Showing posts with label hydraulic fracturing. Show all posts
Showing posts with label hydraulic fracturing. Show all posts

Saturday, June 22, 2013

On Charlie Rose NYPL Trustee Stephen Schwarzman Confirms Suspicions: His $100 Million To The Library Was Linked To NYPL’s Real Estate Plans

NYPL trustee Stephen A.Schwarzman appearing on Charlie Rose to discuss, among other things, the NYPL's Central Library Plan.  Is that pinch to illustrate how the libraries get smaller as he sells off their real estate?  Keep reading.
(Correction appended 07/02/2013)

One of the great mysteries about the New York Central Library plan is why on earth would the NYPL’s trustees want to approve the NYPL’s giving up substantial library system assets and vastly shrinking the library system’s space, spending hundreds of millions of public dollars, perhaps in the end as much as a half billion dollars, to do so?  Is it true that the only possible explanation is that the there are library trustees interested in seeing the real estate plans go forward, no matter the cost to implement the plans or the lack of benefit to the public?

Wednesday night NYPL trustee Stephen Schwarzman, head of Blackstone Capital, a major investment and real estate firm, confirmed on Charlie Rose the interest he had, going back to 2008, in seeing the Central Library real estate deals go forward at that time when they were launched.  See: See: Charlie Rose: With Stephen Schwarzman, Wednesday, June 19, 2013.

NYPL Real Estate Deals

In March 2008 Schwarzman committed $100 million to the NYPL.  When Rose on Wednesday night’s show asked Schwarzman about his standards for that money going to the NYPL and the negotiations that might have taken place, Schwarzman said that when “the head of the library came over to visit me [about the $100 million] as these things tend to work” (Schwarzman referred to “numerous meetings” on the plan) and that he, Schwarzman , therefore “knew how they were going to spend it . . .to reconfigure the library system.”

The Rose interview doesn’t provide greater specificity than that with respect to exactly when all these discussions took place, but, indeed, at the end of 2007 and the beginning of 2008 a lot was happening at the NYPL in terms of its real estate plans.  November 7th is when it was abruptly disclosed to the public that, after a secretive process, the beloved Donnell Library had been sold.  That five-story, 97,000 square foot library on Manhattan’s 53rd Street between Fifth and Sixth Avenues across from MoMA was sold for an absurdly low figure, netting the NYPL only $39 million.  The 7,381 square foot penthouse apartment in the 50-story building now going up at that site is being marketed for far more, $60 million.  There will be a “replacement” Donnell of only 28,000 square feet that will be mostly underground and largely bookless.  It might finally be built by 2015.  See: Monday, May 27, 2013, More Thoughts On Valuation And What The NYPL Should Have Received As Recompense For The Public When It Sold The Donnell Library and Friday, May 24, 2013, Previews Of The Proposed New Donnell Library: The NYPL Unveils Its Version Of The “Silk Purse” Libraries It Envisions For Our Future.

Extent of Blackstone's Real Estate and Other Investment Interests

Why should we note with interest Schwarzman's admission of the linkage of that $100 million to the real estate plans?  (He describes the plans as “terrific” and designed to put the NYPL in “better financial shape.”)

Because Schwarzman’s Blackstone Capital is involved in real estate and investments creating all sorts of possibilities of conflicts of interest.  And because Blackstone is so huge those possible conflicts are huge.

Albeit there was a lot of boasting and associated PR during the Rose show intended to make Schwarzman look good, some of which may need to be discounted, but at the top of the show, by way of introduction Charlie Rose began with the following information about Blackstone: 
Rose: . . .  it is now the world's largest alternative investment firm with over $200 billion under management.
Further into the show there was this exchange:
Rose: I think you're the largest real estate investor in the world, aren't you?

Schwarzman: That's true.  (Nodding)
During the show, working from a list in front of him where he was crossing things off, Rose clarified with Schwarzman that through Blackstone Schwarzman was involved in the following seven lines of business:
    •    private equity,

    •    hedge fund,

    •    real estate

    •    a large credit business that does highly leveraged credit,

    •    a mergers and acquisition group

    •    a troubled company restructuring business,

    •    Raising money for other people in the alternative asset classes from institutional investors.
Not only is Blackstone the “largest real estate investor in the world,” Schwarzman says during the program that Blackstone is similarly preeminent in hedge funds:
Schwarzman: We are the largest investors in the world in hedge funds.
Are hedge funds notorious these days for making a lot of money?  Schwarzman says his private equity business is bigger:
Schwarzman:     … Private equity is a bigger business… The rates on return on private equity tend to be much higher.
And when Schwarzman speaks of the $100 million to the NYPL as being connected to the 1007/2008 real estate plans it is worth thinking about what he next told Rose about making those private equity profits:
Schwarzman:     . .  And the reason is that you have control of businesses or control of real estate. You can change the management. You can change the business strategy, and it's not passive. 
How Readily Conflicts of Interest Can Crop Up

It would therefore be easy for Schwarzman and his Blacktsone Group to have conflicts of interest.  Actually, it would be perhaps be hard to avoid them.

One example of how easily conflicts of interest potentially crop up is that in the spring of 2007, the same year that Donnell was sold by the NYPL Peter Slatin wrote speculatively in The Street envisioning that Schwarzman would be one of the buyers of Orient-Express Hotels, the company to whom it was announced the library would be sold.  And Slatin envisioned that Schwarzman would buy it partnering with Sternlicht of Starwood Hotels, the company that wound up actually buying Donnell when the dust settled.  He imagined a celebratory scene respecting the purchase: “Steve Schwarzman and Barry Sternlicht are sitting down for burgers” at the 21 Club with Andrew Davis of Von Essen Hotels celebrating their purchase of Orient-Express Hotels.  Interestingly, the 21 Club, adjacent to Donnell, factored in prominently with its purchase.  See: Getting All Aboard the Orient-Express, 03/26/07.

Who knows if there was something particular that stimulated Slatin’s speculative imagination coming up with so many odd prescient details, but the idea that what he imagined or any variation of it could actually easily have happened emphasizes the concern about where conflict of interest might lead.

Another example of relationships that point to the ease with which conflict could crop up is that the Chief Operating Officer of the NYPL, David Offensend, came from Wall Street and is a cofounder of Evercore Partners, a firm that might be described as sort of a boutique spin-off of Schwarzman’s Blackstone (two key partners, Roger Altman and Austin M. Beutner, are Blackstone alumni).  Offensend is the most important employee of the NYPL in terms of implementing its real estate plans and he describes the NYPL’s plan as originating back in 2006, perhaps as far back as 2005.  Offensend began working for the the NYPL in 2004.

Not that Schwarzman and Offensend are the only significant individuals with respect to the making of real estate plans at the NYPL.  According to Vartan Gregorian, who became the NYPL’s president in 1981, he put NYPL trustee and real estate developer Marshall Rose in charge of the supervision of the entire real estate holdings of the NYPL.  Mr. Rose has continued to handle the NYPL’s real estate ever since, even during a period of time that he was chairman of the NYPL’s trustees.

It is harder to ignore these concerns when real estate deals Mr. Schwarzman says are intended to put the NYPL in “better financial shape” seem to impoverish it instead:  Things like the sale of Donnell or the Science, Industry and Business Library (SIBL).  That library, in the old B. Altman department store building  was completed in1996 as one of the projects under Mr. Rose’s guidance at a cost of $100 million.  Last year the NYPL, calling virtually no attention to the fact, sold off 87% of its space for $60.8 million.  Was the publicly paid for library that recently cost so much worth now worth that little?  See: Saturday, June 15, 2013, SIBL, NYPL's Science, Industry and Business Library Sold At An Unreported Loss To The Public (And an Elucidating Sideways Look At The BAM South Library Real Estate Games).

Schwarzman's Purpose on Wednesday Night?

Why was Schwarzman on Charlie Rose Wednesday night?  He was on Rose once before, but it was years ago, in 2006.  It could be that the Central Library Plan is running into difficulty, encountering opposition, and he was there to give it a PR boost.  This could be particularly important at this moment because this coming week the selling off and shrinkage of New York City libraries will be the subject of a hearing by the New York State Assembly Committee on Libraries and Education Technology on Thursday June 27, 2013 (10:30 a.m. Assembly Hearing Room 1923, 19th Floor, 250 Broadway, Manhattan).  See:  Subject: The Sale of Public Library Buildings in New York City/Purpose: To examine the practice of selling public library buildings to private developers and the impact that sale has on the library and the services it provides.

Relying on Charlie Rose? 

Charlie Rose is a notoriously soft interviewer who compliantly works with his interviewees to support them in putting out their PR in exactly the way they want to put it out.  This can involve being sycophantically servile to those with power and sometimes that means that misinformation is promulgated uncorrected.   I’ve previously written in Noticing New York about how Rose put himself in harness to promote real estate developer Bruce Ratner’s Atlantic Yards ambitions.  See:  Monday, April 2, 2012, Charlie Rose Does Infomercial For Forest City Ratner.

Bruce Ratner partnered with Russian oligarch Mikhail Prokhorov on Atlantic Yards and in that earlier Noticing New York Article I observed:
Rose's cavalier, jokey exchange with Ratner about Prokhorov may some day come back to haunt him. Ratner joked that Prokhorov almost became president of Russia. Prokhorov has long been one of the insiders who get along with Putin. Most interpret his feint at a run for president as an effort to deflect real opposition to Putin, but Rose wasn't doing a serious international affairs interview so he simply played along.
It turned out that one Charlie Rose show promoting Bruce Ratner’s Atlantic Yards was apparently not enough and a few months later Rose did another, this time hosting not only Ratner but also the Russian oligarch, and as a softening measure Prokhorov brought along his sister Irina.  (See: Monday, October 08, 2012, On Charlie Rose, uninformed sycophancy redux; host lets Ratner spin, claim arena was gift to Brooklyn, admit working the levers of government "in the traditional way").  This show, promoting the so-called “Barclays” center as an entertainment venue, did find Rose obsequiously joking with the oligarch about Russian politics.
      
Rose’s show can be informative (misinformative too) and, obviously, much of what I am writing here is drawing upon worthwhile information from the Rose Schwarzman interview.

Schwarzman The Compassionate Romneyite 

Later in the interview we learn from one of Rose’s inquiries that Schwarzman is a “a Republican” who has been  “a strong supporter of Republican candidates including Governor Romney and, Rose implies, one who has problems with President Obama and the way Obama is handling the American economy.  We also find out that Schwarzman believes the current United States tax system should be replaced with a “flat tax” (like Russia! he points out) although he allows that in the engineering of such a massive overhaul others could advocate for progressivity of the tax rates.  Schwarzman says he thinks that it would be more equitable and that the tax code should be made simple.  These are familiar talking points from an admitted Republican but I for one, while I would favor simplifying the tax code, don’t believe that it can ever be made “simple.”

