Saturday, December 24, 2011

Traditional Christmas Eve Revisit of a Classic Seasonal Tale: Ratnerville, the Real Life Incarnation of the Abhorred Pottersville

It’s Christmas Eve, which means that it is time again to acknowledge and revisit the story of the creation of Brooklyn’s Ratnerville. It is, if you will, the real-life materialization of the bad alternative future the heavenly angel allowed the Jimmy Stewart character to see in the film “It’s a Wonderful Life.” That film proposed that it wasn’t going to be good for the townspeople of Bedford Falls if a one single man, Mr. Potter, with a self-interested eye only on profits, was allowed to own and control the entire town. Now in Brooklyn, because Mayor Bloomberg together with state officials at the Empire State Development agency, believe in the proposition that it is good for a single self-interested Bruce Ratner to own a 50+ acre mega-monopolistic swath of Brooklyn we are seeing materialize in reality a version of that alternative reality: Instead of the movie’s “Pottersville” we have “Ratnerville” that does, indeed, embody the sort of abhorrent conditions of life looked askance at in the film.

In real life, it is the reverse of the film: The alternative reality that can only be imagined with the aid of an interceding angel is the better life that could have been brought about if what the community asked for had been pursued. That better path would have involved implementing a variation of the UNITY Plan and awarding development of multiple parcels to different competing developers based on bids.

Returning to this story is now an annual tradition for us. Here are previous Noticing New York posts on the subject from Christmas Eves past:
• Thursday, December 24, 2009
A Christmas Eve Story of Alternative Realities: The Fight Not To Go To Pottersville (Or Ratnerville)

• Friday, December 24, 2010
Revisiting a Classic Seasonal Tale: Ratnerville
What shall we add to update the story this year? What hard lumps of coal wound up in people’s stockings as 2011 gifts from Mr. Ratner? Please indulge me if the list, compiled in haste (preferring that more holiday-compatible thoughts might preoccupy us), is less than complete. We all do know, however, of a certain omniscient Mr. Oder who keeps a thorough long list of the year’s not-nice naughties. Here though are a few events worth adding this year to additionally ornament this holiday story:

• Those who were promised constructions jobs by Mr. Ratner and BUILD (effectively Ratner's subsidiary) and never received them (although they actually labored without pay in a scam) felt it appropriate to sue both the developer and BUILD: Tuesday, November 15, 2011, Lawsuit Against Forest City Ratner And The Fallacy Of Relying On A White-owned Monopoly To Create Construction Work For The Minority Community
• It looked as if because Ratner’s arena was behind schedule and/or that the schedule for construction was never reasonable to begin with, Ratner made a decision that the surrounding neighbors should suffer 24/7 work, work throughout the night and on weekends. Wednesday, September 21, 2011, Construction of the Ratner/Prokhorov (“Barclays”) Arena Is Behind Schedule. Either That, OR a 24/7 Construction Schedule Was ALWAYS Intended. That's what it looked like and it turned out that this was probably true. What the neighbors have been subjected to includes bright land-of-the-midnight-sun lights and extreme noise situations at all hours. (Photo from Atlantic Yards Watch below.)

• When the Jimmy Stewart character staggers through the snowy streets of Pottersville in “It’s a Wonderful Life” he is assaulted by the unfriendly throb of neon lights advertising the thicket of bars that have usurped what was previously a hospitable domestic scene. Noisy real life sports bars are coming to brownstone Brooklyn: Thursday, May 19, 2011, Beyond Prime 6 and the sports bar/gastropub, a 35,000 square foot entertainment center planned for Pacific at Flatbush.

• Not content that his mega-monoply is already sufficiently sprawling Ratner was busy grabbing the last vestiges of sidewalk, leaving an almost impassibly narrow sidewalk beside his arena. Wednesday, October 5, 2011, Mayor Michael Bloomberg In the Regalia of Queen Elizabeth I? Noticing New York’s Testimony at the DOT Hearing on Atlantic Yards Bollard Plan

• The unions and public were subjected to a scary surprise even if it is only a not-nice bluff- The rest of the mega-project might be built using unattractive, untested modular units, cutting the union’s coveted payday down to . . . What?: Friday, March 18, 2011, A Ratner Bluff on the Not-So-Fab Prefab Modulars? A Second Opinion and Friday, March 18, 2011, The Real Question to Ask About the Ratner Bait-and-Switch Approach on Atlantic Yards.

