CMD Special Report: ALEC's (Corporate) Love Affair with Fracking

Sometimes you can judge a book by its cover. Just one look at the cover of the brochure for this year's annual meeting of the American Legislative Exchange Council (ALEC) reveals where some of the corporate bill mill's loyalties lie: with the "natural" gas industry. The full-page ad on the brochure's inside cover -- paid for by the American Gas Association, a trade group for gas utilities companies -- identifies just one of the corporate underwriters that litter the pages of the conference booklet shared with all of the elected representatives and unelected corporate lobbyists who attended the convention at the luxurious Grand America resort.

(To see a pdf of the ad, which appeared in a key spot on the inside cover check downloads below.)

The conference brochure listed some 15 corporations that stand to benefit from the expansion of fracking, including Chevron, Exxon Mobil and Koch Industries.

Through ALEC, corporate lobbyists have an equal vote with state legislators on ALEC "model" bills, that are pushed in states across the nation. Often the bills were drafted by the corporate lobbyists before being approved by ALEC "task forces." ALEC's legislative agenda includes efforts to bar taxes on windfall profits of energy companies and numerous bills that would make it harder to regulate carbon or address global climate changes, as well as bills that would make it harder to hold these and other companies accountable when Americans are killed or injured as a result of a corporation's product or practices in regulated industries.

ALEC's corporate wish list also includes legislation that creates loopholes specifically for companies engaged in the extraction of oil and gas through the controversial process of hydraulic fracturing or "fracking."

As companies have dramatically expanded fracking operations over the past few years, the industry has found an eager companion in ALEC to help facilitate the rush to industrialize land in many rural communities but with few rules to address the problems endemic to fracking. Last December, a "model" bill was approved through ALEC and then pushed in some states that would ensure that a loophole from rules of the Clean Water Act that was created for the industry at the federal level is effectively in place at the state level, along with other initiatives that benefit the oil and gas industry in the states.

Fracking has come under heightened scrutiny over the past year as the public has learned more about the toxic chemicals in fracking fluid, the vast quantities of drinkable water that fracking uses and leaves behind as waste, as well as links between fracking and the contamination of wells and other health and environmental ills.

ALEC's Model "Disclosure" Bill Allows Companies to Skirt Disclosure

During the process of fracking, large quantities of water, along with sand and chemicals, are pumped into shale to crack the rock and allow oil and gas in the seams between layers of the shale to be released. Recent technologies have made accessing these deposits cheaper, leading to a rapid-fire expansion of fracking across the country. A key part of the controversy with fracking is that the chemicals are not disclosed by all of the companies involved in fracking, which have labeled them "trade secrets," making it harder for people to know what chemicals and carcinogens are in the fracking fluid and waste water. During the George W. Bush Administration, Congress created an exception to the safety rules of the Clean Water Act to help companies keep the fracking chemicals secret, companies like Halliburton -- which had been led by Dick Cheney, Bush's Vice President. It's called the "Halliburton loophole," but it benefits many other companies.

In December 2011, as reported by The New York Times earlier this year, disclosure language for a bill on fracking was approved by ALEC at its "States and Nation Policy Summit" in Scottsdale, Arizona. As Common Cause discovered, that model bill was proposed by Randy Smith of ExxonMobil, and the vote to approve the loophole was unanimous among the legislators and there was only one dissenting vote among the corporate members (although the dissenter is not known). A detailed list of the corporations and politicians that have recently been members of that ALEC task force is available here.

What the "Disclosure of Hydraulic Fracturing Fluid Composition Act" has done is pave the way to further the spotty disclosure that the industry has grown accustomed to, where companies can still guard the names and quantities of toxic chemicals as "trade secrets." Exxon Mobil, the largest producer of shale gas in the country, gave a pittance -- an estimated $12,500 donation out of revenue of nearly half a trillion dollars in 2011 -- to help sponsor that ALEC meeting. According to the publicly traded company's 2011 report on donations, ALEC received a total of $86,500 for the entire year from Exxon, which is the largest company in the world in terms of revenue.