Schwarzman may have been a Romney supporter but throughout the show Schwarzman is depicted in `compassionate conservative’ guise.  Rose starts the show by having Schwarzman talk about a scholarship program with his name that involves sending students to China and it then moves on to his affirmative charitable (“eleemosynary”) efforts to hire combat veterans.

In talking about the scholarship program orientated around creating relationships with China (“Schwarzman Scholars”) its is not immediately clear at this early point in the program that there is connection between the program and, controversial at the time, the investment by the Chinese government in Blackstone, buying 9.9% of its stock (“nonvoting” stock) when Blackstone went public in 2007.  The timing to buy into Blackstone, shortly before the financial crisis, was bad and Schwarzman admits the Chinese suffered a loss due to the downturn, but, as described by Mr. Schwarzman, the Chinese, with dividends, are almost back to even, which he describes as “not a bad outcome.”

Getting to Library Issues

The discussion of the library starts about ten minutes into Rose’s thirty minute interview of Schwarzman, a positioning that is a pretty good indicator that this was considered a highlight or prime purpose of the interview.

It begins rights after Schwarzman, talking about his military employment efforts, uses the word “eleemosynary” (i.e. `charitable') as if to cue Rose:
Rose: You gave $100 million to the library; I may have the wrong number, but it was about that.

Schwarzman: That's true.

Rose: How do you decide your philanthropic commitments?

Schwarzman: That's a great question and I am still developing the answer. I make major commitments where I see a major need.  Ah, and there are many different areas where people find need and satisfy it. I happen to like things in the educational area.  I believe that a great education is a passport to a different type of life, and particularly in the world we're living in now, it's really essential.  And if I can help in various situations how people have that boost and have that advantage, I tend to respond to that.  So, at the library we have a huge number of people- New York City, as you know, has people living here I think it's from around 140 countries, 170 countries, somewhere in that area, that the library serves, people who don't have the advantages, necessarily. Some do, but it's a place where, you know, you can take out books, you have the advantage of librarians, you have computers.  So just the opposite of what you might think, attendance at libraries is going way up.
There is a disconnect between what Schwarzman says and much of what is actually going on at the library.  While he says “you can take out books” he doesn’t mention that the NYPL has been implementing a book reduction program administered by such people as Anne L. Coristan, Vice President for Public Service, who is one of those involved in implementing the Central Library Plan: Books are not supposed to exceed 50% of shelf space, no duplicate books are supposed to appear on the shelves (even Hamlet) and “shabby” books are supposed to be thrown out even though many classics and out-of-print books don't look new.

Schwarzman talks about having “the advantage of librarians” but he doesn’t talk about NYPL’s  huge layoffs of librarians, the way they have been intimidated and de-escalated in importance even while those engaged in real estate deals at the NYPL are made more important, and an increasingly large proportion of revenues is diverted to their salaries.

He mentions that “attendance at libraries is going way up,” which it is, but does not mention the perplexing concurrent shrinkage of the libraries under the NYPL’s plans.

Deflection on Democracy Issues?

Perhaps most important, Schwarzman in his mention of “passport to a different type of life,” his conjuring up diversity with his description about people from 170 countries, his talk of `boosting’ people and giving them `advantages’ is on message to deflect the obvious criticism that selling, shrinking and defunding libraries is anti-democratic and discriminatory.   I’ve previously pointed out that deflection of such criticism is probably the reason that Schwarzman and the rest of the NYPL trustees hired Anthony Marx as the new president of the NYPL to implement these plans.  See:  Tuesday, May 14, 2013, A Consideration of Race, Equality, Opportunity and Democracy As NYC Libraries Are Sold And The Library System Shrunk And Deliberately Underfunded.

Schwarzman, the former Romney supporter, sounds studiously aware of getting across the same  talking points Marx routinely works into his speeches in this regard when he goes on to talk about “reaching all kinds of middle-income and lower-income people” (“So I really like that” he says) and serving the “ethnic mix, ah, and economic mix of lower income people.”

While libraries are truly a “vehicle for changing people's lives” there is a hint in Schwarzman’s discussions of `passports to a different type of life’ of the Republican fiction that anyone, through hard work, can elevate themselves to the ranks of the wealthy and privileged.

Name Attuned?

Redundant, or undeserved acknowledgment?  Schwarzman's name on a potential demolition project
When Rose continues, getting to the subject of the Central Library Plan (and, at the same time, Schwarzman getting his name affixed to the NYPL’s 1910 42nd Street building at Fifth Avenue that was built to house the Central Reference Library that Schwarzman’s CLP would now destroy) Rose broaches a typical concern of charitable donors: That money they give to charitable organizations may not be used for the purposes intended.  At City Council hearings at the beginning of this month NYPL president Anthony Marx and BPL president Linda Johnson addressed this concern directly with Marx saying that the NYPL cannot now make a `credible' case to NYPL donors that money given to the NYPL will not be subtracted out again in Bloomberg administration cuts.
Another concern for donors should be that what they give (for example to build the $100 million SIBL) might be squandered in real estate deals.  Lastly, there is the way evanescence of substantial gifts under the new NYPL regime that pays so little attention to history or that which was intended for posterity.  The 42nd Street Central Reference library was paid for (in addition to money from NYC taxpayers) by the Tildens and the Astors.  In inflation-adjusted terms the money Schwarzman has provided to the NYPL is a pittance compared to those who have gone before him.  The library used to have a policy against naming its buildings for living individuals.  Yet Mr. Schwarzman's name has been plastered on that library (which he would like to see destroyed) in five conspicuous locations, obliterating memory of the truer and more substantial patrons of the library that precede him.

The exchange between Rose and Schwarzman allows Schwarzman to appear modest about this naming:
Rose: So when you make that kind of commitment, what is your standard of accountability?  I mean in this case, I assume you didn't do this because you wanted your name on the building … you wanted to do this because you wanted to make a difference, and you want to make sure if you're giving that level of gift that they… the money is spent wisely.

Schwarzman: Well, the advantage here is that I knew how they were going to spend it.  And, the reason I responded to this…

Rose: That was because of negotiation that takes place?

Schwarzman: No, this is because I was on the board of the library, and they hired one of the major consulting firms to figure out how to reconfigure the library system, create a modern lending library in the main branch of the library and be able to deliver better services and put themselves in better financial shape. This is a terrific plan! And so what happened is that the head of the library came over to visit me as these things tend to work, and suggested that I give them $100 million.  They can then have a lead gift to implement their plan, so you get a multiplier of close to $1 billion.  Ah, and ah, you know, they said, by the way we'd put your name on the building. And I said sure sounds like a great thing because there'd been numerous meetings on how this program would kick off a whole reinvigoration of the library system, reaching all kinds of middle-income and lower-income people. So I really like that. I also do major support for the parochial school system in New York. Why do that?: That's an easy one. They have the same basic ethnic mix, ah, and economic mix of lower income people.  And they graduated about 99% of their kids, whereas the public schools are somewhere around 50%. So my wife and I are supporting that because it's just changes the lives of these people because they have 96% that go on to college.  And it's transformational and I've done other things around the world that haven't been disclosed that tap into that and I like education as a vehicle for changing people's lives.

Rose: And giving them opportunity?

Schwarzman: Exactly.
One note: Schwarzman frequently, haltingly interjects “ah”s into his discourse, some of which seem somewhat telling.  You can watch the video to listen for them but as a courtesy and to make it more readable I left most of them out of the transcription.

Adding Consult To Injury

Mr. Schwarzman above refers to the NYPL’s hiring of “one of the major consulting firms to figure out how to reconfigure the library system.”  One reason the major consulting firm is unidentified may be because it is Booz Allen Hamilton, hired by the NYPL to produce a 2006 report recommending consolidation and downsizing of the NYPL.  Mentioning the firm’s name on Rose could have been awkward as the firm is presently getting a level of spectacular attention that a Charlie Rose audience might find hard to overlook: It employed Edward Snowden, now in the news as an intelligence leaker or whistle-blower, to gather intelligence on Americans for the NSA.  The firm currently has a huge public relations problem on their hands.

Booz Allen Hamilton is not the only consulting firm the NYPL has hired to work on the Central Library Plan.  When doing something controversial it is good to hide behind the work of a lot of “consultants” you hire.  According to COO David Offensend the NYPL also hired the Gensler architectural firm to bless its calculations of how much it could reduce its library space and also hired McKinsey & Company in connection with its planned reductions of space and personnel.

More recently, at a May 29, 2013 Historic Districts Council panel discussion of “The Changing Face of New York City’s Public Library Systems,” Scott Sherman, contributing writer and editor of The Nation, who has been covering the changes at the NYPL, noted that journalists calling the BPL for information can no longer get through to the BPL’s own public relations staff; now they are referred out to the firm of BerlinRosen, which Mr. Sherman pointed out, says on its web site that is specializes in crisis management.”  (Correction 07/02/'13: This article originally stated that the BPL and the NYPL had both  engaged Berlin Rosen to provide statements about library sell-offs to the public.  Mr. Sherman only said that the BPL had engaged the firm and the NYPL says that BerlinRosen is not doing work for it.)

One For All?

Berlin Rosen is issuing statements on behalf of both the BPL and the real estate developer it is dealing with on one of the library schemes the BPL is pursuing, the sale of the historic neighborhood Pacific Branch  to partially pay for the outfitting of a new library originally described as being an expansion of the Brooklyn Academy of Music.  This appeared in the Brooklyn Eagle:
Jeremy Soffin of BerlinRosen Public Affairs, representing both Two Trees Management and Brooklyn Public Library, said on Tuesday that Two Trees read a statement into the record "talking about its commitment to good jobs. It did not commit to union wages on this project."
(See: 32-Story ‘BAM South’ wins NYC Council approval, by Mary Frost, June 17, 2013.)

The way in which BerlinRosen is representing both the BPL and Walenatas developer’s Two Trees Management is reminiscent of how an earlier Brooklyn Community Board 5 committee meeting on the same "BAM South" project held in March was attended by Jamie Van Bramer (no apparent relation to City Councilman Jimmy Van Bramer on the library committee) of the Yoswein New York, Inc., a firm hired to lobby for both the BPL and the developer.  Mr. Van Bramer told the assemblage that although his firm also lobbies for the developer he was not there that day to represent the developer on that particular project.  Van Bramer has been at many subsequent meetings where both the BPL’s and the developer’s interests were similarly at stake.

