Commonwealth Foundation - The Great Frack Attack: The War on Natural Gas

1. POLICY BRIEF Vol. 23, No. 07 from the COMMONWEALTH FOUNDATION July 2011The Great Frack Attack: The War on Natural GasPAUL CHESSER AND MARK NEWGENT Introduction The development and growth of the Marcellus Shale natural gas industry is a major boom for Pennsylvania’s economy. The industry has directly and indirectly created tens of thousands of new jobs, with tens of thousands more to come if natural gas is allowed to continue in a safe and responsible manner; paid out billions in royalty and lease payment to landowners; and contributed hundreds of millions of dollars to state and local government tax coffers. Yet the development of this eco- This policy brief nomic opportunity has become extremely controversial, with many politicians andidentifies some of advocates calling for new taxes and fees on gas drillers and even an outright ban on all drilling in the commonwealth. the top foes or obstructionists of Much attention has been paid to the efforts of gas companies to influence the an industry that political debate through campaign contributions and lobbying efforts. But anti- has brought tens drilling activists—while claiming gas companies use their vast financial resources of thousands of to weaken regulatory structures and silence poorly funded environmental groups— jobs to the Com- influence politicians through their own lobbying efforts and by spreading myths monwealth of about drilling. Among the myths alleged about “Big Gas” is that drillers are flocking Pennsylvania. to Pennsylvania’s rich Marcellus Shale reserves, engaging in dangerous and highly polluting drilling activities, and shirking responsibility for damages while success- fully avoiding paying taxes. These intentional distortions of reality have both misinformed the public under- standing in Pennsylvania and the policy debate in Harrisburg. So who is behind the attack on natural gas? Why are they doing it? And how much are they spending on their efforts to hinder or prevent the extraction of natural gas in Pennsylvania? This policy brief identifies some of the top foes or obstructionists of an industry that has brought tens of thousands of jobs to the Commonwealth of Pennsylvania. The Wealthy Liberals While some media contribute to the hysteria by passing along the propaganda and exaggerated claims of environmentalist groups, some “journalistic enterprises” were created specifically for disbursing their biased message. That’s what Herb Sandler did with the nonprofit ProPublica in 2007. Together with his wife Marion, the couple sold their subprime mortgage firm Golden West COMMONWEALTH FOUNDATION for PUBLIC POLICY ALTERNATIVES

2. COMMONWEALTH FOUNDATION | policy brief Financial Corp to Wachovia Corp. for $24.2 billion in 2006. Shortly after the sale, the Charlotte-based bank was on the brink of failure when Wells Fargo Bank res- cued the weakened Wachovia in 2008 for $14.8 billion. Meanwhile, the Sandlers took their cash, created their own philanthropic foundation, and began “strengthening the Progressive infrastructure,”1 donating millions of dollars to support leftist groups like the Center for American Progress, National Council of La Raza, Center for Responsible Lending, Pew Charitable Trusts, Ameri- can Civil Liberties Union, Natural Resources Defense Council, EarthJustice, Center for Biological Diversity and Free Press. In 2007, Herb Sandler helped launch the investigative reporting nonprofit Pro- Publica, infusing it with $1.25 million and becoming its board chairman. In 2008, he followed with another $8 million. More than 92 percent of ProPublica’s revenues in its first two years came from Sandler. The statement of ProPublica’s primary ex- empt purpose, from its IRS Form 990 tax returns, says: This mission to fight “exploitat- The Organization’s work focuses exclusively on truly important stories, stories ion” and with “moral force.” The Organization does this by producing journalism that “unsavory prac- shines a light on exploitation of the weak by the strong and on the failures of those with power to vindicate the trust placed in them. tices” includes attacks on the According to ProPublica’s Web site: natural gas industry—especially its In the best traditions of American journalism in the public service, we seek to process of hy- stimulate positive change. We uncover unsavory practices in order to stimulate draulic fracturing reform. We do this in an entirely non-partisan and non-ideological manner, ad- (“fracking”). hering to the strictest standards of journalistic impartiality. We won’t lobby. We won’t ally with politicians or advocacy groups. We look hard at the critical func- tions of business and of government, the two biggest centers of power, in areas ranging from product safety to securities fraud, from flaws in our system of crimi- nal justice to practices that undermine fair elections. But we also focus on such institutions as unions, universities, hospitals, foundations and on the media when they constitute the strong exploiting or oppressing the weak, or when they are