The geological formation that has ignited the shale gas boom stretches across several states in the Midwest and Mid-Atlantic. And not every state has taken the same approach to managing the social and economic impacts of this new wave of natural gas exploration. Recently, the Multi-State Shale Research Collaborative, which represents budget policy analysis groups in Ohio, West Virginia and Pennsylvania, released two documents that compare state performance on a variety of issues. One, a scorecard, rates the states on their drilling policies; the other, makes recommendations for best practices that can guide local governments. Jan Jarrett, who works with the collaborative, briefed us on some of the findings.
The Allegheny Front: Let’s talk about the scorecard first. What are some of the criteria that states were graded on?
Jan Jarrett: Well, we looked at several areas: How the states taxed the shale industry; whether they are effective in making sure jobs generated by shale drilling stay local; and whether states are planning for the boom-bust cycles that are part and parcel of the fossil fuel industry. We also looked at whether states are doing anything to track health impacts, and how effective states are in allowing local governments to manage the impacts of drilling within their communities.
LISTEN: Rating Pennsylvania’s Handling of the Gas Boom
AF: So who got good grades, and who should probably go back to school?
JJ: West Virginia does pretty well when it comes to taxing the industry. And we believe that is a product of long-standing tradition: They have always taxed extractive industries, including coal mining and timbering. West Virginia also does okay in planning for the boom-and-bust cycles. They have set up a future fund into which monies will be deposited to spur all other kinds of economic development when the shale gas and oil is eventually gone.
In tracking health impacts, Pennsylvania does okay in that they are gathering complaints that come into the department of health. It’s not public, it’s not searchable, and whether or not they’re doing anything with it, they’re at least gathering the data. But neither Ohio nor West Virginia are even keeping track of complaints. Pennsylvania also does fairly well in addressing housing crunches that happen in intensely drilled areas when hordes of workers descend on a place and rents suddenly triple. Pennsylvania has a dedicated fund to get more affordable housing in those communities so that people who are priced out of the housing markets have an option where they can live in decent housing.
Ohio does a really good job in managing road damage. They actually require a local plan to deal with roads, whether it’s using the right roads or requiring [companies] to upgrade roads before they even start to use them. That is a condition of their permit to drill, so it is very proactive and forward-looking. Regarding effective local government regulations, none of the states allow municipalities to ban drilling. The state law that oversees drilling preempts the local municipalities in all three states.
AF: So it sounds like none of the states get straight As, and none of them flunk completely. Is the idea of grading them that the states can learn from one another?
JJ: Yeah. I think that states can look at this and see where they are falling short and maybe take the best ideas from each state and implement them. Obviously, the states that are doing well in one or another area haven’t killed off the industry by doing something close to a best practice. So we think it would be a useful thing for policy makers when looking at how to minimize the impacts on communities and how to protect communities from the worst impacts of gas drilling.
AF: Well, let’s talk about the guide for local governments, “Lessons from the Gas Patch,” which is the other document the group released. What are some things that can be done around natural gas issues at the local level?
JJ: There is a range of things that communities can do, including things like modernizing the record-keeping capacity at the recorder of deeds offices. One of the first things that happens in an area that’s going to be drilled is employees or contractors of the gas drillers descend on the county courthouse, searching for deeds, so that they can buy up leaseholds. And most of them were overwhelmed. Also, making sure that you’re planning for the increase in traffic and crime that tends to come along with gas drilling. And making sure that your emergency responders are trained in some of the specific hazards that they may encounter around the drilling pads.
We think now is a really good time for communities to look at these recommendations. Right now, there is a lull in gas drilling because the price has been so low. And so this gives them an opportunity to stand back and figure out what they have learned. There are also communities that haven’t had drilling yet that will come in line for drilling once the price of gas goes up and once companies start to access the deeper, larger Utica Shale.
AF: What about policies around the next phases of gas development, like pipelines and compressor stations? Are local governments prepared for these?
JJ: No. And many are far away from the actual gas drilling themselves. And those issues are really becoming front and center in many municipalities, particularly in the eastern and southeastern parts of Pennsylvania, where there are lots of pipelines proposed. And along pipelines, compressor stations need to be built. And many municipalities didn’t understand that. So their zoning powers may come into play when they’re deciding on the locations of those compressor stations. Local municipalities can also have somewhat of a say in pipeline siting, particularly if residents within their communities make it an issue.
Jan Jarrett is a consultant with the Multi-State Shale Research Collaborative. The group brings together independent, nonpartisan research and policy organizations in New York, Ohio, Pennsylvania, Virginia and West Virginia to monitor employment trends, tax policy, economic development and the community impacts of energy extraction in the Marcellus and Utica Shale.