Schwarzman Dreams Of A Hydro-Fracked World

Is Mr. Schwarzman sincere or merely unabashed when it comes to talking points?
Schwarzman environmental finger!: Schwarzman raising his finger to emphasize the point that fracking is `environmental'
After the library discussion Rose gave Schwarzman a chance to expound on his theory of where things were in the world economically, which Schwarzman used as an opportunity to swing the discussion around so he could do some cheerleading for hydrofracking.  (Blackstone invests in fracking.)  The discussion, sanitized to the point that it never mentions the term “hydrofracking,” is scary in the way it invokes “dreaming” as an invitation for Americans to sleep through, and not notice, Schwarzman’s deceptive depiction of fracking as environmentally beneficial.  An indication of the coordination between Rose and Schwarzman is the way that Rose, jumping in, knows that Schwarzman is talking about fracking for natural gas and its supposed “benefits” before there is any concrete clue of the topic in Schwarzman’s own words.
Schwarzman: The US in particular is quite interesting because we have a revolution going on in the energy business in the United States which is presenting…

Rose: What impact is it going to have on the United States in terms of making it, certainly, energy independent and not dependent on energy from the Middle East?

Schwarzman: Well, it does a lot of really neat things.  right? Well, what happens is our price of natural gas is going to be way below world levels. And that's going to enable us, theoretically, to do all kinds of things.  First, it's a clean fuel, which (pointing with a raised finger) is a very important environmental thing.  Second, because it's cheap we are going to be able to attract companies from around the world to locate in the United States, in the petrochemical area and all kinds of allied types of businesses.  Third, we are going to convert over time to gas powering utilities, which is pretty cheap.  We could convert cars to natural gas. The amount of money that we would save would be equivalent to a "peace dividend" plus we'd have clean fuel. We already use natural gas in a lot of cities for buses.

Rose: Right.

Schwarzman: And it's… It will be the natural logical fuel for the United States.

Rose: A better source for propulsion for cars than electric?

Schwarzman: You've got to make electricity. So you could look at it, I guess, you know, either way you'd have to build new electric plants and so forth. I look at this just in terms of dreaming as to what the United States could become as a result of this type of thing.

Rose: So when you dream, the United States could become what?

Schwarzman: Oh, oh, could significantly increase its growth rate, we could be attracting companies and investment from all over the world because we have such cheap energy and we have rule of law here. We have safety and not all the places where you produce energy have rule of law or are safe or don't have threatening neighbors very close by or instability in their populations.  So this can be a kickstart for a new economic age in America if you were to dream.
(To start reading more about what fracking and climate change really mean for the country see: Tuesday, December 6, 2011, Testimony at Department of Environmental Conservation’s 11/30 Hearings on High-Volume Hydraulic Fracturing (“Fracking”): The LONG and the SHORT of It.)

Creatively Cheerful Destruction?

The Schwarzman-Rose tag team are ready to make anything sound good.  But sometimes Schwarzman slips up.  The greedy calculations involved in how to make money in real estate can sometimes involve a certain grim grislyness.  In an exchange with Rose, Schwarzman tells Rose about how he has recently been involved in making money from foreclosed American homes.  Rose quickly identifies what can be described as cheerful about this:
Schwarzman: We started actually buying individual houses from Foreclosure about a year and a quarter ago. We're now the largest owner of houses in the United States.

Rose: Can you say we're the largest investor in houses in the United states, which therefore says that we have confidence in the future of the housing market in the United States?

Schwarzman: Absolutely and in fact it's turned out to be so even faster than we wanted it to.
Schwarzman’s slip-up?: “it's turned out to be so even faster than we wanted it to.”   He was happy to be improving his financial position as others were foundering!  This is one of the trustees pushing through the real estate deals that sell and shrink our libraries?

Schwarzman’s Central Library Plan shrinks 380,000 square feet of library space down to fit into just 80,000 square feet.  It sells off the Mid-Manhattan and SIBL libraries and involves demolishing and getting rid of the research stacks that make the important Central Reverence Library it was meant to be.  All this shrinkage, its full cost not having yet been determined, is likely to cost the public something in the neighborhood of perhaps a half billion dollars, the current estimate being at least $350 million with $150 million being the direct expenditure of taxpayer dollars dictated largely by Mayor Bloomberg.

You can find out more about this from the Committee To Save The New York Public Library.  There is also a petition to be signed from Citizens Defending Libraries (of which I am a co-founder) which is leading a campaign against the sale, shrinkage and deliberate underfunding of all New York City’s libraries in order to create real estate deals for the benefit of developers, not the public.

So did Schwarzman, going on Charlie Rose this week, do a good job in promoting the NYPL’s plans to sell and shrink libraries?  Not for those listening carefully.

NOTE Correction 07/02/'13: This article originally stated that the BPL and the NYPL had both  engaged Berlin Rosen to provide statements about library sell-offs to the public.  Scott Sherman of the Nation only said that the BPL had engaged the firm and the NYPL says that BerlinRosen is not doing work for it.

Tuesday, October 23, 2012

Perennial Bad Penny: Barclays Name Turns Up In A New York Times Article About Hydraulic Fracturing and Bankers Behaving Badly

The “Barclays” Bank name comes up again, yet one more time in unflattering context, in another New York Times article.  This one is about investment bankers behaving badly in the context of hydraulic fracturing or “fracking.”  The gist of the complaint about investment bankers is that they have been making some quick bucks treating those investing in that new drilling technology very unfairly. . .  and how that is leaving them in the financial red.

Yes, “Barclays,” that bank with the LIBOR scandal-besmirched name that now brands two Brooklyn Subway hub stations and the new Bruce Ratner/Mikhail Prokhorov sports arena, a problematic here’s a how-de-do the Times only occasionally mentions while running a great deal of promotion for that so-called “Barclays” Center.  (See: Monday, September 17, 2012, NY Times Runs 3rd Article Mentioning That, Given Scandal, Promotionally Naming Subway Stations & Arena “Barclays” Is Problematic.)

While an investment banker working for Jefferies & Company, another banking firm, gets most of the article’s negative attention, Goldman Sachs earns some focus for behaving. . . well, like Goldman, all over again.

Let’s mention that Goldman was involved in financing the “Barclays” Center with tax-exempt bonds.

The Times article, although entirely in the context of fracking, is very reminiscent of so much of what has gone before and the article pays tribute to that fact, mentioning, for instance, the, “recent credit bubble” saying:
the boom and bust in gas were driven in large part by tens of billions of dollars in creative financing engineered by investment banks like Goldman Sachs, Barclays* and Jefferies & Company.
It provides plenty of unsavory details describing how  “Wall Street deal makers . . . play a vital, though less visible, role in the nation’s surging energy production” much of it, you will conclude as you read through the article, by treating investors with calculated disregard.

For more on this as well as thoughts about what the Times this time glosses over about the detrimental effects of the fracking industry in general and the particular negative implications that loom as fracking companies now face bankruptcy see: Tuesday, October 23, 2012, Investors Discover That Fracking Costs Exceed (In The Not-So-Obvious Way) Expected Financial Benefits: What The New York Times Fails To Say.

Tuesday, December 6, 2011

Testimony at Department of Environmental Conservation’s 11/30 Hearings on High-Volume Hydraulic Fracturing (“Fracking”): The LONG and the SHORT of It

(Above, evening hearing attendees in the 900 seat auditorium)

I presented Noticing New York and National Notice testimony last Wednesday when the New York State Department of Environmental Conservation held a day’s worth of afternoon and evening hearings in Manhattan concerning Governor Cuomo's proposal to start allowing High-Volume Hydraulic Fracturing, aka “Fracking,” in New York for the first time by lifting the current moratorium under which it is effectively banned. The next day I posted my testimony about introduction to the state of that new, still largely untested technology here at Noticing New York while promising that I would update the post to include an account of those hearings (with pictures) together with substantial amplification of the points in the testimony presented (which testimony appears again below). As of yesterday those updates were available, see: Thursday, December 1, 2011, Wednesday’s Department of Environmental Conservation Hearings on High-Volume Hydraulic Fracturing (“Fracking”): Noticing New York’s Testimony Plus. .

(People lined up after me Wednesday morning to get into DEC's first hearing, the afternoon hearing on introducing the new technology of fracking to New York state.)

If you want to read an account of the hearing (almost everyone spoke against fracking) that is more thorough than you will find elsewhere, along with a comprehensive discussion of just how important the concerns are that the state is facing, click on the above link to read that updated article. But if you are interested in just the tantalizing pith of things you can confine yourself to reading the testimony I provided below. In one sense this is the “short” of it.

(Above, DEC hearing officials, DEC’s Deputy Counsel Russo and hearing officer on far right, ready to give a limited number of speakers three minutes apiece.)
The testimony is organized to highlight in just three minutes (the total time permitted speakers testifying) the breadth of devastation the state faces if this poisoning technology is introduced to the state. (If video of my testimony becomes available I will update this post to link to it.) But, as reading the much longer article I have made available will make clear, three minutes is hardly adequate to consider all the dire facts in full. Therefore the other article is, in one sense, the “long” of it.

In another sense the “long” and “short” of it is this . . . If permitted, the facking industry with its predicted financial collapse will likely be in and then out of the state in a very short period of time, during which it will do an unbelievable amount of environmental damage, that being the “short” of it. But the incredible destruction besetting New York State as a result, including the destruction of the state’s increasingly more precious drinking water and water richness, will last for thousands of years, and that’s the “long” of it.

Happy reading, whichever of these articles you have time for.

Testimony of Noticing New York and National Notice

Here is our own testimony supplied at the afternoon hearing.

November 30, 2011

New York State
Department of Environmental Conservation
625 Broadway
Albany, New York 12233-6510

Re: November 30, 2011- Hearing Regarding High-Volume Hydraulic Fracturing SGEIS

Dear Department of Environmental Conservation:

This comment is being offered in the name of Noticing New York, and National Notice, independent entities dedicated to insistence on good economic development policies in New York and the nation as a whole.

I offer this testimony as an attorney experienced in real estate, as an urban planner and as former senior government official who worked for more than a quarter of century in the areas of public finance and development for the state’s finance authorities.
1. With the introduction of fracking New York State is about to suffer a colossal hit and run at the hands of the fossil fuel industry.

2. Most hit and runs are accidents. Not this one. This one comes at us premeditated and well financed.

3. When I was in government my departing boss left me in charge of the legal department for my agencies with a critical piece of advice: “Just because someone tells you that you have to make a decision immediately, don’t think you have to: You’ll be better off waiting.” Indeed, I knew from experience negotiating hundreds of deals: When someone is trying to rush you to make a decision the rush is going to be to their benefit and your detriment.