abusing the public trust. ProPublica’s mission to fight “exploitation” and “unsavory practices” includes attacks on the natural gas industry—especially its process of hydraulic fracturing (“fracking”) of rock formations to access gas—as ProPublica has shown in its 100- plus article series titled “Buried Secrets: Gas Drilling’s Environmental Threat.”2 The list of titles read like a series of press releases from the other enviro-activist groups, such as Earthjustice or Center for Biological Diversity, that Sandler bankrolls. A majority of ProPublica’s natural gas articles were written by reporter Abrahm Lustgarten. In 2009, his reporting came under the scrutiny of the Independence In- stitute’s Dave Kopel, who found several errors and exaggerations that reflected poorly on the industry (the same can be said for much of the ProPublica series). In one example Kopel cited:3 The Colorado experience of zero cases of water contamination from hydraulic fracturing is consistent with the 2002 study from the Interstate Oil and Gas Com-2

3. policy brief | COMMONWEALTH FOUNDATION pact Commission (a consortium of state regulatory agencies). The Commission surveyed regulatory agencies in 28 states (including Colorado and the other four states where ProPublica claimed that there were more than 1,000 “documented” cases of contamination). The response covered the entire history of hydraulic fracturing in those states. Every single one of those 28 states reported that there had never been groundwater harm due to fracturing. The ProPublica article did not report the evidence from that government study, but brusquely dismissed it as “an anecdotal survey done a decade ago.” Actually, the 2002 study has no anecdotes, and with a dataset of almost a million wells, it cannot plausibly be considered “anecdotal.” Kopel’s observations about Lustgarten’s overall reporting were confirmed by astate regulator interviewed by the ProPublica reporter. Wyoming groundwater regu-lator Mark Thiesse, told Kopel in an email,4 “I spent several hours on the phone andaround a dozen follow up emails to try and help him write a factual article. Unfor-tunately he seemed to have his own agenda.” More than 100 More than 100 articles dedicated to the misrepresentation of the dangers of natu- articles dedicatedral gas drilling is not a “journalistically responsible” effort, as ProPublica claims. to the misrepre-It’s become an effort to totally undermine a job-creating industry whose hydrofrac- sentation of theturing has been practiced safely for decades. dangers of natural gasHeinz Endowments drilling is not a “journalistically Within Pennsylvania, the philanthropic giant behind opposition to Marcellus responsible”Shale drilling is the Heinz Endowments. The foundation led by billionaire heiress effort, asTeresa Heinz, wife of Massachusetts Sen. John Kerry, has increased scrutiny of ProPublicanatural gas via grants, from none two years ago to 10 in 2010. Grants from Heinz En- claims.dowments to universities and nonprofits for the study of gas drilling “impacts,” out-reach, organizing, legal issues, and oversight totaled more than $680,000 last yearalone. The purpose for the heightened interest by Heinz Endowments is clear: to putthe gas industry on notice. According to a Pittsburgh Tribune-Review report, theEndowments are “providing grants worth about $2 million [apparently multiyearcommitments] for local universities to study the industry by first setting baselinesfor the environment in areas where the drilling has not started,” said Caren Glot-felty, director of the Heinz Endowments’ Environment Program. 5 “We see the ramping up of the drilling and development of these natural gaswells in the region without a very adequate regulatory framework,” she said. “Thereare just a lot of impacts that people aren’t aware of.” Various universities and non-profits have sought Heinz money to advance the foundation’s political objectives.According to the Heinz Endowments’ Web site, Cornell University received$150,000 “to analyze economic impact of Marcellus Shale natural gas drilling onaffected areas of Pennsylvania and New York.” Carnegie Mellon University received$200,000 “to collect and manage baseline aquatic resources data to evaluate the im-pact of shale gas development” and “to characterize the air pollution impacts ofMarcellus Shale development.”6 3

