June 7 Frack Lobby Day in Harrisburg

Today was the Rally and Lobby day in Harrisburg PA. I signed up to attend with 400 other people so that we could voice our opinions to our Senators and Representatives; as well as hear speeches from people affected by drilling; a few politicians who have proposed legislation to place a moritorium on new drilling, provide for a remediation fee (tax, impact fee; call it what you will) and move new drilling far away from any water sources. I also picked up many pieces of literature with more details about the impact of Hydraulic Fracturing and Drilling in the Marcellus Shale region. Some of the details from this literature and the rally appear below.

• An interview with a former employee with one of the gas companies gave eyewitness accounts of illegal actions taken by drillers when there is an accident–they range from dumping on the road, dumping in creeks to burying contaminated soil under new soil; all while not reporting the accident to the DEP and hoping that no inspectors make a surprise visit.
• A social worker who shared that the homeless numbers are on the rise in areas where the drilling is taking place, due to increases in rental rates because the drillers are willing (and of course able) to pay up to 2x more for rents. This, in turn, affects people living in the area who do not make enough money to afford the increased rental rates.
• Evidence from Careerlink of a 25% attrition rate among native Pennsylvanians who the drilling companies hire; due to ‘cultural differences’, like working 12-hour days for weeks at a stretch without days off.
• Josh Fox, who made the academy award nominated film ‘Gasland’; which still draws controversy, even though much of the details have been proven factual.

No story, however, is more poignant than that of Crystal Stroud. She lives in Towanda PA and like many, was lured by the prospect of financial gain for leasing the drilling rights on the 2 acres of land she and her husband owned. Little did she know that the drilling would negativley affect her family’s health in a way she could not imagine. A few months back she began having health issues; her hair was falling out, she would have uncontrollable muscle tremors, heart palpatations and panic attacks. They tested her for thyroid issues, but that was normal. The recommendation was that she take anxiety medication. A few days went by and she began to have worse affects. During all of this, they had the water tested from their well; and the results came back; the well was contaminated with Barium, Lead, Strontium, Choloride, Methane, Radon and other Radiological materials. She had her blood tested and found that her Barium level was 110—normal is 0-10. Barium accumuluation affects the nervous system; and her problems were definitely among the symptoms.

The Stroud family contacted the drilling company and they sent a representative out to look over her water results, he began to explain away the items found and she asked about the Radiologicals; he looked only at the Radon (1.2pCi/L before drilling; 154.5pCi/L after drilling began). Crystal asked him specifically about the Gross Alpha and Gross Beta; to which the representative replied; “I don’t know anything about those.” DEP representative have told neighbors with similar issues to ‘just buy a water filter, you’ll be ok’. The Stround house has filtering equipment and the water from the tap is still contaminated at those levels.She also shared with us the fact that her son has the same levels as she had; 18 days after they ceased to use the water; and that her levels have nearly doubled since April. They have to move; but can’t sell their property with a contaminated water well.

The Stroud story is not unique; numerous families have been affected in the region–from the much publicized Dimock issue; to local landowners who didn’t know the mineral rights to their property had been sold off decades ago. Wells are contaminated, water is being taken from our streams and creeks; with full blessing of DEP and other agencies.

Studies have been done about the affect on local wildlife and in areas with heavy drilling the impact is significant; diminished mayfly populations and salamander populations abound in regions with heavy drilling. These are the ‘canaries’ in the coal mine; mayflies are a major food source for many animals; if their numbers are depleted, one can only imagine how the populations of other animals will be detrimentally affected.

All along we’re being fed the ‘economic development’ platitudes from the industry and from our political officials. Yet the math doesn’t make sense. The estimated impact of Gas Production for PA is a paltry $22 billion dollars. That’s only 2.3x what Hunting, Trapping and Fishing (at an estimated $9.5 Billion dollar) brings to the Commonwealth. Plus, the Fishing Industry alone directly employs 17,000 PA residents; either as guides or at tackle stores and other directly employed individuals. Other industries such as agriculture and tourism contribute nearly $350 Billion more and employ more than 10x the number of people who live in PA–the Gas Industry employs an estimated 48,000 people; over half of which are not residents of PA. Gas industry jobs are temporary; each well has a life expectancy of only 5-7 years. Sure; there is an estimated 100 years of Gas underground; but at what cost?