4. There are reasons the fracking companies want to do their dirty work fast:
a. They want to get in before people realize how extraordinarily damaging fracking will be to the environment, (most of that damage is very long term and too much of it, like leaking wells, won’t show up immediately: 5% of new wells leak but 50% leak eventually), and

b. They are aware that fracking, even though it was just invented, is about to be an obsolete technology. I refer you to economist Paul Krugman’s recent [November 6, 2011] “Here Comes the Sun” column for two propositions:
∙ That if the fracking industry were forced to internalize its huge external detriments and cost to the public it is probably not economic now, and
∙ Solar cell technology is advancing so fast that even without that internalization fracking will soon be uneconomic anyway.
5. Virtually no corner of the state will be unaffected by fracking’s external costs:
a. Decades of water pollution, poisoning:
∙ essential underground drinking water aquifers, and
∙ drinking water in rivers and streams- water treatment facilities will be wrecked.
b. Massive quantities of water usurpation
c. Radiation poisoning in the form of released radium and radon (lasting for thousands of years).
d. Earthquakes and instability of the land.
e. Significant poisonous air pollution.
f. Release of carcinogens.
g. Greenhouse gas pollution releasing climate change-causing carbon that was safely sequestered for 400 million years.
6. There is a sales pitch about economic benefits but fracking is a resource extraction economy that builds up no long-term benefit compensating for the damage it will leave in its wake or the businesses it will drive out.

7. Some might say the fracking companies want to get started before the science on this brand new technology is in. I’d suggest they want to get started before the science that’s already in gets out.

8. Fracking is too destructive to be permitted at all but it certainly should not be permitted without significant protections not now in place or proposed, including:
a. Prohibitions on confidentiality covenants that prohibit the true facts from getting out, and
b. Lessor remorse covenants that allow landowners to terminate lessees upon the unveiling of any misrepresentations of science or facts by the industries.

Sincerely,


Michael D. D. White

PS: Attached are two of the articles I have written about the proposal to allow high-volume hydraulic fracturing, both of which are available on the web:
∙ Monday, November 21, 2011, Fracking Double Whammy: New York Loses Two Aces In The Hole When Confronting Climate Change (i.e.Weather Weirding/Global Warming)

∙ Friday, July 29, 2011, Conundrum: If Gov. Andrew Cuomo Traded The Moratorium on Hydrofracking To Get Gay Marriage Would That Be Good Or a Bad Thing?

(Hazmat suited protester. The first thing many saw approaching the hearing location)

Thursday, December 1, 2011

Wednesday’s Department of Environmental Conservation Hearings on High-Volume Hydraulic Fracturing (“Fracking”): Noticing New York’s Testimony Plus. .

(People lined up after me Wednesday morning to get into DEC's first hearing, the afternoon hearing on introducing the new technology of fracking to New York state.)

I attended last Wednesday’s New York State Department of Environmental Conservation hearings at the Tribeca Performing Arts Center at 199 Chambers Street (adjacent to the Borough of Manhattan Community College). I also provided my Noticing New York and National Notice testimony.

I can give you a full report covering all of what was an extended day. I would have had to plan a lot better if I had just wanted to get there, testify and leave as quickly as possible. Arriving at 11:30, I was not unable to register early enough to succeed in testifying during the afternoon hearing which started at 1:00 and concluded slightly late at about 4:15. Not realizing quickly that I had to re-register to speak at the evening hearing (beginning 6:00 PM) I didn’t wind up actually delivering my testimony until about 9:00 PM and that was close to the bitter end of things as the second hearing was scheduled to conclude at 9:00 PM.

(Hazmat suited protester. The first thing many saw approaching the hearing location)

More Than 100 Speakers Testifying; More 100 Speakers Testifying Against

(Early crowd- front part- waiting to get in to the evening hearing)

The opposition to fracking was so great that the hearing was almost more like a rally against high-volume hydraulic fracturing than a hearing about whether and how it should be introduced into New York State. (Hereafter, we will refer to this recently invented technology as “fracking” for simplicity’s sake and in order to make this comprehensive article a fraction shorter. More than a hundred speakers testified at the two hearings while I was there and of all the speakers, including a number of elected representative, more than a hundred spoke against fracking, virtually all of them advocating an outright ban.

4 ½ Speakers In Favor of Fracking

Of all the speakers who testified while I was there only 4 ½ spoke in favor of fracking. I will give those 4 ½ individuals their due first:
• One was a round man in a grey suit who could have been a time travel visitor from the 1950's who said he worked for an electric company.

• Another was a Christmas tree farm owner from the Syracuse area who said that he believed the oil and gas companies were already commendably being good neighbors and providing jobs in the area with their current activities. I couldn’t help wondering why, if that was so, it was envisioned as necessary for the companies to expand into fracking, which is so qualitatively different that it bears no relation to any existing activity.

• A rumpled man who said he was a scientist and who, as we shall discuss later, advocated, as per a standard fracking industry theme, that facking should be used to produce gas as a “transitional fuel.”

• A nerdy reader suggesting that he was the only one who had actually read through details of the very thick documents concerning prospective environmental impacts and the possible regulation of them. “Nerdy” is not meant to be derogatory in this context. You have to be “nerdy,” like us, to spend time reading these kinds of documents. You are also unlikely to read what is in them or try to find your way through to what they actually mean unless you are driven by a certain passion. I found myself wondering because I could not perceive what passion had driven this gentleman to undertake all this reading or to alight on certain passages in all this dense and turgid prose which for certain technical reasons he thought were helpful to the fracking industry. Immediately after speaking he sat down with two other people in the audience, seemingly supportive friends or family. Shortly after that they all got up and left together.
You may wonder why I say there was a “half” speaker favoring fracking. My “half” person was the following:
• There was a young gentleman full of energy who explained that he was the owner of a technology company. He spoke in favor of allowing fracking with the proviso that the technology of his company be used and required by Department of Environmental (DEC) regulation to address certain risks. He explained that using his company’s brand new technology, which he described as “elegant,” was the only way that radioactive poisons could be kept underground when fracking occurred.
All of the people speaking in favor of fracking together with this last mentioned technology company owner encountered angry booing when they spoke resulting in the hearing officer halting the 3-minute clock to allow them to resume speaking when quiet resumed. In the case of the technology owner’s testimony, the booing may have been quite counterproductive because what he was spending his time describing, the need to keep some released and scary sounding radioactive substances from ever coming to the surface, made him sound more like he was supporting the case against fracking than speaking in favor of it. Whether the booing (which certainly lacked decorum by conventional measures) was productive or not requires some balancing: Certainly, it reflects justified anger. It also caused delays and shortened the amount of time to give others a chance to speak out with strong rational and very informed arguments against fracking.

Rather Like an Anti-Fracking Rally, Really

As the entire very crowded event seemed more like a rally against fracking than anything else I felt less deprived when I was informed by a brown uniformed DEC enforcement officer that I was not being allowed to attend the opponent-sponsored press conference preceding the hearing as I had planned (and arrived early) to attend. At the press conference a number of people spoke, including representatives of environmental groups, elected officials, documentary film maker Josh Fox ("Gasland") and actors Mark Ruffalo and Deborah Winger. Fox and Ruffalo also testified at the hearing.

(Ruffalo testifying below)

Free Speech Curbed

“We are net letting anyone else go to the press conference,” said the DEC officer in his brown police-style uniform.

“So you are saying that the First Amendment isn’t going to apply here?” I asked.

“Right,” said the officer.

This business of authorities in charge doing more and more about telling us who can speak where, when and how effectively and also who can listen is something I have been writing a lot about recently. (And the theme gets picked up again in amplifications appearing near the end of this article.)

I did not make an issue about the officer turning me away. I slightly hoped that going into the auditorium immediately might ensure I could speak sooner (it didn’t). I could have made the point that I was press. I did not. Technically, I believe that writing for Noting New York and National Notice I qualify as press although I am not what is refereed to as “credentialed press.” Although New York Times media journalist David Carr says that he would only let his credentialing “press pass” be pried out of his cold dead hands I have never wanted to apply for these “credentials.” They are issued miserly and discriminatoryly by NYC government and are not a true qualifier for who is press. I probably would not have needed “credentials” to persuade the officer to let me cover the press conference but I also have a certain philosophy about seeing things from the standpoint of the general public without exerting special privilege.

The Need For Good Coverage By The Press

One problem with this philosophy: It means that for a lot of reporting we are too much at the mercy of the “credentialed press” when understanding current events. As will be made clear from some of the amplifying material I am providing following the print version of my testimony that appears, the credentialed press cannot always be relied upon to do a good job, including the New York Times. Thankfully, with respect to its coverage of the threat of fracking the New York Times has been doing a lot of remarkably good journalism.

Here is New York Times coverage of Wednesday’s hearing: November 30, 2011,
Chants, Boos and Celebrities at a Hearing on Fracking, By Mireya Navarro

Here is WYNC coverage: WNYC News, City Says Fracking May Compromise Water Supply
Wednesday, November 30, 2011, By Ilya Marritz. Click below to listen to WNYC’s audio broadcast covering the hearing.



In WNYC’s broadcast you can hear Alex Greenleaf singing his testimonial comment which may be a pretty good way of holding yourself to the 3 minute time limit that was given for testimony.

Another speaker who did something similar when he testified (and also timed things well to come in under the thee-minute limit) chose to `amplify’ his voice with more than the microphone provided: As he spoke, audience members all around the auditorium who had copies of his statement arose to speak it out in unison, reminiscent of Occupy Wall Street’s “mike checks.” I heard reports that Occupy Wall Street’s mike check was used by Josh Fox at the press conference I (and many others) were not allowed to attend.

Hundreds Seeking to Speak: A Filled Auditorium

(Evening hearing. Front rows reserved for DEC and elected officials. Below, views from two other vantages.)
By my count, approximately 60 speakers spoke at the afternoon hearing without getting to the end of list I know not how long. It was announced at the beginning of the evening hearing that 125 members of the public had signed up to speak and they were allowing additional others to do so. The auditorium was pretty well packed throughout the hearings, particularly in the evening when nearly every seat of the auditorium (a reported 900 seats) was filled. When I spoke, close to 9:00 PM, I was by my count the 48th to give testimony. I know the hearing ran past its scheduled ending time but it was obvious that without running way into night only a minor portion of those wishing to speak were going to be heard.

Electeds Testified

(State Senator Tom Duane testifying above)

The speakers included elected representatives who were given priority. There were more of them at the afternoon session: State Senators Tony Avella, Liz Krueger, Bill Perkins, Tom Duane, State Assembly members Richard Gottfried, Jim Brennan, and Linda Rosenthal and City Council Member James F. Gennaro. State Senator Velmanette Montgomery and Manhattan Borough President Scott Stringer spoke in the evening. I believe I am leaving out one or more speakers sent to speak on behalf of City Council Members, but you get the point.

