Resource Boom to Revitalization: the Local Economic Planning and Governance Implications of Fracking in Northern Appalachia

Resource Boom to Revitalization: The Local Economic Planning and Governance Implications of Fracking in Northern Appalachia

Austin Lewis Zwick

A thesis submitted in conformity with the requirements for the degree of Doctor of Philosophy Department of Geography and Planning University of Toronto

Resource Boom to Revitalization: The Local Economic Planning and Governance Implications of Fracking in Northern Appalachia

Austin Lewis Zwick Doctor of Philosophy Department of Geography and Planning University of Toronto 2018 Abstract

Small cities in Appalachia have been battling an ongoing struggle against economic decline for decades, but now some find themselves amidst a new natural resource boom. The technological innovation of hydraulic fracturing drilling, commonly known as ‘fracking’, has revolutionized global energy markets overnight, leaving a gap of understanding about its local implications in the process. Most early research focused on documenting the environmental risks of fracking, but little work has gone into understanding its local economic and planning impacts. Promises of economic growth and blue-collar jobs give hope to this declining region, but resource extraction municipalities often struggle with inadequate fiscal and administrative capacity to deal with the environmental and infrastructure externalities caused by the industry. As municipalities grapple with these challenges, the ‘boom-bust cycle’ may become reflected on their balance sheets, putting their fiscal health at risk. What are the local economic planning and governance implications of the fracking boom in Northern Appalachia?

Additionally, because of the newness of fracking, this specific industry in this specific region offers a rare opportunity to study the impact the introduction of natural resource development impacts local economic resilience. My doctoral dissertation offers a unique theoretical

contribution, as tension in literature exists on whether contemporary extractions industries positively or negatively impact diversification. It also offers a practical contribution, considering that little research exists on job estimates and governance issues that arise with fracking. Each chapter of this dissertation, intended to be independent academic works with their own literature reviews and methods, contributes to our understanding through: (Chapter 1) introducing the geography of the region, (Chapter 2) overviewing the economic history of Northern Appalachia;

(Chapter 3) testing changes in economic diversity indices; (Chapter 4) investigating migration, housing, and employment patterns; and (Chapter 5) surveying local planners about regulatory responses. Finally, my dissertation concludes with a review of findings and a brief set of policy recommendations. The goal of this research is to provide information that helps small cities best plan and manage the fracking boom; finding that the industry is not dramatically altering patterns of long-term decline in Appalachia.

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Acknowledgments

To the people who guided me through my life; the ones who I could not have done this without. First, my PhD supervisor Jason Hackworth who always gave great advice and continually pushed me to keep writing. The thoroughness of his work continues to inspire me. John Miron who always pointed me to the canonical writings in regional science. John’s wisdom is timeless and his unending curiosity inspires me. Amrita Daniere, whose supportiveness of my undertakings built confidence in me to keep pushing forward. She is a role model of the professor I’d like to be. Enid Slack’s advice and comments on the public finance and governance sections really improved my understanding. The doors she opened for me and the personal connections she helped me make are priceless. Prior to entering my PhD program, the mentorship provided by Susan Christopherson during my masters’ degree, and Kate Bronfenbrenner during my undergraduate, deeply shaped me into the scholar that I am today. My early experiences of being guided by scholars with such a passion for research made me want to follow in their footsteps. Finally, I’d like to thank my wonderful wife Maria Pontikis without whose love and endless support I would have never ventured – or completed – this endeavor.

There are several organizations I’d like to thank for their generous support of my dissertation process. Thank you to the Munk School’s Centre for Study of the United States (CSUS) and Institute of Municipal Finance and Governance (IMFG) for generous funding and providing forums for thoughtful feedback. Thank you to the Regional Studies Association (RSA), American Collegiate Schools of Planning (ACSP), University of Toronto Graduate Students’ Union (GSU), University of Toronto’s School of Graduate Studies (SGS), and my home department for providing funds to help me travel for purposes of field research and conferences. These experiences were invaluable. Finally, thank you to the Lincoln Institute of Land Policy and University of Toronto’s Department of Geography and Planning for their generous funding that bought me time (and data) to complete my dissertation.

Table of Contents

Acknowledgments...... iv

Table of Contents ...... v

List of Tables ...... viii

List of Figures ...... ix

List of Appendices ...... x

Chapter 1 Introduction: Northern Appalachia: Stuck in the Middle of Somewhere ...... 1

1.1 Chapter Introduction ...... 1

1.2 Geography: Places, People, and Well-sites ...... 4

1.2.1 Places ...... 4

1.2.3 Sub-regions ...... 14

1.2.4 Well-sites ...... 18

1.3 Identity and Politics: Coal to Fracking ...... 22

1.4 Outline of Dissertation ...... 26

1.5 Limitations ...... 32

1.6 Autobiographical Arc ...... 34

1.7 Chapter Conclusion ...... 38

Chapter 2 The Economic History of Northern Appalachia: From Furs to Fracking with Coal Everywhere In-Between ...... 40

2.1 Chapter Introduction ...... 40

2.2 Economic History: Freedom, Farming, and Coal ...... 41

2.3 Appalachian Regional Commission ...... 55

2.4 Operations of the Fracking Industry ...... 60

2.5 Comparing the Coal Industry to the Fracking Industry ...... 67

2.6 The Exception that Proves the Rule: Collegetowns ...... 73

2.7 Chapter Conclusion ...... 76

Chapter 3 Testing the Local Natural Resource Curse Hypothesis: A Case Study of Fracking in Northern Appalachia ...... 80

3.1 Chapter Introduction ...... 80

3.2 Literature Review ...... 83

3.2.1 Negative Hysteresis ...... 83

3.2.2 Positive Hysteresis ...... 86

3.3 Methods ...... 88

3.3.1 The Resilience Framework ...... 88

3.3.2 Data and Economic Diversity Indices...... 90

3.4 Results...... 98

3.5 Chapter Conclusion ...... 112

Chapter 4 Fracking and Regional Growth: A Case Study of the Residential, Employment, and Commuting Patterns along the New York-Pennsylvania Border ...... 116

4.1 Chapter Introduction ...... 116

4.2 Literature Review ...... 117

4.3 Study Area ...... 123

4.4 Methods ...... 125

4.4.1 Descriptive Statistics ...... 125

4.4.2 Economic Base Analysis...... 130

4.4.3 Commuting Analysis ...... 135

4.5 Discussion ...... 141

4.6 Chapter Conclusion ...... 142

Chapter 5 Municipal Responses to Fracking in Northern Appalachia ...... 144

5.1 Chapter Introduction ...... 144

5.2 Literature Review ...... 150

5.2.1 Implementation of Environmental Sustainability Initiatives ...... 150

5.2.2 Municipal Regulatory Challenges of Fracking ...... 154

5.3 Research Process ...... 159

5.4 Findings ...... 166

5.4.1 Maryland ...... 166

5.4.2 West Virginia ...... 167

5.4.3 New York ...... 168

5.4.4 Pennsylvania ...... 171

5.4.5 Ohio ...... 174

5.5 Discussion ...... 178

5.6 Chapter Conclusion and Local Policy Recommendations...... 185

Chapter 6 Conclusion ...... 188

References ...... 196

Appendices ...... 234

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List of Tables

Table 1.1: Overview of Findings by Dissertation Chapter ...... 4

Table 1.2: Population of Rust Belt Cities from Peak to 2010 ...... 6

Table 1.3: Overview of Economic Characteristics ...... 12

Table 1.4: All Cities of Northern Appalachia with Greater than 25,000 Population in 2010 ...... 14

Table 1.5: US Total Coal Workers and Total Production ...... 27

Table 3.1: Descriptives of Study Area Counties ...... 92

Table 3.2: Percentage Change in Industries by Fracking Intensity ...... 99

Table 3.3: Simple Correlations Between Well Counts and Economic Diversity Indices ...... 105

Table 3.4: One-Way ANOVA Results Between Categories of Fracking Intensity, 2000 to 2013 ...... 107

Table 3.5: Standardized Beta Coefficients for Linear Regression Model ...... 111

Table 4.1: Study Area Descriptive Statistics ...... 129

Table 4.2: Location Quotients for Study Area ...... 131

Table 4.3: Job Creation Estimates ...... 132

Table 5.1: Number of Fracking Wells per State (2005-2014) ...... 146

Table 5.2 Oil and Gas Pre-empt Home Rule in New York ...... 148

Table 5.3: Number of Fracking Wells drilled within 25 miles of Case Study Cities ...... 162

Table 5.4: Description of Municipal Regulation of Fracking ...... 164

Table 5.5 Oil and Gas Pre-empt Home Rule in Ohio ...... 177

Table 5.5: Distribution of Industries in Case Study Cities ...... 181

Table D.1: Companies that fracked more than 250 wells in Northern Appalachia, 2005 – 2014 ...... 240

Table D.2: Offices of Drilling Companies with more than 250 wells in Northern Appalachia, 2005 - 2014 ...... 243

Table D.3: NAICS Code 21 (Mining) for Pittsburgh MSA, 2005 – 2014 ...... 245

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List of Figures

Figure 1.1: Northern Appalachia, where Appalachia overlaps with the Rust Belt ...... 5

Figure 1.2: County Economic Status Overview ...... 11

Figure 1.3: The Sub-regions of Northern Appalachia ...... 16

Figure 1.4: Shale Plays in North America ...... 18

Figure 1.5: Shale Plays and Fracking Wells of Northern Appalachia ...... 20

Figure 1.6: Natural Gas Pipelines and Fracking Well-Sites ...... 20

Figure 2.1: Fatalities in the Coal Industry from 1900 to 2015...... 46

Figure 3.1: Visualization of How Gini Coefficients are Calculated ...... 94

Figure 3.2: Distribution of HHI Index by Fracking intensity...... 102

Figure 3.3: Distribution of Gini Coefficients by Fracking Intensity ...... 103

Figure 3.4: Distribution of Ellison-Glaeser by Fracking Intensity……………………………..104

Figure 3.5: Maps of Fracking Intensity and Indices ...... 114

Figure 3.6: Maps of Bivariate LISA Between Indices and Well Counts ...... 115

Figure 4.1: Cities, Counties and Well-Sites (2005-2010) in the Study Region ...... 12625

Figure 4.2: Fracking Industry Breakdown of Total Spending ...... 127

Figure 4.3: Net Change in Workers’ Residency Between Counties, 2002 to 2010 ...... 139

Figure 4.4: Mining Industry and Out-of-State Workers Comparison ...... 140

Figure 5.1 Decision Tree of Local Governments Considering Fracking ...... 15150

Figure 5.2 Complaints to Pennsylvania to Department of Environmental Protection, 2004 – 2016 ...... 1809

Figure 6.1 Global Map of Shale Resources ...... 195

List of Appendices

Appendix A: County Economic Levels ...... 2344

Appendix B: Fracking’s Exacerbated Boom-Bust Cycle ...... 2355

Appendix C: Additional Hot-Spot Maps from Chapter 4 ...... 238

Appendix D: Ownership of the Fracking Industry ...... 240

Appendix E: Survey Questions of “Municipal Government Responses to the Fracking Industry in Appalachia” ...... 2466

Appendix F: Example of Prior Municipal Regulation on Fracking ...... 2477

Appendix G: Example of New Comprehensive Municipal Regulation on Fracking ...... 2544

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Chapter 1 Introduction: Northern Appalachia: Stuck in the Middle of Somewhere

Introduction and Placemaking Chapter

1.1 Chapter Introduction

Northern Appalachia is a beautiful disaster. A contrast of verdant land and human tragedy. Rural poverty hides underneath the deciduous canopy, following the rivers as they bend along the mountainsides. The underlying strength of the region in the 19th century – natural endowments coupled with the grit of its people – has become an enduring liability as such assets have become extraneous in a modern economy. As technology continues its unrelenting march forward, their traditional livelihoods of subsistence agricultural and resource extraction – mainly, coal – have been slipping away for decades as machines have automated the work they used to do. This is similar to other regions throughout the world which have experienced slower economic growth despite – or perhaps, because of – their natural resource wealth, a concept known as ‘the natural resource curse’ (Auty, 1993; Frankel, 2011). Resource regions on the periphery of the global economy, suffer inequities compared to their core regions who act as intermediaries (Wallerstein,

1987). A ‘negative hysteresis’ sets in where economic decline begets further decline; ‘path dependency’ results in economic dependency.

Even in the face of innumerable environmental and economic challenges, the people of

Appalachia continue to stick to their small, cohesive communities with a strong connection to the land (Cooper et al., 2010). Some jobs in these declining industries remain, but nostalgia for what used to be and resentment for what is, has become ingrained in the cultural fabric. Jacker

Weller’s (1965) Yesterday’s People, a seminal controversial sociological study that both

2 idealized and derided Appalachian way of life, still echoes. When a new natural resource extraction industry – fracking – came to town, they saw more than just the promised jobs and investment but also an embodiment of nostalgia that brought hope for the future; a silver bullet to change the region’s economic trajectory. In a region with nearly negligible oil and gas drilling over the past five decades, over 15,000 wells were drilled between 2005 and 2014. Regulatory regimes were caught unprepared to handle the speed, size and scale of this new industry (Carter and Eaton, 2016), while most early academic research focused on documenting the environmental risks of fracking (Howarth et al, 2011; Osborn et al, 2011; Jackson et al, 2014).