If the Gas Industry continues its’ desecration of pristine forests, streams, creeks and agriculture land; the larger industries of Agriculture, Hunting, Fishing, and other related industries will be doomed in PA. The great World-Class fly-fishing streams will be a memory; and the hunting lands will be gone. Tourism in the Marcellus Shale areas will diminish to nearly nothing.

One of the greatest lies we’re being told in PA, however, is that the Gas will give us (and potentially the US) ‘Energy Independence’. This is simply not true–a majority of the leases have been sold overseas; with the bulk going to China, South Korea and India; it’s not staying here. China is already buying millions of gallons of water from us, now they want our Gas too.

The Jury is still out on whether or not Hydraulic Fracturing in the Marcellus Shale region is safe—or ever will be. Studies by the EPA are undeway; but aren’t expected to be complete until 2012 and released some time in 2013. Like other people who were at the Capitol today; I support a moratorium for 1-3 years until the studies are done. At that time, with the evidence in hand, we can (if it is possible) extract the Gas safely; it’s not going anywhere.

Study shows proximity of hospitals, day care and schools near Marcellus wells

From the report:

From Pittsburgh to Scranton, gas companies have already drilled more than 3,000 hydraulic fracturing wells, and the state has issued permits for thousands more. Permitted well sites exist within two miles of more than 320 day care facilities, 67 schools and nine hospitals statewide.

 

Read the rest here.

 

Nuff said.

Pro Marcellus rally in Harrisburg

Today in Harrisburg a Pro-Marcellus rally was held at the State Capitol. The same old rhetoric was heard; and an interview was presented with an individual who works for the Pro-Drilling group; the Marcellus Shale Coalition. His interview plays on the emotions of the reader like a virtuoso bowing a Stradavarius .

The past president of the Westmoreland County 4-H board, said “I’ve spent a lot of time talking to FFA and 4-H families, and it’s fun to hear their stories about how they have been able to maintain their farms … because of the opportunities in the Marcellus Shale.”

Ah yes, we can save the Family Farm if we just lease part of our land and let them drill. Never mind all of the problems people have faced with drinking water in areas where wells have been drilled.

Our esteemed Governor wants to use the ‘jobs’ mantra as an excuse to keep on drilling, with minmal limitations and the McPermit operations (you know, the 35-72 minute approval process) to keep wells going. Of course, his own Department of Labor and Industry refutes the job creation data; with data on their site that indicates the total number of jobs created is much lower. DLI reports Gas Drilling jobs in the Logging and Mining report. There are a total of 30,000 jobs in that group as of 2011, with 6100 jobs created in 2010. For perspective–leasure and hospitality and manufacturing each employ over 500,000 people; which is 1/6th of the PA workforce of 6.4 Million. Marcellus shale employes somwhere around 40-50,000; or less than 1%. Big employment numbers. Even the best estimates say there will only be 200,000 jobs created by the end of this decade; less than 5% of the total workforce in PA. Oddly enough, Alternative energy estimates (conservative figures) are around 350,000 jobs; nearly double that of Marcellus Shale; and with less envrionmental impact. 

Yes, many of the regions where Marcellus drilling is happening in PA have lower unemployment numbers than the rest of the state; but at what cost? Liberal estimates place the total economic impact of Marcellus Shale at around $35 Billion by the end of the decade; yet agriculture, tourism and recreation already have a nearly $400 billion impact.More wells means less of the others that contribute 10x what shale drilling does. Already sportsmen are seeing impacts; from fish kills and inedible fish; to tainted deer meat

Which of these industries do you think holds more promise for our future?