• Jay-z’s image has been Ho Ho Ho Hyping around everywhere. (Is he personally Oh-noing in secret?) Wednesday, October 26, 2011, Longing For Correcting Images to Jay-Z’s Hip-Hop Hype and Ratner’s Atlantic Yards “Strategy of Distraction”

• Ratner was proving in as many respects as possible that he presides over an unregulated and unregulatable mega-project. Friday, September 30, 2011, Could the Atlantic Yards Monopoly Be Even Less Regulated Than It Is? Why A Mega-Monopoly Continuation Isn’t Workable. Ratnerville? some of those down in the dumps are calling it Ratner Heights.

• Ratner put the community at risk by not securing his construction site before an impending hurricane- And, for perspective, compare the hefty subsidies Ratner is getting with the cost of cleaning up after that storm: Thursday, September 1, 2011, Cuomo, Asking For Help From the Feds, Announces NYS’s Toll From Irene Will Be Less Than the Public Cost of Ratner’s Atlantic Yards Mega-Monopoly.
• Ratner was conniving to pull the Brooklyn Academy of Music into his web to produce circuses in the arena that nobody wanted to call "circuses": Friday, July 1, 2011, Cultural Circus? Mr. Ratner’s Attempt to Rechristen His Arena A “Cultural Center”.

• Another gift under the Christmas tree of government function that the Ratner-Grinch helped himself to was to have a private consultant reporting to him redesign the traffic pattern for nearly the entire Borough of Brooklyn: Thursday, June 16, 2011, Sovereign Immunity, Reconfiguration of Brooklyn’s Traffic And The Peculiar Verisimilitude of Government Functions When Forest City Ratner Takes Over.

• Mr. Ratner’s troops were still distracting the public with the misguided notion that, like the magical tents in Harry Potter, the innards of his tiny arena can hold an ice skating rink large enough to host a professional hockey team, the Islanders: Thursday, April 21, 2011, Question Revisited: How Craftily Close Did Forest City Ratner Skate On Thin Ice of Securities Law Violation With Non-Promise of a Hockey Arena?

• In dark city tunnels around the time of Halloween pictures of Mr. Ratner’s arena were saying boo at you from the walls: Sunday, November 6, 2011, Rogues Gallery: The AIANY (“American Institute of Architects New York”) Subway Corridor Posters Under the IFC Center Showing “Urbanized”.

• Things were kept interesting with investigations in Mr. Ratner's neighborhood as we heard about the new situation with Senator Kruger: Friday, March 11, 2011, Lightning Keeps Striking: It Couldn’t Happen To Some More Deserving People . . Over and Over, Again- Ratner, Illegal Bribes and Jay-Z and Beyoncé.

• This was the year that we heard about how Jay-Z’s Wife, Beyoncé was amongst a small set of top entertainers to be paid large sums of money to perform for the family of now-deposed Libyan Dictator Muammar Gaddafi (Qaddafi) on New Year’s Eve 2009 in St. Barts in the Caribbean: Wednesday, March 9, 2011, An Insert Preview - Music Superstar Ethics: How Completely You Can Sell “You can say what you say, but you are what you are.” Jay-Zzzzus!
All in all the Ratnerville story has been well ornamented by this year's events. What more can the new year bring? Almost anything. After all, who would have thought 2011 could have brought us all this?

Tuesday, December 20, 2011

John Liu And the Mayoral Race: We Are Confronted by A Misfortune. Can Misfortune Be Turned Aside?

Who ever really knows what to expect from a politician? Almost all politicians come equipped with an extremely likeable side, a side to charm you if you just relax and enjoy it. Most often though, when we think of politicians we think of the side that brings infuriating disappointment: They convince us that they can be counted upon to do one thing and then do something quite the contrary.

If no one ever really knows what to expect, who’s to say what we could really expect were New York City Comptroller John Liu to become the next mayor of New York?

The New York Times has recently run two articles counting John Liu out of the race for mayor. One was an assessment of the entire field of candidates running for mayor written by Kate Taylor* and the other was an article that tells us a federal investigation into Liu’s fund-raising practices is continuing with an effort to hunt up more witnesses. (See: To Find the Perfect New York Mayor, Only 2 Years Left, by Kate Taylor, December 11, 2011, and More Liu Donors Said to Be Examined in Fund-Raising Inquiry, by William K. Rashbaum and David W. Chen, December 15, 2011.)

