Andrews County, TX—Tucked away on the Texas/New Mexico border is a 15,000-acre low-level nuclear waste disposal site run by Waste Control Specialists (WCS), a subsidiary of Valhi, Inc. Only five miles away from the nearest city of Eunice, this site is to be a permanent disposal [...]]]>

Harold Simmons (Photo credit Dallas Morning News)

Andrews County, TX—Tucked away on the Texas/New Mexico border is a 15,000-acre low-level nuclear waste disposal site run by Waste Control Specialists (WCS), a subsidiary of Valhi, Inc. Only five miles away from the nearest city of Eunice, this site is to be a permanent disposal site for level A, B, and C radioactive waste. WCS sought two licenses that allowed them to accept a total of 60 million cubic feet of low-level radioactive waste from federal and state sources, including nuclear reactors, weapons programs, and hospitals, roughly enough to fill half of Cowboy’s Stadium. The citizens of Andrews County are thrilled to have the disposal site, which provides jobs and revenue to the small town. The town receives 5 percent of WCS’s gross receipts and received their first payment in August, about $620,000.

The company is owned by Harold Simmons, Texas billionaire and owner of Contran Corp, worth an estimated $9 billion; Titanium Metals Corp, the top producer of titanium for weapons and other industrial uses; Amalgamated Sugar; and WCS’s Valhi Inc, a Texas-based waste management company. Simmons is considered by many to be a great philanthropist. Almost every hospital in Texas has a medical wing named after him based on his generous contributions. Yet, Forbes’ 55th richest man has some interesting relationships with politicians and has been named by D Magazine “Dallas’ most evil genius”.

Simmons graduated from the University of Texas at Austin Phi Beta Kappa and earned a master’s degree in economics. According to Golden Boy: The Harold Simmons Story, the 2003 authorized biography of Simmons, his first business deal of significance was in 1956. A man who owned a bank in La Vernia, Texas, wanted to sell so he could retire. Simmons convinced him to sell with no money down. Simmons then sold the bank for $7,000 more than the asking price, paid the seller, and pocketed the profit, meaning Simmons sold the bank before he even owned it.

By the mid-1970s, Simmons was a successful businessman, having built and sold a chain of drugstores. He was creating a small empire of insurance companies, farmland, and industrial manufacturers when he was indicated by a U.S. attorney in Illinois for mail and securities fraud relating to transactions he made on behalf of one of the insurance firms he owned. Simmons was found not guilty of criminal charges and settled a related civil suit out of court.

In 1983, Simmons used $15 million from the pension fund of one of his Dallas-based hardware companies to take over an agricultural enterprise called Amalgamated Sugar. The U.S. Labor Department sued him in federal court. The judge ruled against Simmons, forcing him to sell the shares. Simmons responded by buying back the shares with his personal fortune and taking control of Amalgamated Sugar once again. It is with the takeover of this company that Simmons began his ongoing relationships with local, state and national politicians.

Amalgamated Sugar processed domestically grown sugar beets. The company was successful because of Congress’s willingness to maintain high tariffs on imported sugar. In 1997 Simmons is quoted as saying, “We have a very hard battle every year in Congress and the Senate of that issue because our main opponents are Philip Morris, RJ Reynolds, and Hershey Foods, General Foods—massive corporations who make more profit in one day than we make all year…We have to really protect ourselves and work hard at it.” But in the six years after Simmons took over Amalgamated Sugar the company’s value grew nearly ten times to $330 million.

With his success depending more and more on political decisions, Simmons developed an affinity for donating to political campaigns. The FEC fined him in 1988 for donating more than twice the legal limit in an election cycle for George H.W Bush’s presidential campaign and other congressional candidates in positions to influence legislation that benefited his businesses. It was alleged that Simmons gave even more, millions of dollars of trust assets, to conservative political causes and politicians. Some of the alleged contributions were thought to be illegal and many were alleged to be designed to avoid federal election laws. Yet, the FEC took no action on these allegations and they were all but forgotten.

By 1996, Simmons had developed a massive trust that not only included the vast majority of his personal wealth but also the majority of the stock of his publicly traded business holdings, which caught the eye of the IRS. They began pursuing Simmons for millions of dollars in back taxes, so Simmons paid a $600,000 fine and moved to dissolve one of the trusts to avoid further penalties.

Simmons has been active in political fundraising since the 1990s and has always been influenced by Karl Rove, financing Rove campaigns since 1986. He donated $90,000 to George W. Bush’s gubernatorial campaigns and $2.5 million to Bush-allied political organizations during his presidential runs. Valhi, a Simmons corporation, previously employed Gale Norton, the Bush administration’s Secretary of the Interior, and former Vice President Dick Cheney. Norton was an attorney and lobbyist for Valhi, defending Natl Lead Industries in lawsuits involving lead paint poisoning and schoolchildren. Cheney was the former CEO of Halliburton when Valhi primarily owned it.

George Bush

Gale Norton

Dick Cheney

Between 1997 and 2000 Simmons and his companies’ executives and PACs contributed nearly $650,000 to state candidates and PACs, according to Texans for Public Justice. He also donated $1 million to federal candidates, PACs, and Republican Party committees. In 2004, Simmons gave $4 millions dollars to the Swift Boat Veterans for Truth campaign, the GOP-backed effort to discredit Democratic presidential nominee John Kerry’s Vietnam War military record. In 2008, Chris LaCivita launched the American Issues Project that aired TV ads trumpeting then-candidate Barrack Obama’s past association with the former Weather Underground member William Ayers. The group’s entire $2.9 million ad budget came from Harold Simmons. This year, Simmons donated $18.7 million to the Republican Party, including more than $14.5 million to Karl Rove’s American Crossroads and $800,000 to Restore Our Future. Simmons’s private expenditure groups gave $800,000 to Mitt Romney, $1.2 million to Rick Santorum, $1.1 million to Newt Gingrich, and $1.1 million to Rick Perry.

Clearly, Simmons donated a great deal of money to many politicians over the years and being a friend of Simmons’s seems to have financial advantages. But does this campaign money come at a price? Is it really too good to be true?

In 1997, two congressmen tried to establish a loophole for a specific type of agricultural cooperative transaction. Simmons happened to be making this type of agricultural cooperative transaction and also happened to have supported the congressmen’s campaigns. The congressional committee estimated that the loophole could have netted Simmons $60 million. President Clinton struck it down in the first ever use of the presidential line-item veto.

NL Industries, another Simmons company, also left a particularly nasty legacy. In more than a century of continuous business, NL Industries’s operations have involved magnesium, titanium, zinc, lead pigment, lead-based paint, lead smelters, lubricants, drilling equipment for oil fields, municipal, industrial waste disposal, the enrichment of uranium for nuclear weapons, and the production of projectile weapons using depleted uranium. NL Industries has left contamination across the country. According to the company’s annual report from 1994, NL Industries and its subsidiaries had “been named as a defendant, potentially responsible party, or both … in approximately 80 governmental and private actions,” with many sites and facilities on the EPA’s Superfund National Priorities List or similar state lists.

Simmons’s relationship with WCS began in 1995 when Kent Hance, a former congressman and lobbyist in Austin, approached him about a business proposition. One of Hance’s lobbying clients at the time was WCS and the company’s then president Ken Bigham was building a toxic waste dump near Andrews but was running out of money. Hance wanted Simmons to invest, and, over the years, Simmons acquired shares until he owned nearly all of the company.

Even before Simmons’s involvement, WCS made hundred of millions of dollars storing hazardous waste. But the radioactive waste disposal market held out the promise of even larger profits. The United States only had three privately-operated, low-level nuclear waste dumps and if WCS could break in to that market, they stood to make billions of dollars. However, Texas state law barred private companies from running nuclear waste dumps and with Bigham as President of WCS, they had been unable to change that.

