Pro-Industry Interests Dominate N.C. Commission Writing Hydraulic Fracturing Regulations

Shale Gas, North Carolina

Two of 15 members of a panel set up to write the regulations for hydraulic fracturing in North Carolina have potential conflicts of interest, according to disclosure forms and land records. Both members were assigned to seats that were supposed to go to environmentalists. And the chairman of the state Mining and Energy Commission says he intends to move swiftly to draft regulations and likens the risks of hydraulic fracturing, also known as fracking, to the chances of getting hit in the head with a meteorite.

All of this has environmentalists wondering how impartial the panel will be.

“We were well aware that most of these appointees…were folks that were pro-fracking,” Hope Taylor, executive director of Clean Water for North Carolina says. “Many of them have been overtly, outspokenly pro-drilling.”

Hope Taylor

Fracking is a controversial method of obtaining natural gas trapped in shale rock deep in the ground by blasting it with water, chemicals and sand. Studies have found that fracking contaminated nearby water with dangerous chemicals in Pennsylvania, New York and Wyoming. A study in Colorado found air pollution in areas close to fracking sites.

Supporters of fracking say it can be done safely if properly regulated. A state study says fracking would provide hundreds of jobs for central North Carolina, which has double-digit unemployment. The process provides a domestic source of energy that is cheaper than oil and cleaner than coal, supporters say. It has the backing of President Obama, and the EPA said in a news release last December that natural gas has “extensive economic, energy security, and environmental benefits.”

The state General Assembly structured the fracking commission so that it would include a researcher from North Carolina State University, as well as representatives of both state agencies and the mining industry. The legislation also called for two seats for representatives of conservation groups.

Ray Covington

North Carolina Speaker of the House Thom Tillis (R-Mecklenberg) appointed Ray Covington to fill one of the seats earmarked for a conservationist. Covington is co-founder of North Carolina Oil and Gas, a company set up to negotiate mineral leases for landowners in exchange for a portion of their profits.

He also manages the Covington Family Limited Partnership, which owns 54 parcels and more than 1,000 acres in and around the town of Sanford in Lee County, according to county tax records and deeds recorded in the courthouse. The land is at the center of where fracking would take place. Covington said on his disclosure forms that he has an 8.19 percent interest in the partnership, which is headed by his father.

The Covington family has long been interested in marketing its mineral rights. On Aug. 19, 1985, Ray Covington’s father and mother, M .Cade and Irene Covington, renewed two deeds from 1982 that leased 1,140 acres in Lee County to Seaboard Exploration and Production Co. for drilling.

David Rogers

David Rogers, field director for Environment North Carolina, says Covington has a clear conflict of interest.

“He owns a company that’s going to work to manage leasing rights with oil and gas companies. Obviously, the more fracking we allow the greater he stands to benefit from those negotiations,” Rogers says. “We’re concerned that [the board is] so heavily slanted toward industry that it’s not going to protect North Carolina’s drinking water.”

Covington says he “absolutely” does not have a conflict, although he reported his family’s business on his disclosure form in a section set aside for potential conflicts. He says he has been a conservationist all his life, citing a conservation merit badge he earned as an Eagle Scout. He also says he is on the board of the Cape Lookout Environmental Education Center, which is primarily a summer camp for school children, according to its website. Covington also notes his participation in an effort to restore the Endor Iron Furnace, a Lee County Civil War site. Covington says he’s a member of the North Carolina Conservation Network but when asked says he joined “five or six months ago, somewhere in there.”

Covington says he co-founded North Carolina Oil and Gas to protect the environment.

“Basically, we have been contacted by a number of different land men coming into North Carolina and we decided to form an organization to make sure that we understood our rights as landowners and how to protect the environment, the water, land and air,” Covington says.

George Howard

The other conservation seat on the North Carolina Mining and Energy Commission went to George Howard, who was appointed by state Senate President Pro Tem Phil Berger (R-Rockingham). Howard was elected vice chairman by fellow panel members.

Howard is president and co-founder of Restoration Systems, a mitigation firm, which earns its money by restoring environmentally damaged land. Restoration sells credits for the work to companies that are required by state and federal officials to offset the ecological harm they cause. Restoration Systems’ website features mitigation work the company is doing to offset damage resulting from fracking in Pennsylvania.

Howard says the amount of natural gas in North Carolina is small by national standards and its production is still years away. It would be a waste of his time to sit on the fracking board in hopes of getting work, he says.

According to the U.S. Geological Survey, the Deep River Basin, a 150-mile stretch of shale rock extending from central North Carolina to the state’s southern border, has 1.7 trillion cubic feet of natural gas. That’s enough to fuel the state for five and a half years, according to the federal Energy Information Administration. It’s worth about $6 billion, based on today’s prices, however natural gas prices fluctuate widely. By contrast, the U.S. Geological Survey estimates that the Marcellus Shale formation, running from Tennessee through Pennsylvania and on to New York, has 84.2 trillion cubic feet of natural gas, worth about $292 billion by today’s prices.

“The resource in North Carolina is very, very small,” Howard says. “It would be absolutely foolish for me to join a high-profile commission, give up hundreds of hours of my time, take myself away from my business, impair my economic prospects in the interest of possibly in the future selling some de minimis amount of mitigation credit to an industry that doesn’t even show up on the radar nationwide.”

Dan Crawford, a lobbyist for the North Carolina League of Conservation Voters, says there’s still a potential conflict of interest.