I met another elected official, City Council member Steve Levin, as I was in line to go into the evening hearing. I quipped with him that he should read my testimony instead of me as there were so many people waiting to testify and they were giving priority to elected officials. As it was, he departed and as far as I know never did go inside to testify. Upon returning home, I was dismayed to discover that the previous night Levin had made use of his time by being the only elected official to join Bruce Ratner and Brooklyn Borough President Marty Markowitz in their Metrotech Christmas tree lighting ceremony. Merely to show up at such an event is to support Ratner’s government-assisted eminent domain abuse-fueled 1% style mega-monopoly in Brooklyn, which accounts for the dearth of politicians appearing there.

Cuomo As Another Elected

(Nearly full size Cuomo image in line waiting to get into the afternoon hearing.)

There was one non-present elected representative to whom everyone in the room was paying a lot of attention, the one who was running the show: Governor Andrew Cuomo. There was a pervasive worry that Cuomo was fixated about issuing permits to frack as soon as he could. About the only way perceived to pull him back from the brink was something else people were talking a lot about: How fracking ought to interfere with his presidential aspirations (and as one woman speaking said, even his aspirations for a second term as governor).

New York’s Leadership

Several speakers brought up the subject of New York’s leadership. Going back to the era of Teddy Roosevelt New York has always been a leader in protecting its environment. The fossil fuel industry’s purpose in targeting New York so strenuously for an overturn of its environmental protections likely has a particularly insidious aspect to it: If the industry can sell despoliation in New York it can by “spreadin’ the news” parlay that into a sales pitch for fracking anywhere else in the country. A sort of “New York, New York” refrain mentality: “If I can frack it there, I'll frack it anywhere, It's up to you, New York, New York.”

The alternative is for New York to continue to the be the kind of environmental leader it has always been by being the first state to ban fracking.

“Report Environmental Crimes”

("Report Environmental Crimes": click to enlarge)

A defining moment of the hearing came when one fellow testifying noted in his testimony that brown police car-style DEC automobiles lined up on the street outside the entrance of the hearing all had a DEC motto stenciled on their sides:“Report environmental crimes.” The gentleman really didn’t need to say anything more. Recognition of the perspicacity of his comment spread throughout the auditorium, putting it in an uproar of laughs, hoots, hollers and gasps of disbelief because all of us there knew in that instant that this was exactly what we were truly there for: In our testimony we were all reporting an environmental crime. In fact, that’s the way I already had my testimony written. I was reporting it as a crime in the making, a “hit and run.”
(Above, "Report Environmental Crimes," Special Phone number: 1-800-TIPPDEC or 1-800-847-7332)

My testimony on the subject follows (which I also handed in in writing with attachments linked to in this article). Moving briskly I delivered it within the three-minute deadline. Following that testimony below I am continuing this article with substantial written amplification of most of my testimony’s points and in the course of doing so I provide more coverage of the hearing by referring to points covered by others.

If and when I become aware of any available video of my testimony on the web I will link to it and perhaps insert it in this post. I tried to deliver it with an impact that would give Ruffalo a run for his money.

Deadline for Submitting Written Testimony Extended to January 12, 2012

One last thing I should note before getting on to my testimony: The big news announced at the beginning of the hearing is that the deadline for submitting written testimony was extended (as of last week) from December 12th to January 12th. Everyone should consider taking the opportunity to submit testimony.

(Map of Marcellus Shale from Geology.com. Click on this or any other image in this post to enlarge.)

Testimony of Noticing New York and National Notice


Here then is our own testimony supplied at the afternoon hearing.

November 30, 2011

New York State
Department of Environmental Conservation
625 Broadway
Albany, New York 12233-6510

Re: November 30, 2011- Hearing Regarding High-Volume Hydraulic Fracturing SGEIS

Dear Department of Environmental Conservation:

This comment is being offered in the name of Noticing New York, and National Notice, independent entities dedicated to insistence on good economic development policies in New York and the nation as a whole.

I offer this testimony as an attorney experienced in real estate, as an urban planner and as former senior government official who worked for more than a quarter of century in the areas of public finance and development for the state’s finance authorities.
1. With the introduction of fracking New York State is about to suffer a colossal hit and run at the hands of the fossil fuel industry.

2. Most hit and runs are accidents. Not this one. This one comes at us premeditated and well financed.

3. When I was in government my departing boss left me in charge of the legal department for my agencies with a critical piece of advice: “Just because someone tells you that you have to make a decision immediately, don’t think you have to: You’ll be better off waiting.” Indeed, I knew from experience negotiating hundreds of deals: When someone is trying to rush you to make a decision the rush is going to be to their benefit and your detriment.

4. There are reasons the fracking companies want to do their dirty work fast:
a. They want to get in before people realize how extraordinarily damaging fracking will be to the environment, (most of that damage is very long term and too much of it, like leaking wells, won’t show up immediately: 5% of new wells leak but 50% leak eventually), and

b. They are aware that fracking, even though it was just invented, is about to be an obsolete technology. I refer you to economist Paul Krugman’s recent [November 6, 2011] “Here Comes the Sun” column for two propositions:
∙ That if the fracking industry were forced to internalize its huge external detriments and cost to the public it is probably not economic now, and
∙ Solar cell technology is advancing so fast that even without that internalization fracking will soon be uneconomic anyway.
5. Virtually no corner of the state will be unaffected by fracking’s external costs:
a. Decades of water pollution, poisoning:
∙ essential underground drinking water acquirers, and
∙ drinking water in rivers and streams- water treatment facilities will be wrecked.
b. Massive quantities of water usurpation
c. Radiation poisoning in the form of released radium and radon (lasting for thousands of years).
d. Earthquakes and instability of the land.
e. Significant poisonous air pollution.
f. Release of carcinogens.
g. Greenhouse gas pollution releasing climate change-causing carbon that was safely sequestered for 400 million years.
6. There is a sales pitch about economic benefits but fracking is a resource extraction economy that builds up no long-term benefit compensating for the damage it will leave in its wake or the businesses it will drive out.

7. Some might say the fracking companies want to get started before the science on this brand new technology is in. I’d suggest they want to get started before the science that’s already in gets out.

8. Fracking is too destructive to be permitted at all but it certainly should not be permitted without significant protections not now in place or proposed, including:
a. Prohibitions on confidentiality covenants that prohibit the true facts from getting out, and
b. Lessor remorse covenants that allow landowners to terminate lessees upon the unveiling of any misrepresentations of science or facts by the industries.

Sincerely,


Michael D. D. White

PS: Attached are two of the articles I have written about the proposal to allow high-volume hydraulic fracturing, both of which are available on the web:
∙ Monday, November 21, 2011, Fracking Double Whammy: New York Loses Two Aces In The Hole When Confronting Climate Change (i.e.Weather Weirding/Global Warming)

∙ Friday, July 29, 2011, Conundrum: If Gov. Andrew Cuomo Traded The Moratorium on Hydrofracking To Get Gay Marriage Would That Be Good Or a Bad Thing?
Hit and Run As the Appropriate Metaphor For What Is About To Befall New York at the Hands of the Fossil Fuel Industry

Numerous times during the hearing speakers said that “we can’t play Russian Roulette with the future of New York.” Although that metaphor about playing with risk seems to have gained significant traction I don’t think it is as good a description of what is waiting in the wings as an intentional hit and run by the fossil fuel industry. That is because with Russian Roulette there is an implicit 5 to 1 chance that the risk being played with, although significant (death), might not materialize. With fracking it is altogether certain that New York State will be damaged significantly in numerous ways. Consequently, everyone will be affected if only as a taxpayer but probably also by one form or another of the extensive pollution. The prospect of deaths also factors into the equation. The risk of any particular set of damages occurring to any one family or community may have an unpredictable Russian Roulette quality but overall significant damage to the state is guaranteed. That’s why it needs be spoken of as an intentional “hit” by the industry. The reason it is also a “run” is that the industry is providing no meaningful insurance or guarantees that in the aftermath the ensuing devastation can or will be cleaned up or otherwise attended to.
(Above, a map of of major NYS drainage basins from the NYS Department of Environmental Conservation.)

Evidence of the Rush

Something that many of those testifying complained about itself stands as evidence that Governor Cuomo is attempting to rush the approval of fracking in fthe state: Why, the question was asked repeatedly, are the regulations, the environmental impact statement and the plan to start permitting all being presented for consideration simultaneously, rather than step-by-step, one at a time? This combined approach means, for instance, that regulations won't get considered in the context of the public knowing what environmental mitigation will and will not go into effect as a consequence of the environmental review. And it looks like Cuomo wants to start issuing permits as soon as possible no matter what.

(Hearing officer DEC’s Deputy Counsel Russo on right, stenographer on left)

This rushing is also evidence that Cuomo is treating hyrdofracking as a political deal he has made and therefore also a “done deal” that he plans to force through no matter what. A “done deal” scenario means that there is very little that those holding the hearing are willing to seriously listen to, especially since the overriding message of those testifying was that fracking should simply be banned, something Cuomo doesn't want on the table. Therefore, the concerns of one person testifying about whether any of the speakers could legitimately expect to be listened to were on target. My memory is that this was the same person who noted that at various points during the hearing the DEC’s Deputy Counsel Russo had accused attendees of being childish in their jeering and who then observed that any childishness occurring was on the other side and at a much grander level if Russo and the state were holding the hearing merely for show.

With respect to the rush, a number of speakers made the point that if extraction of gas from the Marcellus Shale is actually a good idea, it is one that can wait. The shale has been down in the ground for 400 million years and it will certainly still be there after taking the the time to carefully consider the wisdom of extracting its gas.

With Internalization of Costs Fracking Is Already Uneconomic

That industries should pay for the harm they cause, internalize those costs, is a basic economic rule. Paul Krugman puts it very well in his “Here Comes the Sun” column:
Economics 101 tells us that an industry imposing large costs on third parties should be required to “internalize” those costs — that is, to pay for the damage it inflicts, treating that damage as a cost of production. . . . But no industry should be held harmless from its impacts on the environment and the nation’s infrastructure.
Accordingly, Krugman also points out that the special treatment the fossil fuel industry wants in order to exempt fracking from internalizing its costs “makes a mockery of free-market principles.”

Now it may be that when industries affect health, cause death and ruin the environment for the rest of the public they shouldn’t be permitted at all. There is, however, an argument you can make in economic circles that if you can place a price on these things then you should permit an industry that succeeds in internalizing such costs to do business. Still, when you do put a price on all of the harm that fracking will do, including the very long-term damage of global warming, permanently polluting drinking water, earthquakes and thousands of years of radium poisoning it is extremely doubtful that fracking can pay for itself now. That being said, the industry is looking to be excluded from internalizing virtually all of its eternal costs.