WCS caused a scandal in 1995 when two of its lobbyists, John Birdwell and Kent Hance, were exposed trying to get an outspoken republican opponent of their radioactive waste bill to change his mind by promising $60,000 in campaign contributions in the next election. Representatives Robert Talton and Ray Allen reported the incident to the executive assistant to House Speaker Peter Laney, and the District Attorney’s office. Allen claimed he was approached by Birdwell who said of Talton, “why, they would put $60,000 in his campaign in a heartbeat if he would back off.” Allen said that “it certainly sounded like a bribe using campaign contributions…There was clearly a linkage between the campaign contributions and Robert dropping his opposition.” Hance denied everything claiming that it was a “cheap trick” to kill the bill, saying “it is an absolute lie…I don’t know what he is smoking. This guy is out of control. The bill comes up tomorrow, and he hates my client.” Hance was referring to the fact that Talton knew Bigham and had some disagreement 20 years before when Talton was on the Pasadena police force and Bigham worked for the Harris County Sheriff’s Office.

Ray Allen

Robert Talton

Bigham was fired as CEO in 1999 and unsuccessfully sued Simmons and Hance, claiming that they had misused Simmons’s “connections with several state politicians, including then Governor George W. Bush and current Governor Rick Perry, as well as several federal politicians, including Kay Bailey Hutchinson, Phil Gramm, and Orrin Hatch.” WCS executives drew up a memo detailing plans to “stir up federal politicians” for their benefit.  According to Bigham, a copy of this memo found its way to an Energy Department official who faxed it back to a WCS consultant with a note saying, “You can’t expect us to be very supportive of [WSC’s waste storage plant] with this kind of stuff going on.”

Kay Bailey Hutchinson

Phil Gramm

Orin Hatch

For WCS to be profitable they needed the state of Texas to allow them to run the nuclear waste dump and they needed to be able to store materials from other states, not just Texas. Initially the Texans Natural Resource Conservation Commission, which is now known as the Texas Commission on Environmental Quality or TCEQ, opposed the idea of a private company storing out-of-state waste in the Texas-based storage site. A lobbyist for then Governor Bush—who, as mentioned earlier, received $90,000 in campaign contributions from Simmons—visited the commission’s director. The commission reversed its position. Simmons later hired several of Bush’s aids as lobbyists. Simmons had also discussed the issue with Bush and, according to the Dallas Morning News, said, “I basically told George that I was involved in the company as a major investor and I wanted him to be aware of it in case the issue ever came up.”

An incoming general counsel in Bill Clinton’s Energy Department balked at the idea of a little-known company storing federal waste. But Senators Hutchinson, Gramm, and Richard Shelby held up the appointee’s nomination; all were beneficiaries of Simmons’s campaign financing. The Dallas Morning News obtained court documents after the dismissal of the WCS vs. DOE lawsuit in 1998, which revealed that Kent Hance asked Shelby, Hutchinson, and Gramm to block the nomination of Mary Anne Sullivan for DOE General Counsel. The three wrote a letter that was signed by 18 of the 30 Texas House members, nine of whom had received donations from top WCS supporters.

State senators M. Teel Bivins and J.E. “Buster” Brown helped pass the bill allowing the private nuclear waste dump in Texas. They had collectively garnered at least $30,000 in contributions from Simmons. The first two attempts to pass the bill failed. The night the second attempt failed in the House in the spring of 2001, Simmons reportedly called the House Speaker Pete Laney demanding an explanation.

M. Teel Bivins

J.E. Buster Brown

Peter Laney

By 2003 WCS had renewed its push to get the legislation through the Texas House and finally succeeded. In an interview with Dallas Business Journal in 2006, Simmons all but claimed to have written the law himself saying, “We first had to change the law to where a private company can own a license [to handle radioactive waste], and we did that. Then we got another law passed that said they can only issue one license. Of course, we were the only ones that applied.”

Pat Haggerty was the official who requested specifically that the compact dump be moved to Andrews County. Haggerty received campaign donations form Ken Bigham, former CEO of WCS, Chet Brooks, and Carl Parker, both former state senators and current WCS lobbyists. These donations were submitted on the same day only a few weeks prior to the El Paso meeting where Haggerty made the site suggestion.

WCS lobbyists Kent Hance, Chet Brooks, Bill Clayton, and Carl Parker (left to right)

With the legislation passed, WCS had to prove that its site in West Texas was a safe place to permanently dispose of materials that could stay radioactive for thousands of years. The success of the application hinged on one question: Was the ground beneath Andrews County dry? Local geologists believed that it was but, according to the state Water Development Board’s maps, the site came dangerously close to several groundwater deposits, including the Ogallala Aquifer, the largest underground water system in North America and possibly the world.

To determine the location of the groundwater, TCEQ assigned 8 staffers to review the application. In August of 2007 a memo to an agency manager writer by four experts—two geologists and two engineers—noted that based on the company’s own data, “Groundwater is likely to intrude into the proposed disposal unit and contact the waste” from two different water tables in the area. The team suggested that one of the two sources for groundwater “may be closer than 14 feet away” from the facility and recommended emphatically that the agency deny WCS the license.

Glen Lewis

By September, two TCEQ experts had quit over concerns about the WCS site when agency officials had ignored their recommendations. One of the members who quit was Glenn Lewis, a spokesman and public affairs officer at TCEQ who spoke, wrote, and published on behalf of the agency. In an affidavit from the WCS v. Greenwood trial, Lewis describes the events that led up to WCS receiving their license to store low-level nuclear waste. Lewis said, “I came to be the technical editor on the team responsible for reviewing the application for a low-level radioactive waste license filed by Waste Control Specialists, LLP, or WCS. Among the team members were Peter Lodde, Bruce Calder, Abel Porras, and Roger Dockery. Peter Lodde and Abel Porras are engineers, and Bruce Calder and Roger Dockery are geologists…The team spent four years reviewing the WCS application for a low level radioactive waste storage facility. A separate team reviewed WCS’s application for a byproducts license. The team was unanimously disappointed with the content and organization of the application submitted by WCS.”

According to TCEQ records obtained by the Texas Observer, WCS’s top executives, investors, and lobbyists made at least ten visits to the offices of the commission’s top two officials between July 2007 and January 2008. In 2007, agency head Glenn Shankle overruled his own experts and recommended that the commission issue the license to store the waste. A year later WCS hired Shankle as the company’s lobbyist in Austin.

Chuck McDonald

Chuck McDonald, a WCS spokesman, claimed that the water complaints were no longer relevant. “There’s been six hundred wells drilled out there now, “McDonald said. “We’ve got cored samples and test wells at every conceivable level out there. And they were able to determine unequivocally that the site is dry and doesn’t impact any underground water sources.”

In 2009, Lubbock’s NewsChannel 11 interviewed David Barry, EPA spokesperson for Region 6. When he was asked about the boundaries of the Ogallala Aquifer he replied, “Yes, the facility [WCS] does sit above the Ogallala Aquifer. It sits on the southern end of the aquifer.” Strangely, in a phone interview a few months later with D Magazine, Barry seemed to reverse his opinion saying, “It is the agency’s position that the WCS site is not above the aquifer. A portion of the site sits on top of the Ogallala Formation, a non-water-bearing part of the Ogallala.”

WCS’s position statement on the aquifer, found on savetheogallalaaquifertruths.com, claims, “In the last 18 years, WCS…[has] spent tens of millions of dollars to verify the subsurface properties of western Andrews County and, as a result, have further delineated the boundaries of the Ogallala Aquifer. As a result of the data developed from these efforts, the Texas Water Development Board (TWDB) remapped the Ogallala Aquifer in late 2006 to definitively show that the boundary does not extend to WCS’ property. The current State of Texas aquifer maps show a more accurate depiction of the proper location of the aquifer.” WCS claims its data convinced TWDB to redraw the boundaries of the Ogallala Aquifer. Yet, TWDB denies that it used WCS’ data. Leslie Anderson, the board’s spokesperson, said, “The TWDB technical staff initiated the change. The impetus for the change was work on a groundwater model that included the Pecos Valley Aquifer. Our revisions were not based of WCS’ data. The chance was based on our modeling work, past TWDB boundaries, and the U.S. Geological Survey boundary.” Anderson adds that the changes to the maps reflect “the boundary between two aquifers. When we changed the boundary for the Pecos Valley Aquifer, it also affected the boundary for the Ogallala Aquifer. The revised hydrology maps, in fact, show this.