In March, ALEC's Energy, Environment and Agriculture Task Force staff Director Todd Wynn touted that states including Pennsylvania, Ohio, New York, Illinois and Indiana had taken up the "model" disclosure bill. In the same blog post Wynn bragged that, "ALEC has been at the forefront of the effort to retain state sovereignty over hydraulic fracturing, and our recently adopted model bill, the Hydraulic Fracturing Fluid Disclosure Composition Act, aims to preempt the promulgation of duplicative, burdensome federal regulations from U.S. Environmental Protection Agency (EPA)." (Documents from Common Cause showing ALEC tracking that bill are available upon request.)

Wynn is not just a cheerleader for ALEC's oil and gas company agenda, he's also expressed some unusual views on climate change. According to ExxonSecrets.org, Wynn has previously said:

I think that global warming could be a net benefit for the planet in fact.

Before joining ALEC, Wynn worked for one of its sister organizations, the "Cascade Policy Institute," one of the so-called "think tanks" that are part of the "State Policy Network," which has received Koch money and given donations to ALEC. Wynn says he studied climate impacts while getting a degree in economics. His views on climate change are most definitely not shared by most of the leading scientists in the world. Bill McKibben, for example, recently reiterated that devastating consequences of the current rate of climate change in an interview with the Center for Media and Democracy's PRWatch, which included his views on fracking and climate change.

Utah Meeting Gathers Frack-Friendly Crowd

The romance between ALEC and fracking continued at this year's ALEC meeting in Utah -- an appropriate location for the frack-friendly ALEC crew. In May, the U.S. Secretary of the Interior Ken Salazar approved a major shale gas project by Texas-based Anadarko Petroleum Corp. in Utah's Uinta Basin -- expected to develop more than 3,600 new wells over the next decade.

In another industry-friendly move, Utah's Governor Gary Herbert, who spoke the ALEC conference's opening luncheon, signed a bill into law in March demanding that Congress hand over 30 million acres of federal land to the state by 2015 or the state will sue. According to the Associated Press, Lawmakers in Utah and Arizona have said the legislation is endorsed by ALEC. As documented by the Center for Media and Democracy's ALEC Exposed Project, ALEC drafted the "Sagebrush Rebellion Act," which was "designed to establish a mechanism for the transfer of ownership of unappropriated lands from the federal government to the states." According to the Southern Utah Wilderness Alliance, the governor's initiative would open up millions of acres of the "Wilderness Study Areas and proposed wilderness areas to oil and gas development" but in the process would cost Utah taxpayers enormously.

At the meeting, the CEO of the Institute for Energy Research (IER) Dr. Robert Bradley was one of the featured speakers. Bradley, formerly a director of policy analysis at Enron, also spoke at the 2011 ALEC conference in New Orleans. He is also an "adjunct scholar" at the right-wing think tank the Cato Institute and specializes in "global warming alarmism." IER is a non-profit group focused on global energy markets that pushes for deregulation, advances climate change denial, and attempts to discredit renewable energy sources. The group's 2010 IRS 990 form said that its focus was narrowed in on "impediments to domestic energy production, including government restrictions on access, burdensome regulations, and the favoritism of energy sources that are unsustainable in the marketplace."

IER received some $307,000 from Exxon Mobil between 2003 and 2007, according to the publicly traded company's "Corporate Giving Reports." IER also received a total of $235,000 from Koch Family foundations between 1997-2010. Koch Industries, an ALEC member, also profits from the expansion of fracking. Unlike Exxon, because Koch is not a publicly-traded company, any corporate donations to groups like IER, AEA, or AFP are not publicly disclosed.