Marcellus Shale Rally in Harrisburg

Today I joined with Gas Truth of Central PA, Clean Water Action and a dozen more organizations at the Rachel Carson Building in Harrisburg, PA to protest what we feel is a shameless lack of democracy in PA. The protest was aimed at the members of the Marcellus Shale Advisory Commission–which to anyone with a modicum of sense in their heads looks like a very one-sided stacked deck. Led by Lt. Governor Jim Cawley; this commission has the majority of membership coming from the Oil and Gas Industry. By no means am I saying that they should not be represented, but when they make up the bulk of the membership of the group–13 out of 30– the deck is well and truly stacked. Interestingly enough, these 13 members contributed heavily ($557,000) to Governor Corbett’s campaign. Twelve more members are from companies who contributed just over $562,000 to the Governors campaign, and one is the son of a $300,000 contributor.  That’s 26 members who contributed $1.4 Millon to the Corbett Campaign. The remaining four members are from Conservation groups: Chesapeake Bay Foundation, the Pennsylvania Environmental Council, Western Pennsylvania Conservancy and the Nature Conservancy. Four members out of 30. Thirteen members from Oil and Gas industries. Glaringly missing are representatives from Health agencies–many of the chemicals found in frack fluids and waste frack fluids are known carcinogens; not to mention radioactive. There is only one woman on the commission; she’s from a conservation group.

As an interesting statistic, the Oil and Gas companies represented on the Commission represent 42% of all violations–514 out of 1,227–in 2010 that occured at drilling sites. The violations ranged from pretty severe (illegal discharge of industrial waste) to seemingly innocuous (administrative oversights). The number of violations is about 1/6th of the total number of Gas Wells in the Marcellus Shale region of PA. Chief Oil and Gas led the way (Terry Bossert; their VP of Government sits on the Commission) had the highest with 174. Chesapeake Energy (Dave Spigelmyer, VP of Government Relations) was number 3 at 132. Other companies such as East Resources (74), Exxon Mobil (66), Range Resources (32), Chevron (16), EQT (15) and Consol (5) all have seats on the Commission.

The hue and cry is that there is no danger from the Frack Fluids; that 90% of them remain in the ground, locked in the shale. Ok, lets review the process. We drill down below the water table until we’re in the shale bed. Then, we drill a long horizontal tunnel in the shale, then fracture using the fluids and sand, and pump the gas out. Key word here: Fracture. While the shale is geologically less than permeable; putting fractures in it reduces that impereabiltiy. And..these chemicals are now below the water table. Centrifugal force from the rotation of the earth tends to force the fluids to the surface; and natural geologic activity will tend to increase the fractures. Result: eventually the fluids will end up in the water table. It might happen today, via cracks in the cement casing they put down the well on the sides; or it might happen tomorrow at some date in the future.

What about the 10% of frack fluids that are recovered? Well; they contain water, sand, a mixture of chemicals ranging from Benzene to xylene; all of which are carcinogens. Some of these fluids are ‘recycled’ but a majority go out for disposal. As an example, every day 14 waste disposal facilties along the Monongahelia Watershed accept these fluids and place 826,825 lbs of total dissolved solids (anything that isn’t water is one; and could be a toxic material), 486,812 lbs of chloride, 16,737lbs of strontium, 15,033 lbs of barium into the river. Every Day. Under the ‘Haliburton Loophole’, Oil and Gas exploration are exempt from the Clean Water Act.

Governor Corbett really needs to open his window and hear the shouts of the people who are against this drilling. These are ordinary people who, since fracking operations moved in, can’t use their water, are tired of the endless truck traffic,  have property values reduced; can’t get FHA loans to buy property in the area or see the deterioration in forested lands caused by the gas well pads and roads needed to reach them. These are real people with real problems caused by the unchecked growth of this industy. Mayor Calvin Tillman of Dish TX (pop. 218) who has seen the results of shale drilling in the Barnett Shale area stated that there were about 100,000 wells in his area; and the Marcellus Shale is about 5 times larger; simple math says 500,000 wells in PA, WV, part of Ohio, MD,  NY and KY; should all of the region be developed. Even worse–below the Marcellus Shale is the Utica Shale; so when the Marcellus is tapped out in 25-50 years; Utica will be next.

