John Holko of Lenape Resources. Mr. McLarin represented the Town of Avon. The Attorney Generals office sent Steve Nagle, an attorney, to represent the DEC, a co-defendant in the case. Judge Robert Wiggins heard the case. In a nod to the many drawn to the courthouse by the current controversy, all agreed that the case did not involve the practice of hydraulic fracturing, but rather the law. Mr. Joy led off with a brief history of oil and gas development in western NY and its recent decline due to activism on part of antis and inaction on part of political leadership. Small oil and gas businesses like Lenape are now squeezed by the arbitrariness of individual Town Boards. Business needs certainty in order to thrive. When a business depends on the results of the election cycle, that certainty vanishes. History is important in this context. In 1981 the legislature recognized that geology and local political boundaries don’t coincide. To stem the growing chaos at that time (local towns were making a patchwork of regulations) the legislature wrote new laws. One key element was the Oil, Gas, and Solution Mining section of the Environmental Conservation Law (ECL), specifically Article 23 - 0303 (2) with its preemption of “all local laws or ordinances relating to the regulation of the oil, gas, and solution mining industries” except in matters dealing with roads and taxes. Under this statute local zoning is not permissible. The anti camp asserts that the Mining Land Reclamation Law (MLRL) is substantially the same as the OGSL Simply put, their argument is since MLRL allows zoning, OGSM must also allow zoning. Mr. Joy acknowledged the findings in the Dryden and Middlefield cases which support this line of thinking but asked the Judge Wiggins to look further. He noted the DEC’s long term, ordinary practice in regard to the oil and gas industry underscores its preemption powers. Since enactment in 1981, the DEC has been telling drillers where they can (or cannot) put their wells through spacing, setbacks, and other rules and regulations. Is this the legislature’s intent? Obviously, it is. No entity has objected or tried to take over the function of placing wells for about 30 years. The judges in the Dryden and Middlefield cases, in coming to the conclusion that the DEC only has the power to tell the driller HOW to drill, not WHERE to drill, didn’t take the history of day-to-day standard operating procedures of the industry into account. Mr. Joy asked the judge to re-read the law, note the history, and come to his own conclusions. In spite of this line of logic, Judge Wiggins was still concerned with precedent set by Dryden and Middlefield. Mr. Joy once again advised the judge that ECL, Article 23 -0303 (2) preempted zoning and stated that Envirogas v. Kianatone, the only relevant case, also agreed with State preemption. His suggestion again -- please read the law and judge for yourself. Mr. McLarin, representing the Town of Avon, stressed precedent, citing Dryden and Middlefield, and adding the Binghamton case (Jeffries v. Ryan). In Jeffries v. Ryan, the court dismissed the Binghamton ban but commented favorably on the reasoning in Dryden and Middlefield (Editor’s Note -- Dryden and Middlefield should be overturned at the appellate division. Middlefield goes back to court on March 21. Expect a decision about 2 months later. Then it will go to the Court of Appeals -- another year in the courts before the matter is finally settled). Mr. McLarin also noted that Mr. Holko of Lenape Resources did not make use of a hardship provision in the local banning law. Mr. Holko’s lack of action in this instance precludes him from a takings argument later on. Mr. McLarin further stated that the Court should not supersede local democratically elected officials. In questioning, the judge asked Mr. McLarin if Avon was allowed to shut down a business such as Lenape Resources. Mr. Mclarin answered no. There was a grandfather clause in the ordinance and there are other legal remedies. The DEC, represented by Steve Nagle from the Attorney General’s Office, argued on technical grounds that DEC should not be a party to this case. In the summation, Mr. Joy noted that historical context is important. Since 1981 drillers haven’t had to go to towns for drilling permits. They go to the DEC. Permits indicate location of wells, WHERE wells are permitted. Permitting is done at the State level, not the Town. Both HOW to drill and WHERE to drill are State prerogatives. Mr. McLarin restated that towns could not regulate oil and gas activities but they could determine WHERE drilling could occur. Furthermore, he said, Towns have always had the right to decide what activities could occur within their borders. Mr. Joy brought up a interesting contradiction in Mr. McLarin’s arguments. If Lenape is required to seek a hardship provision in order to drill, isn’t this a form of permitting? If a business has to get something (permission) in order to operate, then it is regulated. But, he noted, Mr. McLarin just said that Towns could not regulate oil and gas … Judge Wiggins will review written and oral arguments before returning a decision. He indicated it could be a speedy decision. Mr. Joy estimated this could be as soon as 6 weeks. ENDNOTE: Courthouse records in Cooperstown show that Lenape Resources has 26 leases in Otego, 8 in Butternuts, and 5 in Unadilla.

