Burning Water

April 17, 2014

By John Howell, Esq., Vice President

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The debate surrounding hydraulic fracturing, or “fracking”, is hot…almost as hot as burning water. At the federal, state, and local levels a battle is being waged and there seems to be no middle ground, no room for negotiation. While fracking has been around for decades, this battle over its future viability is just beginning. Pitting the environment against energy independence, a stream of documentaries and even a feature film, has certainly led to greater awareness and, perhaps, greater vitriol on both sides of the issue. If nothing else, watching this debate and monitoring the regulatory activity across the country is a fascinating exercise as the federal government, state legislatures, governors, local municipalities and courts are all active participants.

Last month, the U.S. Department of Energy’s Secretary of Energy Advisory Board (SEAB) published its Task Force Report on FracFocus 2.0. FracFocus is the reporting mechanism through which companies engaged in fracking disclose the chemicals added to their respective fracking fluid. This disclosure is intended to provide stakeholders with sufficient information to make informed decisions concerning environmental impacts due to fracking. FracFocus is maintained by the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (IOGCC) lending credibility to the data contained in FracFocus.

The Task Force Report is informative and I believe it is a good tool to limit the environmental impacts of fracking fluid…but, absent a willingness to find a middle ground concerning fracking, will it be effective? Claims of sickness, higher concentrations of cancer, undrinkable water, and even earthquakes have been attributed to fracking by its opponents. Will detailed and effective reporting of chemical use somehow lessen the import of these claims when those same claims are based on the use of chemicals? Not in Butte County California.

Last week, the Butte County Board of Supervisors voted to draft an ordinance that could ban fracking in the county. If this ordinance is ultimately passed Butte County will be the first county in California to enact a ban. One Supervisor, speaking in support of drafting an ordinance, cited a concern that fracking “is moving a lot of stuff underneath us that’s holding us up…by taking the foundation away, we’ll crumble”. Can middle ground exist if people are concerned with falling into the earth? It is worth noting that there have been no fracking operations in Butte County to date so, perhaps, everyone is safe.

Texas – a solidly pro-fracking state – utilizes a framework of sophisticated industry-friendly regulation that governs recycling practices for fracking flowback fluids and for casing, cementing, and well control of fracking well holes. Similarly, the Texas Commission on Environmental Quality adopted rules in 2013 to regulate disposal of certain radioactive tracers used in the exploration, development, and production of oil and gas resources. In Flower Mound Texas that may not be enough. Last week the Flower Mound City Council convened to “discuss and consider action related to gas drilling and development” with a focus on “community health issues related to hydraulic fracturing.” In Denton, Texas, a local activist group is working to place an ordinance banning fracking on ballots. The ordinance may result in a possible legal battle over the authority of local governments to ban fracking in Texas. In New York State, the November elections appear to be keeping the fracking discussion to a slow crawl. Now in the 6th year of a moratorium to study the effects of high-volume hydraulic fracturing, New York is not expected to issue final regulations anytime soon….certainly not before the elections. Despite dozens of bills sitting in the State Legislature and claims that the lack of movement in New York on the issue is having a significant economic impact and stunting job creation, final regulations are not expected from the Department of Environmental Conservation until at least April 2015. As a result, in February, a pro-fracking group filed suit against Governor Andrew Cuomo (D) to compel the state to complete its review of high volume hydraulic fracturing. In addition, the New York Court of Appeals is expected to hear cases soon regarding whether municipal governments have the authority to ban fracking within their borders.

While the fracking battle is being waged in these states and others across the country, money is flooding into North Dakota due to roughly 1 million barrels of oil production per day from the Bakken shale formation. This oil boom transformed North Dakota into the second largest oil producer in the country, only surpassed by Texas in terms of oil production. As a result, the unemployment rate in North Dakota is the lowest in the nation and the state has the most counties with increases to median household income. While North Dakota supports disclosure of fracking fluid chemical use in FracFocus and has recently adopted rules addressing oil and gas exploration, neither the court of law nor the court of public opinion seem to be impeding the state’s economic velocity.

Effectively monitoring state legislative and regulatory activity surrounding fracking is a true national effort. We are aware of the same dynamic playing out in Maryland, Minnesota, Los Angeles and everywhere else in between. Rarely have we monitored an issue this polarizing and divisive. Federal activity and the jurisdictional battles being waged in courtrooms across the country only add complexity and dimension to this effort. While issues often start out contentious and resolve with a predictable compromise, we do not see a compromise on the fracking horizon. Rather, we see the hydraulic fracturing debate being waged for years to come by two sides firmly entrenched in their beliefs.

About that burning water: in certain localities across the country, tap water can be lit on fire due to the level of methane in the water. Opponents of fracking claim methane in tap water as direct evidence that fracking fluid is poisoning groundwater and is not worth the environmental risks. Supporters of fracking point to the fact that tap water has been lit on fire since the 30’s – predating the first fracking operation. How, then, is fracking to blame? If we cannot agree on burning water, what can we possibly agree on?