McDonald responded to this information by saying, “The area where WCS is located is part of the Pecos Valley system. However, that does not mean that there is potable water at the site. The nearest water underneath the site is a brine formation, the Dockum, and it’s separated by 500 feet of red-bed clay. Those regions designated as aquifers don’t mean they have water underneath…If you drill a hole [at WCS], there is no water there.”

Cyrus Reed

Yet director of the Sierra Club’s Texas chapter, Cyrus Reed, is not convinced. The site, he said, is close to the Ogallala Aquifer, a major source of drinking water. The Sierra Club is suing WCS, challenging the company’s state environmental licenses because of the discovery of groundwater in some of the waste disposal site’s 520 monitoring wells. Andrews County has responded by suing the Sierra Club in what Sierra Club lawyers are claiming is a strategic lawsuit against public participation, of a SLAPP suit, which is illegal in Texas. Andrews County claims that the actions of the Sierra Club have scared off potential business yet Reed says, “We’re just acting within our rights, as any citizen can, when you feel someone is acting against yours. The Sierra Club doesn’t exist so that Andrews County can make money.”

Lewis claims that at the time WCS submitted their original application, they claimed that ground water was protected by hundreds of feet of intervening impermeable clay. “At the time of the submission of the WCS application, the TCEQ team of which I was a member,” said Lewis, “was aware, through Texas Water Development Board maps and geological records on file with TCEQ and the Texas Water Development Board that the Ogallala Aquifer was one of several aquifers in the immediate vicinity, if not directly underneath, the proposed WCS disposal site in Andrews County. The TCEQ team noted throughout its review that WCS, as applicant, refused to reference the proximity of the Ogallala Aquifer. Instead it referred to an aquifer called the OAG. The “O” in OAG means Ogallala.” Lewis explains that the TCEQ team concluded that a mere 14 feet separated the water table from the proposed storage site and found groundwater from the OAG and Dockum water tables impinging on WCS’s site. Thus, the team concluded that WCS’s license should not be issued because, “the geology of the site was incompatible with protecting the environment from radiation exposure.”

At the time Susan Jablonski became the director of the Radioactive Materials Division. Lewis claimed that Ms. Jablonski helped draft the legislation that made WCS the only company that met the qualifications to submit an application to import and bury radioactive waste in Texas. On August 14, 2007, Lewis wrote a memo to Jablonski formally advising TCEQ management of the fatal flaw in the application i.e. the geology. The memorandum stated that, “Groundwater is likely to intrude into the proposed disposal units and contact the waste from either or both of two water tables near the proposed facility. WCS has failed to successfully use numerical modeling to predict the future location of one water table that is expected to intrude into radioactive waste.” Therefore, the memorandum concluded that WCS “has not demonstrated that the site is suitable for near-surface disposal of radioactive waste…technical staff recommends denial of license issuance.”

According to the affidavit of Glenn Lewis, shortly after delivering the memo, Dan Eden and Susan Jablonski officially informed the team the Executive Director Glenn Shankle had decided to support issuance of a license to WCS. Lewis resigned rather than continue to work on this project along with Patricia Bobeck and Encarnacion Serna. Lewis stated, “In late October, Susan Jablonski acknowledged in writing to senior management in the agency that faulty site conditions exist and that they cannot be corrected through license conditions. What is baffling is that Ms. Jablonski—at the same time acknowledging the inherent impossibility of correcting a bad application—still pledged to support whatever nonsensical recommendation her boss may decide to pursue.”

Due to all the issues with suspected groundwater at the Andrews County site, it seems simple enough that the site should be moved to a new location. However, the Andrews County site was important for one main reason: its approximation to the URENCO USA plant in Eunice, NM. URENCO USA enriches uranium and produces large quantities of nuclear waste. By having the sites across the border from each other, it guaranteed that URENCO USA would store its waste at WCS’s facility. URENCO USA is a subsidiary of the foreign corporation, URENO, which partnered with Louisiana Energy Services (LES) to receive the license to open the plant. In 2006, the Louisiana-based energy company received the license for its uranium enrichment plant in New Mexico, while WCS was still lobbying for their own licenses. If the two managed to be located just across the New Mexico/Texas border from each other, URENCO USA could save millions transporting nuclear waste and WCS could make a fortune storing their waste.

After WCS received its license, it lobbied hard to expand its market, which the state had restricted to waste from the federal government, Texas, and Vermont. In 2011, the legislature passed a bill that would allow 36 states to dump low-level waste in Texas. Simmons had contributed to nearly three-quarters of the legislators and 83 percent of voted for the bill. Simmons also contributed half a million dollars to state politicians outside of Texas since 2000—nearly all of them in states with nuclear power plants but without nuclear waste disposal facilities. When the dump was opened to 36 states, Valhi, WCS’s parent company, saw a stock jump of 62 percent and Simmons saw his net worth jump from $5 billion to $9.6 billion in a single year.

Tom “Smity” Smith, the Texas director of Public Citizen, said that opening the site to waste from other states could create a capacity problem. “We may not have enough space for our waste—for Texas waste and Vermont waste,” said Smith. He also cited concerns about the increased number of trucks carrying hazardous materials on Texas roads as well as the potential impact on local groundwater if the wastes migrated.

The waste disposal site in Andrews County is divided into two sections. One section is slated for commercial waste and is permitted to hold 26 Olympic size swimming pools worth of the waste. The other section is the federal waste repository and is ten times that size. Scheduled for completion this year, Simmons and WCS now have to figure out how to fill the space.

When the Nuclear Regulatory Commission in 2006 began to consider allowing private low-level nuclear waste dumps like WCS to accept depleted uranium from nuclear power plants and weapons sites, a higher grade of waste, a multibillion-dollar opportunity arose. Simmons’s company lobbied the Obama administration, spending $885,000 from 2009 to 2011, according to Bloomberg­. In 2010, when a federal commission was tasked with finding an alternate storage site after the Yucca Mountain project was sidelined, WCS executives invited the commission members to visit Andrews County.

Chuck McDonald says that WCS has not lobbied in connection with the NRC deliberations. Yet WCS and Simmons stand to make a great deal of money if higher-level waste is allowed to be stored at locations like the one in Andrews Texas.

Recently, Republican Drew Darby from San Angelo has presented a new bill to the Texas House that will limit a citizen’s ability to challenge WCS. The legislation limits out of state citizens and groups from challenging WCS, even though Eunice, New Mexico is only a few miles away from the site. The Sierra Club is challenging this new legislation. “They (citizen of New Mexico) are not any less affected because they’re on the other side of the border,” said Marisa Perales, an Austin attorney who represents the Sierra Club. “I just can’t imagine what the justification is.” This contested bill also allows WCS to begin receiving even hotter waste. While currently restricted to 120,000 curries, which is a measure of radioactivity, this bill would allow WCS to receive 220,000 curries, a profitable but possibly dangerous venture. Interestingly enough, Drew Darby has received $20,000 from WCS’s Super PAC.

A family-related court case gave a glimpse inside Simmons’s operations. Simmons transferred money regularly among his companies and the trust while also withdrawing money for contributions to individual politicians. This trust controlled three political action committees (PACs) and supplied most of the funding for a fourth. Simmons admitted in court to donating money in his daughters’ names and forging their signatures for authorization when he met his own legal limit for contributions. “I thought it was right to sign the names because it would help the Helms campaign. It was a mistake, wrong and bad judgment,” he testified. The court case involving Simmons’s two estranged daughters, the oldest from his first two marriages, could have been avoided with mediation but talks broke off a year before the trial began. Serena Connelly, one of the daughters who did not sue her father, objected to the political contributions in a letter filed with the court, writing: “I believe this practice to be highly unethical… I do not care what you do with your money. I do care what you do with my name.”

The nuclear waste dump in West Texas has grown incrementally in size and the amount of radiation it will store. Even if the federal repository at Yucca Mountain had opened, it would already be filled with waste from nuclear reactors and federal weapons programs. Nuclear proponents and environmentalists agree there is an urgent need for safe storage of radioactive materials. Harold Simmons is an octogenarian who will not live to see the consequences of his company’s efforts to make money storing nuclear wastes. But generations from now, Texans and other Americans will be living with them.

A federal appeals court ruling Tuesday that the Environmental Protection Agency has the authority to rescind a dumping permit three years after it was granted by the Army Corps of Engineers drew cheers from environmentalists.