Wednesday, February 6, 2013

Good Letter to THE LEADER

Mr. Ek: Your article on Fracking in the "Perspective" section in Sunday's paper missed the mark - I think! I seemed all the articles in that section were to deal with "economics". Your article on fracking did not "go there" at all. Mr. Santulli's statement - "I don't see any significant retail expansion happening until the gas industry reasserts itself…" - was more relevant to the economics of the issue than the total of your essay. My initial reaction to your essay would be 'why would Mr. Ek go political rather than economic here?' But then we both know the answer to that - I think! If you had wanted to discuss the possible economic effects of gas drilling in New York you could have found all the evidence you needed for an honest and objective report by simply looking at the experience of Pennsylvania and more recently Ohio. However, Pennsylvania is more accurate to relate to New York - more in line with an 'apples to apples' comparison than Ohio. (larger economic boon, but different shale). I would like to point out just a couple of interesting comparisons - by no means all of the positive points. Eliminating the overall wealth that would be created by drilling, let's look at just the job creation element. We all know that the industry (in line with the Bush-Cheney- Haliburtan conspiracy) cannot be trusted here- they insist that 74% of their hires are local. The Pa. Department of Labor puts that fiction to rest - they say that a mere 71% of the jobs are local! In addition the DOL (see 9/02/11 report) places the job creation rate for Pa. for 09,10, and 11, "core and ancillary" industries, at a mere 238,000! A related second economic point is where New York could be, or could have been, I once saw a map (see Jamie Johnson at IDA, Bath) that covered the Southern Tier of New York and the Northern Tier of Pa., and showed specifically the infrastructure of the two areas as they would relate to the gas industry. The comparison is absolutely amazing. The Southern Tier has Rt. 17 (as compared to Rt.6! ), much better railroad mileage, and all kinds of gas pipelines - much more than the Endless Mountains ( ie. the Northern Tier) of Pa. We know that the gas industry as of early 2008, wanted to come to N.Y. because of these infrastructure advantages. In fact, at least Chemung County has benefited from this line of thinking - up to now. We can certainly safely assume that they would have come here - except for the statewide moratorium. Let's be extremely conservative here and assume that only 25% of those jobs would have come to the Southern Tier. That equals 60,000 jobs in three years. These are good paying, full-time , year -round jobs. Not part-time, summer only, jobs related to tourism. I have asked this question several times at various public meetings over the recent years: 'Is there any industry, any economic operation or area of activity, that is capable of creating that kind of job openings in the Southern Tier?' Anything, including Corning Glass - even assuming they don't go to China with their latest large scale expansion?For some reason I have always gotten a look that falls somewhere between stark confusion and a deer-in-the-headlights look. ( I actually remember this look well from my teaching days: It was especially common when my students would read my questions for year end final essay questions!) This is really only the tip of the economic iceberg of advantages from drilling. The "economics" of this issue are, as far as I can see, all positive - as opposed to the would be, usually imaginative, environmental concerns. The proofs of the economic advantages are simple - look to Pennsylvania. It's really a shame that you chose not to do that for your article. Jeff Heller SCLOC

Sunday, February 3, 2013

Is New York Economy Rebounding?