4. COMMONWEALTH FOUNDATION | policy brief Similarly, Heinz Endowments donated $59,000 to the Clean Water Fund “to connect state networks of community efforts with policy development and to characterize pollution impacts of Marcellus Shale development.” Considering the pre- disposition of Heinz and their support of environmental extremism in the past, one can imagine the characterization of pollution impacts is not in the natural gas industry’s favor. A $25,000 gift to PennEnvironment “for outreach and organizing on Marcellus Shale gas issues,” should put aside any doubt that Heinz is building a framework for opposition to natural gas exploration and drilling. And Heinz Endowments is also proactive in its enlistment of allies to exaggerate the environmental threats of natural gas extraction. In November 2009, the Univer- Carnegie Mellon sity of Pittsburgh announced:7 University received The Center for Healthy Environments and Communities (CHEC) at the University $200,000 “to of Pittsburgh Graduate School of Public Health (GSPH) has been contracted by characterize the The Heinz Endowments to conduct an analysis of the major threats to the environment and health of people who live and work in southwestern Pennsylvania. air pollution The Pittsburgh Regional Environmental Threat Analysis (PRETA) will identify impacts of these threats throughout the region’s 10 counties. Marcellus Shale development. “Environmental health encompasses all aspects of the natural and built environment that may affect human health,” said Conrad D. Volz, DrPH, MPH, PRETA principal investigator, director of CHEC, and assistant professor of environmental and occupational health, GSPH. “Given southwestern Pennsylvania’s industrial legacy and diverse topography, this kind of analysis is vitally important to the health of residents across the region.” Study investigators plan to identify and interview key informants from southwestern Pennsylvania about their perspectives of the most important local environmental threats. Heinz Endowments helped CHEC initiate a special Marcellus project called “Fractracker.org,” which it describes as “a new web-based tool for tracking and visualizing data related to gas extraction.” Attached to the datasets is a blog that regularly posts anti-drilling research and political news, such as PennEnviroment’s recent Marcellus Shale report, the New York Attorney General’s lawsuit demanding a thorough impact study of fracking, and an article from lawyers of the Community Environmental Defense Council explaining how to ban nonconventional drilling at the local level. It’s not surprising that Heinz would choose Volz to run their project, since he won an “environmental hero” award in January from the Group Against Smog and Pollution (GASP).8 Besides funding the analysis of “threats,” the Center betrayed its bias in a press release:9 Serious economic, environmental and public health concerns have been raised concerning gas extraction at the Marcellus Shale, a sedimentary rock formation that may contain trillions of cubic feet of methane gas, as well as other explosive4

5. policy brief | COMMONWEALTH FOUNDATION gases and vapors. Some of these issues include road infrastructure degradation, explosions and blowouts, effects on agriculture, hunting and fishing, water contamination from the disposal of waste fluids into surface waters and human expo- sure to volatile organic compounds. Volz is no stranger to hyperbole, having been captured on video10 numeroustimes wildly warning (even using profanity) of public health threats posed by hy-draulic fracturing and other activities. One March 2011 CHEC report accused thenatural gas industry of dumping carcinogenic agents into drinking water. Volz hadto quickly issue a revised report and make numerous corrections. According to sci-ence watchdog Steve Milloy, proprietor of JunkScience.com, even in his reworkedreport Volz and his research team made several glaring errors, with repeated appli-cations of water quality criteria to standards that were not relevant to his study sub-ject.11 Perhaps not coincidentally, Volz announced on April 9, 2011, that he wouldleave the University of Pittsburgh. He cited his inability to speak publicly on envi- Volz is noronmental issues as the reason for his departure. stranger to hyperbole, Volz’s PRETA project produced an 86-page graduate student thesis paper filled having beenwith one-sided and outright dishonest information about alleged environmental captured on“threats,” “contamination,” and “pollution” attributed to shale gas extraction. In- video manycluded among the falsehoods were the claim that Colorado residents’ “flammable” times wildlytap water was linked to hydraulic fracturing, a lie popularized in the one-sideddocumentary Gasland. warning (even using profanity)International WOW of public health threats posed Other departments at the University of Pittsburgh have embraced the error-laden by hydraulicfilm Gasland. In June 2010, the Environmental Studies Program sponsored a show- fracturing anding at its Bradford campus followed by a question-and-answer session with Gasland other activities.director Josh Fox, Ben Price of the Community Environmental Legal Defense Fund,and environmental attorney Paul Burroughs. Even more significant is The Academy of Motion Picture Arts and Sciences’ rec-ognition12 of Fox’s film with an Oscar nomination for Best Documentary (it lost).Created by Fox’s International WOW company, Gasland—by accounts of both in-dustry leaders and even environmental watchdogs—at best stretches the definitionof the category (Merriam-Webster defines “documentary” as “factual, objective”).For example, America’s Natural Gas Alliance reported:13 In the film’s signature moment Mike Markham, a landowner, ignites his tap water. The film leaves the viewer with the false impression that the flaming tap water is a result of natural gas drilling. However, according to the Colorado Oil and Gas Conservation Commission, which tested Markham’s water in 2008, there were “no indications of oil & gas related impacts to water well.” Instead the investigation14 found that the methane was “biogenic” in nature, meaning it was naturally occurring and that his water well was drilled into a natural gas pocket. This is one of several examples where the film veers from the facts. A second depiction of a flaming faucet in the home of Renee McClure also misleads viewers about the connection between natural gas development and methane 5