(* The Times seems to be building up Ms. Taylor’s profile with all manner of assignments, some of them rather fluffy and others, like this one, more consequential although her ability to put PR in perspective to discern an accurate big picture is not in evidence.)

The Times articles essentially evaluate as nails in the coffin of Liu’s mayoral race the federal investigation into Liu’s fund-raising. The investigation is the result of an apparently successful FBI sting operation. How bad is it?: The article about who is in the potential field of candidates for mayor doesn’t even include Liu’s picture amongst the panel depicting the panoply of contenders (see above).

If the sting operation succeeds in knocking Liu out of the race it will be unfortunate from the standpoint of Noticing New York's family of concerns in one respect: As the collection of alternative candidates considered in the December 11th Times article emphasizes, no one else likely to run is likely to pose the same threat to the Bloombergian real estate industry-dominated status quo as John Liu. The threat Liu presents to that established order calling the shots in this city is best judged by his record. As a member of the City Council Liu stood out as part of a small minority willing to reject the dictates of Bloomberg’s Quinn (serving as Speaker of the City Council): He voted in a principled manner on projects such as the irredeemably tainted Walentas Dock Street project. As City Comptroller he continued to take on Bloomberg when almost nobody else did.

It is difficult to say for sure what exactly a Liu-as-mayor future would hold because politicians don’t come with guarantees but the other candidates who don’t have Liu’s record aren’t even offering politicians' promises to change the business-as-usual prominence that real estate money gets in this city. If those candidates were, it would contradict their records.

None of this is to endorse the kind of improper fund-raising the FBI sting operation caught the Liu campaign in. It was improper. The Liu campaign was caught taking larger-than-permitted campaign contributions from one individual and then fictitiously ascribing those contributions to multiple other individuals so as to ostensibly come within the per donor contribution limits. If you want to know what I suspect about the way the FBI sting was structured (which is to say it's not what I actually can claim to know), my guess is that the FBI had information leading it to believe that the Liu campaign might already have been engaging in some sort of similar “bundling” practice so that they expected that the campaign would go along when an FBI agent posing as a political donor proposed to structure his contribution in this way. The FBI may now be looking for other witnesses, hoping to show that the result of the sting operation was reflective of a pattern.

Campaigns ought not to engage in such tactics to raise money. As far as we know, during the last mayoral campaign Tony Avella, similarly a foe of the real estate industry’s domination of the local politics, ran a clean fund-raising campaign. He also raised virtually no money when he ran for the Democratic Party nomination, which is why we wound up with Bill Thompson as the Democratic candidate for mayor.

Any candidate running against the real estate powers-that-be in this city is facing an uphill battle in terms of fund-raising. That's because of the outsized value of political favors that are routinely handed out to the big fish in the real estate industry here.* Consequently, a huge amount of money pours in to those who will play this game and not upset this applecart. It's true that wealthy real estate industry executives are similarly subject to limits on the campaign contributions they make but they can get around those limits by having their highly paid employees also contribute to candidates. This can be accomplished, for instance, by having an appreciable portion of bonuses to a number of employees flow right through to a campaign in one nice big bundle. It’s a monied industry so it all adds up very fast.

(* It is worth noting that self-interested political donations from large industries are typically driven by what in economic terms is described as "rent seeking" which means that those making the donations are interested in government handouts for which the donating entities will give the public the least possible in return.)

Does this bundling sound a lot like the prohibited conduct the Liu campaign got stung for? Yes, it does. It is similar and if a real estate boss flowed bonuses to his employees with an overt enforceable directive that all or some of those funds be forwarded as campaign contributions to an identified candidate it would be tantamount to the same thing. Not only that, it would also be illegal. Illegal, yes, but it would be harder to prove and harder to catch in a sting operation. Besides, even if they are not the directing bosses, those who are highly paid in the real estate industry don’t have to be made subject to a directive to understand why it is in their interest to make contributions to those certain candidates likely to bestow benefit upon their companies.

Real estate executives can also send bundles of contributions that exceed the limits to which they are subject as individuals by having family members make campaign contributions. Or they can send funds to a national or central campaign rather than to the campaigns of the particular candidate for whom they have reached their personal donation limit. Handled the right way they will still get credit for future real estate-oriented political favors.