One would think that a process that has been in use since 1949 could be safer than it is; but alas it is not. We the people must use our voices and we must shout loud enough so our elected officials hear us. This commission is a sham; and its’ recommendations will only further the interests of the drillers; not the people.

This is what Democracy Looks Like

Related articles, courtesy of Zemanta:

• PA Fracking Fluid Blowout Sparks Outrage: Citizens Join Marcellus Shale Oil and Gas Litigation Group in Demanding Temporary Drilling Moratorium
• FYI:A Letter to President Barack Obama Concerning Natural Gas Extraction from Marcellus Shale in the Chesapeake Bay Watershed
• Spill at Marcellus Shale drilling site in Bradford County prompts evacuation
• Environmental Protection Agency steps into probe of fracking spill
• Gas panel members rack up violations
• The Marcellus Shale Has Friends in Low Places

Breaking News: Gas Well spill prompts evacuation

Ok, it’s seven total families who may or may not have left the area, but that not the point. There has been a major accident at a Gas Well in Bradford County, PA, resulting from ‘equipment failure’ at a Chesapeake Energy sitel located west of Towanda, PA.

According to Chesapeake spokesman Brian Grove, “At approximately 11:45 p.m. on April 19, an equipment failure occurred during well-completion activities, allowing the release of completion fluids from a well at a location in Leroy Township, Bradford County, Pa.”

To add insult to injury; the spill contaminated Towanda Creek–a creek that drains into the Susquehanna River. The spill appears to have overwhelmed the containment features at the well. They were  already strained due to the large volumes of recent rains. Just as with the BP spill, the drillers are attempting to get this well under control using ‘drilling mud’; but the product on hand wasn’t ‘heavy enough’ to stop the flow.

According to DEP spokeswoman Katy Gresh, the agency has at least eight staffers on scene. DEP also states that fluids are no longer flowing into the stream.So far, there is no evidence of aquatic life killed, but DEP is actively monitoring.

So, it’s been a day and a half since the spill began; and it’s not under control yet. Even more so is the naïvetè of Bradford county’s director of public safety  who reported to the media that he didn’t know what types of chemicals spilled, but that he was sure there was no damage to the creek.

Too many people are thinking with their wallets and not with their minds. Those containment features should have at least been pumped dry before work continued on this well.

Please, write your legislators and express your outrage at this latest travesty! If you live in PA, you can find them here.

Marcellus Shale Drillers pay taxes!

(source)

Or so says Governor Tom Corbett. He told a crowd at the Lebanon Valley Chamber of Commerce that the drillers have paid $71 million in taxes to the state coffers over the past two years.

There is, of course, an element of truth to that–however, there is no way to determine if this is just the drillers tax revenue. The reason? Well, this $71 million includes corporate net income taxes, corporate stock options, franchise taxes, employee wage taxes, as well as sales and usage taxes on item. This is a pretty broad spectrum of taxes we’re talking about. No taxes are paid on drilling equipment or supplies, as these are considered manufacturing expenses and there is also no property tax burden on gas reserves.

Add to this, an analysis by the PA Budget and Policy center revealed the following:

• 70 percent of companies pay no corporate tax
• 85 percent of oil and gas sector companies owed no taxes in 2008
• 967 pass-through businesses in the oil and gas extraction industry had a reported $597 million in positive PA source income in 2008. The ultimate recipient (individual or corporation) is unknown.

Of course, the amount of pass-through companies should come as no surprise; the biggest players like Chesapeake, Range Resources and Anadarko all have headquarters in other states. This means their revenues go outside of PA.

Even more astounding is the fact that we are still importing Natural Gas to PA. This means that PA consumers are helping to pay the severance taxes to Gas that is extracted in other states. Our gas is also being exported to other states and even overseas. Of course, we have no severance tax, so the other states do nothing to help our coffers, while those states with a tax get to tap the wallets  of PA consumers.

I don’t think we can argue that the drilling companies are helping to fill the states coffers; nor can we argue that they are contributing to local economies; even if they’re bringing in the bulk of their technical expertise from outside of PA. However, what we can argue is whether or not they’re contributing in a meaningful fashion. The revenues from oil and gas drilling to the state’s coffers was $47.7 million in 2008 and $44.5 million in 2009; even though the number of wells increased. This revenue is less than 10% of the reported PA Source income from the pass-through businesses in the industry in 2008.