6. COMMONWEALTH FOUNDATION | policy brief in water wells. McClure’s well was sampled by the state of Colorado and it, too, showed only naturally occurring methane.15 Lest there be any doubt about the industry’s defense of itself, the natural gas industry also received assistance from two unexpected sources as it tried to debunk Gasland. The first came last year, by a willing participant (albeit briefly) in Fox’s film— former Pennsylvania Secretary of Environmental Protection John Hanger. Previously the president of environmental activist group Citizens for Pennsylvania’s Future (PennFuture), Hanger was interviewed by Fox in Gasland for about five minutes before the director challenged the secretary to drink a bottle of water he said was con- taminated by a Marcellus Shale gas well. Hanger, described by the Philadelphia In- quirer as “a liberal who spent years in the mainstream environmental movement,” However, accord- later called Fox a “propagandist” and characterized Gasland as “fundamentally dis- ing to the Colo- honest” and “a deliberately false presentation for dramatic effect.”16 rado Oil and Gas Conservation The other unforeseen defender of natural gas was the Environmental Defense Commission, Fund. Although not a critic of Gasland per se, senior policy adviser Scott Ander- which tested son—in a video interview with Energy and Environment17—dismissed the film’s Markhams wa- premise that hydraulic fracturing is a reckless, dangerous process: ter in 2008, there were "no E&E: “Do you believe that [hydraulic fracturing] can be used safely?” indications of oil & gas related Anderson: “Yes I do. I think in the vast majority of cases, if wells are con- structed right and operated right, that hydraulic fracturing will not cause a impacts to water problem.”… well. E&E: “How difficult is it for states to regulate this practice? And should it be done on a state-by-state bases, a region-by-region bases or nationally?” Anderson: “The states actually have a lot of knowledge and experience in regulating well construction and operation. We think that states have every reason to be able to tackle this issue and do it well. We also think that if states fail in that and the federal government has to takeover, the states will have no one but themselves to blame.”… E&E: “Without this practice of hydraulic fracturing, what would our natural gas supplies look like?” Anderson: “Our natural gas supplies would plummet precipitously without hydraulic fracturing. About 90 percent of gas wells in the United States are hydraulically fractured, and the shale gas that everyone talks about as being a large part of the future of natural gas production is absolutely dependent on fracturing in each case.” E&E: “So you would say that this is a necessary part of our energy future?” Anderson: “Yes. At the Environmental Defense Fund we don’t pick fuels, we are realist, we recognize that fossil fuels will be around for a while, a long6

7. policy brief | COMMONWEALTH FOUNDATION while most likely. We recognize that natural gas has some environmental advantages compared to other fossil fuels, so we do believe that natural gas will be around, and has a significant role to play….” Industry group Energy in Depth has also published a lengthy rebuttal18 to thefalse claims made in Gasland, and even the Colorado Oil and Gas ConservationCommission—under one of the nation’s most environmental activist governors, BillRitter—issued a fact sheet19 that “correct(ed) several errors” in the film.National Groups Feeding Pennsylvania Affiliates The well-funded activist organizations attacking the natural gas industry are nu-merous. The Center for the Defense of Free Enterprise has archived a list of founda-tions and groups and built them into a social network diagram20 at its Web site, un-dueinfluence.org, which includes lists of grants made by large donors to anti-oil and The Colorado Oil-gas nonprofits. Donors to what was originally called the “No Dirty Oil and and Gas Conser-Gas” (NoDOG) effort (now called “No Dirty Energy”) include the Ford Foundation, vation Commis-New-Land Foundation, Energy Foundation, Turner Foundation, Bullitt Foundation, sion—under oneand Wilburforce Foundation, among many others. of the nation’s most environ- One activist multi-millionaire worth special attention is Paul Brainerd, who mentallythrough his money and influence pressed two green groups—the Mineral Policy friendly gover-Center and the Oil and Gas Accountability Project—to merge into