Preempting Democracy

It's been almost two weeks since the final version of Pennsylvania House Bill 1950 was passed and sent to the governor. Meanwhile, I've been wrestling with writer's block.  Stating all the reasons I oppose this bill would require several pages. A less satisfying but more realistic option is to break the task up into smaller parts.

I'm opposed to drilling for natural gas in the Marcellus shale in Pennsylvania using hydraulic fracturing (fracking) for two main reasons. Briefly:

• Fracking poses long-term dangers to the public health and safety by releasing carcinogens and other toxins into the air and water on which we all depend. It may also threaten the geological stability of the land.
• Further drilling for natural gas will further delay the transition to renewable energy—primarily, wind and solar power—that is essential to avoid dangerous climate change that threatens to end human life on earth in just a few decades.

I'll discuss both of those issues in more detail on another day. This post is just about HB1950. I'll assume there will be more drilling and ask whether we are taxing and regulating it effectively. To say that the bill is industry-friendly is an understatement. But that should be no surprise, since the government of Pennsylvania is a wholly-owned subsidiary of the natural gas industry.

Flaring at a natural gas well in Potter County.  © Joshua B. Pribanic

Impact Fee

First of all, there is the optional impact fee. Each county must decide whether to impose it, which means that gas industry lobbyists will be flocking to the major drilling counties, checkbooks in hand, hoping to play off one county against another. (“If you impose the impact fee and the adjacent county doesn't, we'll leave your natural gas in the ground. And if you believe that . . .”)

The amount of the impact fee is difficult to pin down because it varies with the price of natural gas, but at current natural gas prices, it amounts to an effective tax rate of 2.6%—as opposed to, say, the marginal income tax rate of 28% that most upper middle class Americans pay. This amounts to about $240,000 per well, as compared to $993,700 per well in West Virginia, $878,500 in Texas, and $555,700 in Arkansas.

Sixty percent of the impact fee goes back to the counties to cover local costs, such as police and fire protection, damage to roadways, etc. The remaining 40% is split among state agencies, including some environmental and recreation funds, such as the Growing Greener fund. However, these gains are offset by cuts to environmental and recreation spending in the governor's 2012-2013 budget.

These fees will not even begin to cover the legacy costs of drilling in Pennsylvania. Ultimately, the gas companies will treat Pennsylvania the same way they treat the Third World. They will extract our resources and leave us with a hollowed out shell of environmental destruction. The cleanup costs will be borne by the taxpayers. As the song goes, “find 'em, fool 'em, and forget 'em.” (I think that's how it goes; there may be another “F-word” in there somewhere.)

Health and Safety Standards

The media have dutifully reported the health and safety protections in the bill, such as increased bonding requirements, greater penalties for violations, and setback requirements from homes and waterways. However, the bonds and fines are still inadequate, and the setbacks are a sham, since the bill requires the state to grant a variance from these standards should they deprive a company of its gas rights or if they promise to take protective measures. (For a more thorough critique of the bill's details, see this document from Penn Future.)

There have been over 3000 legal violations by natural gas companies in the last four years. The Environmental Protection Agency's recent decisions to investigate the effects of natural gas drilling in Susquehanna and Washington counties was widely interpreted as a lack of confidence in Pennsylvania's Department of Environmental Protection (DEP) to enforce the law, which seems reasonable if DEP is a wholly-owned subsidiary of the natural gas industry.

Preemption

Another provision of HB1950 preempts any local ordinances that regulate natural gas drilling that are stricter than the state standards—which is most of them. It states: “(A)ll local ordinances purporting to regulate oil and gas operations regulated by Chapter 32 are hereby superceded.” Local governments have 120 days to repeal those laws or they lose any impact fees that might be coming to them, plus they will have to pay legal penalties if they are sued by drilling companies.

Preemption is a legal strategy by which corporations and government take away the right to home rule from a community. It can occur with any law, but it often involves environmental issues such as corporate resource extraction or waste dumping. State preemption goes something like this: A bill is passed by the state imposing lax, corporate-friendly standards on the activity in question. Included in the bill is a section making it illegal for county or local governments to impose more stringent standards than those contained in the state law. The bill is often given an Orwellian title claiming to “protect” the very right that is being taken away.

Remember when the legislature passed its partial ban on smoking in restaurants and bars? Establishments that claim to make 20% or less of their revenue from the sale of food were exempt from the ban. Suppose Allegheny County wanted to ban smoking in all businesses that serve food? Sorry. That's preempted. Another example of preemption in Pennsylvania is the 2005 ACRE act, in which the state overruled local ordinances governing farming practices in Pennsylvania.

Of course, should a state impose environmental standards that corporations find to be a nuisance, such as California's gas mileage standards, they will press for federal preemption of state laws. Congress can preempt state and local laws under the supremacy clause of Article VI of the Constitution. Between 2000 and 2005, the feds enacted 27 preemptive laws overturning 92 state statutes.  The trend appears to be growing.

The ultimate in preemption is the World Trade Organization, where a three-person international committee of corporate lawyers have the power to overrule the laws of any country that they deem to be in “restraint of trade.” These dispute resolution tribunals have consistently ruled health, safety and environmental standards to be illegal under the General Agreement on Tariffs and Trade.

Preemption shifts the decision-making power away from members of the local community who are directly affected by the outcome and gives it to people who don't have to live with the results. The legislators who decide that local communities can't regulate factory hog farms don't have to smell the pig shit. In most cases, it shifts the decision to a level of government where corporations have greater influence, or where they can exert their influence more economically—that is, where fewer people have to be “persuaded” through a combination of lobbying and campaign contributions.

Brian O'Neill of the Post-Gazette said, “We need to elect better poker players to represent is in Harrisburg.” This is typical media talk. It assumes that when our legislators fail to act in the public interest, it is due to incompetence. A more likely explanation is that the public interest is not even a serious issue for our politicians. Their only important constituency is the people who pay for their campaigns. According to Penn Future, Governor Tom Corbett received $1.3 million in contributions from the natural gas industry.

The responsibility for this debacle belongs to the Elephant Party. The Jackasses were excluded from the secret deliberations between the governor, the majority leadership and natural gas industry which produced this bill. But there is no reason to think the result would have been different had there been divided government, or had the Jackasses been in power. (Recall the Rendell administration's similar record on natural gas.) The public interest can be safely ignored because there is no political party in Pennsylvania that represents the public. Democracy has been preempted.