We need a severance tax–other states have them and the drillers did not pack up and leave town. Representative Kate Harper, a Republican from Montgomery county plans to introduce a Severance tax bill, modeled on the one from Arkansas that provides 1.5% tax on gross units severed for the first 60 months, then 5% thereafter on production exceeding 90,000 cubic feet per day.

The revenue collected through the tax would be distributed into the Natural Gas Severance Tax Account to be distributed as follows:

• 32 percent to the Education Supplemental Account whereby 2/3 would be used to support basic education and one-third would be to support community colleges and higher education in the Commonwealth;
• 29.6 percent to the Environmental Stewardship Fund (Growing Greener)
•  32 percent to the Local Government Services Account, to be further distributed to counties and municipalities affected by natural gas drilling, as well as ten percent to the Pennsylvania Emergency Management Agency;
• 1.6 percent to the Hazardous Sites Cleanup Fund;
• 1.3 percent to the Conservation District Fund for distribution to county conservation districts pursuant to guidelines established by the State Conservation Commission;
• 1.4 percent to the Fish and Boat Commission;
• 1.3 percent to the Department of Public Welfare to provide cash and crisis grants to low-income households under the Low Income Home Energy Assistance Program;
• 0.8 percent to the Department of Environmental Protection for State dam removal, restoration and repair projects.

This seems fair and should be passed and signed by Governor Corbett. She is searching for co-sponsors, please write your representatives and urge them to support her.

Contact information for them is here.

35 minutes.

Yes, that is all it takes to receive a Marcellus Shale Gas Well permit from Pennsylvania Environmental Regulators. Not only that, but if you plan to drill near a high-quality stream or river; you won’t get any additional scrutiny. This came from PA DEP Regulators who testified recently behind closed doors during a hearing about a permit that was issued for an exploratory well less than a half mile from the Delaware River, and 300 yards from a pristine stream in Northeastern PA.

Why does this happen, you ask? PA DEP staffers indicate they are overburdened dealing with this ‘gold rush fever’ boom to tap the lucrative Marcellus Shale in PA. The rush to get wells permitted and drilling started is motivated simply by greed–and not on the part of the State; as they’re not taxing the drilling as other states are. The simple fact is that out of over seven thousand well permits that have been applied for; only 31 have been rejected. That seems to be an extraordinarily low number but during testimony, the regulators revealed:

• potential impacts on high quality watersheds are not considered; rather than determining that wells meet the minimum setbacks.
• municipal or regional zoning laws are not considered during the permit process
• no consideration is given to wide-scale development of concentrated gas wells in any area
• There appears be  a fuzzy understanding of laws governing the process. One upervisor was unable to define the requirements of a key anti-degradation regulation requiring that  pristine waterways “shall be maintained and protected,” while a geologist said he didn’t know that streams and rivers that are legally designated as “high quality” or of  “exceptional value” were entitled to an extra layer of protection.
• This same geologist could not define what a  ‘high quality waterway’ was nor what that meant in terms of the level of protection these same waterways have  under the law. He  also testified that he was the principal geologist responsible for performing the substantive technical analysis of the well permits.

This overburdening results from the fact that PA-DEP is woefully understaffed for the permitting process. Under the law, they have 45 days to review and grant or deny the permits. If they fail to achieve this; it is DEP policy to refund the application fee–which varies from $900-$3000, depending on well depth. While staffing for DEP has increased from 88 in 2008 to 202 in 2010, and many of these are in the oil and gas permitting group, the staff is still overburdened.

The State of PA needs to update their 25-year old antiquated oil and gas law and also place oil and gas wells out of the exemption that most receive under the law. This exemption allows most wells to be drilled close to the pristine waterways that grace the northern tier counties.

Action needs to be taken to halt this process; this is akin the recently noted Air Traffic Controllers falling asleep in the towers; our waterways are in danger and are crying for us to help.