one group called nors, Bill RitterEarthWorks. OGAP had conducted aggressive anti-oil and -gas campaigns, which —issued a factEarthWorks has continued. As the Marcellus Shale development has drawn interest, sheet thatso too have environmental groups increased activity in New York, Pennsylvania, “correct(ed) sev-West Virginia and Ohio. In April, EarthWorks announced the hiring of Nadia Stein- eral errors” inzor —a former consultant to progressive organizations and who served with the the film.group Zero Population Growth—as its Marcellus Regional Organizer.21 EarthWorkspromoted Gasland and its various myths about the dangers of fracking; successfullypushed for a drilling moratorium in New York; and calls for the passage of the fed-eral FRAC Act, which would make redundant regulatory requirements already car-ried out by the state. EarthWorks is allied with PennEnvironment, a member of Earthworks OGAP.PennEnvironment opposes fracking in Pennsylvania, but recognizes an outright banis not achievable. However, it has supported a moratorium, and organizes citizensto push for stronger state regulations and taxation of drilling in the Marcellus Shaleregion.22 PennEnvironment conducts statewide meetings with citizens to discuss thedangers of fracking and to foment public opinion favorable to taxing the gas compa-nies,23 and sponsors viewings of Gasland.24 PennEnvironment is a member organiza-tion of the Marcellus Shale Protest (motto: “No fracking way”), a group engaged in“advocating for legislation to ban shale gas drilling throughout the region.”25 According to its 2009 annual report PennEnvironment made fracking its top pri-ority that year: It seems unimaginable that Pennsylvanians would invite companies to come into the state and then allow them to poison our wells, contaminate our wa- 7

8. COMMONWEALTH FOUNDATION | policy brief terways and destroy our wild forests. Yet in 2009, energy companies ex- panded their use of a dangerous new form of drilling to exploit gas reserves on millions of acres of Pennsylvania land, with alarming results for our drinking water, local wildlife and our forests. PennEnvironment made this unprecedented threat a top priority in 2009.26 In October 2010, PennEnvironment criticized Pennsylvania Senate Republicans for refusing to vote on a severance tax on gas companies drilling in the state, which has included provisions to share the revenue with environmental organizations.27 Meanwhile, PennEnvironment’s field director, Adam Garber, fretted to the Pitts- burgh Post Gazette that his group does not have $100 million to give to Pennsyl- vania legislators as the gas companies do. Yet with its allies, PennEnvironment has plenty of resources.28 The group is a state subsidiary of Environment America which is a creature of the Fund for the Public Interest. The Fund for the Public Interest, or PennEnviron- “The Fund,” is also the financing arm for the U.S. Public Interest Research Group ment’s field direc- and their state affiliates nationwide. Some of The Fund’s more notable grantees in- tor fretted that clude the Association of Community Organizations for Reform Now (ACORN), the his group does George Soros-backed Center for American Progress, and Media Matters for America. The Fund boasts that its alumni now work in over 400 left-wing organizations such not have $100 as ACORN, AFL-CIO, and Service Employees International Union (SEIU).29 million to give to Pennsylvania leg- PennEnvironment, along with border state groups Environment Maryland and islators as the gas Environment New Jersey, all have the same cookie-cutter Web sites with similar companies do. color schemes and layouts, and they all receive money from The Fund. According Yet with its allies, to their latest available IRS 990 tax returns, PennEnvironment received $376,335 PennEnvironment from The Fund for citizen lobbying and education and outreach operations.30 Envi- has plenty of re- ronment America gave PennEnvironment $414,673 for general support and global sources. warming advocacy, according to former’s 2009 tax return.31 The related Environ- ment America Policy and Research Center also gave PennEnvironment $127,600 for “environmental protection,” according to that group’s latest IRS 990 form.32 In its annual reports, PennEnvironment creates the illusion that the majority of its funding comes from member donations. While they do list some of the foundations from which they receive support (including William Penn Foundation and the Energy Foundation),33 PennEnvironment does not list the money they receive from The Fund, Environment America, or The Environment America Policy and Re- search Center in any of those annual reports. The Fund does see a monetary return on its investments in the state PIRGS and environmental groups, as they pay The Fund for its canvass and outreach services. In 2008, PennEnvironment paid The Fund $721,762 for “outreach/canvass” services. The Fund gained some measure of infamy as the sponsor of Craig’s List ads in several cities during the summer of 2009 advertising canvassing and outreach jobs to “Help Pass Obama’s Healthcare Reform.”34 Another active organizational proponent of taxation and regulation of hydraulic fracturing is the Keystone Research Center’s Pennsylvania Budget and Policy Center (PBPC). In general, PBPC advocates for higher taxes, more regulations and specifically for a severance tax on gas companies operating in Pennsylvania.358