Wherever fracking went, landscapes of conflict emerged as communities were deeply split between the classic tradeoff between economic development and environmental protection. On one hand, fracking provides much-needed jobs to otherwise declining rural regions; but on the other hand, the industry is detrimental to livability. “When all factors are taken into consideration, neither the long-term nor the short-term economic benefits of shale gas extraction on local communities, is… evident” (Bamberger and Oswald, 2014).

Furthermore, although federal (Brady, 2011; Tiemann and Vann, 2015; US EPA, 2017) and state

(Richardson et al., 2013; Shenk et al., 2014; and Zirogiannis et al. (2016) regulatory responses to the fracking industry are well-documented, particularly around health and environmental issues, little research has looked into municipal responses. Local governments are on the front line attempting to manage the externalities of this new industry, which include water safety, air quality, noise pollution, wastewater disposal, truck traffic, and even minor manmade earthquakes (Goho,

2012). “Questions about what mechanisms local governments can use to regulate fracking, the scope of local authority over fracking, and which aspects of the fracking boom local government regulations can and should target remain largely unanswered” (Minor, 2014).

This research was designed to study the regional variation of a contemporary practical planning problem of municipal governments – the hasty rise of the fracking industry – and to provide local public policy recommendations to more effectively address issues that have arisen. Drawing from methods of economic planning, public finance, and policy analysis, this dissertation is intended to help local policymakers approach this industry with a more informed cost-benefit analysis when deciding whether - and how – to take municipal regulatory action by (a) evaluating the economic promises of the industry [Chapter 3 and 4] and conducting a comparative analysis of municipal policy [Chapter 5]. Though the decision to allow and license fracking ultimately lies at the state-level, local governments can choose their degree of hospitability towards the industry. But in moving towards this end, unique opportunities to address knowledge gaps within the academic literature presented themselves, including (1) whether the ‘natural resource curse’ framework is applicable on the local scale, and (2) whether implementation of environmental sustainability initiatives is more likely to succeed when municipal governments face predictable, palpable, and imminent risks through inaction.

Surprisingly, the answer to both inquiries on theory, was not what was expected. As opposed to the predications of the “natural resource curse” literature, fracking created enough jobs in secondary services and up-stream/down-stream supply linkages that the regional economy diversified; putting it on more solid economic footing for future growth [Chapter 3]. The cost of these diversified jobs was environmental risk. Despite the immediacy of a need for regulation to protect the health and safety of the community, the local political argument in favor of job growth was too strong, preventing the building of consensus necessary to enact municipal environmental regulation [Chapter 5]. Even places that experienced environmental incidents

4 failed to regulate, though there was considerable variation – which seems influenced by current economic prospects and the presence of certain pre-existing industries.

This same story of being surprised by results kept repeating itself. Everything I thought I knew about fracking – all of which was conventional wisdom circa 2013 – proved to be incomplete in some instances, and completely incorrect in the rest. As shown in Table 1.1, chapter by chapter, the findings in my masters’ research was put to the test and found wanting. Fracking is not nearly as beneficial in terms of economic gains or nearly as dangerous to existing communities as purported by activists, politicians, and scholars. Yes, it can be very disruptive to rural communities and individual farmers, that is still true, but – despite it transforming global energy markets – the regional economic changes it has brought to the region are comparatively small, particularly when compared to the long history of challenges these places already face. Though this was not my intention to write a dissertation that challenged conventional wisdom instead of capturing it, that is what happened. The rest of the introduction overviews the geographies, research questions, and limitations of this research.

1.2 Geography: Places, People, and Well-sites 1.2.1 Places

As shown in Figure 1.1, this research focuses on where small-town Appalachia overlaps the deindustrializing Rust Belt. A region stuck between worlds, Northern Appalachia. Cities and states along the Great Lakes were built-up during the 18th and 19th century through the primary industries of mining, transportation, and manufacturing. The industrial economy centered around moving freight via frigates through major waterways: the Great Lakes, man-built canals, and

Table 1.1: Overview of Findings by Dissertation Chapter

Ch. Prior Understanding Dissertation Findings 1 Introduction

2 Fracking transformed rural landscapes Fracking is a continuation of a long history into industrial extraction zones, risking of extraction and production, and much less the local environment in the process, in environmentally damaging than the coal the name of jobs. mining that came before it. 3 Fracking is pushing up costs of local There is no evidence that fracking is inputs, ‘crowding out’ adjacent industries ‘crowding out’ adjacent industries. The in favor of jobs in a high-paying but boom is smaller and longer-lived than short-lived boom in the resource sector. previously thought. 4 Fracking is providing significant Fracking does not provide much employment to the local economy, but employment, and most of the jobs are much of it goes to ‘fly-in/fly-out’ (FIFO) eventually taken over by regional workers outside workers. who ‘drive-in/drive-out’ (DIDO) for the gig. 5 In informed of local risks and planning Local governments are somewhat aware of options, local governments will act to the risks of fracking, but often choose not to regulate or ban the fracking industry. act for political-economic reasons. They are choosing jobs over the environment. 6 Conclusion

Figure 1.1: Northern Appalachia, where Appalachia overlaps with the Rust Belt

Table 1.2: Population of Rust Belt Cities from Peak to 2010

City Peak 2010 Population Population Buffalo, NY 580,132 (1950) 261,310 Cleveland, OH 914,808 (1950) 388,072 Chicago, IL 3,620,962 (1950) 2,695,598 Detroit, MI 1,849,568 (1950) 713,777 Milwaukee, WI 741,324 (1960) 594,833 Pittsburgh, PA 676,806 (1950) 304,391 St. Louis, MO 856,796 (1950) 319,294 Source: US Census (2010)

8 navigable rivers that connect them inland. States and cities included, moving from West to East:

Wisconsin, Michigan, Illinois, Indiana, Ohio, Pennsylvania, and New York excluding New York

Metropolitan Area. Major cities include Chicago, Cleveland, Detroit, and Buffalo – all centers that combined heavy industry, warehousing, and transportation networks – which became concentrations of agglomeration economies. As shown in Table 1.2, this region reached its zenith during World War II when it was nicknamed the ‘arsenal of democracy’ as it produced the majority of the weapons and equipment for the war effort. Since then, decades of grinding deindustrialization have earned the region a different moniker – the ‘Rust Belt’ – as cities have struggled with problems of abandonment: declining employment bases, deteriorating housing stock, climbing poverty rates, violent race relations, urban brown fields, and more. Some cities have started on the road to recovery by diversifying their economies (e.g., Chicago, Pittsburgh), while others remain poster-children of urban decline as little has sprung up to replace manufacturing (e.g., Cleveland, Detroit).

The borders of Appalachia are defined by the Appalachian Regional Commission (ARC), which was formally established by Congress in 1965, “to innovate, partner, and invest to build community capacity and strengthen economic growth in Appalachia (ARC, 2017a)” [discussed more in Chapter 2]. ARC’s boundaries follow the mountains and rolling hills stretching diagonally as far south as northern Mississippi, northeast through Tennessee and Kentucky, consuming West Virginia, and ending in Pennsylvania and the Southern Tier of New York. The south and east is where the mountains peak in elevation with Mount Mitchell at 2,037m in western North Carolina, whereas the mountains ease to rolling hills in the north and west. Some scholars include the Blue Mountains of New Hampshire and the Ozarks in Arkansas, but ARC does not extend this far because they define the region as much by physical geography as it does

9 about politics, culture, and economic standing. ARC’s (2017b) spatial definition has changed slightly over time – with the consent of its 13 state members – but its mission has not, which is:

“ARC’s strategic plan identifies five investment goals to advance this mission: creating economic opportunity; preparing a ready workforce; building critical infrastructure; leveraging natural and cultural assets; and cultivating leadership and community capacity. In partnership with the states and 73 Local Development Districts (LDDs), ARC has supported 662 projects in Appalachia totaling $175.7 million [between October 2015 and January 2017]. These investments have been matched by more than $257.4 million and will attract an additional $443.3 million in leveraged private investments in Appalachia. They will also create or retain more than 23,670 jobs, train and educate over 49,000 students and workers, and benefit the more than 25 million residents in Appalachia’s 420 counties [across 13 states].”

Appalachia is a distinct rural region within the United States composed of small towns and up to midsize cities (with the exceptional case of Pittsburgh), with the people having much more in common with each other than the urban residents of cities of their own states (Flynt, 1979). The people have a shared history, cultural, and agricultural based economy, grown by successive waves of investment and migration driven by the resource extraction industries – predominantly coal. Now they share similar problems of rural poverty while being a ‘forgotten people’ (Flynt,

1979). Many sources generalize all of Appalachia as one and the same – moving between

Kentucky to Pennsylvania without missing a beat - while other scholars mention minor differences between the Northern, Central, and Southern mountains, all with varying definitions of exactly where these places stop and start.

Fracking represents an exceptionally rare phenomenon of the rapid rise of a new resource industry which transformed existing geographies. This research focuses on Northern Appalachia, the geographic overlap between Appalachia and the Rust Belt1, which happens to overlap nearly identically to the Marcellus shale [Figure 1.5]. This study region was chosen because of the presence of pre-existing communities and industries, which contrasts with most shale plays that are in overwhelmingly rural areas absent of significant population centres. Furthermore, because of the obtainability of time-lapsed data is often an issue when studying resource industries in international contexts, this specific industry in this specific region offers a rare chance to quantitatively study the effect of boom-bust cycles on established industries in these places. The presence of these attributes generates a need for local government to make informed cost-benefit decisions on what their response to this new industry will be.

Northern Appalachia has many rivers and streams that flow downstream into the canals into the

Rust Belt cities. Because of this, Northern Appalachia experienced some industrialization in the eighteenth through twentieth centuries, but not to the same degree as the rest of the Rust Belt – except for Pittsburgh [discussed below]. Despite deindustrialization, the north is considered economically better off (higher-level economic status as seen in Figure 1.2; higher incomes, lower unemployment, and lower poverty rates as seen in Table 1.2) than Southern Appalachia, which is defined as all other counties of Appalachia. The even more mountainous terrain of

Southern Appalachia, coupled with the lack of major waterways, has made this region relatively

1 For simplicity, this research includes the mountain counties of Western Maryland, which sits atop the Marcellus shale, into the definition of Northern Appalachia even though it is not traditionally considered part of the Rust Belt. This definition also aligns with Union states versus the Confederate states during the American Civil War.

Figure 1.2: County Economic Status Overview

Attainment Competitive Transitional At-Risk Distressed Total Appalachia 1 11 205 110 93 420 Northern 0 7 97 22 16 139 Southern 1 4 108 88 77 281 Note: Full category definitions can be found in Appendix A Source: Appalachian Regional Commission (2016)

12 more disconnected from the broader economy than the north (Lewis, 2004). Because of geographic proximity, Northern Appalachia has more cultural connections to the East Coast cities and Midwest, whereas Southern Appalachia has more connections to the Deep South.

Though these people of the mountains share more in common than those of the surrounding areas, they have often left (and in many cases returned) seeking work; thereby establishing cultural and familial ties to the surrounding lowlands.

The city of Pittsburgh is an exceptional case. Like the rest of Northern Appalachia, it is caught between the mountains of Appalachia and the broader geography of the Rust Belt. Yet Pittsburgh

(population 305,704) is the one major city in the mountains of Appalachia – three times larger than the next closest of Erie, PA (population 101,786) – as well as the poster-child for post- industrial transition to a technology-based economy in the Rust Belt. The ‘Steel City’ was founded as the meeting point of three rivers – Monongahela, Allegheny, and Ohio – which brought natural resources to it from the rest of Appalachia, smelted and shaped those into raw materials for industrial use, and then sent them onwards to Youngstown, Akron, and Cleveland through the canal system, where they would be further processed and transformed throughout the region. When the steel industry declined, education, health care, and research (particularly robotics at Carnegie Mellon University) came to dominant its economy. Google, Apple,

Autodesk, and IBM are among 1,600 technology firms all have research offices here. This is unheard of in the rest of Appalachia.

As shown in Table 1.3, Pittsburgh maintains a lower unemployment rate, higher income, and lower poverty rate than the US average, and even more so compared to the regions it is caught between. Pittsburgh’s land-use policies have kept fracking away from the city core, but it is the one city in the United States where the industry engulfs it on all sides. Asking why Pittsburgh is

Table 1.3: Overview of Economic Characteristics

3-Year Average Per Capita Market Poverty Rate, Unemployment Rate, Income, 2013 2009-13 2011-13 United States 8.1% $37,127 15.4% Appalachia 9.1% $23,173 19.5% Northern 8.4% $25,030 16.8% Southern 9.5% $22,224 20.8% Allegheny County 6.8% $44,114 12.9% (Pittsburgh) Source: Appalachian Regional Commission (2016)

14 such an outlier compared to its surrounding regions would be a research project unto itself. For the purposes of this research, because of Pittsburgh’s exceptional circumstances, generalizations made about Appalachia do not necessarily apply to this city even though the geography, history, and cultural do overlap. Frankly, little will be said about Pittsburgh going forward.