Trucks and more Trucks

Took a ride up rt. 287 to Ansonia PA, Tioga Co.
Stoped at the Darling Run Access and biked down along Big Pine Creek to the Owassee. That’s the name of the rapids on a turn in the creek in the upper part of the PA grand canyon.

We then drove west to Potter Co. and down rt. 44. This is all yesterday, Sunday. If we passed one water tank semi, we passed a hundred. They are hauling the water to the gas wells for fracking the shale viens. The serenity of the beautiful mountain roads has been prettty much destroyed. Along with the roads. The mountain road stretch of rt. 44 coming down from Fin, Fur, and Feather to Waterville has been crushed and semi rebuilt over the last couple months. There again, yesterday, Sunday that stretch was one tanker semi after another.

I stopped by my favorite fishing blog the other day, and one of the posts had this in it. Traffic–all of the traffic–Trucks for the water, cars and trucks for the people driving to the well sites, the waste hauler trucks, the well equipment, the chemicals.  Chesapeake Energy has stated that they don’t have enough trucks so they are bringing in 5,000 more from Wyoming. This is just going to get worse everyone.

5,000 additional trucks; for just one company. That is a mind-numbing thought;  can you imagine the fuel usage for those 5,000 trucks; the carbon emissions for those trucks, and just the smell of the diesel fumes? These trucks aren’t just in operation from 8-5, but rather they are on the road 24×7. All of this additional  traffic is also wreaking havoc on the infrastructure. Yes, I know the Gas industry pays for the repairs, and often leaves them better than they were; but at what cost? We need to look at the bigger picture.

Recently, Cornell University published a study showing that the Natural Gas extraction from Fracking may actually contribute to Climate Change, and it’s easy to see why–but not just from all of the increased traffic, but with the venting of Natural Gas to the atmosphere. Methane is a far more hazardous greenhouse gas; and while we don’t have any actual numbers, it’s possible that up to 7.6% of the total volume of a well is vented to the atmosphere. Some wells actually burn or ‘flare’ the gas; and while that’s not as hazardous; there are still greenhouse gases being contributed.

Our water is in danger, our air is in danger; we’re killing out planet. When do we all start caring? When do we all say ENOUGH!?

Is Water the Next Oil?

A few years ago, I published this article on another site. I felt a need to publish it again here.

 

Oil. When the price of a barrel of oil rises, we shudder. Every time the price of gasoline goes up a few cents, we complain. We hear about the profits of Exxon, Shell, or other oil companies and we curse the ground on which their offices sit. We are certain that nearly every country in the Middle East has their wealth tied to this “Black Gold.” We all know there is a finite amount of oil in the world, yet we still take it for granted. There is another finite material on Earth we all take for granted, too – although we don’t really track its daily cost fluctuations. That material is water. Unlike oil, water is easier to reassemble. Water changes its state from liquid to gas, or is split into its atomic components only to be recombined in animal respiration or by some other process. It is still in finite supply, but unlike oil, it is much easier to return to a usable state. Here in the U.S., most of us are spoiled. Water is usually always there; whether it’s a simple walk to the tap, or a stop at the local mini-mart, we have it when we want it. Water.

Of all of the issues in the world today, from endless wars to global warming, there is none more powerful than access to clean, safe drinking water. While our planet may be mostly water, less than 3% of it is fit for human consumption.  Of that 3%, only about 1% exists outside of glaciers — although, with the glaciers melting faster than predicted,  that may not be true in a few years. Water rights are the fuel for problems in Darfur,  and it is easy to see similar situations arising elsewhere as the demand for clean water increases.

Drought conditions over the past several years in the U.S. have taken their toll on multiple communities.  In 2007, the usual spring water source for Orme, a tiny town in Tennessee, dried up early and for a longer time than normal. The residents survived on trucked water from a fire hydrant across the state border and three hours of access to their water tank per night.  Large metropolitan areas also suffered from drought conditions. Atlanta was  in the news a few years ago because their reservoirs were at a critical level.  Conditions such as these could lead to a financial climate that will allow for major players in the water game to profit immensely. Back in 2000, the World Bank estimated the value of the world water market to be $1 trillion, even though only 5% of the world population received their water from private companies back then.  In their words, the potential for profit was “unlimited.”