9. policy brief | COMMONWEALTH FOUNDATION Started in 2005, PBPC bills itself as non-partisan think tank dedicated to helping“working families.” PBPC is a project of the Keystone Research Center (KRC), whichis governed by a board of directors made up of officials from government sector un-ions like the Pennsylvania State Education Association, American Federation ofState and Municipal Employees (AFSCME), United Food and Commercial Workers,and SEIU.36 KRC/PBPC regularly publishes studies favorable to labor unions on is-sues like prevailing wages, the government-run liquor stores, and state project laboragreements (PLAs).37Local Activism Tries to Thwart Development Activism against natural gas has even drilled down to the local level. DamascusCitizens for Sustainability is a grassroots group, formed in 2008, that is“dedicated to protecting the Upper Delaware River Basin and beyond from the rav-ages of deep-shale gas extraction and the threat posed by the natural gas industry.” Center for Coal-Josh Fox dedicated Gasland to DCS and even allowed special screenings of the film field Justiceto help raise money for the group.38 DCS circulated petitions in Pennsylvania and launched a pro-New York to enact a two-year moratorium on drilling until an environmental im- test in Pittsburghpact study could be completed to assess “all of the ramifications of this intensive against the gasindustrial activity.”39 industry which included punk Many local efforts to oppose hydraulic fracturing in Western Pennsylvania are music artist Justinpromoted via the Marcellus Protest project, established by the radical Center for Sane who per-Coalfield Justice. Marcellus Protest was created “to stop the destruction of our envi- formed his songronment and communities caused by Marcellus Shale gas drilling as well as to sup- “Gasland Terror,”port other directly affected communities.”40 On Nov. 3, 2010 the group launched a which “equatedprotest in Pittsburgh against the gas industry (proclaiming “a revolution”) which the gas industryincluded punk music artist Justin Sane who performed his song “Gasland Terror,” with terrorists.”which (by CCJ’s own description) “equated the gas industry with terrorists.”41 Local governments are being targeted by groups like the Community Environ-ment Legal Defense Fund. CELDF characterizes drilling communities as “resourcecolonies of the energy corporations” and works to pass ordinances banning naturalgas drilling to defend natural community and ecosystem rights.42 These ordinanceshave little legal standing and are often overturned. These laws amount to temporaryobstacles, leaving taxpayers to foot the bill when they are challenged in court.43CELDF has been instrumental in the passages of drilling bans in communities likePittsburgh and Baldwin.PennFuture No report on aggressive environmentalist antics would be complete without not-ing the anti-gas presence of Citizens for Pennsylvania’s Future, or PennFuture. Lastyear, Commonwealth Foundation exposed44 the Harrisburg-based group’s hypocriti-cal accusations against natural gas companies for their lobbying and political cam-paign expenditures, when PennFuture for years failed to disclose to the IRS its lob-bying and grassroots activities on behalf of the alternative energy industry. PennFuture has pleaded that they cannot keep up financially with the gas indus- 9

10. COMMONWEALTH FOUNDATION | policy brief try, but the evidence tells another story. PennFuture received nearly $1 million from alternative energy companies over a five-year period while it lobbied heavily for tax breaks and subsidies for wind and solar projects. In addition to those funds, PennFuture benefited from more than $9.5 million in grants from wealthy eco- activist foundations such as the Heinz Endowments, the William Penn Foundation, and Pew Charitable Trusts. For the fiscal year that ended in June 2010, the group was able to once again en- rich its coffers from the environmental foundations. According to its IRS Form 990,45 PennFuture received: $100,000 from the Keith Campbell Foundation for the Environment; $372,250 from the Energy Foundation; $544,000 from the William Penn Foundation; $600,000 from Pew Charitable Trust; and $975,000 from the Heinz Endowments (identified as the “Howard Heinz Foundation” on the tax return). Overall, PennFuture enjoyed more than $3.5 million in revenues last fiscal Among the rea- year. sons given for this substantive As noted earlier, it is no surprise that Heinz Endowments joined forces with levy are to PennFuture, considering its many other recent grants. But it may be that with the “provide signifi- nearly $2 million commitment that Heinz made to the group in 2009, that it is look- cant money…to ing to PennFuture as its most tenacious attack dog against natural