The Times article on the potential field of mayoral candidates in the same sentence that dismissed Liu as politically crippled mentioned that mayoral “hopeful” Anthony D. Weiner was sidelined by scandal. Weiner with his famous tweeted underwear photos (and more important his deceitful denials on the subject) clearly brought himself down, but it also clear that Weiner was targeted when he was brought down, not because he was running for mayor, but because it was valuable for the national Republicans to bring the congressman down. On national issues like healthcare and tax and budget issues Weiner had a spine and a sharp intellect and a sharp tongue. Noticing New York was never likely to have supported Weiner for mayor: Mattering less than the idiosyncrasy of his sex life (though his stupid and dishonest disavowal was very bad) would have been that Weiner did not oppose Atlantic Yards (a critical touchstone for all NYC politicians) and was against bike lanes.

Perhaps the Times article did not need to mention (as it didn't) that also viewed as politically sidelined is another mayoral “hopeful” of the past: Brooklyn Borough President Marty Markowitz. One of the things assisting this safely sidelining of Mr. Markowtiz was the Times own front page story this October about Markowitz's questionable practices when it comes to campaigning and fund-raising; he runs four charities that operate like political campaigns and real estate developers like Forest City Ratner (the Atlantic Yards mega-monopoly supported by Markowitz) pay into them. See: From Brooklyn Office, Mixing Clout and Charity, by Liz Robbins and Alison Leigh Cowan, October 24, 2011.

That October article mentioned that Markowitz “is considering running for mayor in 2013.” Why did the article run when it did? Norman Order in Atlantic Yards Report noted that the Times incorrectly asserted that:
Mr. Markowitz’s role in fund-raising for his nonprofit groups has gone virtually unquestioned.
According to Mr. Oder's correction in his first article on the subject:
No, it hasn't. It has gone virtually unquestioned by the Times. The New York Daily News (9/15/08), the Brooklyn Paper (9/18/08), and the New York Post (10/10/08) were all on this topic three years ago, albeit not in such a thorough manner.
Noticing New York also provided such coverage: Monday, October 20, 2008, “Charity?” We Begin to Groan. That article also noted how City Council Speaker Christine Quinn was caught around the time of her first campaign for mayor using fake charities to route money for political purposes. (Just a few years later she’s now considered a front-runner in the 2013 race.) More important, however, the article described interrelationships between Markowitz’s charities and Bloomberg-controlled charities (Markowitz’s charities get money from the Bloomberg ones) and similarities between what Markowitz does with his charities and Bloomberg does with his.

In a follow-up Atlantic Yards Report article about the Times front page Markowitz story Norman Oder observed, referring back to Noticing New York coverage:
Yes, the Times article focused on real estate firms and businesses that had reason to seek Markowitz's favor.

However, it omitted, curiously, New York City Mayor Mike Bloomberg, who's known for an even more elaborate and sophisticated charity strategy, as Noticing New York's Michael D. D. White has extensively analyzed.
Mr. Oder also offers his thinking that the timing of the Times Markowtiz article can perhaps be explained as an effort to sideline Markowtiz as a mayoral candidate:
Perhaps this article had been in long gestation.

Or maybe it was goosed by supporters of a political rival aiming to ensure that Markowitz, hardly an aggressive campaigner for 2013, stays out of the mayoral race.
Any effort to sideline Markowitz would not be motivated by the fact that Markowtiz doesn’t support the real estate industry. He is certainly an indefatigable supporter of Atlantic Yards in the face of any and all inconvenient facts. The reason to sideline the hyperactive, hyper-promotional Mr. Markowitz is that he is a lose cannon who can't be taken seriously: He's so perpetually a promoter that like Spinal Tap's fabled volume amplifier dials the only way he can surmount his own din is by assigning volumes equivalent to "eleven" and beyond to a scale that tops out at ten.

The Times article about Markowitz engages in a frequent Times stylistic device: It walks right up to the line of proclaiming that something wrong in local politics is illegal and then doesn’t cross it.

Though the Times clearly used the New York City Conflict of Interest Board as a resource to write the Markowitz article it did not in that article communicate the rule that it is illegal for a political official to require a donation to a charity in connection with that individuals’ exercise of a discretionary act by them as a public official. In other words it is illegal to bribe a public official and you can’t get around that rule by taking a bribe in the form of a donation to a charity you identify. The Times article doesn’t communicate that rule but it implies that it is there and that Markowitz has not broken it only in wink, wink, nudge, nudgeterms.