Table 1.4 indicates that there are 26 municipalities with more than 25,000 population in Northern

Appalachia; most with fewer than 50,000 people. Four are Pittsburgh and its suburbs, but the remaining 22 is a region of rural towns and small cities. All 22 of these places lie in counties with ‘transitional’ status, meaning that they are in the middle 50 percent of economic status in the entire US. Out of these, the cities with the highest income and lowest unemployment are mostly college towns (e.g., Ithaca (NY), State College (PA), Morgantown (WV)). One is also a state capital beyond being a college town (Charleston, WV). These places are more connected to the outside world, acting as anchors of investment. The rest of Northern Appalachian counties, particularly those without a small city, are worse off with most of the rest of the counties being

‘At-Risk’ or ‘Distressed.’ [For full definitions, see Appendix A]. It’s in these rural landscapes where most fracking takes place.

1.2.2 Sub-regions

This region is stereotyped as lacking diversity; being uniformly white, rural, protestant, and working class. Though there is truth to this, Northern Appalachia has its own diversity based on who, when, and why people moved to these sub-regions. As seen in Figure 1.3, Northern

Appalachia can be further subdivided into three sub-regions as defined by their English dialects

(Labov et al., 1997). These three sub-regions share similar geological and topographical attributes, but the history and culture of the places differ slightly based off the wave of migration.

Table 1.4: All Cities of Northern Appalachia with Greater than 25,000 Population in 2010 City, State City County County County County Per County Population Economic 3-Year Capita Poverty Status Average Market Rate, Unemploy - Income, 2009-13 ment Rate, 2013 2011-13 Hagerstown, MD 39,662 Washington Transitional 8.8 30,499 12.4 Binghamton, NY 47,376 Broome Transitional 8.4 30,057 17.4 Elmira, NY 29,200 Chemung Transitional 8.2 29,663 15.7 Ithaca, NY 30,014 Tompkins Transitional 5.5 33,711 20.5 Jamestown, NY 31,146 Chautauqua Transitional 8.1 24,749 19.1 Austintown, OH 29,677 Mahoning Transitional 8.6 28,759 17.6 Boardman, OH 35,376 Mahoning Transitional 8.6 28,759 17.6 Warren, OH 41,557 Trumbull Transitional 8.7 24,532 17.4 Youngstown, OH 66,982 Mahoning Transitional 8.6 28,759 17.6 Zanesville, OH 25,487 Muskingum Transitional 10.4 24,554 18.1 Altoona, PA 46,320 Blair Transitional 6.9 28,109 14.1 Bethel Park, PA 32,313 Allegheny Competitive 6.8 44,114 12.9 Erie, PA 101,786 Erie Transitional 7.7 28,527 16.9 Hazleton, PA 25,340 Luzerne Transitional 9.5 29,880 15.6 Monroeville, PA 28,386 Allegheny Competitive 6.8 44,114 12.9 Plum, PA 27,126 Allegheny Competitive 6.8 44,114 12.9 Pittsburgh, PA 305,704 Allegheny Competitive 6.8 44,114 12.9 Scranton, PA 76,089 Lackawanna Transitional 8.9 31,351 13.6 State College, PA 42,034 Centre Transitional 5.7 36,129 20.5 Wilkes-Barre, PA 41,498 Luzerne Transitional 9.5 29,880 15.6 Williamsport, PA 29,381 Lycoming Transitional 7.7 30,319 14.2 Charleston, WV 51,400 Kanawha Transitional 6.3 34,146 14.1 Huntington, WV 49,138 Cabell Transitional 6.5 25,680 22.2 Morgantown, 29,660 Monongalia Transitional 4.7 33,002 22.4 WV Parkersburg, WV 29,660 Wood Transitional 7.1 33,002 16.2 Wheeling, WV 31,492 Ohio Transitional 6.8 25,307 15.4

Source: Appalachian Regional Commission (2016) and US Census (2010)

– and the origin of – the ethnicities who predominantly populate the area. The borders of the sub- regions are an approximation, being more fluid than they appear on the map.

The Western Pennsylvania sub-region is centered around Pittsburgh and suburbs, dominated by the Scotch-Irish working-class but also German, Polish, and Ukrainian immigrants who lent words to the language. The economy of this region is centered around Pittsburgh and its environs, and is much more urban and industrially focused than the other two. Recent immigrants went to work in factories or became skilled tradesmen.

The Inland Northern sub-region was brought by workers from the East Coast – east of the

Appalachian Mountains – and moved westward along the Great Lakes system of trade. German is the predominant ethnicity, but major waves of immigration also include English, Irish, Italians, and French. This region is mixed between smaller urban ports of the Great Lakes and rural most other places. African-Americans later moved in large numbers to this region.

The South Midland sub-region stretches westward from southern Ohio into the southern part of the Great Plains, brought by the rural agricultural settlers originating from the South during the

1800s. The predominant ethnicities are English, German, Scotch-Irish, and ‘American’ – a catch- all term used for people who do not know their ethnic background or describe themselves as

White, mixed ethnicity. African-Americans, descendants of small-farm slaves, comprise approximately 10 percent of the population. This region is predominantly rural, but has some small cities along major rivers. Further south outside the sub-region fall the major cities of

Cincinnati and Lexington.

Figure 1.3: The Sub-regions of Northern Appalachia

1.2.3 Well-sites

Previously inaccessible oil and gas captured in small pockets of shale rock – like the holes in swiss cheese – became commercially viable to extract with the technological innovation of fracking, which is the shattering of shale rock with high-pressure water, sand, and chemicals to release its contents [described in more detail in Chapter 2].

Shale rock is spread out in a geologically thin layer between 500 to 12,000 feet beneath the surface, known as shale plays. These can be found throughout the world, but so far extraction has focused in North America. Geological shale rock formations that contain known oil and gas, as determined by the United States Geological Survey (2014) are shown in Figure 1.4. These plays are big. The most productive shale play, the Permian Basin in west Texas, stretches over 75,000 square miles. While the largest by land area, the Marcellus Shale, stretches over 170,000 square miles over five states.

As shown in Figure 1.5, the Marcellus Shale is almost geographically synonymous with the region of Northern Appalachia. The shale formation is known for natural gas, which is then shipped via pipelines to the Midwest for primarily industrial purposes and the Northeast for primarily consumer heating. Drilling has focused wherever the elevation is less than 600 meters

(1,970 feet), most likely due to the flatness of the terrain - the absence of the forested rolling hills

– making it easier to construct drilling platforms. Figure 1.6 shows that, Marcellus drilling has focused on two sweet spots irregardless of pipeline location: (1) Northeastern Pennsylvania along the New York border, and (2) the Tri-State area (Ohio, Pennsylvania, and West Virginia) near Pittsburgh. Beneath the Marcellus Shale lies the oil-rich Utica Shale, making the region like a layer-cake of fossil fuels; promising to bring drilling jobs for decades to come. The additional expense to reach its further depth makes most of the Utica is not commercially viable at today’s

Figure 1.4: Shale Plays in North America

Source: U.S. Department of Energy (2014)

Figure 1.5: Shale Plays and Fracking Wells of Northern Appalachia

Sources: ArcGIS (2013a), ArcGIS (2013b)

Figure 1.6: Natural Gas Pipelines and Fracking Well-Sites

Source: ArcGIS (2015)

22 prices. The Utica sweet spot is where most drilling in the Utica takes place – concentrated in

Eastern Ohio. Drilling outside the shale plays indicates either (a) test-wells or (b) that the play extends farther than USGS survey. Information on drilling permits - made available by New

York, Pennsylvania, Ohio, and West Virginia - often do not consistently indicate which shale play the drillers are targeting, but the general rule is: Marcellus for natural gas, Utica for oil.

Although there are positive economic impacts to fracking, including financial gains from leasing, short-term hiring, and lower energy prices (Wang et al., 2014), negative externalities have been well-documented as well. These include possible groundwater contamination (Osborn et al.,

2011; Vidic et al., 2013), increased earthquakes (Frölich, 2012; Kim, 2013), and adverse health effects on humans and animals (Clark et al., 2012; Bamberger and Oswald, 2012). These communities do not get to choose whether they want fracking or not [discussed more in Chapter

5], as state governments have the authority over that, but they can make planning decisions (e.g., zoning, setback ordinances, traffic controls, impact fees, etc.) to mitigate the industry’s externalities. But by doing so, they risk losing the industry as it seeks lower-cost alternatives that do not mind participating in a regulatory race-to-the-bottom for jobs.

1.3 Identity and Politics: Coal to Fracking

Biggers (2007) describes the four stereotypes of Appalachia – pristine, backwater, Anglo-Saxon, and pitiful – and how they all hold a shred of truth, but the region is so much more. Northern

Appalachia is not quite a pristine wilderness in a far-off middle of nowhere. It is stuck between the metropolitan Northeast, the industrial Midwest, and the agricultural South. The region is influenced by the cultural and economy of each, but a part of none. Composed of self-reliant farms and even smaller towns, it is quintessential ‘Middle America’ – mostly white, rural,

Protestant, and working class, with creeping levels of higher poverty each decade. But it is also a

23 mixing-pot frontier of indigenous, ‘native’ whites, and African-Americans; many whose ancestors did not come on their own volition, but now people proud of their heritage, sense of independence, and the tenacity to take care of themselves and their communities [described more in Chapter 2].

The region’s identity is closely intertwined with industries that have precipitously declined in employment in recent decades – agriculture and mining, mostly coal. The closing decades of the nineteenth century is when the myth that Appalachia was a place where “time stood still” was first introduced (Lewis, 2004: 63), but it was the 1960s when it took hold in the public imagination. Jack Willis’ (1969) documentary Appalachia: Rich Land, Poor People broadcasted the life and plight of coal miners into the nation’s living rooms for the first time; the sight of land that is rich with coal and other natural resources, yet its residents living without adequate food, housing, and medical care. Roul Tunley’s (1969) article “The Strange Case of West Virginia” in the Saturday Morning Post went one step further as it was the first to contrast the natural beauty of the landscape with its “chronic, grinding poverty.” At this time, approximately two-thirds of

Appalachian counties fell into the lowest 20 percent of median income in the country (Thomas,

2010). But before the last quarter of the nineteenth century, life in Appalachia was little different than the rest of America. Noticing the emerging deviation, newspapers and writers from outside of Appalachia – a country becoming progressively more defined by prosperous cities on the coast – felt the need to explain the existence of Anglo-Saxon poverty in their backyard (Hsiung,

2004). Ernest and Drake (1959:8) write:

“There’s nothing wrong with hillbillies – a description which Mountain people loathe – that a strong dose of equal opportunity wouldn’t cure. Applying every yardstick of social well-being, their Appalachian homeland emerges as a

sordid blemish on the balance sheet of the wealthiest nation in the world… Their stunted growth… weakens the nation… Today’s inferiorly educated children of Appalachia are Ohio’s citizens of tomorrow.”

Shapiro (1978:119) argues that, since mountaineers’ peculiarity could not easily be explained by living in a foreign land or being of an ‘inferior’ people, their contemporaries felt it necessary to rhetorically assign them to un-American status; “a discrete region defined by a particular pattern of culture as well as by its location and inhabited by a legitimately distinct population.” The mountaineers became their “contemporary ancestors”; a living relic from another age (Frost,

1899). Wilson (1999: 100) argues that this conception had widespread appeal because:

“White Americans wanting desperately to believe in a three-class structure could breathe a sigh of relief. ‘See,’ they could say, ‘that’s the bottom for white folks and we’re not like that at all,’ thus confirming their idealized middle- class self-positioning.”

O’Brien (2002) describes how the Appalachian people did not take kindly to being looked down upon by the cities on the coast; full of financiers, executives, land-holders, and educated elites who they felt were responsible for their predicament. As affluent outsiders used the media to stereotype Appalachia as a primitive backwater populated by hillbillies, residents resisted the government’s attempts to ‘improve’ their homeland and they questioned their remedies and the need for them to change. Behind a guise of ‘economic development’, they felt that outsiders were attempting to take over their local school systems and impose control over their mountains.

The stereotype of served as a powerful tool in “the public imagination as a particular bygone and unsustainable way of life…. Develop[ing] into a critical component of the rhetoric of poverty and backwardness that eventually facilitated the transformation of private property into federal lands” (Gregg, 2010:1).

Even though what brought coal and coal communities to their knees was the decline of employment driven by market forces [discussed in-depth in Chapter 2], environmental policy promoted by the federal government is not without fault. Not coincidentally, these same policies have promoted natural gas at the next alternative. Betz et al. (2015) summarizes the three policy reasons why coal is losing ground to its alternatives:

“(1) the Clean Air Act of 1990 that increased demand for low-sulfur Western coal at the expense of Appalachian coal; (2) [federal government-funded] innovations in unconventional drilling in shale formations for oil and natural gas that began in the late 1990s; [and] (3) U.S. climate change policies to reduce carbon which would further increase demand for natural gas relative to coal.”