gas. help fund Grow- ing Greener,” The first goal in PennFuture’s “10-point plan to set world-class standards for which is a politi- drilling” is to “pass a substantial drilling tax.” Among the reasons given for this cal slush fund substantive (others would argue “punitive”) levy are to “provide significant that has been money…to help fund Growing Greener,” which is a political slush fund that has used to finance been used to finance millions of dollars in loans and grants for PennFuture’s wind millions of dol- and solar projects.46 The fund has also paid for non-essentials such as a recreational lars in loans and water park in Ebensburg.47 grants for Penn- Future’s wind The measures that the commonwealth has taken to oversee gas drillers have not and solar pro- been good enough for PennFuture. By the environmental group’s own admission, jects. “In 2009, the Department of Environmental Protection raised the fees drillers must pay to apply for a permit by at least 1,000 percent and generated more than $10 million to more than double permitting and enforcement staff in its Bureau of Oil and Gas.” Yet that still is not good enough for PennFuture, which continues to demand a drilling tax, a ban on further leasing of state forestland for drilling, and “world class drilling standards,” which remain undefined. Donations from Heinz Endowments and others greatly enhanced PennFuture’s capacity to deliver misinformation about the gas industry, such as the “fact sheet” the group issued in July 2010 that elevated their call for a severance tax.48 The report cites “the incredible damage to wildlife and water—not to mention the people—from BP’s tragic accident in the Gulf of Mexico,” as though that oil drilling dis- aster had anything to do with natural gas in Pennsylvania. PennFuture’s “facts” also noted the Gasland depiction of families setting their tap water on fire, which was proven to be unrelated to natural gas drilling.10

11. policy brief | COMMONWEALTH FOUNDATIONConclusion To listen to environmental groups and liberal activists, one might think the fos-sil-fuel industry—especially natural gas in Pennsylvania—controls the levers ofpower in Harrisburg and Washington with their vast financial resources. Whilethey certainly have the resources to try to prevent government from over-taxing andover-regulating an already heavily taxed and regulated industry, it is not at the ex-pense of their opponents. As illustrated by this policy brief, opponents of natural gas exploration and itsprocesses do not lack for money or mouthpieces. The gas industry has multi-millionaires such as the Sandlers and Heinzs attacking it; a journalistic organizationin ProPublica that has exceeded 100 articles dedicated to ginning up anti-drillingparanoia; dozens of well-heeled environmental groups that exaggerate or outrightdeceive the public about the impacts of gas drilling; and an Oscar-nominated film Opponents ofproducer spreading disinformation across the country. natural gas exploration and its Meanwhile, the gas industry continues to explore and innovate, safely using the processes do nothydraulic fracturing processes that have enabled Pennsylvania to access important lack for money ornatural resources, creating jobs and keeping energy prices low. It is not a business mouthpieces.without risks, but its enemies would be recognized as having greater integrity ifthey stopped demonizing with a broad brush, told the entire truth, and worked col-laboratively with natural gas to attain their environmental goals.Endnotes1. Carolyn Said, “Why Sandlers sold their S&L,” San Francisco Chronicle, May, 9, 20062. ProPublica: Buried Secrets, Gas Drilling’s Environmental Threat, http://www.propublica.org/ series/buried-secrets-gas-drillings-environmental-threat3. David Kopel, “ProPublica’s Shaky Facts,” Rocky Mountain News, January 10, 2009, http:// www.rockymountainnews.com/news/2009/jan/10/kopel-propublicas-shaky-facts/4. “ProPublica’s Dishonest Defense its Dishonest Article,” http://volokh.com/ posts/1231808338.shtml5. Andrew Conte, “Environment to be studied before drilling work begins,” Pittsburgh Tribune- Review, September 4, 20106. Environment Grants Awarded, Heinz Endowments, http://www.heinz.org/programs_cms.aspx? SectionID=5&ParentID=587. “GSPH to Evaluate Environmental Threats in Southwestern Pennsylvania,” http:// www.publichealth.pitt.edu/news.php?id=1318. “Conrad Dan Volz Recognized by GASP as Environmental Hero,” http:// www.publichealth.pitt.edu/news.php?id=1379. “GSPH Center Launches Online Tracking Tool to Assess Impact of Marcellus Shale Drilling,” July 1, 2010, http://www.publichealth.pitt.edu/news.php?id=16710. “Pitt Prof Caught Off Base in New Frack Attack,” http://junkscience.com/2011/03/27/pitt-prof- caught-offbase-in-new-frack-attack/11. Ibid.12. Winners and Nominees for the 83rd Academy Awards, The Academy of Motion Picture Arts and Sciences http://www.oscars.org/awards/academyawards/83/nominees.html13. The Truth About Gasland, America’s Natural Gas Alliance, http://anga.us/learn-the-facts/the-truth -about-gasland?gclid=CLvg8-X3-KYCFaRd7AodnDKzBw14. COGIS Complaint Report, http://anga.us/media/136662/cogis%20complaint%20report%205-23- 08.pdf15. COGIS Complaint Report http://anga.us/media/136665/mcclure%20complaint.pdf 11