“His company’s still involved in the process of fracking,” Crawford says. “The company stands to make a profit. You’d never expect him to say there’s a conflict of interest.”

Dan Crawford

With the seats that were supposed to be given to conservationists taken by Howard and Covington, there will be few voices representing environmental concerns, Environment North Carolina’s Rogers says. The commission includes one appointee from the state Environmental Management Commission and one from the state Commission for Public Health.

“[T]here’s just very few people speaking out about the environmental concerns of fracking because not only are there industry experts representing the industry side of the thing but there are also industry people who are representing the conservation side,” Rogers says.

Howard says he qualifies as a conservationist because his company has planted two million trees and freed up 22 miles of the Deep River in central North Carolina by removing a dam built in the mid-19th century. The project was part of the company’s mitigation work.

But Molly Diggins, state director for the North Carolina chapter of the Sierra Club, says the appointments of Covington and Howard rob the fracking panel of the true environmental voices the legislature intended the commission to have. The board is heavily weighted toward industry, Diggins says, and the conservation seats were added during protracted negotiations in the General Assembly.

Molly Diggins

“Those seats were added and yet they were filled with officials who are unlikely to challenge proposals that would expedite fracking,” Diggins says. “There are a lot of tough issues to be worked out by the commission and you need a balanced group, including some skeptics who will ask the tough questions.”

Howard reported his company’s ownership of the mineral rights to 51 acres of land in Lee County as a potential conflict but said he did so only in an abundance of caution. He says the land, which contains a 7,000-foot stream, sits right on the edge of where natural gas has been found and it’s unclear whether natural gas lies beneath it. The land has been set aside as a protected conservation area but the conservation easement doesn’t cover the mineral rights.

“I don’t think it’s on the shale from what we can determine from maps,” Howard says. “And I would be happy to donate – if it happens to be on the shale, which I don’t think it is – I’d be happy to donate it to local conservation groups.”

The commission is charged with drafting regulations to oversee fracking by October 2014. Fracking has led to environmental problems in other states. A National Academy of Sciences study in May 2011 found methane, a flammable gas, at 17 times the normal level in tap water taken from homes near fracking sites in Pennsylvania and New York. It was a level high enough to set the faucet water on fire. In a draft study in December 2011, the Environmental Protection Agency found high levels of chemicals, including benzene, a carcinogen, in well water near a fracking site in Pavillion, Wyoming. The EPA said the study shouldn’t be applied to fracking in general but environmentalists say the agency’s findings are still troubling.

Last March, the Colorado School of Public Health released a three-year study that found a number of “potentially toxic petroleum hydrocarbons in the air near the wells, including benzene…” The report said that fracking may contribute to “acute and chronic health problems for those living near natural gas drilling sites.”

In April 2011, a fracking well exploded in northern Pennsylvania, spewing thousands of gallons of chemical-laden liquid into a creek and shaking houses a half-mile away, according to press accounts at the time.

Asked if the commission can come up with regulations to ensure that fracking is safe in North Carolina, Howard says no.

“Someone could have a truck accident. There’s no way to make any industrial process entirely safe,” Howard says. “But I think it’s a relatively safe process compared to other energy extraction methods, including coal mining, which is its direct competitor. Coal mining is truly dangerous. It rips the tops off of mountains and destroys large swaths of ecosystems.”

Elizabeth Ouzts

Environment North Carolina’s Elizabeth Ouzts finds rare agreement with a fracking supporter.

“He’s absolutely right,” Ouzts says. “There’s no way to make fracking completely safe. We’ve seen water contamination in other states and increased air pollution. We’ve seen landscapes destroyed. That’s all the more reason why we should focus on true clean energy sources that won’t contaminate our drinking water and won’t increase air pollution.”

James Womack

James Womack, chairman of the fracking panel and a member of the Lee County Board of Supervisors, dismisses such concerns. Womack, who was appointed by Senate President Pro Tem Berger, told a local television station in September that calls from environmentalists to move slowly were not “logical.”

“I don’t think there’s any question that the shale gas industry is good for North Carolina,” he told WRAL-TV. “’Slow down’ is not in my lexicon.”

“You’re more likely to have a meteorite fall from the sky and hit you on the head than you are to contaminate groundwater with fracking fluid percolating up from under the ground,” Womack continued. “It hasn’t happened.”

Environmentalists find Womack’s approach alarming.

“Before we do anything that’s going to potentially harm the drinking water in North Carolina, we want to make sure it’s been studied thoroughly and that people with a lot of letters after their names who have made a career out of studying ground water contamination say this can be done in North Carolina,” Crawford says. “We want to make sure we have some better answers, not just, ‘Hell yea, drill, Baby, drill.’”

Last July, the Republican-led General Assembly overrode a veto by then Gov. Bev Purdue, a Democrat, to pass a bill to set up fracking in the state. The veto override passed by just one vote in the House after Rep. Becky Carver (D-Charlotte) pushed the “yes” button by mistake. The vote count was 72 to 47, just above the 60 percent needed to override a veto. The vote came at 11 p.m. after a long day of debate and, the Charlotte Observer reported, Carver wept after the vote.

Howard is president and co-founder of Restoration Systems, a mitigation firm, which earns its money by restoring environmentally damaged land. Restoration sells credits for the work to companies that are required by state and federal officials to offset the ecological harm they cause. Restoration Systems’ website features mitigation work the company is doing to offset damage resulting from fracking in Pennsylvania.