Shale Researchers Release Local Government Handbook and State Policy Report Card

July 5, 2016.  Last week, the Ohio, Pennsylvania and West Virginia organizations that are part of the Multi-State Shale Research Collaborative (MSSRC), released two new reports: a handbook for local officials entitled Lessons from the Gas Patch: A Local Government Guide for Dealing with Drilling; and A Report Card on Shale Gas Policies in Ohio, Pennsylvania, and West Virginia.

The new reports build upon

The new Report Card on Shale Gas Policies in Ohio, Pennsylvania, and West Virginia grades the three states on their policies in each of nine areas of fiscal, social, and economic policy. The report card is limited to issue areas in which the MSSRC has expertise. Thus, for example, the report card does not evaluate either the states’ environmental policies or their substantive public health policies.[1]

The nine policy areas on which the Report Card evaluates the three states’ policies are:

  • Severance Tax Policy.  Do state policies allow for the collection of sufficient revenue to cover the cost of the public services necessary to deal with the impacts of shale drilling in a timely manner and to allow for sufficient investments in a secure economic future?
  • Property Tax Policy. Do state policies allow local governments to raise the revenue required to meet the local service costs and the local infrastructure maintenance costs that come with shale drilling?
  • In-State Jobs Policies. Do state policies help to increase the in-state share of shale jobs through training and job matching initiatives and by encouraging formal agreements that give qualified in-state workers first shot at available opportunities?
  • Employment Documentation Policies. Do state policies accurately measure direct jobs impacts; estimate indirect jobs impacts in a reasonable manner; and systematically track jobs going to in-state workers?
  • Policies for Addressing the Boom/Bust Cycle. Does the state address the negative aspects of the boom and bust cycles of natural resource extraction by dedicating a portion of its drilling-related revenues into a permanent trust fund that grows over time, generates a stabilizing revenue stream, and creates a lasting benefit from the use of a non-renewable resource?
  • Policies for Managing Road Damage and Other Road and Traffic Impacts. Does the state: require drillers to pay for directly attributable repair and maintenance costs; have sufficient bonding requirements; require pro-active upgrade and use agreements with drillers; and require drillers to repair and maintain roads that service pipelines and compressor stations?
  • Policies for Addressing Affordable Housing and Other Social Impacts.  Does the state generate enough revenue (and effectively utilize that revenue) to address the impact of drilling on the availability of affordable housing for long term residents who do not benefit economically from drilling activities?
  • Policies for Tracking Health Impacts. Does the state log and analyze drilling-related health complaints and health care utilization on a confidential basis?
  • Polices Regarding Local Government Regulation.  Does the state allow local governments to regulate drilling and provide clear guidance on the extent of local power to address drilling impacts?

The grades earned by the three states in each of the nine areas are presented and explained in the Report Card and demonstrate significant room for improvement. All three states got at least one F with Ohio and Pennsylvania each receiving two Fs. In addition Ohio received three Ds and Pennsylvania received two. The only As were earned by West Virginia in the two fiscal policy areas (for the effectiveness of its severance tax policies and its policies governing local property taxes).

Overall, the Report Card is an important reminder that even if the negative environmental and public health impacts of shale drilling were not as daunting as they are, there are significant fiscal, economic and social problems associated with the implementation of shale drilling that will not be addressed without the proactive involvement of the states and their local governments.

  • State and local governments must monitor and proactively address the negative social, economic and community impacts of shale drilling.
  • State governments must empower their local governments to monitor and proactively address those negative social, economic and community impacts that are more effectively addressed at the local level rather than at the state level.
  • State governments must raise the revenue necessary to fund the state and local services and the infrastructure investments necessary to mitigate the negative social, economic, and community impacts of shale drilling.

 

[1] While the MSSRC Report Card does not examine the three states’ substantive public health policies, it does evaluate the effectiveness of their policies for tracking health impacts. For information on environmental and substantive public health issues related to shale drilling, see the materials published by the New York State Department of Environmental Conservation in conjunction with its comprehensive, seven-year review of the impacts of high volume hydraulic fracturing (HVHF). On the basis of this review, in June 2015, DEC issued a final State Environmental Quality Review (SEQR) Findings Statement officially prohibiting HVHF in New York State.