How Do Water Companies Make Money?

Water utilities vary in the U.S. – some are municipal and others private. The largest two private utility companies, listed according to the number of consumers they have are:

• American Water – Serves 15 million customers, in 1600 cities in the US and Canada
• United Water– Serves 7 million customers and is owned by Suez-Ondeo, a French  company

In the U.S., the mostly municipally owned water utilities tend to view water as a birthright rather than as a commodity. Many of these municipal utilities need help with modernization, upgrades and major maintenance. According to the EPA, the cost of needed upgrades and replacements to pipes and infrastructure alone will exceed $500 billion by 2019.  While rate hikes are frequently granted in exchange for infrastructure improvements, it is always after the fact – which requires an outlay of monies from the water utility or loans to be taken out in order to pay for the improvements. This is often met with opposition from residents who fear the impending water (and sewer, because they are frequently intertwined) rate increase. Mistrust also ensues when water systems are sold to private firms who are viewed as less committed to the residents as the municipal authority would be. These fears have led to the proposition of a “partnership” in which the private company manages the utility and is responsible for operation and maintenance, and the municipality (public company) retains ownership.

These “public-private partnerships”  are supposed to allow both parties to benefit. The municipality contracts out the management and maintenance, often at substantial cost savings because the municipality keeps the revenue generated by the utility, less the amount of the contract. Issues sometimes arise outside of the scope of the contract, but most are handled per an agreed fee schedule. While the private partner has to operate and maintain the facility for the contractual payment amount, the public-private relationship creates greater profit potential for the private management entity than owning the water utility outright, as most states limit the capital expenditure returns for municipalities at or near 10%, and profits upwards of 20% are not uncommon. The managing company is not dependent upon utility rates, nor are they usually governed by utility commissions, who are responsible for rate caps. These public-private partnerships are governed only by the level of savings they are able to generate from cost-saving measures such as automation using SCADA Systems, which are used to control, acquire and transmit data back to a central location. Also, many times numerous utilities are owned by one company, so they are able to centralize purchasing and administrative duties, resulting in lower supply cost and simplified administrative operations. This can lead to staff reductions – in many cases consisting of hourly staff (who are paid overtime) as well as union staff (who have more contract negotiating strength at contract time) – and thereby reduce cost.

These public-private partnerships are not without their pitfalls. For example, in Atlanta in 2002, deficiencies were revealed in the public partnership with Suez/United Water. These ranged from violations of federal drinking-water standards, to maintenance problems (e.g., broken security cameras, gates, etc.), or even to open manholes and water-main leaks that went un-repaired for weeks. There were numerous instances of residents waiting months for basic repairs, and when repairs were made, water was reported to be brown and dirty for days afterward. In fact, United Water failed to complete more than half of all required repairs in 2001. Even worse, collection rates dropped from 98% to 94%, costing the city millions of dollars in revenue. The end result was the dissolving of the contract early in 2003, sixteen years early.

Atlanta wasn’t the only city to have issues with United Water partnerships. Other examples include:

• Milwaukee – Repeated sewage spills into Lake Michigan and even into residents’ homes resulted in Milwaukee resulted in  their wastewater contract being awarded to Veolia Water North America, rather than renew with United Water.
• Buenos Aires – Following the Argentina economy collapse, Buenos Aires charged high consumer rates while cutting off citizens who were unable to pay – all while as the utility polluted water sources. The Government eventually took back the Water Utility in 2006, owed to “very serious” contractual breaches, a lack of agreed upon investments and the “existence of high levels of nitrate in water that was allotted for human consumption” .
• Jersey City – United Water diverted $1.2 million worth of the Jersey City’s water to other communities without paying for it.

American Water has had its problems, as well. Within California cities, ratepayers grappled with large increases and declining service.

There have been success stories with these same firms. United Water has had a successful contract with the city of Indianapolis for management of their Advanced Wastewater Treatment facility since 1994, and has had their contract extended recently until 2017, and American Water Works has been successful with several DBO (Design/Build/Operate) contracts. Overall, however, the success has been marginal at best.