Is New York's economy rebounding? High unemployment troubling, but some see economic councils, fracking as fueling solution By Joseph Spector | FILED UNDER - Local News / New York | 4:48 PM, Feb. 2, 2013 | ALBANY — No area of New York state saw its unemployment rate drop between 2011 and 2012, and the rate outpaces the national average. Meanwhile, New York ranks last in the nation for its business climate, the Tax Foundation said last fall, and the state has 279,000 fewer people employed than it did in 2008, down 3 percent, state records show. As the nation slowly rebounds from the Great Recession, New York may still be in an economic malaise, particularly upstate. “If anyone thinks we’re out of the woods yet from an economic standpoint, all they need to do is look at the recent unemployment numbers,” said Christopher Wiest, vice president of public policy at the Rochester Business Alliance. Gov. Andrew Cuomo has made the economy a priority, creating 10 regional economic development councils to boost cooperation and drive state aid to projects. But while Cuomo has built a record of accomplishments at the Capitol, the economy remains a formidable challenge. And as the Democratic governor gains national attention as a potential presidential candidate in 2016, the state’s economy is already starting to dog him. “The economic climate that has allowed (Texas) to grow and create jobs — he’d dearly love to be able to stand up and say, ‘We did this in New York.’ But he can’t,’” said Texas Gov. Rick Perry, a GOP presidential candidate in 2012, at a forum in January. Cuomo is also under pressure from business groups in the Southern Tier to allow large-scale hydraulic fracturing, the drilling technique that advocates say would be a boon for the economy. Environmentalists have fought fracking, and Cuomo is expected to decide on the issue by mid-February. Over the past year, the national unemployment rate fell from 8.5 percent to 7.8 percent. New York’s rate stayed flat at 8.2 percent. It was 8.4 percent upstate, up from 7.9 percent in December 2011. Cuomo’s office and some economists said the unemployment rate is not a good gauge of the state’s economic growth. The unemployment rates for New York are calculated by the state Labor Department through a telephone survey. The state Labor Department said New York has recovered all of the private-sector jobs — about 348,000 — it lost since November 2009. It is one of only five states to do so, and the only one in the Northeast. “I tend to not focus just on the unemployment rate,” said Richard Deitz, an assistant vice president and senior economist at the Federal Reserve Bank of New York. “I think a better indicator to look at is total employment.” In that measure, New York has outpaced the nation, Deitz found. New York didn’t dip as low during the recession as other states, and so it didn’t have as far back to climb. The duration of the national unemployment downturn lasted about 25 months; it lasted about 20 months in New York, Dietz said. Kevin Jack, the statewide market analyst at the Labor Department, said even the unemployment rate has shifted downward. It fell from 9.1 percent last August to 8.2 percent last month — the state’s biggest drop over a four-month period since the 1980s. Because the state’s economy is improving, more people are re-entering the work force. “When the job numbers start looking decent, a lot of people who have been on the sidelines decide to jump into the labor force,” Jack said. “Oftentimes, what happens is there is a temporary bump up in the unemployment rate.” The state's efforts Cuomo and economic-development officials said they’ve seen strong regional growth. The Rochester area has a booming optics sector. Buffalo has focused on biomedical research. The Albany area has the burgeoning nanotechnology industry. The Hudson Valley has a promising biotechnology corridor. “There is no real upstate economy. It’s the metropolitan areas that have their unique abilities to do things,” said Gary Keith, a regional economist for M&T Bank in Buffalo. Cuomo has hosted two annual award ceremonies to tout the regional councils and dole more than $1.5 billion in state aid to thousands of projects. In his State of the State address Jan. 9, Cuomo hailed the achievements and recognized that it hasn’t been enough. He pointed out that over the past 10 years, jobs grew upstate at 5 percent, while New York City grew at 16 percent, and the nation 9 percent. “When you look at the job growth in upstate New York, frankly it is sad, and it is troubling,” Cuomo said. “The nation’s growth led upstate New York’s growth.” Cuomo is proposing additional tax-free zones to promote new businesses and expansions. He wants to better market upstate to tourism and build three privately owned resort casinos. “I believe if (people) visit, they will come back and they will stay, but we have to get them there,” Cuomo said. “And I believe casinos in upstate New York could be a great magnet to bring the New York City traffic up.” The state also is grappling with struggling local governments, despite smaller budget deficits in state government. A report last May from state Comptroller Thomas DiNapoli found that while private-sector jobs have returned, it’s been partially offset by the loss of 23,200 government jobs between December 2009 and last April. “Unemployment is still too high,” DiNapoli said. “The challenge for us is that we are not certainly going in the negative, but we are not moving forward in the kind of leaps and bounds people would like to see.” Numbers vary Rochester has led the state in employment gains since the recession, adding back all the jobs it had lost — despite the bankruptcy at the city’s longtime flag bearer, Eastman Kodak Co. But even Rochester has seen an increase in unemployment in recent months. In December, the jobless rate was 8 percent, up from 7.5 percent in December 2011. The unemployment rate, though, didn’t tell the full story. Monroe County added 3,200 jobs between November 2011 and November 2012, up 1 percent — the most of any county outside the New York City area. Tompkins County, aided by being home to Cornell University, had the lowest unemployment rate in the state at 5.6 percent. Moving forward Al Samuels, president of the Rockland Business Association, said the Hudson Valley economic council is seeing success from its efforts. It received $3 million last month to establish the New York State Cloud Computing and Analytics Center at Marist College in Poughkeepsie. “There is improvement in our economy in the Hudson Valley, and we have reason to believe that will continue because of the attention that we have gained and the funds we have gained through the state process,” Samuels said. In the Southern Tier, $7 million in state aid is going to build the Southern Tier High Technology Incubator, a collaboration between Binghamton University and the private sector in the city’s downtown. The unemployment rate in the Binghamton area was 8.8 percent last month, up from 8.3 percent in 2011. The Elmira area had led the state in sales-tax growth for the past several years because of the influx of people due to hydrofracking in nearby Pennsylvania. But the glut of natural gas and the recent closing of Sikorksy Aircraft Corp. last month — a loss of 570 jobs — has hurt the local economy. The Elmira region had the largest increase in its unemployment rate over the past year: from 8 percent to 9.3 percent, state statistics show. Lou Santoni, president of the Greater Binghamton Chamber of Commerce, said the area is hoping for the approval of hydrofracking. The region sits above the gas-rich Marcellus Shale, which has been tapped in neighboring Pennsylvania but not yet in New York. “We’re pinning a lot our hopes on the OK,” he said.