Fracking Is About To Be Made Obsolete By Newer Technologies Like Solar Cell Power

As I said, during the entire time I was at the hearings (1:00 PM to 9:00 PM with minimal breaks) I heard more than 100 speakers and only 4 ½ spoke in favor of the fracking technology. One of the 4 ½ speaking in favor one was a rumpled looking man towing a suitcase who said he was a scientist and he advocated that fracking be allowed using a standard fracking industry argument that gas from fracking should be conceptualized as a “transitional fuel.” In other words, the industry concedes the point: Fracking is not here to stay. Ergo, we are only arguing about exactly how long fracking is expected to be around before everyone picks up and abandons it. The transition that will leave fracking in the dust is coming fast.

Here is another place quoting from Paul Krugman’s article will be worthwhile. Krugman referred to “Moore’s Law — in which the price of computing power falls roughly 50 percent every 18 months” and noted that there is an accelerating downward trend in the price of solar installations:
In fact, progress in solar panels has been so dramatic and sustained that, as a blog post at Scientific American put it, “there’s now frequent talk of a ‘Moore’s law’ in solar energy,” with prices adjusted for inflation falling around 7 percent a year.
You know those huge flat screen televison sets that were being sold for $200 apiece as part of Black Friday specials? Remember just a few years back when equivalent sets were being sold in premium electronics stores for $40,000.00 apiece? That’s the exponential effect of Moores law. What’s not getting any cheaper, however, is the price tag you can put on clean, safe water and the environment. The technology already exists to produce solar cells nearly ten times as efficient as current ones. All that’s needed now is to reduce the cost of that technology. Do you really think that will take very long?

Virtually No Corner of the State will Be Unaffected by Fracking’s External Costs

For more amplification about how fracking’s pollution an effects will extend to every corner of the state (and beyond) read my comprehensive earlier article: Friday, July 29, 2011, Conundrum: If Gov. Andrew Cuomo Traded The Moratorium on Hydrofracking To Get Gay Marriage Would That Be Good Or a Bad Thing?

(A mapping of DOH radon danger data)

Things I heard discussed at the hearing that I did not discuss in that article are:
• How the use of gas from the Marcellus Shale in New York City kitchens (because the gas isn’t the same as gas we currently use from other locations like Texas) will result in accumulation of radon which, it was suggested, would translate into additional lung cancer deaths in the city in the thousands.

• That the proposed regulations would not actually keep fracking even a very small (and unsafe) distance– just feet really– from New York City’s drinking water because apparently the regulations about distance from the drinking water system pertain to the distance a fracking well must be at the surface of the ground, not the required distance from the drinking water underground. Since fracking wells are drilled down and then horizontally, this means that wells could be drilled directly under New York’s water supply and water supply tunnels. The earthquakes or seismic activity caused by fracking could cause fracture of the tunnels and leakage of gas into the system. Thus there was also speculation on the part of testifying government officials that New York City’s water would be could become contaminated in a variety of ways, including with methane and that the methane could cause explosions within the water system.
(Image from geology.com Fractures from explosions can radiate for as much as 1500 to 1800 feet. 16 wells may spread of from one drilling pad location.)

Jobs- It’s An Industry Sales Pitch: Hallmarks of Hyperbolic Hype and Hooey

It can be expected that the fracking industry would be delivering a sales pitch that fracking will be good for the economy and that it will create jobs irrespective of whether that is true. It’s not true: As we will get to in a minute, fracking will be very bad for the economy and will destroy jobs. It’s no surprise either that when people are desperate some of them are going to buy the standard `creation-of-jobs' hype whenever that hooey is served up by any half-decent PR firm. Some of the press is also going to buy in, engaging in press-release journalism. What’s surprising (and one of they ways we know that PR firms are out there working hard) is that within days of each other we heard two “jobs are us” uncritical puff pieces presented on public radio.

One was on NPR’s morning edition: Gas Drilling Boom Brings New Life To Steel Industry
by Jeff Brady, October 13, 2011. It couldn’t have sounded more industry-scripted if it had tried: “rust belt” “brought back to life,” etc. Then it gets into the standard impressive sounding economic jargon stuff, the “ripple effects” those effects apparently being evidenced by a new drilling pipe manufacturing factory in Youngstown, Pennsylvania that ripples further to a steel industry executive testifying that the hotel industry must be doing well because he “had difficulty finding a hotel room in the small town of Williamsport last winter.” The Pennsylvania's Department of Labor and Industry (reporting to a Republican governor supportive of fracking) chimed in with some boosterish background figures and interpretation respecting gas industry hiring. No other side to the story was presented. The closest to it was the suggestion near the end of the story (only intimating a darker side to those listening very carefully) that the additional jobs created extended to Sierra Club’s hiring of a gas industry monitoring activist who in turn is hoping that the increased drilling activity will lead to the hiring of more government regulators to “look over the shoulders of drillers.”

The other story was on APR’s MarketPlace: North Dakota, land of jobs, by Stacey Vanek-Smith
Marketplace, Tuesday, October 18, 2011. That broadcast also hits on the `it’s hard to find a hotel room/motel room’ angle. Same PR firm? And it also gives examples of the economic “ripple effect,” this time for North Dakota: Walmart is hiring, and McDonalds is offering hiring bonuses, truck drivers are employed. Like the preceding story this one also engaged in a wowie contrasting of conjured images: a `world without jobs’ vs. ‘a world with jobs.”

Unlike the preceding story this one could not find any example of another factory or business (like the drilling pipe factory) that was created as a direct consequence of fracking activity but it managed to do something far more slick: A voice clip of Republican Governor Jack Dalrymple aying that jobs are great in his state introduces a statement that the tax base is so good that property tax exemptions and a good tax environment “helped attract” a job-creating Caterpillar manufacturing plant to Fargo. Zounds!: Fracking is subsidizing the creation of Caterpillar manufacturing jobs by financing tax abatements? I’d like to see the math on that . . . It probably doesn’t exist. . .

. . . But the story didn’t actually specifically say that. It just sounded like it. And what pays for what in terms of economic development involves a lot of fungibility (one day you might hear one thing is paying for something, another day that something else is) and fuzzy math. Fuzzy math tends to crop up especially when politicians are selling their pet projects. Furthermore, if one industry, like fracking, were paying to subsidize another totally unrelated business (because there was nothing else it could actually directly and naturally economically stimulate) that would probably not be good economics. (The Caterpillar plant was manufacturing mining equipment.) Nevertheless, I thought I would do some checking to find out what reporting there had been on the Caterpillar manufacturing plant story before it was included in this recent puff piece.

One thing I found out was that the Caterpillar manufacturing plant was not a new Caterpillar plant being attracted to Fargo as the APR article made it sound, it was an existing Caterpillar plant that Caterpillar was choosing to expand. Caterpillar was getting support from the state and the city of West Fargo, and a local economic development corporation including property tax exemptions. An article with interview of the mayor telling why West Fargo’s government was providing benefits for Caterpillar in the form of low corporate and property taxes explained that “The people in the city have been struggling with the lack of employment” as “several people from West Fargo had lost their jobs in 2009 due to recession,” quoting the mayor that they would be providing “facilities for the company for assisting their people for providing jobs.” So how a story is told depends on who is telling it, when and why.

Yet another version of the story is that Caterpillar was expanding because of “global ties” and the “current worldwide boom in mining” and because according to the facility manager for Caterpillar's West Fargo operations, “The West Fargo community is really a very good place to do business,” where “there is a well-educated, highly trained work force and the quality of life is good. The metro area is growing and we have an excellent education system.”

Certainly, as fracking is going on in North Dakota there is some identifiable number of jobs that exist there in connection with it and it may further be reasonable (but not a forgone conclusion as we will discuss) to conclude that with fracking's recent advent it has increased the current number of jobs in the state but is fracking the best explanation for why North Dakota currently has a low level of unemployment?

A January 2008 New Year’s Day article in the New York Times, Oil in North Dakota Brings Job Boom and Burdens, (by Monica Davey) reported how an increase in the number of drilling rigs in the state at that time, from 52 in December 2006 to 250 in October 2007, had increased employment. One of type of job focused on in the article was that of “landmen,” the people who show up early on to review land records as part of the effort to buy up drilling rights for the oil companies. Because of the availability of figures in the article like the number of drilling rigs and the number of new workers that the oil industry says it “expects to need” in the next two years (12,000) and the number of legal agreements that were recorded in a single month permitting drilling on the land of local farmers (1,200) it the industry clearly had some sort of input into the article but the article wasn’t 100% friendly to the industry. The reporter went out to discuss things with others in the community. According to the article “roads and water systems are being used at levels unseen here” and the industry needs “more electricity for its new gas plants, more fresh water for all this drilling.”

The article also noted that many in the community, based on experience, were suspicious of the apparent boom turning into an eventual bust:
Some here also wonder how long the oil boom will last. In places like Williston, a city of more than 12,000 about 70 miles west of Stanley, people have been through such a boom before and suffered through the bust that followed.

When oil showed promise in the early 1980s, some thought Williston’s population would grow to 40,000. City officials took on more than $20 million in debt to build streets and sewers for subdivisions that never arrived after the price of oil collapsed in the mid-1980s.

No one has forgotten.
The article which speaks about an oil boom doesn’t make entirely clear as do later articles about the North Dakota activity, that it is about the new technology of fracking, including fracking for gas, but it apparently is. Fracking can be used to produce oil and/or gas, depending on what is underground. The article explains that the oil was found “more than 50 years ago, but no one figured out how to tap into it successfully until recently” and that it is being extracted now because of rising oil prices and “thanks in part to new extraction technology.” Gas was clearly being produced in addition to the oil as the article tells us “Much of the natural gas that has also been found in the drilling here is being burned off” while workers build new natural gas plants in the region.