Profits for Investors and Corporations

The regulated water utilities also look for other innovative ways to generate profits outside of the typical contracts and water facility ownership. Water utilities typically generate future net income, rather than a positive cash flow. One way to generate immediate profit, however, is through surcharges some states grant for infrastructure improvements that can be immediately added to the water bill paid by consumers. While there are surcharge caps, it is still money up front.Another method used is an IPO, which takes the company public on the U.S. stock market. This is where investors have shown interest, because during the last twenty years the water industry has outperformed Exxon, Wal-Mart and Home Depot. Other profit-generating methods include selling service contracts on the consumer’s water line running from the street to the home, leasing land for cellphone towers, and even by tapping into other lines such as septic treatment and hauling services. Other companies that are not principally “water companies” are also getting involved in the water industry. For example, an equity arm of Macquarie Bank purchased Thames Water from RWE in 2006 and AIG’s Highstar Equity purchased Utilities, Inc. in 2005.

Unanswered Questions

Who really profits from these Public/Private Partnership deals, though? Like oil, water is becoming a “hot commodity” in the early 21st century in terms of profits, but unlike the other “hot commodities”, water is absolutely vital for life. With all of the pressures on our water supply–from Agricultural  to Industrial and even the Pharmaceuticals we use to stay healthy, should we trust clean, safe water will continue to be readily available?

Centralization of Authority

Over the past few weeks, we have seen Governor Corbett centralize authority over the issuance of Marcellus Shale Permits and the inspection/violation/citation process into the hands of two people; essentially emasculating the PADEP and possibly removing any ‘teeth’ the well inspectors might have. This is both a depressing and frightening state of affairs; and has led me to writing my State and Federal elected officials with the following:

I am writing to you today to express concern over recent decisions that have been made by the Governor of the State of Pennsylvania and offices under his authority regarding the Marcellus Shale drilling that have far-reaching consequences for the citizens of PA. I am not opposed to energy independence; nor am I opposed to the safe operation of Marcellus Shale drilling; but I feel that recent events have been contrived to circumvent legal processes that have been in place to ensure the safety of the aforementioned drilling operations; and to protect the citizenry of the State of PA, and the environment from harm that may be caused by dubious operations of said drilling facilities.

The specific decisions I am referering to are:

1. Governor Corbett’s decision to allow the Director of Community and Economic Development, C. Alan Walker, to circumvent the permit process for new Gas Wells if he feels the PADEP or other agencies are not issuing permits fast enough. This process should be a methodical one; given the damage than can result from a poorly operated well. We’ve seen the results of this already; areas and individual who have had their water wells contaiminated after drilling operations began nearby. To allow a single individual the ability to circumvent this process with a proverbial ‘stroke of a pen’ seems irresponsible on the part of Governor Corbett.

2. The recent decision within the Department of Environmental Protection that has centralized the issuance of any Marcellus Shale-related enforcement and permit approvals, including notices of violations, with senior DEP management.  Those clearances would come from the Deputy for Field Operations, Executive Deputy for Programs and final clearance from the Secretary of DEP. The reason given was to ensure ‘consistency’ within the agency; but this removes the inspectors ‘teeth’ (so to speak) and actually could inhibit them from doing their duty—or worse; it could emasculate them to the point that they aren’t being diligent enough when inspecting the wells. Between January of 2008 through October of 2010, there were over 2,000 violations at Marcellus Shale wells here in PA. If the inspectors do not have immediate authority to ensure that the well operations are being safely performed; then the safety of our citizens may be in jeopardy.

It is my fervent hope that your office would be able to look into these matters and suggest corrective actions to be undertaken to protect the Citizens of PA from possible abuses that could arise from the centralization of authority these decisions have created.

Thank you for your time,

L. Dwayne Sudduth

I hope this does some good–but I realize that it takes more than one person writing to goad our elected people into action. Perhaps by spreading this around, many citizens will write and our elected officials will be encouraged to act.