The decision reverses a lower court’s ruling that would [...]]]> Merits of Case Must Now Be Decided

Mingo Logan

A federal appeals court ruling Tuesday that the Environmental Protection Agency has the authority to rescind a dumping permit three years after it was granted by the Army Corps of Engineers drew cheers from environmentalists.

The decision reverses a lower court’s ruling that would have allowed Mingo Logan Coal Co. to proceed with plans for one of the nation’s largest mountaintop mines in southern West Virginia. Mingo Logan is a subsidiary of Arch Coal, the second largest producer of fossil fuel in the country.

But the case is far from over. The decision, written by Judge Karen LeCraft Henderson, returns the case to District Court Judge Amy Berman Jackson. When Jackson sided with Arch Coal last year, she ruled on the company’s argument that the EPA lacked authority to rescind the permit but she must now rule on its contention that the agency was “arbitrary and capricious” in its arguments.

Judge Amy Berman Jackson

That might seem an easier hurdle for the EPA to clear but environmental attorneys say not necessarily. In the case decided this week, the circuit court ruled on whether the EPA has the authority to rescind a permit once granted under any circumstances. Now the district court will look at the specifics of this case, an attorney representing one of the environmental groups who spoke anonymously so he could talk more freely, said.

“Now, it’s going to be decided on the facts of this particular case,” the attorney said. “Whether the impact of this massive surface mine that would fill six miles of pristine headwater streams would indeed have “an unacceptable and adverse” effect on wildlife, as the Clean Water Act requires.

The case centers on Spruce No. 1 mine in Logan County West Va. The EPA said in its brief that the project would disturb 3.5 square miles of earth and spew nearly 3 billion cubic feet of dirt and rubble into six miles of mountain streams. Environmentalists say they are some of the last remaining pristine streams in southern West Virginia, which has been ravaged by coal mining, particularly mountaintop mining.

The legal question before the court was whether EPA has the authority to veto a permit after it’s granted by the Army Corps of Engineers. The EPA argued that the Clean Water Act grants it such authority and that it has used it twice in the past, but Mingo Logan said the law did not allow EPA to veto a permit once granted. A ruling in favor of the EPA, Mingo Logan said, would bestow a broad new power on the agency, creating uncertainty for industry and stifling economic growth.

But the U.S. Circuit Court for the District of Columbia disagreed, citing section 404 (c) of the Clean Water Act and its use of “whenever” to describe when the agency may withdraw a permit.

“Using the expansive conjunction, “whenever,” the Congress made plain its intent to grant the Administrator authority to prohibit/deny/restrict/withdraw a specification at any  time.”

Jim Sconyers, chair of the West Virginia Chapter of the Sierra Club, said although the fight isn’t over yet, the group is “ecstatic” at the news.

“That’s great,” Sconyers said. “The Corps can’t just keep letting companies off the hook when they think it’s OK to bury our pristine mountain streams in billions of tons of mining spoil.”

Arch Coal issued a brief statement. “We’re disappointed in the decision,” Kim Link, a company spokeswoman said in an email. “The case will now go back to the district court for a decision on the merits.”

The National Mining Association said the decision will have a chilling effect on industry.

“This ruling is like a cloud of uncertainty that now hangs over not only the coal industry but all the industries – homebuilding, construction, road-building – that require a permit from the EPA,” Luke Popovich said. “If EPA can withdraw a permit, then it will discourage investment.”

The high-profile case has been closely monitored by industry and environmentalists. The Chamber of Commerce, 34 industry trade groups and seven environmental organizations have filed friend-of-the-court briefs in the case.

epa-logo

Mountaintop mining is the controversial process in which coal companies dynamite off the tops of mountains to get to the coal underneath. At the start of the process, skyline trees – diverse forests of maples, poplars, oaks and other species – are leveled. Then the companies blast away up to 1,100 vertical feet of mountainside, according to the U.S. Office of Surface Mining. The debris is dumped in nearby hollows and streams.

The Obama Administration is blocking a comprehensive environmental study on the impact of exporting massive quantities of liquefied natural gas, or LNG, on the grounds that new gas drilling induced by the exports is not “reasonably foreseeable.”

Meanwhile, the U.S. Department of Energy is resisting [...]]]>

LNG tanker at sea (Photo courtesy of FERC)

The Obama Administration is blocking a comprehensive environmental study on the impact of exporting massive quantities of liquefied natural gas, or LNG, on the grounds that new gas drilling induced by the exports is not “reasonably foreseeable.”

Meanwhile, the U.S. Department of Energy is resisting calls by Dow Chemical and other manufacturers for a more clearly defined and transparent DOE process for determining whether proposed LNG export projects serve the “public interest.”

Both the DOE and the Federal Energy Regulatory Commission face mounting pressure to evaluate the economic and environmental consequences of licensing LNG export facilities. Since the agencies licensed an LNG export terminal in Sabine Pass, La., in 2011, 19 other applicants have lined up with licensing requests.

Sensitive to the potentially huge cumulative impact those projects could have on the U.S. economy, the two agencies suspended approvals pending a two-part economic study by the Energy Information Agency and a private contractor, NERA Economic Consulting.

Christopher Smith

Both analyses are now finished, and Christopher Smith, a deputy assistant secretary of DOE for oil and gas, testified March 19 that LNG export applications would be considered on a “case-by-case basis” in light of their economic conclusions, which have been sharply criticized.

Consideration of the toll LNG exports have on the environment is still up in the air. “I will be unable to comment today on … the appropriate scope of environmental review,” Smith added.

Independent studies predict that unfettered LNG exports will drive up the domestic price of natural gas, spur a boom in fracking shale formations and cause a major transfer or wealth from consumers and energy-dependent industries to the natural gas industry and its investors.

While NERA, the DOE’s private contractor, has not disputed those points, its December 2012 report asserts that aggressive LNG exporting would be a net positive for the U.S. economy. “Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased,” NERA wrote in its policy-driving report.

Response to NERA’s conclusions have been broad and intense. Potential LNG exporters applaud it, but many of the 188,000 comments it triggered were negative.

For example, John Detwiler, an engineer from Pittsburgh, wrote that none of NERA’s scenarios “take a realistic view of the swings in gas supply, demand and pricing in the real world.” Detwiler also charged that NERA has a “consistent public record of advocacy against environmental protections and promoting denial of climate change” and that its lead author, W. David Montgomery, has publicly opposed carbon emission controls and DOE investments in green energy.

While NERA concluded that LNG exports would slightly boost gross domestic product, researchers from Purdue University found the exports would slightly depress GDP. But the two conclusions on GDP were not far apart and were not nearly as important, the Purdue team said, as the wealth-shifting and environmental effects of LNG exports.

“Using the natural gas in the U.S. is more advantageous than exports, both economically and environmentally,” the Purdue report concluded.

While the DOE has listed the environment as one factor it may consider when evaluating the “public interest” of a proposed LNG export project, FERC takes the lead in applying the National Environmental Policy Act (NEPA). In February, FERC granted Cheniere Energy authority to build the Creole Trail Pipeline to connect to its already-approved LNG export terminal in Sabine Pass, La.

The Sierra Club is suing to block the project, alleging that FERC’s failure to require a comprehensive environmental impact statement, or EIS, violates the NEPA law. It argues that FERC’s stance that LNG export-induced gas drilling is not “reasonably foreseeable” collapses in the face of detailed models prepared by the Energy Information Agency. The EIA predicts that an average of 63 percent of exported LNG will come from new gas drilling. Deloitte and other private analysts agree that LNG exports and new gas drilling go hand in hand.

The NEPA law requires a formal EIS whenever there is a “substantial question” about a project’s potential to harm the environment. Since export-induced gas drilling is a given and the preferred modern method of drilling — high-volume hydrofracking — has a controversial environmental record, the FERC staff had no authority to waive a formal EIS, the Sierra Club argument goes.

In fact, the environmental advocacy group claims an LNG-export induced fracking boom would be a calamity for the nation’s water and air quality, and it would exacerbate climate change.