Twenty months after the Times article there was a "24/7 Wall Street" article (August 2009) specifically about North Dakota’s low unemployment rate and the reasons for it instead of being about the oil and gas industry. This article, providing another perspective, nearly fails to mention the gas industry at all bringing it up in a list (after geothermal) of what the Nabors company makes: “drilling equipment for geothermal, gas, and oil exploration and production.” Ahead of this mention the article discusses as reasons for the state’s high level of employment in the following order:
• the growing health care industry (“A large number of the biggest employers in North Dakota are health care companies. MeritCare in Fargo is the largest with a total of 6,400 workers. Ten of the twelve largest employers in the state are hospital groups, clinics, hospitals, or benefits firms.” )
• Bobcat, which makes small loaders, excavators, and industrial vehicles used at construction sites.
• LM Glasfiber, which makes wind power infrastructure components.
• Infrastructure investment paid for by the stimulus package.
• The high tech disk company Imation.
So both wind power and geothermal were mentioned as employers before the gas industry. The article sums up the way it sees the big picture of employment in North Dakota, population 640,000 people:
North Dakota may be a job utopia of sorts. Health care and government work support a great deal of the state’s population. Everyone works, no one makes much. For those who can live through the winters, the air and water are clean.
(See: Unemployment USA: Moving America To North Dakota, by Douglas A. McIntyre, August 6, 2009)

To be fair, since this article was written in August of 2009 and fracking is a recent 2006/2007 technology fracking may, since that time, have had a chance to become a bigger part of North Dokota’s employment picture but, by the same token, the article’s concluding mention of how the “the air and water are clean” may be less appropriate then when it was written.

We have digressed covering other reporting to make clear that with respect a number of things the APR MarketPlace North Dakota fracking=jobs story could have been a very different one presenting different facts and explanations, why unemployment might be low in North Dakota, whether a fracking boom actually augments a state economy in a stable contributory way, why and how the expansion of a Caterpillar manufacturing plant occurred (not the creation of a new plant), whether any other real jobs of value outside the industry were truly being stimulated as they existed alongside fracking, etc.

If the hype of the MarketPlace story was not otherwise absolutely explicit there is one thing that should make it so: It included as news a clip a Halliburton executive (Jim Brown) going on Jim Cramer's CNBC “Mad Money” show begging workers to come to North Dakota and promising extremely high-paying jobs while Cramer follows up by tantalizingly emphasizing (as if it were a late night infomercial) “Wait a second, you're talking about an unskilled job!” Why does this make me think of the self-serving job advertisement fliers handed out to the Okies in the “Grapes of Wrath”? We all know Dick Cheney's Halliburton. And Cramer was, after all, the fellow who was famously skewered by Jon Stewart going about as far as Stewart ever has on his “Daily Show” for being the willing host and home for uncritical hype and shilling for businesses clearly destined to do damage to his listeners (video available).

Featured near the end of the MarketPlace story is the fact that there are jobs at North Dakota McDonald’s. The oddness of this anticlimactic information is accounted for by its use as a cute device to suggest that North Dakota’s fracking-based formula for low unemployment can be “franchised in other states” (are you listening, New York?). How would that best be done? Governor Dalrymple comes on again in another clip to convey a favorite Republican message, that an important part of that franchising formula (besides not taxing companies) is “a friendly regulatory climate.”

Excuse me: Is the idea to promote unregulated or lightly regulated fracking? The industry certainly got their message in here, didn't they?

Why Fracking Won’t Be Good For the New York Economy: Why Fracking Will be BAD For the New York Economy

You can’t expect that reporters, even reporters for APR’s MarketPlace, are going to be economists but you can expect that they would at least be fact checkers. But let’s now get into the economics.

(Above, DEC hearing officials ready to give a limited number of speakers three minutes apiece.)

Fracking transforms a region into a resource extraction economy. A resource extraction economy is one variation of what Jane Jacobs in her “Cities and the Wealth of Nations” (1984) calls a “supply economy.” Regions that depend on “supply economies” she calls “supply regions.” A resource extraction economy is likely the lowest rung of desirability in terms of such economies, being the least worthwhile in that after the resources are extracted, the region can no longer supply them as opposed to a farming region that doesn’t deplete its soil and can sustainably keep producing its product era after era. Fracking also depletes local natural resources in in the damage that it does to the environment. Even if a full extraction of the natural resource never occurs a supply economy can suffer an equivalent terminal ending when demand for its product fails.

It may take a moment’s thought to fully appreciate this but its Jacob's analysis that in a major sense supply economies don’t really represent true development at all. Jacobs compares the economies found in supply regions to those of the third world. The problem is that supply economies are not built upon connections and they don’t build up the intricate nearby and interior connections and industry that allow a community to advance. In fact, not being built on connections and interrelationships, the minimal connections of a supply economy that do exist to the rest of world and outside economies may be exceedingly tenuous: The outside economies supplied may be across an ocean or the connections may be little more than depositing gas or oil in a pipeline that then traverses a continent and perhaps afterwards an ocean.

For one illustration to understand the drawbacks of supply economies it is an interesting exercise to think back to the United States Civil War. Thinking back to consider why the North won the war you might recall reasons having to with the North’s superior industrial might, its supremacy when it came to ships and their manufacture, as well as the railroads that had newly emerged in importance and the North's thriving industrialized cities that supported a much bigger population that could be tapped for soldiers. You might conclude from this that the North had a bigger superior economy that in the end enabled it to prevail even though the South was fighting on its own turf to defend its own soil. But one should not be too quick to conclude that the North was necessarily the richer half of the country with the bigger economy. It depends how you measure these things. It is possible to argue this both ways.

By some conventional measures the South was, at the start of the Civil War, the wealthier half of the country, notwithstanding that the slave-based nature of its cotton-growing economy was deserving of opprobrium in and of itself. If ranked as an independent nation, its per capita income, excluding slaves, would have ranked it as the fourth richest country of the world in 1860, the year preceding the outbreak of war. Furthermore, as Jacobs points out elsewhere in her book, the South would have been even wealthier before the war if Northern industry had not been protected by tariffs on goods imported from abroad. (Those tariffs were also an important part of government income.) The South would have preferred to get greater value when selling their cotton by being able to buy, without tariffs, lower cost manufactured goods imported from Europe.

Jacobs likens the South's pre-Civil War economy of to the supply region economy paradigm she offers by describing the economic history of Uruguay (at the beginning of her chapter on “Supply Regions”) which “beginning in 1911 . . . . was able to start building what became probably the world’s most generous and fully rounded welfare state.” Uruguay prospered “as an unusually rich supply region for several generations” making “a big success of animal husbandry” supplying “meat, wool and leather to distant markets.” It did little else but “lacked for nothing because whatever Uruguay did not produce, it could afford to import.” However, things went economically awry for Uruguay as soon as its markets overseas dwindled and disappeared.

Jacobs describes how Uruguay managed to compound its problems by thereafter not developing an organically connected economy before it was too late. Ultimately, as the U.S. State Department puts it: “In 1973, amid increasing economic and political turmoil, the armed forces closed the Congress and established a civilian-military regime, characterized by repression and widespread human rights abuses.” (You may remember Costa-Gavras’ 1973 film “State of Siege”.)

What happened to Uruguay has parallels in what happened to the American South. Suffice it to say that after the war the market for the South’s cotton largely disappeared, and with it the South’s wealth, like Uruguay’s, evanesced. One can argue to an extent about how precisely this happened. For instance one reason European countries may have started buying their cotton elsewhere was because were unable to buy cotton from the South throughout the way because of the Northern blockade. It is also true that the South also suffered significant destruction at the hands of the North during the war.

But afterwards and as Jacobs says (page 82) “until the 1930s” the South was “the most backward part of the country” with an antiquated farm economy that couldn’t support its residents resulting eventually in the clearance of a vast population from the area. Jacobs notes that in Georgia:
. . . there had been about 1.5 million farmers and farm workers in 1930. Fifty years later there were only about 2225,000 and more than 300,000 farms had been consolidated into fewer than 70,000 in 1930.
Jacobs quotes a famous passage (page 36) about a Pickens County funeral that was part of an 1889 speech made by Southerner Henry Grady to a gathering of industrialists and bankers in Boston when Grady was seeking economic development aid for the South from the North. Grady was an essayist and editor of the leading newspaper in Atlanta. Pickens County was about eighty miles north of Atlanta.
The grave was dug through solid marble, but the marble headstone came from Vermont. It was in a pine wilderness but the pine coffin came from Cincinnati. An iron mountain over-shadowed it but the coffin nails and the screws and the shovel came from Pittsburgh. With hard wood and metal abounding, the corpse was hauled on a wagon from South Bend, Indiana. A hickory grove grew near by, but the pick and shovel handles came from New York. The cotton shirt on the dead man came from Cincinnati, the coat and breeches from Chicago, the shoes from Boston; the folded hands were encased in white gloves from New York, and round the poor neck, that had borne all its living days the bondage of lost opportunity, was twisted a cheap cravet from Philadelphia. That country, so rich in undeveloped resources, furnished nothing for the funeral except the corpse and the hole in the ground and would probably have imported both of those if it could have done so. And as the poor fellow was lowered to his rest, on coffin bands from Lowell, he carried nothing into the next world as a reminder of his home in this, save the halted blood in his veins, the chilled marrow in his bones, and the echo of the dull clods that fell on his coffin lid.
The point of the above is not that all these nearby available resources should have been extracted; the point is that, had they been extracted, the South was without the wherewithal, the intricately interrelated businesses, that would have enabled it to process and make use of those resources. In the past its economy had simply focused on shipping cotton to distant ports. (Grady was pleading for Northern aid. Jacobs explains how for years the cities of the North, in fact, then did actually subsidize the South.)

Jacobs says on page 63:
Rich or poor, supply regions are inherently over-specialized and widely unbalanced economies, hence unresilient and fragile, helpless when they lose their fragments of distant markets. The disasters that befell Uruguay are the nightmares that trouble the rulers of currently rich oil supply regions, and with good reason.
Translated that means an economy that is fragile and helpless as soon as fracking is abandoned.

Later, Jacobs, explaining what makes “supply economies not efficient,” speaks about their detriments and why they are so often poor or needy of subsidies (p. 71). A supply economy is an economy that “contains few different sorts of niches for peoples’ differing skills interests and imaginations” and “can fill few of the needs of its own people and producers.” On page 143 she bluntly uses the adjective “dead-end” to sum up the problem nature of a supply economy an adjective she uses again (p. 146) to describe how with a supply economy focus the cities of the South, “Charlston, Savannah, Richmond, St. Augustine and Williamsburg” failed to develop and mature confining “themselves for the most part to simple two-way, dead-end trade . .”

Fracking is not an economic activity that is built up on existing connections in the area. It is not, for instance, attracted to the area because it is compatible with or aided by the existing network of roads. In fact, in rural New York it will stress the inadequacy of those local roads and the fracking industry has no interest in paying for and will not pay the additional cost the taxpayers will have to bear as the industry begins to burden those roads. Rather than being based on connections to the existing local economy, fracking is the reverse: It is the lack of connection that the frackers have with the local businesses that allows them to make plans so economically hostile to the existing interconnected local business that currently do exist, businesses like winemaking, tourism and farming.

Fracking's Collision With an Alternative Vision of New York . . . Whose Was It? . .