These policies happened for good reason. National priorities to prevent acid rain, protect the ozone layer, decrease greenhouse gases, as well as local priorities for clean air and clean water have moved to the forefront of national consciousness since the 1970s. Economic development agencies saw tourism and outdoor recreation as the balance to bring in jobs while achieving these goals. “Federal policy shifted from prioritizing land distribution [for economic development] to encouraging conservation... local and state governments sought to collaborate with federal agencies… to preserve wide swaths of national forests” (Gregg, 2010:4-5). Although some cheer, many others saw it as governmental interference in their lives. These policies may create a broad swath of winners in the name of the national good, but may significantly hurt the residents of Appalachia who lack alternatives for making ends meet.

The people of the mountains have long used their muscles and their grit to grind out an existence.

Table 1.4 shows that today more coal is produced in the US than a century ago, but with less than 1/17th of the workforce. The loss of the coal employment represented more than the loss of a

26 job, but the loss of identity. “If you’re a miner, your crew is like your brothers in the mines,” retired coal miner Jonny Bishop says. The coal companies and the nation’s leaders “didn’t pay attention to us,” he says. “We used to have so much here. We got coal. We got natural gas. We got timber. There used to be no poor people in McDowell County” (Heller, 2017). Though jobs have popped up at Wal-mart and as park rangers, retail and tourism do not play as powerfully in the imagination, launching stories, inspiring music, forging identity; “Coal created its own geographical area and culture” (Freese, 2010). Families, churches, and communities bond over what coal is to them.

Northern Appalachia is where coal miners wish one day to become fracking workers, and that has translated into support for Donald Trump. McDowell County, WV – in the heart of coal country, which declined in population from over 100,000 to less than 18,000 today – is one of the poorest counties in one of the poorest states in the country. In the 2016 election, it was in this county that the highest percentage of people in the country voted for Donald Trump in the

Republican Primary (91.5 percent) and then 75 percent for him in the General Election (Politico,

2016). Coal may be disappearing, but drilling rigs are popping up all around. The natural resource legacy lives on. This research did not intend to discuss politics, but it became unavoidable as it became a vehicle for the region to express its identity and economic desires.

1.4 Outline of Dissertation

The paradigm through which I view this research is evolutionary economic geography’s ‘path dependence’, where past decisions constrain future choices by changing the underlying cost- benefit analysis of potential future decisions. Northern Appalachian towns, being dependent solely on resource extraction for so long, have made other economic development strategies

Table 1.5: US Total Coal Workers and Total Production

Year US Number of Coal US Coal Production in Workers Thousand Tons 1923 863,000 556,500 1950 479,000 560,388 1970 140,000 612,661 2003 70,000 1,071,752 2016 50,300 728,231

Source: BLS (2016)

28 more arduous as the preconditions for endogenous growth – diversity of human and business capital in an urban concentration (Jacobs, 1986) – never developed, while the land itself is still charred by the social, environmental, and economic consequences of the past. The heart of these challenges is more than the physical manifestations of the urban form, but the underpinning social characteristics as well. This region is still marred by unviable social forces, acutely tinged by pervasive racism, as its people attempt to move into the future. How to overcome these dynamics, especially as these places continue to honor their heritage and are nostalgic for their past, is one of the defining questions of the urban/rural decline literature. My dissertation research does not portend to address this issue head-on, but rather acknowledges how the rise of this new industry continues to be influenced by – if not reminiscent of – these shadows of the past, and yet may also offer the greatest potential for the future.

Not counting this introduction [Chapter 1] and the conclusion [Chapter 6], this dissertation is broken up into four substantive chapters. Each chapter addresses a sub-question, which helps inform a part of the larger research question. Each chapter is intended to stand as an independent academic work, which will be or has been submitted to an academic journal, as each addresses a specific academic literature, and each uses a unique methodology. Discussed more in Chapter 5, surveys and informal conversations were conducted with municipal planners, professionals, and academics throughout Northern Appalachia to inform research questions and validity to results.

Though uncited2, their viewpoints and expertise are sprinkled throughout the dissertation.

2 In part, at their request. In part, to comply with UofT ethics guidelines when speaking with professionals.

[Chapter 2] Considering the economic history of Northern Appalachia, how do the communities understand how the fracking boom affects their municipalities?

The economic history of Northern Appalachia needs to be understood because it reflects the reasons why the region overwhelmingly supports fracking; framing the rest of the dissertation within the lense of their perspective. The second chapter investigates why fracking, here, reflects a future that looks very much like the past, providing ‘good jobs’ to the very same low-skill, blue-collar workers who have been put out of work by the decline of the coal industry that this region has historically relied upon. Resource extraction has always taken an environmental toll, and it is a trade-off that the region has made for the sake of work. But it feels to them that environmental protection has historically been forced upon them by government regulators in far off Washington and by people who do not understand them. Promises of federal help through the

Appalachian Regional Commission (ARC), which was created explicitly to raise the region out of poverty, though appreciated, has done far too little. But now, the former competing interests of Washington and Appalachia may not be as oppositional as they once were. The environmental risks of fracking for natural gas may be the lesser of two evils compared to the bane of mountaintop removal coal-mining. Natural gas is by far better for both local air quality, water supply, and climate change compared to the coal that it is displacing, as well as being less disturbing to those residents who live on the surface.

[Chapter 3] Considering the natural resource curse literature, does natural gas extraction increase or decrease a region’s economic resilience by increasing/decreasing its economic diversity?

Although most of the dissertation is focused on addressing a practical planning problem, this chapter makes a major theoretical contribution. The natural resource curse has been written about on the national scale, but much less so on the local level. The burgeoning economic resilience literature provides a framework, positing economic diversity is the key because as one industry falters, another can grow in its place. Because of the newness of fracking and the consistency of public government data in the US, this specific industry in this specific region offers a rare opportunity to quantitatively study the effect of the introduction of natural resource extraction’s effect on economic diversity in preexisting communities.

With fracking and long-term growth, there are two competing narratives. First, during the boom extractive industries crowd out adjacent industries by driving up local costs of inputs while the outputs are price-takers on international markets, which puts these adjacent industries in a position where they must leave the regional economy to remain viable. Second, extractive industries may add to the economic base of a region, which adds more suppliers and customers through increased external investment, which then provides capital for adjacent industries to grow alongside the extractive industry. This paper uses three economic diversity indices

(Hirschman-Herfindahl, Gini Coefficients, Ellison-Glaeser) to see which, if either, of these narratives pans out in the quantitative data; finding that fracking, in the greatest intensity counties, slightly increases economic diversity. Although no evidence for a ‘crowding out’ is found, the evidence is not strong enough to support the conclusion that fracking generates enough economic diversity to change the economic trajectory of the region.

[Chapter 4] How many jobs will fracking bring to this region? Has resource extraction lead workers to permanently in-migrate to the region paving the way for regional growth?

The fourth chapter uses economic base analysis to calculate job growth and then investigates long-term regional growth prospects by examining migration patterns. A small study area along the New York-Pennsylvania border was selected as a case study due to the intensity of the fracking industry and the lack of other new economic activity. The chapter begins with a liteature review highlighting the shortcomings of input-output methods in a temporary industry as job projections are overly optimistic, as well as discussing the ‘fly-in/fly-out’ (FIFO) live-work arrangements common in the oil and gas industry. This paper then uses a series of quantitative tests as an alternative: (1) descriptive statistics, which show small gains in job growth and housing; (2) economic base analysis, which finds the industry creates a few thousand jobs; (3) commuting pattern analysis, which shows that most workers in the industry commute from nearby places, exhibiting a ‘drive-in, drive-out’ (DIDO) pattern; and (4) spatial cluster analysis, which infers that workers are taking up temporary housing options – mostly rentals – near well- site locations instead of integrating with the urban fabric of nearby cities. These four pieces come together to paint a picture that the industry provides fewer jobs than advertised, which go to regional (not necessarily local) workers who show no indication of permanently relocating.

[Chapter 5] What are the local government’s regulatory responses to the shale boom and its corresponding fiscal costs? Do local governments face the same barriers to plan and implement regulations for fracking as they do other environmental initiatives?

With (mostly) inaction by the federal and state governments, local governments are placed on the frontline of protecting their communities from the negatives externalities of the shale boom. The academic literature on the implementation of economic sustainability initiatives finds that small cities often do not take regulatory action due to the lack of local political-economic consensus.

The fracking industry poses a faster-moving and more concrete environmental threat than other

32 environmental challenges (e.g., climate change). The fifth chapter finds that municipalities reactions are largely dependent on their existing industries. Blue-collar towns do not regulate fracking, white-collar collegetowns attempt to ban the industry, and only those caught in- between attempt to find a balance of regulations. Even then, local municipalities are hamstrung by state laws on how they can regulate. This chapter also reviews the planning implications that local governments have at their disposal (e.g., zoning and police powers), along with the public costs that local communities are expected to bear, and the revenue streams that might mitigate these expenses. The one regulation that near all municipalities enact is to take advantage of state pathways to ensure road repair. Overall, the fracking industry poses significant fiscal health risks to communities with uneven revenue streams to pay for it. This chapter concludes with a handful of policy recommendations for local municipalities.

1.5 Limitations

To answer specific research questions, all research projects must make decisions on how to limit their focus and choose an appropriate methodology. This research is no exception.

First, by choosing a case study region (Northern Appalachia in the United States) that is one of the (if not the) largest and most active natural gas plays in the world but also has a particularly history that operates within a particular governmental framework, the generalizability of the case study may be limited. Other regions, especially in other countries, have different histories, governing mechanisms, and responses to the shale boom. The local economic planning implications of this research may differ from those in other places. This research mentions those other places in the conclusion, but does not study them in depth.

Second, even though the process of the public discourse as well as the method of drilling for both oil and gas is the same, coal too for that matter, the two are traded on different markets and the experience of the workers may differ. As fossil fuel companies typically engage in both oil and natural gas instead of specializing and given that both are found in this region, I switch back and forth between the two. This research does not investigate the differences within or between the operations of oil and gas companies, nor does it investigate whether the planning impacts differ between the two. Furthermore, this research does not engage fossil fuel companies directly for their perspective, rather it relies on public officials and public data to reach conclusions.

Third, my choice to interview planners and other professionals may lead to a skewed perspective as their voices come from the higher, more affluent part of the social spectrum. Their expert opinions are from a bird’s eye perspective of the shale boom and knowledge of local governments’ responses. This research is not intended to be a complete survey of stakeholders

(Anderson and Theodori, 2009; Brasier et al., 2013; Jacquet, 2012), sociological investigation

(Morrone et al., 2015), or ethnographic study (Willow and Wylie, 2014) of the experience of the workers or the public perspective at-large. Similarly, this research is not intended to capture the consequences of environmental destruction, or the human stories thereof, caused by this industry

(Howarth et al., 2011; Osborn et al., 2011; Jackson et al., 2014). Nor does this research investigate the activism that surrounds the industry (Neville and Weinthal, 2016). Although I brief touch upon national policy goals, I do not focus on this subject either. By putting these issues aside, it allows the research to concentrate solely on the local economic planning and governance ramifications of the shale boom.

Lastly, even though quantitative methods create an impression of objective findings, I made a number of decisions over which data to include and which formulas to use. Although I justify my

34 choices along the way, another quantitative researcher may make different – yet equally valid – decisions that come to a different conclusion. Though my findings are one piece of evidence, I do not consider them to be the last word on the subject. Because of the newness of the data and the rapidly changing nature of the industry, the economic impacts of the industry may change with time. This research primarily focuses on the time period between 2005 to 2014, as government data is now available for those years, but more data will be forthcoming. As the price of oil collapsed in late 2014, this will obviously have ramifications for the future operations of the industry and its planning impacts on communities.

In the end, this research is an honest attempt to answer fundamental questions about the local economic impacts of the shale boom and its regional responses. Despite these limitations, the information discussed in this dissertation is intended to be useful to both academics and planning professionals who are attempting to make sense of this new industry. As I’ve dug into the data,

I’ve been able to answer some questions and yet doing so opened the door for many more. I view this research not as end-point, but a first attempt to understand an industry that will only play an increasingly larger role for the next few decades as coal plants are being retrofitted for the

‘bridge fuel’ of natural gas.

1.6 Autobiographical Arc

Growing up in Texas, the sight of oil rigs along the highway was a common occurrence. When the wind shifted just right, the morning air filled with the fumes of freshly pumped crude. But I didn’t begin researching the industry until many years later in a graduate workshop supervised by Susan Christopherson as a part of my masters’ degree at Cornell University. Here, a small group studied the socioeconomic impacts of the fracking boom on tourism, agriculture, and housing and its potential implications for upstate New York. The initiative of this project began

35 when several administrators, planners, and other public officials from nearby counties kept asking the same question: What are the long-term socioeconomic impacts of this industry for our community? It was the same question that my parents were asking back home in Texas, put more colloquially: “this fracking thing, seems like a big deal, but is this good or bad for us?”

The workshop stemmed from community leaders watching what was happening south of them across the state border in Northeastern Pennsylvania. Landmen, drillers, frackers, support workers, and others began showing up by the truckload and seemingly out of nowhere. Fossil fuel companies began advertising for ‘blue collar’ labor left and right, paying salaries that were unheard of for nearly any other industry. The technological innovation of hydraulic fracturing drilling, more commonly known as ‘fracking’, revolutionized global energy markets overnight, but created a gap of understanding about its local implications in the process. Nobody knew what to expect and what problems this industry might bring.