Cheniere responded to the Sierra Club legal challenge April 9, writing: FERC “has previously explained that ‘projections of the locations and amount of future (gas drilling) production would be very speculative if attempted on the basis of’ the Creole Trail Expansion Project. Sierra Club’s mere disagreement with the commission does not entitle it to a stay.”

Cheniere is in favored position. It is the only company recently licensed by FERC and the DOE to export LNG to countries that do not have a free trade agreement with the United States (aside from a small facility in Alaska that has been exporting to Japan for decades). Virtually all of the world’s leading LNG importers are non-free trade agreement countries, including Japan, China, India and most of Europe. (Licenses to export to countries with a free trade agreement with the U.S. are routinely granted and are far less valuable.)

Cheniere, which plans to complete export terminal construction at its Sabine Pass facility by early 2017, recently signed a contract to deliver LNG to the United Kingdom.

Located on the Sabine River on the Texas-Louisiana border, the terminal is authorized to export 2.2 billion cubic feet of gas per day. The 19 pending non-FTA export applications seek a combined 26 bcfd, nearly half of the existing domestic gas supply.

The DOE has divided the applications into two groups, prioritizing according to when they were filed and how much success they’ve had lining up financing and customers. Of the nine projects with the best chance, one is in Maryland, two are in Oregon and six others are in Texas or Louisiana on the Gulf Coast.

The applicants expect FERC and DOE to apply the same licensing standards to them that they applied to Cheniere. “We’re pretty confident that we deserve these permits,” Thomas Farrell, chairman and CEO of Dominion Resources Inc., told Jim Cramer, host of CNBC’s “Mad Money” April 2. Dominion has signed deals to export Marcellus and Utica shale gas to India and China from its planned Cove Point terminal in the Chesapeake Bay.

Although FERC dismisses the likelihood that an LNG exporter might stimulate new gas drilling, Dominion’s license application touts the project’s power to do precisely that. “The most basic benefit of the proposed LNG exports will be to encourage and support increased domestic production of natural gas,” Dominion says in its FERC application.

U.S. Rep. Steny H. Hoyer

The Obama Administration can count on intense lobbying and political pressure to approve LNG export projects like Dominion’s. In the case of the Cove Point project, U.S. Rep. Steny H. Hoyer, a Maryland Democrat and the House minority whip, has voiced support.

Meanwhile, Japan and other key U.S. trading partners are eager to tear down the regulatory barriers that prevent them from importing America’s relatively cheap shale gas.

The market price for natural gas in the U.S. has been fluctuating around $3.50 per million cubic feet, compared to around $15 mcf in Japan. Even allowing for shipping and processing costs, that leaves room for wide profit margins.

Aside from the gas industry’s profit motive, the other incentives to export LNG relate to its potential contribution to the U.S. balance of trade and to trade relations with allies. “It would be a major mistake not to do it in terms of U.S.-Japanese relations,” Dennis Blair, Obama’s national intelligence director from 2009 to 2010, told Platt’s earlier this month. “History shows that every time you try to set government policy against market forces in the interest of near term popularity, you end up making your lift that much heavier in the long run.”

But approving all pending LNG export applications could hurt U.S. consumers and manufacturers by causing domestic natural gas prices to spike.

Dennis Blair

Purdue researchers Wallace E. Tyner and Kemal Sarica calculated that LNG exports totaling 6 bcfd would push domestic wellhead gas prices up 16 percent above the no-export case by 2035. Exports of 18 bcfd would drive a 47 percent increase by that year.

Both the EIA and NERA, the DOE’s economic consultant, predicted a similar effect but found smaller jumps in domestic prices. On the other hand, Charles River Associates found that unlimited LNG exports could triple domestic gas prices. That study was sponsored by Dow Chemical, a leader of America’s Energy Advantage, a group of prominent manufacturers who rely on low-cost energy. Dow uses gas to run its plants, and gas is a raw material for many of its plastics and chemicals. As the shale gas drilling boom has lowered domestic prices, Dow has launched plans to spend $4 billion on new chemical plants along the Texas coast.

Andrew Liveris

Andrew Liveris, Dow’s CEO, argues that high-margin, labor-intensive domestic manufacturing is a far better use for domestic gas than simply exporting it wholesale to foreign manufacturing rivals. “America’s natural gas bounty is more than a simple commodity. It’s a once-in-a-generation opportunity for America to export advanced products, not just BTUs,” he said in testimony at a Senate committee hearing in February. Liveris said he doesn’t categorically oppose LNG exports — only unchecked exports that threaten to knock the economy out of whack by devouring domestic supply. He acknowledges that banning LNG exports entirely could invite shortages too because gas drillers might have dangerously little incentive to drill.

Liveris has tried to prod the DOE to be more forthcoming on how it strikes the right balance when it rules on export applications. Last October, Sen. Ron Wyden, chairman of the Senate Energy and Natural Resources Committee, tried to pin down the DOE on that exact point. He wrote the agency asking for “an all-inclusive description of the factors” DOE considers in ruling on an LNG export application. Wyden has said the U.S. needs to seek a “sweet spot” in LNG exports, allowing enough to spur drilling and gas supply, but not enough to create export-driven supply shortages.

Oil and gas giants that have invested heavily in U.S. shale gas plays, including ExxonMobil and Royal Dutch Shell, tend to favor unlimited LNG exports. They say the gas drilling boom could die if exports aren’t allowed to push up domestic prices.

Under the Natural Gas Act, the DOE is legally obligated to approve LNG exports deemed to be in the “public interest.” The agency construes that law to mean that exports are presumed to be in the public interest unless opponents successfully argue that they’re not. So the DOE relies on advocates and opponents of specific projects to set the terms of the “public interest” debate.

Those “narrow and vague” criteria are dangerously inadequate, given the stakes, Liveris and the Sierra Club now argue. They and others are campaigning for the agency to launch a rule-making process that establishes what Liveris describes as “uniform and actionable criteria with measurable metrics” on whether a given LNG export application meets the “public interest” test.

But comments by the DOE’s Smith in March don’t suggest that any such initiative is in the works. He said the agency is reviewing the NERA report and the comments it stimulated, and it “will address those comments when it issues decisions on the applications.”

Meanwhile, another factor could emerge as a wild card that completely alters the LNG exports debate.

Leaders of Trans-Pacific Partnership Member States

A proposed new free trade agreement, the Trans-Pacific Partnership, could strip federal regulators of their obligation to conduct a “public interest” test on LNG exports to future TPP partners, including Japan.

That’s because a 1992 amendment to the Natural Gas Act created a giant loophole in the “public interest” test. It requires that any LNG exports or imports with a free trade partner be approved automatically on the grounds that they are presumed to be in the public interest. The rule was passed to address an urgent U.S. need two decades ago: gas imports from Canada. But the amendment’s final language was expanded at the last minute and without debate to include gas exports as well.

Negotiations for the new Pacific trade deal are mostly secret. But several fundamental provisions that are known are deeply troubling to Ilana Solomon, a trade representative at the Sierra Club. The TPP would apply to LNG trading, and the pact’s membership would be open to additional countries after its initial ratification. “Anyone can jump on, so it’s a potentially ever-expanding web that gets automatic licensing (for LNG trade with the U.S),” Solomon said. “It will become illegal to deny a licensing.”

Ilana Solomon

The principle beneficiary of the loophole would be Japan, which relies more heavily than ever on natural gas after shutting down its nuclear power industry in the wake of the Fukushima nuclear meltdown in 2011. Japan, which operates more LNG import terminals than any other country in world, said in March that it wants to join the TPP. Because Japan currently pays three or four times the U.S. market price for its natural gas, investors see a huge opportunity to arbitrage the gigantic price gap between the two countries. That arbitrage potential is one reason investors — banking on a relaxed approach to LNG trade licensing — are committing billions of dollars to build new LNG export terminals in the U.S.

Solomon said President Obama has set October as his target for completion of TPP negotiations. She said the next set of negotiations is scheduled for Peru in May. Further talks may be held in Canada in July and Indonesia in October, she said. At that point, the president might well seek “fast-track” treatment in Congress for the trade deal that administration negotiators have fashioned, Solomon added. If the president is successful, Congress would get an up-or-down vote on the TPP, but no opportunity to fine-tune it.