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John Howell is Vice President of Regulatory Services at Stateside Associates. With substantial policy and legal experience, Mr. Howell guides Stateside Associates’ regulatory counsel and provides clients with hands on Regulatory Issue Management support from strategic planning, regulatory advocacy, and working with groups of state and local officials.

Call to Duty: Why Groups Enlist Business to Help with Military Challenges

April 10, 2014

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By Michael J. Behm, Senior Vice President

Paying attention to the military has become much more than a nod to patriotism for state and local officials Groups, but rather an urgent recognition that military-related challenges facing public officials, the Department of Defense (DoD) and business are converging like never before.

The drawdown from the conflicts in Afghanistan and Iraq, a flood of returning veterans, massive defense cuts and the threat of a future round of BRAC base closures have created something of a perfect storm of challenges for DoD and the states and local governments which host its installations.

Over the last several years, state and local officials – through their respective Groups – have raced to create leadership-level task forces, special working groups, committees and websites to raise awareness about the military presence in their states, draw attention to incompatible growth around military installations, and focus on wide range of veterans issues.

As an active participant in many of these committees, I am frequently asked the question: If I am not an elected official with a military base in my backyard, should I care about what these military-focused committees are doing?

Business definitely thinks so.

The National Conference of State Legislatures’ (NCSL) Military and Veterans Task Force has been meeting since 2008, the National Association of Counties (NACo) has created a Veterans and Military Services Committee, the National League of Cities (NLC) has a Military Communities Council, the National Governors Association (NGA) has several ongoing projects addressing veteran employment and military base sustainability, the National Lieutenant Governors Association (NLGA) has featured presentations on veteran transition and the Council of State Governments (CSG) and US Conference of Mayors (USCM) have held meetings focused on military installation and veteran issues. The “Big Seven” now meets quarterly to discuss military and veteran issues critical to state and local government.

And private sector involvement with each of these Groups’ military-related programming is growing. Military-focused committee and task force meetings have featured presentations from the U.S. Chamber of Commerce’s “Hiring Our Heroes” program; Edison Electric Institute’s “Troops to Energy Jobs” Program; Walmart’s Welcome Home Commitment; and the Home Builders Institute’s training and certification of veterans for employment in the construction industry. The Groups are helping DoD and business to highlight the education, training, on-the-job experience and leadership skills that veterans bring to the civilian job market. Guiding state and local officials to interested employers, and focusing on the veteran employment challenges, have become a very high priority for the Groups over the last two years.

State and local officials Groups and businesses also recognize that finding employers is not the only challenge for recently-separated service members. Neither DoD nor state government has made it easy in the past to translate military education and training into recognized (and required) state professional certifications and licenses. With the prodding of NCSL, NGA, NACo, NLGA, and the support of organizations such as the American Trucking Associations and health professional groups, states have been enacting laws to make it easier for veterans with documented training, work experience and necessary skills to obtain professional licenses such as a CDL, EMT, LPN and PA – licensure for high demand, civilian trucking and health care jobs. In 2013 alone, legislators on NCSL’s Military and Veterans Task Force introduced bills in 16 states – that were then enacted – that ease the professional licensing requirements for skilled veterans.

The Groups are also highlighting the threats posed by uncoordinated and incompatible development and urban sprawl to the nation’s military installations and testing/training ranges and local economies. In many states, the military is among the largest industries and employers and is directly responsible for the economic health of neighboring communities by generating a steady stream of revenue and jobs. When an installation can no longer perform its intended mission – whether that’s sailing ships, flying aircraft, firing artillery, training infantry or testing new technologies – it impacts the ability to realistically train soldiers, sailors, airmen and Marines. It also puts that “mission” at risk of being relocated or subject to a future round of BRAC.

DoD’s REPI (Readiness and Environmental Protection Integration) Program has used these Groups forums to highlight its cost-sharing partnerships with organizations as diverse as The Nature Conservancy, agri-businesses, foresters, private landowners, conservationists and state and local governments to help avoid or relieve land use conflicts near military installations. These partnerships protect the local economy, critical habitats and at the same time sustain the military presence.

Raising awareness about these problems within the Groups forums, and the benefits the military provides its neighboring communities and businesses, is paying off: Dozens of bills have been enacted since the Groups began addressing everything from compatible land use policies, property buffering, coordination with local military installations about land use changes, limiting lighting that can interfere with military training to creating open space areas around military bases – many of these land use solutions having been born out of discussions at Groups meetings. A number of states – Hawaii being a good example – have also enacted legislation or implemented executive orders intended to protect the military mission by more closely coordinating with state chambers of commerce and other statewide business entities.

Many other issues are being discussed that have a state and local government-military-business nexus, such as renewable energy siting coordination, translating military training and experience into higher-education academic credit, military-energy utility partnerships, National Guard deployments, transportation and infrastructure and Tricare changes to name just a few.