At first, it seemed like an economic miracle. The last time this area was a major center of drilling was at the very beginning of the American oil industry in the 1860s. The industry moved on to

Texas and California and never looked back. For the previous 150 years, little new drilling had occurred in the American Northeast. The region was considered ‘tapped out’ with the remaining resources as unviable. Yet this new technology, fracking, changed that. As it made the previously inaccessible resources trapped in shale rock commercially viable for the first time, the industry spread like wildfire. During the height of the Great Recession, the industry was a godsend. The

Marcellus Shale, which lies from the southern tip of West Virginia through the southern tier of

New York, became the epicenter for fracking for natural gas and one of the top three fracking areas overall; only after the Barnett Shale near Ft. Worth, Texas and the Bakken Shale in

Western North Dakota, where both regions were drilling primarily for oil.

What was unknown at the time, was that the drilling would stay on the Pennsylvania side of the border. New York State, under then-Governor David Patterson, signed an executive order for a one-year moratorium on fracking in the state to allow time for an environmental study of the industry. That moratorium was then extended another year, then another, and finally made permanent under Governor Andrew Cuomo. As New York City comprises the clear majority of

New York state voters, and has the largest unfiltered municipal water supply in the world, it became clear that any risk to the city’s water supply was too simply too much to risk. New York

City voters, comprising over half of the state’s voters, overwhelmingly called for the mortarium to be made permanent. New York State remains the only state that had a commercially viable fracking industry to ban it.

Most of the early academic research on the industry focused on its environmental risks and impacts. The question of “is our drinking water safe?” did, and should, trump the question of economic externalities. Preserving the potability of natural groundwater remains the key message of the ‘fracktivists’ who wish to ban the industry. As regional government leaders had already consulted with environmental scientists on the safety of the industry, they came to our study group to specifically ask about the socioeconomic impacts to gain a deeper understanding of the economic and administrative concerns that they may face. Environmental concerns in that research, as well as this dissertation, are set aside. They are acknowledged only in the terms of how they overlap with these other focus areas.

The answers our study group came up with were preliminary and, to me at least, unsatisfying.

They were based on (1) the literature of previous boom-bust natural resource cycles, (2) mapping the extent to which fracking was popping up throughout the United States, and (3) news clippings of current events in other places. We were assembling information to write a report, not

37 producing new research. The real conclusion was that the phenomenon was too recent to have anything more than anecdotal evidence, and previous experience in other extractive processes, from which to learn. The ability to quantitatively measure the impacts of this industry with any degree of statistical rigor had to wait until more data had accrued.

As I finished my masters’ and left Cornell, I became more interested in another topic for personal reasons: shrinking cities. Growing up, my family was part of the mobile working class.

Skilled enough to move to where the work was, but financially insecure enough not to be able to settle down. I tell people that I am from Texas because that’s where I graduated high school, but that’s not the whole story. We constantly moved, from D.C. to Sacramento, and many places in between. I was fascinated by the places and the people that we left behind. What were they to do? How could these places pick themselves up again? And, on a more personal level, what would have to happen for my family not to move so often?

Near the end of my second year in the PhD program, under the recommendation of my supervisor, I returned to my masters’ work on fracking. I still did not have good answers to the questions that were asked from the beginning and had become even more important since. There was still little understanding of the long-term economic impacts of fracking on pre-existing communities. I identified both with the point of view of the fractivists who protested the industry as well as the rural working class who welcomed it with open arms. My opinion on whether the industry was ‘good’ or ‘bad’ was, and continues to be, a blank slate. My motivation is merely the desire to be the first to answer a question that no one else had a good answer on.

As the geography of the Marcellus Shale is nearly identical to Northern Appalachia, I merged my interest in urban decline and revitalization with that of researching economic impacts of the

38 fracking industry. In the conclusion of his book Beyond Rust, Allen Dieterich-Ward discusses how, for blue-collar workers, the steel mills and coal mines are being replaced by oil rigs. Even after accounting for upstream and downstream supply linkages, this new industry cannot bring back what was, as the number of jobs being lost due to deindustrialization far outnumber the impact of this industry. But for these workers, the smell of oil is the smell of hope; a countervailing force to otherwise insurmountable trends.

1.7 Chapter Conclusion

Northern Appalachia was once a land that made things. This was the land whose natural resource wealth made America. This is where the past lies, but perhaps within that lies hope for the future.

An America that appreciates Appalachia and an Appalachia that no longer aspires to be somewhere else – as the coal industry promised to give them the suburban American dream, built in their artificial communities – but rather continues to build off their old strengths and values.

Since the skills are similar to coal mining and production cycles to manufacturing, the hope is that fracking will bring yet another wave of blue-collar employment to the mountains; that fracking may be the silver bullet that transforms the economic trajectory of this otherwise declining region. What do municipal governments need to do to prepare for a new, fleeting wave of investment? What must they do to harness this industry?

For all of its shortcomings, fracking has brought new national attention to the hills – and plight – of Appalachia. Yet the eyes of America are like the wind that blows through Appalachia, unwavering for the mountains and forests, and unyielding for what lies beneath. What’s left behind is “a pocket of poverty” (Drake, 2001: 39) where, despite the cities on all sides of them, the people are too poor to stay but also too poor to leave. They are stuck in the middle of

America. Malcolm Harrison Ross (1933: 3-4) wrote in Machine Age in the Hills:

“A machine age twilight has settled over the coal hills… a region of small farmers was made momentarily prosperous by a sudden invasion of industry; the wave passed, leaving them spoilt for the old way of life and helpless to face the new… Morose prophets have been predicting for a decade that machines would eventually create a surplus of human hands for which society will never be able to find work. Others supposed that increased production could keep pace with technology… Some day, however, that question must emerge again into reality, and the answer will be of first importance. For a chronic surplus of unwanted workmen is a much more serious concern than an epidemic surplus which will disappear during convalescence from depression.”

Chapter 2 The Economic History of Northern Appalachia: From Furs to Fracking with Coal Everywhere In-Between

Economic History Chapter

2.1 Chapter Introduction

“Centuries of isolation and economic privation had made [Appalachia] as distant from the rest of the country in culture and politics as it was in miles,” writes Hume (1971: 94). Although

Appalachia was almost always considered a poor region, the stereotype of it being backwards did not arrive until after World War II, when employment of its traditional industries – coal mining and small-scale agriculture – collapsed due to automation. Those who could afford to leave did, leaving behind those who could not. The Appalachian Regional Commission (ARC) made investments in the region to address the poverty of the region, but it was too little too late.

Fracking now presents the next best hope. This section focuses on the region from an economic history perspective, showing how the economy of today came to be, why prospects for well- paying work are currently hard to come by, and why fracking seems different, perhaps even better, to people of the region than what came beforehand.

In Northern Appalachia, the comparison of the fracking industry to the coal mining is not a unique observation. Several scholars (Brasier et al., 2013; Stedman et al., 2012) have investigated the social and community consequences of both the boom-bust cycles of coal mining in the 20th century and fracking in the present. This research builds off that comparison, in an attempt to explain why Morrone et al. (2015) found that residents are not overly concerned with warnings of the health and environmental consequences of this new industry: it is a tradeoff they have always made – and will happily continue to make – for jobs. Though they worry about

41 the long-term implications of breathing in coal dust or drinking contaminated water, their primary concern is feeding their families in the present.

2.2 Economic History: Freedom, Farming, and Coal

Although the first people to inhabit what would become Appalachia were indigenous tribes that made this land their home for tens of thousands of years, the recorded history of the region started with the arrival of Europeans. Early pioneers into Appalachia would trap deer, beavers, and other fur-bearing animals and then trade the pelts at outposts that stand where Pittsburgh

(PA), Point Pleasant (WV), and Huntington (WV) now are (Ambler, 1940). Appalachia was at the periphery of American capitalism, the interior connected by streams and rivers to larger markets on the East Coast and along the Great Lakes (Lewis, 2004). Here Indigenous tribes,

French traders, and English settlers fought for survival, against both each other and Mother

Nature.

The American frontier was a violent place but the idea of it was still seen by some as a preferable alternative to a harsh life in Europe. Paying high rents for bad harvests, governed by despotic royal governments with arbitrary laws and taxes, and facing religious/ethnic persecution, the

‘open land’ of the New World was appealing. James Scott (2009) argues that civilized peoples have long fled to inhospitable locales (e.g., mountains, deserts, etc.) to avoid the control of state expansion, providing a refuge far away from their taxes, wars, and disease. Appalachia was a place where you could carve out an existence on your own land, far from governments of the day. Those willing to risk everything by leaving behind their former lives and adventuring into the unknown boarded ships and sailed west; to be reborn as yeoman farmers and mountaineers on ‘free land’, priding themselves on their sense of rugged individualism. This is the mythology of Appalachia.

Challenging this myth, Dunaway (1995) argues there was never such a thing as ‘free land’. The early land policies favored “speculators at the expense of pioneer settlers”, many of whom never visited the land that they had claim over and had little interest in building infrastructure improvements favored by the settlers – preferring low taxes on the land to profit financially from their absentee landlordism (Thomas, 2010: 41). ARC conducted a study that found that this early pattern of absentee ownership – particularly over mineral rights – established a pattern of restricted taxation and investment that hampered economic growth through the 20th century and continues to this day (Eller, 2008). Many people came not of their own choosing, either by way of expulsion from their homelands, indentured servitude to a creditor, or on a slave ship to be sold to a master. The English would send orphans and prisoners to be servants in the New World rather than take responsibility for them (Drake, 2001).

Settlers arrived from Northern England, Wales, and Germany, but by far the largest group was the Scots-Irish. The English King James I, tired of rebellions in the Scottish Lowlands, offered land grants to entice Scots to cross the Irish Sea and move to the province of Ulster – a region now known as Northern Ireland – beginning in 1606. Over 200,000 people immigrated to Ireland in the 17th century. Violence was constant between the Irish Catholic natives and the

Presbyterian Scots-Irish settlers, while life was made even more challenging by a series of droughts and rising rents by absentee English landlords. When English King Charles I attempted to convert Ireland to the Anglican Church in the 1630s, many Scot-Irish decided to re-immigrate to the New World. They took to the highlands of Appalachia; attracted by relatively open land, liberal religious laws, moderate climate, and the lack of government interference in their lives.

Most settled around Pittsburgh and the surrounding mountains and soon numbered one-third of

Pennsylvania’s population by 1770 (Blethen and Wood, 2005).

If not for the borderland between the British American colonies and the wilderness of French

Louisiana, settlers of the 18th century may have moved right through it to the greener pastures on the other side. But as it were, they stopped in the mountains as they could safely go no further.

The frontier was born from this land in-between. The Pennacook, Mohican, and Susquehanna lived on the land near northern Appalachia, while the Cherokee inhabited the land near the southern Mountains. Lundy (2016:246) writes:

“Appalachia was itself a passage… to the fertile plains of the Midwest and the frontier beyond. And the abundance of natural resources in the mountain, discovered early and exploited quickly… meant there were well-traveled trails for hauling, salt, timber, and ultimately coal… it sparked the improvement of those trails into improved roads.”

The texture of the terroir – hilly, rocky soils at steep inclines – lent themselves to small family farms (Gregg, 2010). American Indians foraged apples, berries, and rhubarb, while growing corn, beans, and squash – a combination known as the ‘Three Sisters’ which naturally kept the soil fertile (Mt. Pleasant, 2006) – on these hillsides for millennia. European settlers adopted these foods, but additionally brought with them sturdy staple crops – potatoes and grains. Keeping a pen of chickens and a handful of hogs to graze the property – most feed themselves on the wild shrubs – remains common practice of the people of Appalachia. Food preservation through

“drying, burying, curing, and fermenting was essential to the settlement of the mountain regions and a part of the foodways of both Indigenous peoples and the Europeans during the 18th century” (Lundy, 2016: 205).

Even though the rocky soils aren’t naturally suitable towards agriculture, if the ground can grow the hardwoods of maples, beeches, birches, poplars, and oaks, then it was hardy enough to grow

44 root vegetables, too – particularly the beloved potato. Settlers claimed small plots of land along the riverbends and then clear-cut the trees to make room for the soil to be tilled. As the

Indigenous people did before the settlers arrived, they hunted to supplement farming and gathering. The thick underbrush of the forests provided fertile grounds for wild turkey, wild boar, and white-tailed deer; game species still hunted to this day, whereas bison, elk, and wolves were quickly hunted to extinction in Appalachia with the arrival of Europeans (Drake, 2001).

The lumber industry was the first resource extraction industry in Appalachia and the main connector to the outside world. But other extraction industries quickly appeared as the mountains were speckled with licks of salt, veins of iron ore, beds of coal, and deposits of granite and marble. Other extractive resources included copper, gold, alum, lead, and saltpeter (Lewis,

2004).

Slavery was not as prevalent in the mountains as it was in the South as the land was not suited towards plantation-style, cash-crop agriculture. But slavery still could be found in small numbers in every county in Appalachia as they were forced to work in salt mines, iron mills, and as an extra hand on small farms. Mining and woodcutting companies owned slaves to solve their labor shortages. By the time of the Civil War, 10 percent of the population of Appalachia was made up of African Americans. The impact of the culture can still be felt today. Crops grown (e.g., okra, sweet potatoes, sorghum, watermelon) and music played (e.g., banjo) have origins in West

Africa. Discrimination, racism, and – after emancipation – economic dependence on their former masters was pervasive (Dunaway, 2013).