Still, the rush by investors to fund LNG export projects could slow down at any time for multiple reasons:

Many experts note alarmingly high well-depletion rates for fracked shale formations, a potentially ominous sign for those counting on nearly unlimited and cheap supplies of domestic gas.

Foreign demand for cheaper U.S. gas may not last indefinitely.

Environmental restrictions on fracking or even taxation of exports are possible.

Blair, Obama’s former national intelligence director, has argued for such a tax to fund proper regulation of gas drilling, though he concedes it will be a tough sell to industry and Congress.

Ernest Moniz

Ernest Moniz, the MIT nuclear physics professor Obama has nominated to head the DOE, has promised to weigh carefully all LNG export applications. Moniz views natural gas as a bridge fuel “over the next couple of decades” to cleaner sources of energy, and he has acknowledged the need to stringently regulate gas drilling.

A 2011 MIT study on natural gas that Moniz co-authored hinted that the existing patchwork of state regulation for fracking shale formations has fallen short and that industry best-practices need to be applied across all shale plays.

But the report stopped short of advocating federal regulation of gas drilling — an untouchable third rail issue for many in the energy industry.

A standing-room only crowd packed a federal appeals courtroom in D.C. Thursday morning to hear arguments over whether the Environmental Protection Agency may rescind a dumping permit after it has been granted by the Army Corps of Engineers.

The high-profile case is being closely [...]]]>

Mountain Laurel Complex in W.V. image from Google Earth

A standing-room only crowd packed a federal appeals courtroom in D.C. Thursday morning to hear arguments over whether the Environmental Protection Agency may rescind a dumping permit after it has been granted by the Army Corps of Engineers.

The high-profile case is being closely monitored by industry and the environmental community. The Chamber of Commerce, 34 industry trade groups and seven environmental organizations have filed friend-of-the-court briefs in the case. Mingo Logan Coal Co., a subsidiary of Arch Coal, the nation’s second largest producer of the fossil fuel, is represented by four lawyers from Hunton & Williams, a powerful law and lobby firm.

At issue is the proposed Spruce No. 1 mine in Logan County, West Va., which would be one of the largest mountaintop mining sites in the country. The EPA says in its brief to the U.S. Circuit Court for the District of Columbia that the project would disturb 3.5 square miles of earth and spew nearly 3 billion cubic feet of dirt and rubble into seven miles of mountain streams.

Judge Thomas B. Griffith

Both sides faced tough questioning from all three judges. Matthew Littleton, a Justice Department lawyer representing the EPA, was only a few words into his presentation when Judge Thomas B. Griffith cut him off. Griffith, joined by judges Karen LeCraft Henderson and Brett M. Cavanaugh peppered Littleton with questions and argued the case against the EPA.

“The Army Corps of Engineers gets to issue permits …” Griffith said. “That’s the central feature of the compromise Congress reached,” when it passed the Clean Water Act.

Griffith asked whether allowing the EPA to rescind the permit was granting the agency “authority that the statute doesn’t seem to allow.”

When his turn came, Robert Rolfe, an attorney for Mingo Logan, was also pummeled with questions from the judges, who argued the case against the coal company.

Mingo Logan says that the permitting process for the Spruce No. 1 mine took 10 years and involved dozens of state and federal regulators. The EPA could have objected to the project at any time before the permit was granted, Mingo Logan argues, but Congress did not give the EPA the authority to veto a permit once issued by the Corps.

Robert Rolfe

But Griffith speculated that Congress intended to give the EPA the power to rescind permits. “What people may have thought,” Griffith said, “is that the EPA might have been more sensitive to environmental concerns and so they gave the EPA a backstop.”

Cavanaugh also questioned Mingo Logan’s interpretation of the law. “I don’t see how anyone can have a permit,” Cavanaugh said, “and assume it’s going to stay in place,” no matter what.

Mountaintop mining is the controversial process in which coal companies dynamite off the tops of mountains to get to the coal underneath. At the start of the process, skyline trees – diverse forests of maples, poplars, oaks and other species – are leveled. Then the companies blast away up to 1,100 vertical feet of mountainside, according to the U.S. Office of Surface Mining. The debris is dumped in nearby hollows and streams.

Studies have linked higher rates of cancer and birth defects to mountaintop mining. Blasting has destroyed the foundations of homes throughout Appalachia and created dust that covers homes, inside and out. Many once clear-running streams have been polluted, and residents say coal companies have blocked off hollows and streams that used to be used for recreation.

Brett M. Cavanaugh

“The pond behind [my] friend’s house – like a stream – is black as coffee at times,” Brandon Nida, a community activist with Blair Mountain Heritage Alliance, says. “The coal companies kind of own this part of the country. There’s an ever-pervasive presence of the coal industry. They have security guards running up and down the roads.”
The Army Corps of Engineers, with input from the EPA, granted a permit for the Spruce No. 1 mine to Mingo Logan Coal in 2007 during the Bush administration. In Jan. 2011, the EPA announced it was going ahead with plans to veto the permit. The agency says its decision to take the rare step of rescinding the permit after it was issued was based on “new scientific evidence” that the mine would pollute waterways downstream from the project, destroying water quality and ecosystems and killing fish and other wildlife.

The veto would ban the dumping of waste material from the mine into Pigeon Roost Branch and Oldhouse Branch and their tributaries, effectively shutting down 88 percent of the project, according to the brief filed with the circuit court by Mingo Logan. The EPA has allowed the company to continue dumping into the Seng Camp Creek but the rest of the project has been halted, pending the outcome of the case.

“Pigeon Roost Branch and Oldhouse Branch, and their tributaries are ‘some of the last, rare and important high quality streams in the watershed’ so their destruction would constitute an adverse impact ‘that the aquatic ecosystem cannot afford,’” the EPA says in its brief, quoting from an earlier agency document.

Mingo Logan argues the EPA could have taken steps to kill the project during the 10 years it took to win approval. “EPA was involved every step of the way,” Mingo Logan argues in its brief. To attempt to veto the permit four years after it was granted is “patently unreasonable.”

The U.S. District Court for the District of Columbia sided with Mingo Logan last March. In a sharply worded opinion, U.S. District Court Judge Amy Berman Jackson scolded the EPA for “magical thinking” in trying to rescind a permit four years after it was granted.

Industry representatives argue in amicus briefs to the appellate court that allowing the EPA to remove the Mingo Logan permit will create uncertainty, hinder investments and stifle economic growth.

The EPA says in its brief that such concerns are unfounded. The agency says it has rescinded only two other permits after they were granted in the 40 years since the Clean Water Act created the permitting process. It cites the low number as proof that it acts with restraint.

In 1981, the EPA rescinded a permit for North Miami to fill wetlands for a park after the agency learned the city was using garbage, according to the EPA’s brief. In 1992, the agency rescinded a permit to James City, Va., after an appeals court overturned a district court ruling ordering the Corps to grant the permit, the brief says. The EPA claims its authority under section 404(c) of the Clean Water Act.

“Amici contend that this [c]ourt’s approval of EPA’s 33-year-old interpretation of [section] 404(c) will suddenly and significantly harm the entire United States economy. But EPA has exercised its post-permit authority sparingly over the past four decades,” the agency writes. “Like Mingo Logan, the Chamber [of Commerce] fails to recognize that absolute certainty for polluters was not the motivating goal behind the Clean Water Act.”

The Justice Department and the EPA declined comment on Thursday’s hearing citing the pending litigation. Mingo Logan said in a prepared statement, “Today we continued to defend the permit for the Spruce No. 1 mine that was granted by the U.S. Army Corps of Engineers six years ago.

Oil and gas companies are funding research at major universities to counter environmental objections to shale gas drilling. President Obama is considering appointing a key beneficially of industry monies at MIT as his new energy secretary.

The oil and gas industry has campaigned hard and paid [...]]]>

Ernes Moniz, Obama’s top candidate for Energy Secretary

Oil and gas companies are funding research at major universities to counter environmental objections to shale gas drilling. President Obama is considering appointing a key beneficially of industry monies at MIT as his new energy secretary.

The oil and gas industry has campaigned hard and paid handsomely for academic support for its media talking points.