IER is a "partner" organization of the American Energy Alliance, a 501(c)4 organization which calls itself the "grassroots arm" of IER. Thomas Pyle is president of both organizations, and is a former lobbyist for Koch Industries and former energy policy aide for former House Majority Leader Thomas D. DeLay, who resigned from the leadership following his indictment on conspiracy charges. Wayne Gable, also a former lobbyist for Koch Industries and former president for two of the Koch Family foundations, is on the board of both IER and AEA.

In 2011 IER and AEA launched "Energy for America" as a joint initiative with a laser point in on fracking, with an aim to "educate" the public on the practice. In October 2011, AEA and IER, in partnership with Koch Industries' astroturf group Americans for Prosperity, started a "Energy for America" bus tour to encourage the expansion of domestic exploration of oil, gas and coal, targeting U.S. Senate battleground states for the upcoming 2012 elections.

Additionally, Brownstein Hyatt Farber Schreck is one of the three chairs of the ALEC Energy, Environment, and Agriculture Task Force. One of its clients is Freeport LNG, which owns and operates one of the first liquefied natural gas import terminals built in the United States. According to the law firm's website, "For the last nine years, Brownstein has been the lead counsel in the structuring, strategy and development of the $1.2 billion receiving and regasification facility with commercial output capacity of more than 2.0 billion cubic feet of natural gas per day."

ALEC's History of Promoting Fracking

ALEC's courtship with fracking goes back much further than last December. Prior to the approval of the chemical disclosure bill, there have been at least two ALEC resolutions passed to push for the expansion of fracking. The first was passed in December 2004, which was six months before the federal "Energy Policy Act of 2005" was passed, which included the "Halliburton Loophole" which exempted corporations from having to disclose the chemical make-up of fracking fluid in accordance with the Clean Water Act of 1972. Titled the "Resolution Encouraging Development of Liquefied Natural Gas," the resolution stated, "ALEC encourages coordination among state agencies that oversee permitting for regasification, and between local, state and Federal government agencies, in order to facilitate and streamline regasification terminal permitting." ("Regasification" relates to the way that gas which is converted to a liquid of a smaller volume than in its gas form is turned back into gas.)

The other resolution, titled the "Resolution to Retain State Authority over Hydraulic Fracturing," states that the "American Legislative Exchange Council supports continued jurisdiction of the States to conserve and properly regulate oil and gas production in their unique geological and geographical circumstances." This resolution pushes for regulation at the state-level rather than the federal level -- under the assumption that the majority of states may impose weaker environmental standards than would be implemented under the U.S. Environmental Protections Agency (EPA) or Congress.

Corporate Pressure Heavy in Lead-Up to Approval of "Disclosure" Bill

In the lead-up to the approval of the chemical disclosure bill's approval, the oil and gas industry had a strong presence at ALEC annual meeting in August 2011 in New Orleans. The Louisiana Host Committee for this conference had at least 13 corporate lobbyists, two of them representing two of the most profitable fossil fuel corporations in the world: Neil Buckingham of Shell and Jeff Copesky of Exxon Mobil. Buckingham is Shell's Louisiana lobbyist, while Copesky is Exxon Mobil's Southern Region lobbyist. Both of the massive global corporations they lobby for have joined in on the fracking agenda and earned a combined $49+billion dollars in 2010. Nearly one-eighth of the highlighted sponsors of the 2011 ALEC conference were players with a stake in domestic shale gas expansion. These included BP, Exxon Mobil, Chevron, Shell, ConocoPhillips, Chesapeake Energy, EnCana Corporation, CN (Canadian National Railroad), among others. If the 2011 sponsorship name levels were the same as for 2010, this amounted to over a quarter of a million dollars in contributions to underwrite the convention expenses.

At this conference, one of the workshops "Why Wait? Start Energy Independence Today" featured industry talking points such as shale gas is "clean, abundant, cheap, and it's ours." The ALEC 2011 Annual Meeting brochure, previewing the workshop, read "... [W]e as elected officials, policy makers and industry representatives must come together to create a 21st century energy policy that reduces our dependence on foreign oil and promotes the use of our most abundant, clean burning and American produced fuel, Natural Gas."