The article quotes one Markowitz statement that “there was no quid pro quo here” and includes his denials “that there was any connection between donations and his role as borough president” by virtue of which conceptual separations (to the extent they can validly exist) allow Councilwoman Letitia James to say of the Atlantic Yards mega-project (which she opposes) “He [Markowtiz] is taking advantage of a loophole in the law.” (According to the Times article: “Forest City is one of the biggest contributors to Mr. Markowitz’s charities, having given approximately $1.7 million.”) The Times reports that Markowitz, discounting connections, “brushed aside questions about whether donors might feel compelled to give because of his political influence.”

At the same time the Times reports (not speaking specifically about Atlantic Yards) that donors “recalled that he [Markowitz] was relentless, seemingly unable to take no for an answer” and that one donor said “He took my arm and twisted it off — yeah, he more than asked me, he kept coming at me, until finally I said yes.” The intermixes all of this this with accounts of situations where it certainly looks as if well-timed donations went along with Markowitz taking positions favorable to the real estate industry donors, including a Markowitz change in stance on Wal-Mart after a bundle of $150,000 donations from Wal-Mart executives.

You may not believe Markowitz when he is quoted in the Times article as saying, “I am not pitching them to give me money, and me in turn give them anything,” but so long as you can’t prove it wrong you might not have a provable violation of the law however close it may be. Is anyone thinking of an FBI sting operation for this purpose? Maybe not even a sting operation; maybe just a few wiretaps or subpoenaed e-mails instead?

The problem is that deciding to go after Markowitz on this one would raise the Bloomberg question. The Times article flings aside the Bloomberg question somewhat casually, literally with a parenthetical: “Mayor Michael R. Bloomberg, a billionaire, has his own charity that does extensive work in the city, but it is largely self-financed.” “Largely,” maybe (if you don't look at who Bloomberg sells his terminals to) but charitable donations to Bloomberg’s East River art project, Waterfalls, came in from real estate developers with whom the city was doing business, including, again, Atlantic Yard’s Forest City Ratner. And that is just the beginning of the problematic ways in which Bloomberg’s charities are politically used.

Returning to the topic with which we began, the weakening of John Liu as a candidate for mayor as a result of the FBI sting targeting his improper fund-raising techniques: It’s unfortunate that John Liu’s campaign staff didn’t stick to proper procedures to raise money. It’s unfortunate that when the FBI ran a sting operation the Liu campaign got caught doing the wrong thing. It’s unfortunate that the result is that the candidate who was perhaps most likely to usher in change and counter the influence of the real estate industry may have been weakened as a result of the successful sting operation. It’s unfortunate that challenging the real estate industry and raising money to run against candidates financed by the real estate industry is such an uphill, lopsided battle. It’s also unfortunate that a great deal of what is making that battle so uphill and so lopsided involves practices by which the real estate industry contributes huge sums to politicians. It’s unfortunate that these real estate industry practices are permitted without challenge.
(Above, Liu at a local Brooklyn fund-raiser.)

If Liu’s campaign has, as it appears, been weakened, it’s unfortunate because I have limited personal resources to donate to politicians who I think may effectively oppose the real estate industry and I am one of the ones who chose to make a donation to the Liu campaign. (My resources were limited enough so that I was not able to donate up to the full amount of the permissible limit.) If Liu’s campaign is weakened by this FBI sting then it is clear that the limited resources I donated with this cause in mind may go less far as a result. That means my voice is weakened. Although donations to Liu’s campaign may now not go as far as before I am still thinking that I may donate more money to Liu’s campaign in the future. What are my alternatives?

Who ever really knows what to expect from a politician? I am not 100% certain about what to expect from John Liu if he surmounts his present adversity to becomes mayor but it is possible that the real estate industry thought they had a fairly good idea of what to expect from Liu and did not want to see him mayor. Admittedly, that’s a bit of a conspiracy theory about why Liu might have been investigated but it goes along with the question as to why other politicians haven’t been investigated.

Tuesday, December 13, 2011

Tough Luck: Heads the Developer Wins, Tails the Public Loses. . Unprincipled Upzoning for Rudin Luxury Apartments at Former St. Vincent’s Site

Below is Noticing New York's testimony furnished yesterday to the City Planning Commission in connection with Rudin Management Company's proposed special upzoning of a portion of the Greenwich Village Historic district so that the company may construct a larger luxury residential condominium tower than otherwise permitted. The testimony concerning the request that involves a history of events that very significantly includes the bankruptcy and ultimate demise of the St. Vincent's Hospital is self-explanatory.