The Civil War had a traumatic effect on Appalachia. The mountains were a no man’s land stuck

– both physically and culturally – between the North and the South. As many men fought for the

Confederacy as they did for the Union. The terrain was unsuitable for pitched battles, so both

45 sides resorted to guerilla warfare “that burned and pillaged their way through the countryside, reducing the population to destitution… and scarring communities for generations” (Lewis,

2004: 63). As mines were destroyed and farms devastated, families fled en masse. Their sons who were lucky enough to survive the war would have nothing to go back to as both sides ransacked farms, burned homes, and stole livestock. The former inhabitants and the cultural wealth of the region never returned home, but a new wealth would arrive in the coming decades.

After the war, railroads reset the geography of the region. Previously, small settlements were built along the streams of Appalachia for the advantage of using the waterways to bring equipment in and send goods to market. The railroads – with exponentially greater carrying capacity, insulated from the weather, and able to go straight through the mountains – brought the time to market down from weeks to days. Large industrial companies constructed railroads with one goal in mind: to extract the natural resource wealth of the mountains. O’Brien (2002) described how land adjacent to the tracks increased in value by a factor of 10 the moment plans were announced to build a line. The small producers, who lived sustainably as they could not cut down the forests as fast as they could grow back, were outmatched by big companies who stripped the hillsides of their forests and then went looking for ‘black diamonds’ underneath.

Instead of buying the land, coal companies would lease the mineral rights from small holders while leading these people to believe that their lives on the surface would be undisturbed. In some cases, it worked out as promised. But in many more, it did not. Giardini (1989) shows that, when the needs of the mineral rights holder conflicted with the surface rights holder, the mineral rights won out; many people were either forcibly removed from their homes, or the environment became so unlivable that they left on their own volition as pollution from the mines made the air and local streams toxic. As the rails brought in heavy equipment and people, they also brought in

46 food “in such huge amounts and at such low prices that local producers were often forced out of their own [local] markets” (Callahan, 1923). Locals either left or moved to a nearby coal town, becoming reliant on those who salted their lands. Corporate property ownership became a “new form of property,” and exacerbated the “virtual land monopoly” (Banks 1995:331). Land, mining, timber, and iron company interests had largely outbid the suffering farming sector,

“destroy[ing] the conditions under which it was possible to carry on an independent mode of production” (Banks 1995:332).

Coal mining was not a ‘good job’. It was back-breaking physical labor far underground where workers struggled to breathe amidst the coal dust. Carbon monoxide and carbon dioxide would cause individual workers to suffocate, while a roof collapse or an explosion – caused by ignition of the coal dust – would kill dozens in an instant. Figure 2.1 shows that, with few exceptions, over 1,000 coal miners per year died in the US due to workplace hazards until 1947. If the workers were ‘lucky’, black lung would slowly kill them instead; a disease not recognized by the

US Government until 1969 (Salstrom, 2004). These were accepted occupational hazards, which made coal mining one of the most dangerous job in the world. While compensation was better for miners than those living off subsistence agriculture, the pay was still meager for most. Yet it was a consistent paycheck, which was otherwise unheard of in this part of the country.

To provide enough labor for these mines, a new wave of immigration arrived. Eastern and

Southern Europeans came to the New World for the same reasons the earlier wave did a hundred years earlier. African-Americans migrated from the South looking for a comparatively better life than being sharecroppers to their former masters governed under the discriminatory Jim Crow laws. To control their workforce, mining companies segregated these different communities – the

Figure 2.1: Fatalities in the Coal Industry from 1900 to 2015

3,500 60.00

3,000 50.00

2,500 40.00

2,000

30.00

1,500 CoalMining Fatalities 20.00

1,000 CoalMining Fatalities per 10,000 workers 10.00 500

0 0.00

1916 1944 1972 2000 1904 1908 1912 1920 1924 1928 1932 1936 1940 1948 1952 1956 1960 1964 1968 1976 1980 1984 1988 1992 1996 2004 2008 2012 2016 1900

Data Source: Mining and Health Safety Administration (2017)

Note: Office workers were included in the definition of coal mining after 1973, contributing to the large decline in worker fatalities.

48 white locals, black migrants, and foreign immigrants – in both the workplace and the company’s housing communities. Williams (2003) shows that the managerial class intentionally sewn racism between the groups. African-Americans were often bused in as ‘scabs’ to break strikes, while hired guns enforced the companies’ will. Coal has always had a history of community conflict driven by immigration and population change (Bell, 2009; Cordial et al., 2012; Black et al., 2005).

Fear of blacklisting, eviction, and termination, along with repression of constitutional rights, including freedom of speech and freedom of assembly, characterized coal towns (Banks,1995;

Henever, 1978; Salstrom, 1994). But the real leverage companies had over their workers was the company houses and the company store. If a worker showed any signs of striking or wanting a union, the coal company would evict people from their residences and blacklist people from buying food. Many mining families would supplement incomes, as well as hedge against the overpriced company store, by continuing to practise small-scale agriculture in their gardens. A miner with six children said, “If we didn't raise hogs, corn, and potatoes, we didn't eat.” Another said, “We grew everything so we had to buy very little from the company store” (Salstrom, 1995:

91). “Every available spot of ground seems to have received attention from the plow or spade, the house resembles the homes of the market gardeners… they raise all the vegetables they require and this assures them that the wolf shall be kept from the door” (McBride, 1896).

Women would tend to the gardens when the men were at work in the mines. This required tilling the soil, planting seed, cultivating, weeding, and harvesting each crop at the right time. Whatever could not be eaten fresh was canned for the winter. Lundy (2016: 206) writes:

“Canning was often communal work, with the women of a family or a neighborhood gathering at one person’s house to share equipment and harvest

for a few days, moving to another the next. The hot, hard work that began in July was tempered by breaks to sit on the porch and string beans and drink iced tea, share laughter and gossip.”

Although “coal became synonymous with Appalachia by the end of the nineteenth century”, the mining sector was a distant second in employment to agriculture (Lewis, 2004: 61). Even at the peak of coal employment in the 1930s, subsistence agriculture workers outnumbered coal miners. During this era, approximately one third of subsistence farms (a now defunct census category) in the US were found in Appalachia despite it making up only 2 percent of the

American landmass. White (1937: 31) remarked,

“There are still many families who come as near as possible to being self- sustaining on their little farms. In a good year they will have plenty of corn for themselves and their stock; they have chicken and eggs, milk and butter, and plenty of meat from their own hogs; honey and sorghum provide sweetening… a cellar or cave holds abundant supplies of potatoes, cabbages, turnips…and an abundance of canned vegetables and fruits.”

By the 1930s, the system began to buckle. “Coal miners are surplus workmen in a declining industry. They are also hill-billies, who have by no means shaken off habits bred through generations of farm life” (Ross, 1933:32). Subsistence agriculture had always struggled to maintain its existence while competing against more fertile grounds out west. Large wild game had been hunted to extinction. The streams no longer provided fish. Soils became depleted of their nutrients and erosion took its toll. Corn, used as feed for the animals that still tilled the soil, had trouble growing in the depleted soils. The Great Drought of 1930-31 during the Great

Depression pushed Appalachian farmers to the brink. Families abandoned their farms, travelling on foot in search of food (Salstrom, 2004). Agricultural economists at the time warned that

50 without adopting modern scientific farming practices, farming in the region would soon become completely unviable (Gregg, 2010). White (1937: 62) says:

“Passing by some of these little ‘farms’ one wonders how people ever do make a living on them. Behind the little log house and long-eroded fields lie bare and desolate; they speak almost aloud of thankless struggle and poverty. The poorest man with the least equipment and the most meager training is on the poorest land."

No matter the warnings, people could not afford to adopt the practices. At the same time, farms in the Midwest did adopt these techniques and were able to (1) achieve economies of scale through massive industrial farms, (2) employ the use of new machinery (e.g., tractors) along with synthetic fertilizers, and (3) benefit from newer, lower-cost transportation options to bring food to markets. Food from elsewhere was soon able to underprice local agriculture even in the deepest trenches of the mountains. Grocery stores in Appalachia could buy and sell corn from

Iowa and potatoes from Idaho for much cheaper prices than local ones. Kirby (1987: 111) writes:

“Millions of acres of [Appalachian] land were abandoned [by 1960]. The shabby remains of semisubsistence life on remote family farms were abandoned, too, or mercifully executed at last by the manifold outside forces of the commercial world, its demands of efficiency and specialization, and the cash nexus.”

Even though coal towns were designed to control, repress and discipline the miners to prevent unionization, the miners fought for better wages and working conditions to make worthwhile the most dangerous job in the world (Banks, 1995). The early 1900s were defined by a series of

‘coal wars’, small-scale and violent skirmishes between organized labor and company guards.

Franklin Roosevelt, wanting to bring up wages during the Great Depression, signed the National

Labor Relations Act of 1935 (the “Wagner Act”) that enshrined the basic right to unionization and collective bargaining. Before that all strikes were put down with private force and/or struck down by the courts. “Almost overnight the coalfields of Appalachia became organized, although organizers encountered fierce resistance in some sections” (Lewis, 2004: 67).

War-time necessity entrenched organized labor. World War II caused demand for coal and industrial output to skyrocket. The National War Labor Board negotiated labor peace between companies, unions, and the government through a ‘maintenance of membership’ provision, through which employers would drop their opposition to unionization in exchange for unions pledging not to strike. Despite this pledge, the United Mine Workers (UMW) and their membership were one of the most aggressive unions to strike during the war. In 1941, all

530,000 coal miners across the country – most of them in the mountains of Appalachia – refused to enter the mines, demanding contract provisions of (1) a 35-hour, five-day work-week, (2) inclusion of all time traveled from the pit entrance to the point of work and back to the surface as part of the paid work time, and (3) a $2-per-day raise in base pay. Despite President Roosevelt’s threats to nationalize the mines, the miners did not budge. The mine workers responded with

“[you] can’t dig coal with bayonets.” Eventually, Roosevelt and the mine owners capitulated because of ‘needs of the war’ (Preis, 1972). Striking – some planned, others wildcatted – throughout the war continued to secure large pay increases, medical coverage, and retirement benefits, but often at the cost of public opinion. Yet for the first and only time, Appalachia had

‘good jobs’.

It was not to last. Harry Truman called mining ‘sick industry’ for its lack of labor peace.

Unionization began to recede from its high-water mark soon after the war. Some of that can be attributed to postwar anti-union legislation (e.g., Taft-Hartley) to curtail perceived ‘excesses’ of

52 union power, but most of the change was due to automation. Although mechanization in the industry began in the 1920s with the introduction of loading machines and conveyor belts, mine owners set out to reduce their reliance on the UMW by replacing workers with capital. In 1935, before the Wagner Act, only 2 percent of coal output was machine-loaded, yet within 3 years it was 21 percent (Salstrom, 2004). After World War II, continuous mining, roof-bolting, and rock dusting made the industry safer and more efficient than ever before. Employment and fatality rates dropped significantly (Figure 2.1).

The ongoing mechanization and unionization led to better, but far fewer ‘good jobs’ and these were becoming more difficult to acquire. Economic development by extractive industries has deep-rooted flaws because companies show little interest in investing beyond the needs of the industry; money was not poured into schools, roads, small businesses, or internal capacities, which are necessary to sustain economic growth. Rather profits were sent elsewhere, to the nonresident owners and corporate offices in the coastal cities (Eller, 2004). State governments passed laws to keep taxes low in order to incentivize more business development, hamstringing municipalities’ ability to provide services; leaving roads in disrepair, schools underfunded, and administrative duties lacking. State laws often did not permit local tax assessors rights to map and survey the land out of fear that they would raise taxes on the coal industry, driving away what few jobs remained (Willis, 1969).

Despite these pro-business policies, coal employment would never again reach the heights it did during World War II. Even during the 1970s pro-coal push towards US energy independence, triggered by the OPEC oil embargo, production increases would not offset the productivity increases. Beyond that, the geography of coal also changed. Surface strip-mining in Wyoming and other Western states became safer and more cost-effective than Appalachian tunnel mining.

For example, Illinois basin coal is approximately 20 dollars cheaper per short ton than Central

Appalachian coal (Epps, 2013). Appalachia was able to hold onto some employment by its own innovations, but it came at a very dire environmental cost. Purdy (2016) explains:

“Back then, almost all coal miners worked underground, emerging at the end of their shifts with the iconic head-lamps and black body-paint of coal dust. In the 1960s, mining companies began to bulldoze and dynamite hillsides to reach coal veins without digging. This form of strip-mining, called contour mining, caused more visible damage than traditional deep mining, leaving mountains permanently gouged and, sometimes, farmland destroyed… Today, contour mining seems almost artisanal. Since the 1990s, half the region’s coal has come from ‘mountaintop removal,’ a slightly too-clinical term for demolishing and redistributing mountains. Mining companies blast as much as several hundred feet of hilltop to expose layers of coal, which they then strip before blasting their way to the next layer… The result is a massive leveling, both downward and upward, of the topography of the region.”