Those efforts to justify and promote aggressive drilling for natural gas in shale formations recently erupted in scandal at three highly-regarded universities: Penn State University, the University of Texas at Austin and the State University of New York at Buffalo. Each time, critics of industry-friendly research ferreted out the university’s failure to fully disclose industry ties and ran to the media, which reliably produced ‘gotcha’ stories and nicknamed the practice “Frackademia.”

But those stories ignored or barely mentioned the energy industry’s pervasive influence at an even more prestigious school: the Massachusetts Institute of Technology in Boston. MIT’s brand as a reliable source of peerless science remains intact.

Even the ombudsman at The New York Times has been dazzled. When the newspaper’s internal critic took issue with an investigative reporter’s probe of the economic staying power of the shale gas boom in July 2011, he scolded the Times reporter for failing to incorporate more optimistic views, particularly MIT’s. The school’s motives were never questioned.

But a long-running squabble between MIT and a pair of professors from Cornell University has helped pull back the veil — even as Reuters reports that one of the school’s leading energy experts is President Obama’s favorite to become the next U.S. Secretary of Energy.

That professor, nuclear physicist Ernest Moniz, is director of the MIT Energy Initiative, a research arm that has received more than $125 million in pledges from the oil and gas industry since 2006, according to the Public Accountability Initiative, a non-profit that blew the whistle on UBuffalo.

The four “founding members” of MITEI — BP, Shell, Italy’s ENI and Saudi Aramco — each agreed to pay $25 million over five years for the right to help manage research projects, maintain an office at MITEI headquarters and “place a researcher in a participating MIT faculty member’s lab,” according to the MITEI website. Ten “sustaining members” commit $5 million each for fewer rights, but still get seats on MITEI’s executive committee and governing board.

A host of others energy interests, including the Clean Skies Foundation, have participated as well, funding and shaping MIT research.

Clean Skies was founded and chaired by Aubrey McClendon, CEO of Chesapeake Energy Corp., the nation’s No. 2 gas producer. At the time Clean Skies officials called on MIT with a research idea, Chesapeake had placed a large bet on high-volume hydraulic fracturing of shale formations, or fracking, by aggressively leasing land in shale regions.

The research produced by the MIT-Clean Skies collaboration was a May 2011 report called “The Future of Natural Gas.” In its acknowledgements, the Moniz team wrote: “Discussions with the (Clean Skies) Foundation led to the conclusion that an integrative study on the future of natural gas in a carbon-constrained world could contribute to the energy debate in an important way, and the Foundation stepped forward as the major sponsor.”

Other acknowledged major funders of the study included the Hess Corp., Agencia Nacional de Hidrocarburos of Colombia, the Gas Technology Institute and Exelon.

“The Future of Natural Gas” was a magnum opus that crowned natural gas as the “bridge to a low-carbon future.” It cited vast new supplies of cheap, clean-burning gas from shale drilling and recommended a switch from coal to natural gas in U.S. electric power generation, industry and transportation.

Anthony Ingraffea

But just weeks before the planned rollout of the MIT report, Robert Howarth and Anthony Ingraffea of Cornell published (with Renee Santoro) a peer-reviewed study that suggested that natural gas might aggravate climate change as much or more than coal — challenging the MIT report’s very thesis.

The Cornell team, financed by a mid-sized Ithaca, N.Y., foundation rather than energy giants, pointed to alarming methane leaks at hydraulically fractured shale gas wells. They concluded that the leaks are hard to quantify but potentially very significant.

The Howarth team members didn’t measure methane leakage themselves. They acknowledged the shortcomings of their data and urged other independent scientists to get busy measuring methane leaks from gas drilling well pads, compressor stations and the often-antiquated pipelines that carry gas to the end user. “The quality of the data is terrible because the industry is very secretive and not very honest,” Howarth said.

Robert Howarth

The Cornell study drew worldwide media attention and helped turn Howarth and Ingraffea into rock stars in the anti-fracking movement. Time magazine named both as “People that Mattered” in 2011, along with anti-fracking activist/actor Mark Ruffalo.

The drilling industry’s response was swift and multi-pronged.

Within days, the Clean Skies Foundation issued a rebuttal. The Moniz team quickly added an appendix to “The Future of Natural Gas” that took issue with several of the Cornell team’s assumptions. But the MIT report did acknowledge the relevance of Howarth’s main question, and it went so far as to recommend: “The Environmental Protection Agency and the U.S. Department of Energy should co-lead a new effort to review, and update as appropriate, the methane emission factors associated with natural gas production, transmission, storage and distribution.”

Meanwhile, energy industry groups pilloried Howarth and Ingraffea, accusing them of producing “garbage science” and worse.

Before long, a Google search of Howarth’s name yielded — ahead any actual search results — a paid advertisement from the America’s Natural Gas Alliance entitled “Howarth: A Credibility Gap.” Its subtitle read: “Research on methane emissions from natural gas discredited by scientific community.”

However, the latest studies based on actual measurements of methane leaks at specific gas drilling sites have tended to support — not discredit — Howarth’s thesis.

For example, joint research by the National Oceanic and Atmospheric Administration and the University of Colorado at Boulder published in January measured unexpectedly high methane leakage from natural gas production sites in Colorado and Utah. Those results were far too narrow to prove the Howarth team correct, but they kept the door ajar on the fundamental question it had raised.

America’s Natural Gas Alliance, the American Petroleum Institute and pro-industry flacks and academics had been working to slam that door shut by dismissing, even demeaning, the Howarth team’s scholarship.

Henry D. Jacoby

Even Henry D. Jacoby, one of three co-chairs (with Moniz and Anthony J.M. Meggs) of MIT’s “The Future of Natural Gas” report, told Nature.com in 2011 that the Cornell study was “very weak.”

Howarth and Ingraffea fired back at MIT for relying so heavily on the Clean Skies Foundation and other energy industry players for funding their gas study and granting them seats on the study’s advisory board.

Ingraffea told the DCBureau in January that the MIT report reminded him of the industry-funded advocacy that recently stained academic reputations at Penn State, UTexas and UBuffalo. MIT, like the other three, had touted gas industry talking points.

The Penn State report promoted shale gas as an economic dynamo and recommended against a state tax on drillers that is customary in other gas drilling states.

The UTexas report dismissed claims that fracking shale contaminates drinking water supplies.

The UBuffalo report concluded that shale gas drillers were getting more careful and efficient under the watchful eye of state regulators.

MIT’s report touted shale gas as a huge economic opportunity and argued that switching to it for electric power generation in particular would help slow global warming.

Asked what differentiated the industry collaboration at MIT from the collaborations at the three schools that suffered “frackademia” PR hits, Ingraffea said, “They’re doing the same thing.”

Asked why MIT’s reputation hasn’t been similarly stained, he added: “Because they’re MIT. MIT has the most prestigious reputation of any technical institution probably in the world. To accuse MIT of some sort of impropriety takes a lot of courage.”

Howarth added: “I received my Ph.D. from MIT and have a huge amount of respect still for the institution. However, their industry-funded work on natural gas has been extremely biased since the start. At best, it represents shoddy scholarship, but often comes closely to plain out advocacy for the industry standpoint. This has happened under Moniz’s leadership, which should make him unacceptable for the Department of Energy position.”

Meanwhile, critics of Howarth and Ingraffea have noted that their study was largely funded by the Park Foundation in Ithaca, N.Y., home of Cornell. Park funds various groups that have raised questions about fracking. DCBureau.org receives funding from the Park Foundation. Details on Park’s spending are made public, while industry funding of academia typically is not. Few disclose as openly as MIT.

Partnerships with various industries are common in academia. It’s become accepted practice to conduct research paid for by sources that have a stake in its conclusions. In an era of constrained government support, universities often solicit industry sponsorship for important research projects. Several industries have calculated that the investment is worth it: energy, pharmaceuticals, finance and tobacco, to name a few.

MIT officials declined to discuss on the record their partnership with the energy industry. But most observers agree that a legitimate argument can be made that a close working relationship is crucial to understanding the nuts and bolts of oil, gas, coal and nuclear. For example, obtaining the methane emission data from well sites that Howarth and Ingraffea call for — because they don’t have it — requires some industry cooperation.