* * * *

December 12, 2011

Amanda Burden
Chair, New York City Planning Commission
22 Reade Street
New York, NY 10007
via e-mail to

Re: ULURP application for Rudin Management Company’s proposed rezoning of the former St. Vincent’s hospital campus
Dear Ms. Burden:

I am writing with respect to the above referenced proposal before the Commission to allow Rudin Management Company to privately benefit by side-stepping zoning that requires a lower of residential development for its above referenced site and applying to itself instead a special upzoning intended exclusively for the development of hospital buildings because of the public purpose they serve.

This comment is being offered in the name of Noticing New York, dedicated to the insistence on good economic development policies in New York and the proposition that developing New York and appreciating New York must go hand in hand. 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.

For my testimony before the commission I am restating my testimony before the September 15th Community Board 2 hearing, below.

I am also attaching and including as part of my testimony to you the article I wrote about that hearing and my testimony, together with a follow-up article I wrote concerning public hearings for big New York real estate projects:
• Wednesday, November 2, 2011, Big Politically-Connected Real Estate Projects: Ignoring The Public Majority With Futile “Participatory Democracy” Hearing Process.

• Tuesday, November 8, 2011, Public Hearings For Big Real Estate Projects: Refining Your Sense of the Absurd.
I invite you, in order to appreciate the bigger picture, not only to read these articles but also to visit it where it is posted on the web so as to make full use of all the amplifying interior links it makes available. One thing the articles make clear is how completely and rightly opposed to the Rudin proposal the community is although it is acknowledged that there is very little likelihood that the Commission will be listening to the salient points that we or the community make. - - Nevertheless, I invite you to prove me wrong by turning down the Rudin proposal.

This testimony I am furnishing will also appear on the web with links.

I am also expanding my testimony to compare and contrast the testimony furnished in connection with this matter by the Greenwich Village Society for Historic Preservation (consistent with Noticing New York’s) and the testimony furnished by the Municipal Art Society of New York (inadequate as will be discussed). That comparison and contrast follows the restatement of Noticing New York’s Community Board hearing testimony below.

Noticing New York’s September 15th Community Board 2 Hearing Testimony

• Why do we even need to be here to consider this question?

• The Rudin/St. Vincent’s real estate deal was a very complicated shell game designed to cash in using the hospital’s 501 (c) (3) status in order to upzone (and essentially sell off) a portion of historic Greenwich Village for the benefit of a private real estate developer. That was a bad thing and you certainly wouldn’t have wanted other 501(c)(3)s to follow suit notwithstanding that there were some who favored this as a way to subsidize the hospital at the expense of the integrity of the zoning code and landmark preservation law.

• The shell game failed when St. Vincent’s failed. One lesson that can be taken away from that failure is that with all the complicated rigamarole and professional energy being put into that subterfuge the eye had been taken off the ball- - In basic terms, the hospital for whom all this bending of the rules was being done was not being properly managed.

• The moral is to stick to basics, to keep your eye on doing right what needs to be done. In this case, it’s a question of proper and consistent enforcement and administration of the zoning code. You can’t get pulled off course by shenanigans.

• If Greenwich Village needs to be upzoned then thought needs to be given to doing that in a thoughtful way throughout the community as a whole.

• You can’t hand out a special up-zoning as a consolation prize when a developer fails to pull off what was a fairly nefarious deal to begin with.
I believe that the testimony furnished by Andrew Berman as Executive Director of the Greenwich Village Society for Historic Preservation accords significantly with Noticing New York’s criticism of this proposal because it focuses on the “particularly profound” issue of principle that is proposed to be violated if this proposal is approved by your commission. And that is why it quite rightly references the unleashing of the free-for-all, Wild West, open-Pandora’s Box situation we will be in if your commission does not adhere to principle. To quote from the Berman testimony:
Our fundamental, overriding concern with the requested rezoning is that a private developer, seeking to construct luxury housing on the site, is seeking an upzoning, using the current zoning density which was allowed specifically for the construction of a hospital in 1979, as the baseline for the new allowable density. This is wrong, not just for this site, but for the city as a whole. If the increased density granted for the development of public service facilities, such as hospitals, can, in whole or in part, as proposed here, be used by private, for-profit developers in the future, we are opening a deeply troubling Pandora’s Box with profound potential consequences for the entire city. If the City Planning Commission approves such a change, it is in fact putting in place a tremendous incentive to allow greater density of development for public service facilities which can later be exploited by private developers when the facility no longer exists, is forced out, or is bought out.
That issue of principle is really the whole of it: Private developer Rudin should not have conferred upon it private benefit from the extra density which was granted to St. Vincent's in order to meet a public purpose that will now not be met and with which the Rudin development has absolutely NO connection. If there is one respect in which Noticing New York’s testimony perhaps diverges from GVSP’s testimony above it is to be absolutely clear that the bamboozling shell game that was played initially was wrong and unprincipled and would have remained so even had St. Vincent’s Hospital not gone bankrupt in the course of the confused misdirection of focus.