12. COMMONWEALTH FOUNDATION | policy brief 16. Andrew Maykuth, “’Gasland’ documentary fuels debate over natural gas extraction,” Philadelphia Inquirer, June 23, 2010. 17. “EDFs Scott Anderson Discusses Fracking Controversy,” E&E TV, http://www.eenews.net/tv/transcript/1235 18. “Debunking Gasland,” Energy in Depth, http://www.energyindepth.org/2010/06/debunking-gasland/ 19. Colorado Oil and Gas Conservation Commission, http://cogcc.state.co.us/library/GASLAND%20DOC.pdf 20. “Connecting the Anti-oil and Gas Dots,” http://www.undueinfluence.com/Anti-Oil-and-Gas.htm 21. “EARTHWORKS announces Nadia Steinzor as Marcellus Regional Organizer,” http://www.earthworksaction.org/ PR_Nadia.cfm 22. Anna Danahy, “Centre County Weighs Pros and Cons of Natural Gas Drilling,” May 23, 2010, http:// www.istockanalyst.com/article/viewiStockNews/articleid/4145794 23. Freda R. Svana, “Fracking process prompts concerns,” February 6, 2011, http://www.phillyburbs.com/news/local/ the_intelligencer_news/fracking-process-prompts-concerns/article_fdea0d5a-c609-58e9-b408-d93fc0435a25.html 24. Amy Pickering, “Gasland screening set at WCU,” September 17, 2010, http://www.dailylocal.com/articles/2010/09/17/ news/srv0000009393259.txt 25. About Marcellus Protest, http://www.marcellusprotest.org/about 26. PennEnvironment 2009 Annual Report, http://www.pennenvironment.org/uploads/24/ ad/24ade38080327085fb1737b5cfe5d464/ANN_PAE_CY09_web.pdf 27. “PennEnvironment Blasts Senate Republicans for Reneging on Marcellus Shale Severance Tax,” http:// www.pennenvironment.org/newsroom/clean-water-news/clean-water-news/pennenvironment-blasts-senate-republicans- for-reneging-on-marcellus-shale-severance-tax 28. Diana Nelson Jones, “Primer Helps Residents Battle Shale Industry with Citizens Army,” Pittsburgh Post Gazette, January 16, 2011 http://www.post-gazette.com/pg/11016/1118385-455.stm#ixzz1EWgkzgRU 29. Fund Alums in 400+ Organizations,  Foundations & Government Offices, http://www.fundforthepublicinterest.org/jobs/ alumni 30. Fund for the Public Interest 2009 IRS Form 990, http://www.scribd.com/doc/48135363/FFPI2009990 31. Environment America 2009 IRS Form 990, http://www.scribd.com/doc/49224870/Environment-America2009990 32. Environment America Research and Policy Center 2009 IRS Form 990, http://www.scribd.com/doc/49224947/ Environment-America-Research-Policy-Center-2009990 33. William Penn Foundation Grant Results, PennEnvironment, http://www.williampennfoundation.org/SearchResults.aspx? n=PennEnvironment 34. “Let’s Talk Astroturf,” RedState, http://www.redstate.com/absentee/2009/08/09/lets-talk-astroturf/ 35. Pennsylvania Budget and Tax Policy Severance Tax page, http://www.pennbpc.org/severance-tax 36. About the Keystone Research Center, http://keystoneresearch.org/about-keystone-research-center 37. “Fox in the henhouse,” The Truth About PLAs, http://www.thetruthaboutplas.com/2009/05/19/fox-in-the-hen-house/ 38. Catskill Mountain Keepers, http://www.catskillmountainkeeper.org/node/1201 39. About Damascus Citizens for Sustainability, http://www.damascuscitizens.org/about.html 40. About, Marcellus Shale Protest, http://www.marcellusprotest.org/about 41. Marcellus Shale Protest, http://www.marcellusprotest.org/over-500-march 42. Gas Drilling Community Environmental Legal Defense Fund, http://www.celdf.org/issues-gas-drilling-1 43. “Potemkin Laws,” Energy In Depth, http://eidmarcellus.org/2011/07/10/potemkin-laws/ 44. Paul Chesser, “PennFuture’s Lobbying,” Commonwealth Foundation, July 2010. http:// www.commonwealthfoundation.org/docLib/20100707_PB2206PennFutureLobbying.pdf 45. Penn Future 2009 IRS Form 990, http://www.pennfuture.org/UserFiles/PDFs/Form990-200-10.pdf 46. “Dear Gas Companies: Replenish Our Slush Fund,” PolicyBlog, http://www.commonwealthfoundation.org/policyblog/ detail/dear-gas-companies-replenish-our-slush-fund 47. “Dear Gas Companies: Please Pay for Our Water Park,” PolicyBlog, http://www.commonwealthfoundation.org/policyblog/ detail/dear-gas-companies-please-pay-for-our-water-park 48. PennFuture Facts, Vol 12, No. 15, http://www.pennfuture.org/UserFiles/PDFs/vol12no15_072110.pdf ABOUT THE AUTHORS AND THE COMMONWEALTH FOUNDATION Paul Chesser is executive director for the American Tradition Institute and a senior fellow for the Commonwealth Foundation. Mark Newgent is a Research Fellow with the American Tradition Insti- tute. The Commonwealth Foundation is an independent, non-profit research and educational institute that develops and advances public policies based on the nation’s founding principles of individual liberty, free enterprise, and limited, accountable government. More information is available at www.CommonwealthFoundation.org. COMMONWEALTH FOUNDATION for PUBLIC POLICY ALTERNATIVES | 225 State Street, Suite 302 | Harrisburg, PA 17101 717.671.1901 phone | 717.671.1905 fax | Info@CommonwealthFoundation.org | CommonwealthFoundation.org

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