This new form of mining, mountain-top removal, employs many fewer people and is much more environmentally damaging than what came before. Communities located near mines face dangers of flyrock from blasting, floods from redirected rivers, poisoned well water, and mudslides intensified by hundreds of acres of compacted, impermeable mine-land (Baber, 1990; Burns,

2007; Perks, 2010). Yet despite the reduction in employment, popular support for coal mining remains (Bell and York, 2010; Scott, 2010; Cheves and Estep, 2013).

The decline of Appalachia was not signified by the noisy blasting of rock, but rather the silence of gradual desertion. As farmers struggled to compete with the low prices of food from elsewhere, it started a process where “welfare was replacing subsistence farming” (Salstrom,

2004: 83). The automation of the mines, coupled with the acute labor shortages in

54 manufacturing, construction, and service occupations in the rest of the country, led people to leave in droves (Obermiller, 2004). Between 1950 and 1970, approximately 4 million people net migrated out of the hills of Appalachia; finding work in the nearby manufacturing cities, heading west to the coalfields of Wyoming, or becoming farmers in more fertile land in the Midwest.

West Virginia lost 7.2 percent of its population during these two decades (Thomas, 2010). US

Route 23 and Interstate Highway 77 were nicknamed “Hillbilly Highways.” Folk-singer Steve

Earle (1982) even wrote a song about it:

“My grandaddy was a miner, but he finally saw the light He didn't have much, just a beat-up truck and a dream about a better life Grand mama cried when she waved goodbye, never heard such a lonesome sound Pretty soon the dirt road turned into blacktop, Detroit City bound Down that hillbilly highway That hillbilly highway Hillbilly highway Goes on and on”

Akron, OH was nicknamed “the Capital of West Virginia” as more West Virginians lived there than in any one city in West Virginia (Johnson, 2000). More specifically, the young, educated and skilled were the ones who left, leaving behind people and places that were older and lacking sufficient human capital to jumpstart new industries. Many left for good, but others returned home. Having a permanent residence in Appalachia and working part of the year somewhere else was common. Economic migrants though shuttled back and forth between their work in the

Midwest and their homes in Appalachia, some on a seasonal basis (Thomas, 2010). During holidays and layoffs, many would head back home to the hills – to a culture and place where they felt they belonged (Kirby, 1983).

Prospects have not looked good for coal country for a long time. While the industry has faced increased competition from other energy sources [described more in the section below], its own supply was dwindling. The remaining coal seams are thinner and harder to access, which means they will be more expensive to access (Goodell, 2009; Mufson, 2012). To remain competitive, states turned to maintaining a ‘good business climate’ (Harvey, 2007; Hansen, 2001:232-233), which means attracting outside capital through cheap labor (Hansen, 2001). Cutting costs has meant giving up the wages, rights, and benefits that the labor movement of the past several decades had fought to secure. To accomplish this, employers and states systematically went about undermining unions to slash pensions and undercut guarantees on conditions of employment (Clawson and Clawson, 1999; Hansen, 2001). It was not enough. Kirby (2013) describes the impact that declining employment had on communities:

“Wave after wave of layoffs brought real pain, and real anger. The community turned tense and polarized, and the whole place felt like a fortress that was indeed besieged by a vast army of shadowy enemies. Public hearings became public theater, as hundreds of coal workers (transportation provided by their employers) swore fealty to coal and vowed vengeance to its enemies.”

2.3 Appalachian Regional Commission

If the region’s decline was going to be stopped, an external force would be necessary.

Government intervention has occurred in on and off cycles over the last six decades, but has offered far too little stimulus, injected far too late. The Washington Post reporter Julius Duscha wrote that Appalachia was America’s “most blighted area” and that the region needed massive aid on the scale that the US was giving to the developing world (Eller, 2008 :102).

Appalachia began to receive some federal relief during the New Deal, but it did not become a central focus of national policy until John F. Kennedy visited West Virginia during the

Democratic primary of the 1960 election. He promised them “a complete program to restore and revive the economy of West Virginia – to bring new industry and new jobs to your state, and all other neglected areas of our country” (Unger, 1996: 27-28). Upon being elected President,

Kennedy immediately put in place a group – informally dubbed the “West Virginia Task Force”

– to make recommendations on how to address poverty. The efforts culminated in the Area

Redevelopment Act of 1961. Though it brought attention to the region, the legislation was not successful for a couple of reasons. First, “the neediest counties sometimes failed to receive funding, because they lacked the resources or personnel to devise the overall economic development plans or to provide the matching funds required by the legislation (Thomas, 2010:

130). Second, the legislation focused on brick-and-mortar development (e.g., building parks, highways), even though it had already become clear that the skills of the unemployed did not match the jobs of the emerging economy – a concept dubbed structural unemployment – and that retraining was going to be necessary to create long-term growth (Unger, 1996). To address these concerns and more, President Kennedy formed the President’s Appalachian Regional

Commission (PARC) in 1963 “to prepare a comprehensive action program for the economic development of the Appalachian Region” (PARC, 1964: II).

In President Lyndon B. Johnson’s 1964 State of the Union Address, he declared an

“unconditional War on Poverty.” The Appalachian Regional Development Act (ARDA) in 1965 formalized the Appalachian Regional Commission (ARC), which was started in 1960 by a group of ten governors covering the region, into a federal agency with the goal of implementing

PARC’s recommendations (ARC, 2017a). In Yesterday’s People, Weller wrote about how the

57 extractive industries exploited the local residents but also blamed the culture and attitudes of its people for their lack of climbing the social ladder. He controversially claimed that “to change the mountains is to change the mountain personality” (Weller, 1969; ix). His conception of a people who were lazy and fatalistic, with poverty caused by inherent cultural qualities, made a strong impression on the War on Poverty policymakers of the 1960s. Although today the framing of these policies would be criticized for ‘blaming the victim’ and a lack of cultural understanding, they did correctly identify the need for programs that were intended to retrain the Appalachian people to raise the cumulative human capital of the region. Unfortunately, statehouse politicians

– despite the reproach of ARC’s federal partners – often reallocated money for other uses. Two- thirds of ARC funds went into roads and road maintenance with the rest to building hospitals, libraries, and other infrastructure projects. Very little ended up in education programs. Thomas

(2010:145) writes:

“enrollees received no vocational training, only rudimentary social services… Most of the enrollees worked for the State Road Commission cutting brush… others dug graves, collected trash, made repairs on private property, built walls, and painted bridges… the program fell far short of the goal of imparting useful new skills to the help the unemployed move towards more productive lives.”

Despite these shortcomings, ARC has had some positive impact on the region. ARC reduced

Appalachian poverty between 1960 and 2000 by 4.2 percentage points relative to comparable counties (Ziliak, 2010). A February 2015 evaluation of the agency’s work showed that in the past

50 years, the ARC’s $3.8 billion invested in non-highway related programs resulted in 312,000 jobs and $10.5 billion in additional earnings (Center for Regional Competitiveness, 2015).

It has not been enough. Although the region experienced a limited amount of job growth between the 1970s and the 1990s, it still lagged well behind the pace of the rest of the United States. Even worse, since 1999 total employment in Appalachia has stagnated. Most of Northern Appalachia experienced population loss during the last four decades at a rate of -0.1% to -2.0% per year. The

US average is +1.0% per year (ARC, 2015). ARC’s impact has been far too little. Every year, because of forces outside its control, ARC is falling further behind its original goal of helping

Appalachia catch up with the rest of America.

Workers are still reliant on extractive industry companies. Decades of public relations campaigns have intertwined the needs of the coal industry with community identities, making people feel as if their needs and that of the coal industry were one and the same (Bell and York, 2010). “I happen to love the coal miners,” declared President Donald Trump in June as he welcomed miners and executives to the White House for a photo op to declare “an end to the war on coal”

(Heller, 2017). Yet, at the same time, Trump’s 2017 budget proposal called for an end to ARC’s

$168 million in annual federal funding; the last vestige of federal investment to improve the lives of the Appalachian people. Nonetheless, the people of the region – who proudly display “Friends of Coal” bumper stickers on their trucks (Bell and York, 2010) – feel as if President Trump is representing their interests. When announcing that the United States was withdrawing from the

Paris Climate Accord, President Trump famously said, “I was elected to represent the citizens of

Pittsburgh, not Paris” (Gambino, 2017). The Washington Post (2017) published excerpts from a conversation between President Trump and reporters aboard Air Force One on July 13, 2017:

“We've got underneath us more oil than anybody, and nobody knew it until five years ago. And I want to use it. And I don't want that taken away by the Paris accord. I don't want them to say all of that wealth that the United States has

under its feet, but that China doesn't have and that other countries don't have, we can't use…. I’m going to produce much much more energy than anyone else who was ever running for office. Ever. We’re going to have clean coal, and Hillary wasn’t. Hillary was going to stop fracking. She was going to stop coal totally. Hey, in West Virginia I beat her by 42 points. Remember, she went and sat with the miners and they said get the hell out of here.”

Some experts doubt Trump’s strategy that rolling back environmental regulations will make a meaningful impact on coal employment, describing these changes as “false hope” (Beeler, 2017).

Jason Bordoff, director of Columbia University’s Center on Global Energy Policy said, “We’ve seen coal production and coal employment in decline for many years now, driven by market forces. And those factors will still be there [even with deregulation]” (Cama, 2017). Christopher

R. Knittel, a professor of applied economics at MIT, commented on a report from the EIA:

“I think what the administration is not realizing is it’s not really regulation that’s killing coal; it’s cheap natural gas… and, if anything, the policies of the current administration are going to exacerbate that… in the sense that they’re opening up lands for more drilling, which is likely to generate more oil but can also generate more natural gas — which might be the final nail in the coal coffin, if you will.” (Mooney, 2018).

The Energy Information Administration (2013) reports that, while coal still is the largest single largest energy source in the United States, it is increasingly struggling to compete with cheaper, cleaner, and more efficient natural gas. In what the Energy Information Administration (EIA)

(2017) calls a “dramatic shift”, “in the nine Northeast states, natural gas nearly doubled its share of the region’s total generation to 41% in 2016, up from 23% in 2006. Coal-fired generation fell from 31% to 11% of generation over the same period.” The EIA reports that plant owners and operators will retire “almost 27 gigawatts (GW) of capacity from 175 coal-fired generators

60 between 2012 and 2016” (EIA, 2017a). These trends are only projected to continue into the future. Natural gas is – and will continue to – displace coal.

The fracking industry is providing work to some of those same people that being laid off in the coal industry. Even as they continue to publicly promote coal, energy conglomerates in

Appalachia have quietly moved towards natural gas extraction from fracking (Bell and York,

2010; Scott, 2010; Cheves and Estep, 2013). Given that 15,186 wells were drilled in the

Marcellus Shale between 2005 and 2014, compared to a negligible number the decade prior, it is the one of the only industries providing new employment to the blue-collar workers of this otherwise declining region.

2.4 Operations of the Fracking Industry

Even though fracking has been ongoing for the past fifty years, the modern fracking industry is very different from what transpired before. To make fossil fuel recovery from shale rock commercially feasible, modern drilling required a combination of the following technologies: horizontal drilling (1991), slickwater chemicals (1997), multi-stage drilling (2002), and cluster drilling (2007). Modern fracking began in 1997 with invention of slickwater chemicals, but only after all four of these technologies were first combined in the Barnett Shale in North Texas in

2008 did the industry really take off (Ingraffea, 2011). George Mitchell, founder of Mitchell

Energy, started drilling wells as a series of science experiments in the Barnett Shale in 1982. He spent 17 years and over $6 million figuring out how to extract natural gas from shale rock at affordable prices (Prud’Homme, 2014). His breakthrough came in 1997 with the use of slickwater chemicals – friction reducers, biocides, surfactants, and scale inhibitors – to prevent the pipes from clogging. Using a combination of chemicals, water, and sand, Mitchell was able

61 to increase the average well output increased from 70 barrels a day of shale oil to over 700 barrels a day compared to early fracking techniques.

The ‘independents’, a group of small and midsize companies that descended from the industry’s wildcatter heritage, seized upon this technology. Too small to have the money or the human capital to own and operate refineries, gas distribution, or offshore oil rigs, they were left to fight over the picked-over US oil and gas fields where the larger companies saw little value (Gold,

2014). Beginning in 1982, it took 26 years to 2008 for an annual production of 1.84 trillion cubic feet of natural gas from shale. In two years’ time, by 2010, that figure doubled to 3.68 trillion cubic feet, and fewer than two more years to 2012 to double that again to 7.36 trillion cubic feet.

“Between 2010 and 2012, the United States added 169,000 fossil fuel related jobs, a pace ten times quicker than the rest of the economy… this came much faster than anticipated,” said Peter

Vose, the chief executive of Royal Dutch Shell. “And neither the regular, the legislator, nor the industry was actually prepared to deal with the issues” (Gold, 2014).

The Marcellus Shale, with close proximity to east coast cities and Midwest manufacturing, provided an ideal location for the development of its natural gas fields (Prud’homme, 2014).