That issue of principle zeroed in upon by the testimony that the Greenwich Village Society for Historic Preservation provided is not only the essential whole of it, it is also the hole in the doughnut of the testimony provided by the Municipal Art Society: Somehow MAS manages to provide testimony that dances around and so doing leaves at its core a void of unaddressed principle. In so doing, it consigns itself to irrelevance by suggesting that everything now is about playing a standard developer’s game of negotiating collateral prettifications when principles are violated to seize the public realm and override basics such as zoning. By engaging in those negotiations everything becomes a matter of mere degree and all track is ultimately lost of what is fair and balanced. In retrospect when all is said and done and some ersatz “compromise” is achieved, who will remember how much MAS “won” of what it “fought” for. All that will be remembered is that MAS simply participated in trotting out a familiar list of things that politically-connected developers like to negotiate about as distracting eyewash when they ride roughshod over rules and protections: affordable housing, a little bit of park space, reduced parking.

This is not to say that the huge amount of parking Rudin is proposing to introduce into Greenwich Village via this single project isn’t ludicrous: It would certainly destroy the neighborhood to introduce it as the norm. Affordable housing and park space are also nice but they shouldn’t be introduced into conversations like this as distractions that disguise the importance of what is going on.

In its testimony MAS invokes its past: “Throughout all of our work, MAS has long history of engagement in Greenwich Village.” But without guts to take on the flouting of principle, is MAS really the same MAS it was in the past?

Here is a clue: Elsewhere in its testimony MAS mentions an earlier fight, partly won and (not acknowledged) partly lost, praising, I think inappropriately, the work of its current Chairman, architect David Childs, brought in to complete both the Time Warner Center and the Freedom Tower:
In 1987, we lead the fight to scale back a proposal for a massive tower on the site of the New York Coliseum at Columbus Circle, thus leading to the creation of one of New York’s most iconic buildings, the Time Warner Center.
The commission may conceive that pragmatism is the thing that is providing the counterweight to principle as it considers this matter. That is not the case. Pragmatism isn’t what is rearing its head here; what we are witnessing is crony capitalism.

After the 2008 financial crisis people were frequently observing that we no longer have functioning capitalism in this society and that we no longer have a level playing field. What we have now instead is crony capitalism. In this regard people noted that with the government bailout of the banks after the risks undertaken by the banks soured, what we got was a privatization of profit with a socialization of risk. The proposed Rudin plan is essentially a version of this page from the crony capitalism game book.

A Rudin masterminded shell game was being played. It was very complicated and not truly defensible. But to recap, the idea was that St. Vincent’s Hospital’s 501 (c) (3) status would be used in order to upzone (and essentially sell off) a portion of historic Greenwich Village for the benefit of a private real estate developer. As inappropriate, unprincipled and unfair as it was, everything was predicated upon a new St. Vincent’s Hospital being created and that hospital being subsidized via an infusion of some of the cash value of selling off a portion of the Greenwich Village Historic District. That plan had certain inherent risks, one of them being the risk that materialized. . . that the hospital would fail. Obviously, our argument is also that the Rudin plan may have contributed to that failure even without that being its intention.

When the risks of the Rudin plan materialized the plan should have ended. Instead, the proposal now before the commission is to rescue Rudin from the materialization of risk inherent in a plan of Rudin’s own design. The private sector will be protected and rescued by the government sector. At the same time there will be no public benefit from a hospital; there will be no government sector rescue of the public in this regard.

The only reason to protect Rudin by salvaging this deal now that the original shell game has collapsed (with no hospital being provided) is that Mr. Rudin is a member of the politically-connected 1% Club. That is the way that crony capitalism works, as will be demonstrated by the commission if it approves this proposal.


Michael D. D. White

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.


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 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.


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 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.)