It is ironic that with his promotion of fracking in New York Andrew Cuomo should be undertaking to undo one of his most major initiatives on New York's behalf when he was Secretary of HUD, the $131 million in federal assistance he was announcing in 1996 and 1997 as the “Erie Canal Corridor Initiative.” It involved additional investment of about $102 million by the private sector and $57.3 million in other public funds. Quoted in his own agency’s press release Cuomo said at the time:
"We expect the Canal Corridor Initiative will pump about $290 million into communities along the canal, and transform the canal system into a mighty engine for economic growth and job creation in New York," . . ."We will make this initiative succeed as a comprehensive, end-to-end revitalization project that will benefit all New York."

"We will create a new Canal Corridor revitalized with new marinas, parks, trails, restaurants, retail stores, businesses, restored historic sites, and other recreational and commercial facilities"
The purpose of the initiative was to build tourism and an attractive future and recreation “recreationway” for boaters and hikers like the canals of England and France, a “magnet for American and foreign travelers and for economic development benefiting the canal's municipalities”:
"The announcements we've made this week in New York will give powerful momentum to the campaign to transform this great canal system from an abandoned commercial waterway into a premier tourist attraction," . . . "We want to make sure that best days of the Erie Canal are not in its past, but in its future."
According to the Times coverage:
The effort to revive the canal survived because the bordering towns and cities want some comprehensive plan that would draw travelers and boaters to take pleasure trips on the canal, which winds through the pleasant scenery of western New York, the Finger Lakes, the Mohawk Valley and up to the Adirondacks.
Comparing the project to other revitalization efforts such as San Antonio’s Riverwalk and Washington State’s Puget Sound Cuomo suggested that advantage could be taken of the fact New York State’s “Erie Canal has nicer geography and a richer history.”

The canal initiative makes a lot of sense in the Jane Jacobean way that it is built upon and integrates with existing infrastructure and history and supports already existing population centers in New York. Senator Moynihan, one of its promoters, focused on the history:
''You go down the canal and every 10 miles there's an event in the history of the Industrial Revolution,'' Senator Moynihan said. ''This is where cannons began. This is where typewriters began.''
And in the HUD press release Moynihan makes these remarks in connection with population centers:
"The contributions of New York's canals once brought prosperity to the towns along their banks. In 1987, we secured the first federal funds for restoration of the Erie Canal. Today's awards will continue this noble enterprise by giving cities and towns along our canals important seed money to support their own redevelopment efforts."
Fracking is not compatible with these visions of improving economic prosperity previously promoted by Cuomo. Can New York expect to take advantage of its superiority as a water-rich state or its bucolic vistas when fracking makes the state synonymous with water, air and radiation poisoning? What accentuates the tragedy of other economic opportunities and businesses being driven out by fracking is that fracking is such a short-term dead end. The American South with King Cotton and Uruguay with its animal husbandry each had multiple good decades before the lack of development associated with their supply region economies came home to roost, for Uruguay it was only four. But fracking will be here just long enough to do its long-term damage and then it will be gone, its companies vamoosing or going bankrupt, leaving behind unpaid bills.

(Crowd waiting for the afternoon hearing to begin.)

This doubling down on fossil fuels to provide energy accompanied by the creation of exponentially greater pollution should be a warning sign in itself. I previously wrote about another observation of Jane Jacobs, also concerning dead ends, this time focusing on pollution. In her “Economy of Cities” Jacobs observes (p. 117) that the most ruthless depredations of the environment occur “where people exploit too narrow a range of resources too heavily and too monotonously for too long,” without repair or developing alternatives. And this, she asserts is symptomatic of “stagnating and stagnant economies.” In other words, it represents dead-end folly.

Says Jacobs, looking back over the entire history of mankind for her evidence (p. 118):
. . serious stagnation becomes appallingly destructive to the environment. Common sequels in the past have been deforestation, complete destruction of wild life, loss of soil fertility and lowering of water tables.
Regulation of Fracking: Does It makes Sense?

Does regulation of fracking make sense? It seemed that the consensus of the more than 100 people speaking against fracking was fairly universal: The speakers were not in favor of fracking, period- It should be banned outright- The harm of fracking cannot be mitigated by regulation. A number of speakers went out of their way to be very clear that fracking cannot be effectively or economically regulated. How would the state be able to afford the army of state employees working for the Department of Conservation and the Department of Health and even the Department of Transportation that it would take? How would you, for instance, stop illegal nighttime dumping of the vast quantities of poisoned wastes?

Even so, I concluded my own testimony by quickly suggesting two regulations even while saying “fracking is too destructive to be permitted at all.” Why? Two reasons: First, to start conceiving of certain regulations not now in place that would have to be in place is instructive about the gravity of the problems being faced, and second, certain regulations that would be altogether appropriate to insists upon would, if put in place, simply kill the industry.

Banning Confidentially Covenants

I suggested banning confidentiality covenants. This goes to a broader matter of public policy. Too often the public and public officials do not have the information available to make appropriate decisions because confidentiality covenants have put that information beyond reach. I am not just talking about fracking. This also applies to the use of confidentiality covenants restricting the free speech of those who sign them in connection with many other things:
• Those being evicted by mountaintop removal coal mining
• Those finally agreeing to accept settlements when being chased off their properties by eminent domain abuse as in the case of Ratner’s Atlantic Yards mega-monopoly or Columbia University’s takeover of West Harlem.
• Those like damaged fishermen accepting settlements or interim clean-up work after being damaged by the huge BP Gulf Coast oil spill and scientists looking for chances to study its effects.
• Those agreeing to accept settlements after being harmed by corporations’ negligence and bad conduct (torts), sometimes intentional, (who may then go on to ridicule and misrepresent situations), as is delineated in the documentary “Hot Coffee.”
• It is likely appropriate to add to this list the perpetuation of existing confidentiality arrangements via collusive legal settlements that stymie insight into the causes of the nation's 2008 financial crisis.
The effect of these silencing agreements also contributes to an overall shift in control occurring generally in a variety of different ways affecting who can speak and how freely and effectively about important issues in this country: Control of effective speech is more and more in a variety of ways becoming the possession of corporations and the most monied class. (See: Saturday, October 22, 2011, Occupy Wall Street and the Banks- Messages From Bonnie & Clyde, “They’ve Got Too Much Money”: Ownership of the Public Forum by the Wealthy?)

These silencing agreements should be prohibited as against public policy across the board so that there can be a more informed public debate. I have said that the industry doesn’t want the facts of fracking to get out to the public and this is one way the industry prevents facts from getting out and perseveres in misrepresentations. When T. Boone Pickens went on WNYC’s Brian Lehrer show in April to promote greater government subsidization of fracking (in which Pickens invests) he folksily bantered to Brian Lehrer about how a lack of public complaint meant that there aren’t negative environmental effects from the poisonous chemical used. Lehrer asked:
There have been two fairly damning studies about the potential effects of hydro-fracking . . . one about methane which will get to in a minute and one about the chemicals used in the process. A Congressional report from Democrats on the House Energy and Commerce Committee found that over 650 of the products used in the hydrofacking process are carcinogens or are controlled by the Clean Air Act, benzene, was amoung those carcinogens and other studies have found that the levels of benzene used in hydrofacking are extremely high, nearly a hundred times in diesel.
Lehrer had to circle back to get Pickens to finally answer the question after Pickens engaged in initial coy roundabout evasions that included misinformation to the effect that the currently proposed fracking is supposedly not a new, significantly different process from anything we have seen before. Pickens finally responded citing the lack of public complaint that has been heard (at about 10:10 in the conversation):
. . . I don’t think. . . I dunno. . Jess . . . You’ll get through the conversation: If you’ve had 800,000 wells fracked and nobody’s complained about it, I don’t think it’s doing what some people say its doing.
Pickens was dissembling in multiple respects: 1.) He persisted in trying to represent that the currently proposed high-volume hydraulic fracturing is not a newly invented technology (dating back to 2006/2007) that’s qualitatively different from what has been done before (and therefore was he was significantly inflating his figures for how many wells have been fracked and how far back in time they were), 2.) He said that nobody has complained (which Brian Lehrer challenged him on because obviously people have complained), and 3.) He implied to anyone uninformed in the audience that the world does not include a large number of people who can’t complain because they have signed confidentiality covenants.

It is time to call the industry’s bluff by changing the law. Because it is a matter of public policy these “omerta” agreements can even be voided retroactively. That's what should be done.

Legislating Lessor Remorse Covenants

I suggested that “lessor remorse covenants” be required that allow landowners to terminate leases upon the unveiling of any misrepresentations of science or facts by the industries. This only seems fair. It also seems as if you might expect it to be the law already. I would go so far as not to require an affirmative fraud or misrepresentation by the particular lessee with respect to a particular lease: The better rule would be to allow contracts to be voidable when the industry as a whole is making misrepresentations or holding back information unless the lessee has affirmatively equipped the lessor of the information the industry is holding back from the public. Leases voidable on such a basis would make fracking leases much less attractive to the industry.

I did not suggest in my testimony, but it should be readily apparent from a new New York Times article, that leases would also need to be regulated for public protection by preventing uninformed landowners from making the stupid mistakes the fracking industry now regularly hopes they will make when signing leases. See: Drilling Down- Learning Too Late of the Perils in Gas Well Leases, By Ian Urbina and Jo Craven McGinty, December 1, 2011.

Says that article:
. . . many landowners and lawyers say that gas companies are intentionally vague in their contracts and use high-pressure sales tactics on landowners.
The article also makes the point that the law requires the fracking companies to tell their investors more about the environmental risks being undertaken than they are required to tell (or probably do tell) the leasing landowners about those environmental risks notwithstanding that it is the owners whose lives (as opposed to just money) will be most directly affected by those risks. Those risks, by the way, are risks that may also make a landowner liable to their neighbors for monetary damages. The article also details how things like the loss of drinking water which it describes in several situations can wipe of the theoretical benefits the landowner was contemplating when they signed a lease.

A valuable addition to the article was: A Layman’s Guide to Lease Terms, December 1, 2011. That itemizes many of the clauses that can be included in leases that will screw landowners. One of them is the “Assignment Clause”:
Allows a company to sell or transfer a lease to another company. Some landowners have complained that their leases have been sold to companies that are financially unstable or have poor environmental records.
So if you were wondering just what the hit and runs in New York may look like, expect to see clauses like these invoked to leave a landscape blanketed by bankrupt fracking companies that won’t be picking up the bill for the damage fracking will have done across the state . . . damage both immediate and damage that can last last for thousands of years.

(Waiting to get into the evening hearing.)

(This post, which started with just a posting of my testimony was updated December 6, 2011.)