Kevin Connor

Kevin Connor, director of the Public Accountability Initiative in Buffalo, said universities need to properly “manage the conflicts” within academic-industry collaborations, and disclosure is an important first step.

“Disclosure is a piece of it, but beyond that it’s a question of how these conflicts are managed” so they don’t slide into pure industry advocacy, Connor said. “But it’s hard to measure advocacy. It’s not as simple as black and white.”

If a university accepts industry funding and then slides into the role of blatant advocate, he added, “its name and its brand should suffer for it.”

In the three recent “frackademic” scandals, critics disturbed by pro-industry advocacy dug deep to find disclosure issues to seal their case.

• A study that came out under Penn State’s name in July 2009 painted a rosy financial picture of fracking but failed to disclose that it had been funded by an industry group. After it was uncovered and reported by outsiders, Penn State officials conceded in June 2010 that the failure to disclose was a “clear error.”
• UBuffalo’s May 2012 study, written for its brand new “Shale Institute” by the lead authors of the compromised Penn State study, concluded that gas drillers in Pennsylvania were making their operations safer. UBuffalo’s president, Satish Tripathi, initially defended the Shale Institute and the study to SUNY trustees, but he reversed himself weeks later after UB faculty members and the PAI unearthed various industry ties. Tripathi shut down the Shale Institute in November 2012.
• UTexas yanked a February 2012 study that found no link between fracking and groundwater pollution after outsiders uncovered the fact that a key researcher, Chip Groat, had earned $58,000 a year as a board member of a gas drilling company, Plains Exploration & Production Co. Groat also held more than $1.7 million in Plains stock. The scandal led to the resignation of the head of UT’s Energy Institute, Raymond Orbach in December 2012.

Whether MIT’s “The Future of Natural Gas” crossed the line into advocacy may depend on the eye of the beholder. But its recommended policy positions harmonized with the goals of McClendon, the Chesapeake CEO who founded Clean Skies, the study’s lead sponsor.

The study concluded that the environmental effects of fracking are “challenging but manageable.” It advocated phasing out coal as a fuel for U.S. electric power generation and replacing it with natural gas because it’s cheaper and produces less CO2, a greenhouse gas that aggravates global warming. The study also urged steps to promote a domestic market for compressed natural gas vehicles and an international trading market for liquefied natural gas, or LNG.

Some of those goals clash with players in broader industry and environmental protection.

James Rogers

Meanwhile, alarm over groundwater contamination and other potential environmental dangers of fracking led the Sierra Club to reverse its support for gas as a “bridge fuel” to a renewable energy future. The Club once accepted (and spent) $26 million from Chesapeake Energy for its “Beyond Coal” program. In 2012 it turned down the gas driller’s offer of $30 million more.

Both the Sierra Club and prominent industrialists are wary of promoting a world market for LNG, especially if it means granting more than a dozen permit applications to export LNG from U.S. terminals. The MIT report doesn’t explicitly advocate LNG exports, but U.S. chemical and manufacturing industries are alert to the threat. “If we allow the world gas price to come to this country by exporting gas then it will destroy the benefits of plentiful cheap gas,” said Andrew Liveris, CEO of Dow Chemical.

On the global warming front, the Moniz team stressed the benefits of natural gas over coal because burning gas produces less CO2, the leading greenhouse gas. It treated methane as a side issue.

But methane’s effect as a greenhouse gas has been found to be 25-33 times greater than CO2‘s over a 100-year time frame and 70-105 times greater over a 20-year time frame. The difference is due to the fact that CO2‘s effects linger far longer than methane’s. Howarth asserted that over a 20-year time frame, methane emissions from natural gas systems represent 44 percent of greenhouse gas effects attributable to man (and 17 percent of total GHG effects).

MIT scientists have said they favor the more conventional 100-year time frame, where methane’s effect is less noteworthy.

Howarth’s study included both time frames for comparison purposes, but it stressed the effects under the 20-year perspective. “The need for controlling methane is simply too urgent, if society is to avoid tipping points in the planetary climate system,” he said.

Sergey Paltsev

The Cornell team estimated the total methane emissions during the life cycle of a shale gas well at between 3.6 percent and 7.85 percent of the well’s total production.

MIT scientists took aim at their assumptions and conclusions shortly after the Cornell study was released. They took up the case again in November 2012 with a peer-reviewed study by Francis O’Sullivan and Sergey Paltsev, two members of the Moniz team that had written “The Future of Gas Drilling” 17 months earlier.

An MITEI press release on the new study declared that methane leaks from gas drilling operations had been “largely exaggerated,” based on data from 4,000 wells in five different shale regions. They questioned the Cornell team’s assumption that all methane leaks from a well pad vented into the atmosphere. They said their review of records at thousands of wells showed that drillers were recapturing 70 percent of all methane that leaked, while 15 percent was flared and only 15 percent was vented.

The Cornell study had cited an EPA finding that “85 percent of flowback gas from unconventional wells is vented and less than 15 percent is flared.” Yet the Howarth team inexplicably assumed that all methane leaks from well pads were vented.

Asked to explain, Howarth said in a Feb. 17 email: “We assumed all venting based on off-the-record communications from industry insiders. In retrospect, I agree that there must be at least some flaring. And of course the situation has changed since last October, when the EPA prohibited much of the venting.”

Francis O’Sullivan

Ingraffea questioned the scientific validity of the O’Sullivan/Paltsev data, given that it was provided to the MIT team by gas drillers who have an incentive to under-report venting. Paltsev did not return phone calls or answer emails to discuss the findings, and O’Sullivan declined to speak for the record. MIT officials declined to arrange an interview with Moniz.

Only a handful of recent methane emission studies have been based on new independent scientific measurements. One of those, a February 2012 study of an oil and gas operation north of Denver by a team led by Gabrielle Petron of the University of Colorado, Boulder, estimated gas leaks from production at 4 percent — within the Cornell team’s estimated range of 3.6-7.85 percent. Another, the NOAA/UC Boulder study published in January, measured methane emissions at two locations: the Denver-Julesberg Basin in Colorado and the Uinta Basin in Utah. It reported 4 percent at the Colorado site and 9 percent at the Utah site. NOAA is continuing its measurements, not only at the well pad but at the transmission, storage and distribution phases of the gas cycle.

Meanwhile, the Environmental Defense Fund has joined forces with several universities, including UTexas and Duke University, and several gas drilling companies, including BP, Shell and Exxon Mobil, to systematically measure methane venting throughout the gas life cycle.

EDF has calculated that methane venting of 3.2 percent represents a crucial threshold. Beyond that, it found, the new combined cycle gas power plants no longer provide greenhouse gas benefits over new coal plants. And at current methane leakage rate estimates, EDF found, converting heavy duty diesel vehicles to natural gas would cause nearly 300 years of climate damage before any benefits were achieved.

The EDF project draws on $6 million in funding from New York City Mayor Michael Bloomberg’s charitable foundation. Bloomberg has already contributed many millions of dollars to the Sierra Club’s “Beyond Coal” campaign, though he has not followed the Club’s about-face on fracking.

Just the opposite. Last August, Bloomberg wrote an opinion article in The Washington Post with fracking innovator George Mitchell that called the fracking of shale formations “the most significant development in the U.S. energy sector in generations.” He cited multiple economic benefits and noted that replacing dirty coal plants with gas-powered plants had helped cut CO2 emissions from U.S. electricity producers to the lowest level in two decades. And he wrote that fracking’s environmental side-effects could be managed with “strong and reasonable state regulation.”

The results of the EDF project shouldn’t be considered the final word, Ingraffea said, especially given the Bloomberg funding and industry’s whole-hearted participation. He reiterated the call he and Howarth made in 2011 for other independent scientists to measure actual methane emissions — at every phase of the gas life cycle. An ongoing study of leaks in Boston’s decrepit gas pipeline network is a start, he said.

“The study that EDF, the industry operators and universities are engaged should have been done years ago,” he added. “It’s now being done after most states and [the] federal government have declared that shale gas is a really good thing to do. [What if the results] show from a climate change point of view this is not a really good thing to do?

“Will EDF stand up and say, ‘We shouldn’t be doing this; it’s really bad for climate,’ knowing full well that their partners are the most prestigious operators? It will be really hard.”