Since 2010, the Center for Media and Democracy has been documenting that even though the fracking industry is engaged in PR campaigns pushing fracking for our "national security," the rate of export of natural gas by for-profit corporations to other countries has increased dramatically, as shown in the chart at the side. In addition, an August 2011 report titled "Pipe Dreams: What the Gas Industry Doesn't Want You to Know about Fracking and U.S. Energy Independence," written by Food and Water Watch, shows that contrary to the industry's talking points, a significant amount of shale gas drilled in the U.S. is exported to foreign countries such as Japan, Australia, India, and China.

A second ALEC workshop "Unconventional Revolution: How Technological Advancements Have Transformed Energy Production in the United States," included, among other panelists, Robert Bryce from the Koch-funded Manhattan Institute. The workshop "highlight[ed] the tremendous opportunities cleaner-burning natural gas offers for job creation and economic development...."

In April 2011, researchers at Cornell University published research indicating that, despite long-standing assumptions and PR about "cleaner-burning" gas, the burning process for shale gas may be dirtier than that of coal in some respects. Also, in June 2011, The New York Times' Ian Urbina wrote a piece which called into question the profitability of shale gas.

Two weeks before ALEC's summer 2011 meeting, Louisiana Governor Bobby Jindal announced that the state would be providing tax benefits to Cheniere Energy which was spending some $6 billion to build a shale gas liquefaction facility at Cheniere's Sabine Pass terminal in Cameron Parish, located in southwest Louisiana, right on the Gulf Coast shoreline. (Liquefaction is a process through which methane gas is changed so it can be transported more easily by truck or train and also used to run vehicles.) One of those tax benefits provides 100 percent property tax abatement for up to ten years on the company's investment in its plant.

During the annual meeting, Jindal was awarded ALEC's 2011 Thomas Jefferson Freedom Award. (Jindal is not only pushing the ALEC corporate gas agenda but has also been instrumental in attempting to implement ALEC's public education privatization agenda in New Orleans in the aftermath of the Katrina disaster.)

Crippling Local Zoning Laws and Pushing for a Weak EPA

Beyond the effort to thwart real disclosure of fracking fluid, other "model" ALEC bills have been crafted to push forward the expansion of fracking. An ALEC bill titled "An Act Granting the Authority of Rural Counties to Transition to Decentralized Land Use Regulation," was passed by ALEC's Energy, Environment, and Agriculture Task Force at its Annual Meeting in August 2010 in San Diego. This model legislation would repeal all land use planning and zoning for "rural" counties by both county and state governments, taking away the local democratic process for communities to set local zoning rules. Legislation similar to this bill has been pushed in states including Pennsylvania, Ohio, Idaho, Colorado, and Texas. On July 26, the Pennsylvania Commonwealth Court struck down Pennsylvania's version of this law stating that it "...violates substantive due process because it does not protect the interests of neighboring property owners from harm, alters the character of neighborhoods and makes irrational classifications."

ALEC has also taken up the promotion of fracking in its April 2012 document called "The Economy Derailed: State-By-State Impacts of the EPA Regulatory Train Wreck." In it, ALEC attempts to discredit Josh Fox's Academy award-nominated film "Gasland," which documents effects of fracking on communities across the country and the report claims that citizens do not need to worry about air or water contamination. It calls EPA efforts towards heightening federal regulations "duplicative and unnecessary" and that "the states themselves are best poised to ensure environmental protection from hydraulic fracturing processes."

No Signs of a Break-Up

The relationship between ALEC and the oil and gas industry has proven to be mutually beneficial, advancing the corporate agenda on fracking at the expense of protections for ordinary Americans. Although 40 corporations, four non-profits, and 70 legislators have left ALEC, there is no indication that the big oil and gas companies that have helped bankroll ALEC are planning to leave any time soon.

This article has been updated to reflect that Cheniere Energy is investing in LNG facilities in Louisiana.