Should your business be involved in those discussions?

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Michael J. Behm is Senior Vice President and a Principal of Stateside Associates. During his 20 years working at Stateside Associates, Mr. Behm’s advocacy work and leadership roles in the state officials Groups have brought him to many state capitols and local governments yielding an extensive network of relationships with legislative leaders and other public officials across the 50 states.

Why EPA Swarmed States’ Meeting

April 8, 2014

By Mark Anderson, Esq., Senior Vice President and Sarah Hunt, Esq., Manager State Issues and Ethics Officer

United States Environmental Protection Agency (EPA) Administrator Gina McCarthy pledged to ECOS last fall that she will “listen to the states” during her tenure at the agency’s helm. If actions speak louder than words, McCarthy underscored this message by sending 30 EPA regional and headquarters staffers to the Spring 2014 Environmental Council of the States (ECOS) meeting held March 31-April 2 at the Cavallo Point Lodge in Sausalito, California. McCarthy’s EPA, in an unprecedented move, also co-sponsored the meeting.

The current commitment of McCarthy’s EPA to ECOS surpasses anything we have witnessed since we began attending ECOS meetings in 1996. As recently as 2012, EPA was all but absent at ECOS meetings, leaving state environmental regulators feeling marginalized by the federal agency and its previous administrators. Despite McCarthy’s promise last fall, EPA’s suddenly stepped-up engagement with ECOS left some states speculating that EPA was only present to promote the federal position on two new and controversial rulemakings, both Obama Administration priorities.

The federal agency recently sent its Clean Air Act 111d rule on carbon pollution standards for existing power plants to the Office of Management and Budget (OMB) for pre-publication review. EPA and the Army Corps of Engineers also just jointly promulgated a draft rule on the definition of the Waters of the United States, a Clean Water Act rulemaking necessitated by a string of US Supreme Court cases that started with Rappanos v. United States (2006).

These two rulemakings are poised to reshape not only American environmental policy, but perhaps energy and land development policy as well. Given their significance, it is unsurprising that a broad spectrum of stakeholders, including many states, have loudly criticized both of these rules. The EPA did not reveal much about the new Clean Air Act 111d rulemaking at ECOS, but a large number of states fear the rule may result in the shuttering of numerous existing coal-fired utilities, resulting in job losses and energy cost spikes. The Waters of the United States rule, as drafted, has the potential to assert EPA jurisdiction over waters previously thought to be outside of federal regulatory authority. This rulemaking has serious implications for state water programs and land development.

At the Spring ECOS meeting, EPA staff held closed-door meetings with state regulators to discuss both of these rulemakings. The only clear outcome from these meetings is that EPA is determined to move forward with controversial aspects of both rulemakings, despite questions and concerns from several states. During the closed-door Clean Air Act 111d meeting, the EPA told states they will not use a state implementation plan (SIP) process to implement the forthcoming existing source rule, leaving states to wonder what mechanism EPA will use to enforce the rules. Interestingly, while EPA staff did discuss some details of the new 111d rule at this meeting, they did not mention to the states that the rule was complete and about to be sent to OMB that afternoon.

The limited public discussion on these important rulemakings at the conference was as unusual as EPA’s ramped-up involvement. Frank discussion of federal rulemakings in public sessions is an ECOS tradition. This time, however, the Air committee skipped over a scheduled 111d item on its public meeting agenda. There was also only one significant mention of the important water rulemaking during public sessions. EPA Deputy Administrator Bob Persciape told a public session that the new Waters of the United States rule “won’t be a big change” in actual EPA policy.

EPA staff made clear their interest in reaching out to state officials at ECOS last week. The question is why.  Many states quietly expressed doubt that this new dialogue will actually shape EPA policy. States welcomed this EPA engagement, but it remains to be seen whether EPA is working toward true collaborative dialogue or merely using this opportunity to inform itself about the coming opposition from some states. States will therefore be watching closely to see if EPA continues its ECOS engagement when these significant Air and Water rulemakings conclude. States will also notice if EPA listened to their concerns when the agency rolls out 111d new source final rule and the 111d existing source proposed rule later this year. If EPA has listened, it will be obvious, and a new era of state and federal collaboration will start on solid ground.

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Mark Anderson, Esq. is Senior Vice President working at Stateside Associates managing the Regulatory Services Division. He advises clients on engagement strategy and directs educational and “grasstops” campaigns directed at governors and regulatory officials. Mr. Anderson also has created issue advocacy coalitions and facilitates work group meetings of state and federal stakeholders addressing environmental issues.

Sarah E. Hunt, Esq. is Manager, State Issues and Ethics Officer at Stateside Associates. She works with clients on a wide range of state and local government affairs issues. Sarah also helps Stateside and its clients navigate lobbying ethics, comply with campaign finance laws, and develop political giving strategies. She practiced campaign finance, election law, and non-profit management with a boutique political law firm for several years before her work at Stateside Associates.


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