Once an area has been identified as a prime drilling zone, a land rush ensued to get mineral rights holders to sign leases before the price was driven up too high. “Acreage that could be had for

$200 an acre spiked to $1,000 and kept rising until it peaked around $6,000 an acre” (Gold

2014). A domino effect ensued as landholders worried that their neighbors would sign, and therefore they would end up with the physical and psychological costs of drilling – trucks, fumes, pollution, and noise – and none of the money. According to John Pinkerton, CEO of

Range Resources, and the first company to drill horizontal wells in the Marcellus Shale, “all of a sudden the land grab started. This acceleration was unhealthy for all involved. The public wasn’t

62 prepared for the onslaught of landmen, regulators were forced to play catch-up, and the industry drilled so quickly that common sense was jettisoned at times” (Gold, 2014; 193).

Bamberger and Oswald (2014) conducted interviews with residents in Pennsylvania who never saw the boom coming. They had consistently leased their land $1 per acre to oil and gas companies for the last thirty years, which they used to subsidize their farm, and nothing ever came of it. Suddenly, landmen started offering money in the hundreds, then the thousands, of dollars per acre. Those who were already under contract lost out. The standard contract provided no protections for homeowners.

“Until you sign the lease, you have the upper hand. Craft an agreement that gives say on where the wells will be drilled, and the infrastructure will be placed, in order to ensure they will have minimal impact of your existence. Keep them out of sight, out of mind, and away from your water source” (Gold, 2014).

A race to drill happens as most of these contracts require drilling before the mineral rights return to the owner. “Under such exceptions, the current owner has a strong incentive to pump the oil or extract the minerals quickly, because it might never benefit from whatever is left in the ground...had kept prices low by pumping oil more quickly than they would have done had they been confident that their claims would remain valid indefinitely” (Frankel, 2011). Workers flocked from all over the country in order to take advantage of this new economic opportunity, because “a rig worker, often with a high school education and a willingness to work long hours, can earn a nearly six figure income. Other than drilling and fracking wells, this kind of paycheck is practically impossible to find in central Pennsylvania… But the hefty compensation is, in part, to compensate for the danger of the work” (Gold, 2014; 226). According to Bureau of Labor

Statistics (2013), truck driving, natural resource extraction, and construction are the second,

63 third, and fourth most dangerous professions in terms of the ratio of occupational fatalities to total workers, only after deep-sea fishing. Hughes (2013) writes:

“A pattern of events has emerged. When a play is discovered, a leasing frenzy ensures. This is followed by a drilling boom because the lease assignments, often 3-5 years long, can be terminated if the site is not producing gas...”

Shale boomtowns see a surge in land, labor, and equipment demand and a shortage of everything

– from drilling-related equipment to housing to human services – results. “Almost all costs of shale gas development including drill rigs, personnel, well casing, drilling supplies and fracking equipment saw price increases” (Duman, 2012). Workers find out that housing is in too short supply with prices that are comparable to downtown Manhattan (Cherry, 2014). Companies resort to temporary housing (e.g., man camps and trailer parks) to make up the difference. New housing construction is often not a feasible option. Development is stymied by the lack of a local resident construction workforce and lack of accommodation for construction and other workers from outside the community (Johnson, 2009). The shorter lifecycle of the extraction process means that capital outlays to build anything more than a temporary camp no longer makes sense as spatially fixed, expensive upfront housing investments are poor investments for a temporary industry (Storey and Shrimpton, 1988). As gas companies’ leases are short-term and most of the work is front-loaded, investments in home-building would have to be paid back over a shorter lifespan. A home built to last 50 years is typically depreciated over a 30-year mortgage. In these shale plays, landlords and construction companies must charge much higher prices to recoup their investment within a much shorter timeframe – as little as three to five years.

As an alternative, Houghton (1993) explains that firms choose a FIFO approach to bringing in workers on a temporary basis and therefore “large scale capital outlays on urban infrastructure

64 are replaced by transport costs,” which are distributed across the life and productivity levels of the project. Storey (2010) states that the new normal organizational structure for extractive industries is FIFO, in which workers spend a certain number of days working on site after which they return to their home communities for a specified rest period. FIFO work arrangements have been made possible by the relatively cheap and flexible transport options provided by airlines and air charter companies (Storey, 2010). Increasingly, resource and mining industry workers choose FIFO commute arrangements and their families locate where the infrastructure and services are better supported (Haslam-McKenzie, 2011). Because of the nature of the work, fracking has become highly reliant on temporary live-work arrangements where workers have lucrative but unstable employment opportunities, often hired by contracted and subcontracted firms (Gold, 2014).

Most of the literature on FIFO has focused on industrial mining in Western Australia (Haslam-

McKenzie, 2011; Haslam-McKenzie and Hoath, 2013; Perry and Rowe, 2014), but this live- work arrangement began with the necessity of offshore oil workers in Mexico (Gramling, 1995) and has since been applied to other extractions situations including mining in northern Canada

(Storey, 2010; Finegan and Jacobs, 2015) and fracking in the United States (White, 2012;

Ruddell et al., 2014). “For two weeks a at a stretch, [Sly Henderson] lives in one of the many man camps that have been built in North Dakota. Cobbled together in a hurry, these sprawling complexes of connected modular buildings can hold seven hundred to one thousand workers each.” In the Bakken Oil fields, the largest man camp operator alone is housing over one percent of all those who reside in North Dakota (Gold, 2014:46).

It has been observed that many natural resource extraction industries are characterized by boom- bust cycles, and fracking is no exception. Jacobsen and Parker (2016) found that the short-term

65 impacts of the boom phase are far outweighed by “the bust and showed no clear signs of recovery at the end of the sample period,” concluding that oil extraction appeared to be a curse for western US communities located near oil and gas facilities. The bust is “best explained by over-entry and over-capitalization in boom-specific capital by local business proprietors who inaccurately anticipated that conditions experienced at the peak of the boom would persist for a longer time period.” Even though many might be aware that the boom will be temporary, many will try (and fail) to time entry and exit to maximize profit. It is nearly impossible to know exactly when the boom will end.

Even if the wells did not decline in production, employment will still decrease substantially because the total labor is frontloaded at the beginning of the process for each well. Jacquet

(2006) says that the peak of the boom is reached during the drilling phase, at which time 900 workers are needed for the average well, but many of these jobs are short-lived – measured in hours or days instead of months or years – becoming the equivalent of 13 full-time employees for one year. Once the well enters the production phase, tasks are relatively simple and therefore a small number of workers can service many wells. The boom-bust nature of natural gas extraction is, therefore, better understood in context of short-term employment levels, where hundreds of wells could be built at once, than in longer-term production levels (Jacobson and

Parker, 2016). For a brief discussion on why the boom-bust cycle is particularly exacerbated in fracking compared to other industries, see Appendix B.

Fracking, like all forms of energy extraction is inherently environmentally dangerous, which is why regulation is important. Even though the industry is correct in saying that 98 percent of the hydrofracking fluid is water and sand while the other 2 percent is chemicals that are “no more harmful than what’s under your kitchen sink,” due to the sheer quantities of fracking fluids –

66 billions of gallons – it still means that thousands of gallons of known carcinogens are being pumped underground and into the environment (Ingraffea, 2011). Osborn (2012) found that

“fracking wells have repeatedly leaked, sending dangerous chemicals and waste gurgling to the surface, or, on occasion, seeping into shallow aquifers that store a significant portion of the nation’s drinking water.” Farmers worry that contamination, or even the fear of, will drive down their ability to lease their land, to grow their crops, and ultimately diminish their long-term property values for a highly unequitable short-term gain (McGraw, 2011).

The technology to mitigate environmental risks already exists, but companies have been resistant to implement it because no one is forcing them to take on the additional costs of doing so (Gold,

2014). Estimates of the cost increase as a result of proper regulation rangers from an additional

$300,000 to $900,000 per well (Jacoby et al., 2012). This would negatively affect the overall profitability of shale gas production in the Marcellus Shale but would not yield a great enough impact to deem a shale gas well uneconomical (Duman, 2012).

In the last few years, however, the government has started to act. The national EPA (2017) passed two regulations pertaining to fracking specifically. The first is a limitation on air pollution and methane emissions (under the Clean Air Act), while the second is mandating that all wastewater go to privately owned wastewater treatment facilities and therefore does not mix with the public water supply (under the Clean Water Act). Furthermore, state legislators and EPA agencies have passed additional rules on: disclosure of chemicals in fracking fluid, requirements of environmental assessments, pre- and post-environmental testing, legal liability of contamination, environmental impact fees, and more. Regulations vary widely from state to state.

Environmental protection has always been a delicate dance between state authority and federal preemption. With the election of the Trump administration and the appointment of Scott Pruitt to head the EPA, how much federal regulations will be enforced - and state regulations allowed to stand - is questionable. The Trump Administration is currently “tearing up [Obama-era] rules on hydraulic fracturing… that struck a thoughtful balance between economic opportunity and environmental safety” (Washington Post, 2018). Yet the courts are acting as a buffer to stop the current administration from making arbitrary changes to regulations. Lisa Friedman (2017) of the

New York Times reports what happened when the EPA decided to delay enforcement of regulations reducing acceptable methane release as part of the fracking process:

“The 2-to-1 decision from the United States Court of Appeals for the District of Columbia Circuit is a legal setback for Scott Pruitt, the E.P.A. administrator, who is trying to roll back dozens of Obama-era environmental regulations. The ruling signals that the Trump administration’s efforts to simply delay environmental and public health actions are likely to face an uphill battle in the courts and require a more painstaking process.”

2.5 Comparing the Coal Industry to the Fracking Industry

The coal industry and the fracking industry both took advantage of surplus low-cost, low-skill labor provided by a declining industry. Coal took advantage of agricultural workers when subsistence farming was no longer feasible, while fracking is currently taking advantage of the decline of the coal industry. Because of this, fracking is providing employment for the same blue-collar workers who have been put out of work and able to pull the same cultural threads of coal mining communities.

The two industries share many similarities, but also a few key differences. The boom-bust cycle of the coal industry lasted multiple generations in concentrated communities. The fracking

68 industry looks like it will survive fewer than two decades over a spatially deconcentrated region, in many places much less time. Fracking is also unable to provide the same degree of employment that coal mining once did.

The coal industry brought many people to Appalachia because jobs were so numerous. Coal formed communities around it. Whether fracking will do the same remains an open question

[investigated in Chapter 4]. In the fracking industry, evidence from elsewhere (e.g., North

Dakota) suggests population booms occur in this industry as well, but population change dynamics have not been studied in Northern Appalachia specifically. The FIFO approach makes permanent in-migration less likely. This influx of others caused community disruption during coal’s early days, who then settled down into coal towns. Now it is a central concern with the arrival of fracking – especially as it is a constantly rotating door of new faces that have little connection to the pre-existing communities and who are unlikely to permanently relocate to the region.

Coal workers were originally poorly paid employees in dangerous jobs. The necessities of life

(e.g., food, housing, health care) were supplied by the coal companies, with the coal company paying for those benefits by subtracting the cost from its employees’ paychecks. Employees who were no longer useful (e.g., due to workplace injuries) were let go. Additionally, this gave employers full control over the workplace environment because the company could take away the homes of those they suspected of being sympathetic to unions. Eventually unions were able to win higher pay and benefits for the workers, after changes in the law concerning collective bargaining. These became career-long occupations where the children of the mining workers were encouraged to work in the mines when in, or following the completion of, high school. The

69 younger generation now has a difficult time obtaining work in the coal mines as the remaining jobs go to those with seniority.

Fracking workers are hired on high-compensation, short-term contracts and classified as independent contractors. Although oil and gas drilling continue to be one of the most dangerous occupations in America, it pales in comparison to the early days of coal mining. Workers’ compensation laws protect workers against workplace injuries and put legal liability on employers. Employers now ensure control over workplace relations by not promising work beyond the current contract. Employees who are discontent, or showing union sympathies, are not re-hired. Only time will tell if unions get a foothold in the fracking industry, professionalizing the job into a long-term career. For the time being, the industry experiences very high turnover rates. Some companies operate work camps where food and housing is provided with dormitories and cafeterias. Other companies make workers fend for their own food and housing. Because of the high wages paid in this and adjacent industries and the shortage of workers, high school graduation rates fall in fracking areas as the younger generation assume these jobs.

The precipitous decline in coal employment was driven by market forces, primarily technological change that paved the way for automation to minimize labor costs. As mines became more productive, companies began to produce more with fewer workers. It was also helped by the industry spreading out beyond Appalachia to places such as Wyoming and the

Illinois Basin, which had geologies where they could take more full advantage of the technologies. As these other regions were able to produce coal more cheaply, Appalachia lost coal jobs. The coal industry thrived even when Appalachia did not because the companies were not tied to the place. Ownership of both the corporations and the mineral rights were held

70 elsewhere. When these jobs dried up, workers traveled to elsewhere to work seasonal shifts before coming home to Appalachia.

As opposed to coal, which is being displaced by technological innovation, the fracking industry was borne out of it, and the pace of innovation has not slowed down in the past decade. As overproduction driven by the introduction of fracking was one of the primary contributors to the collapse in oil and gas prices in 2014; the industry survived the downturn by becoming even more cost competitive through efficiency gains – doing more with fewer people, like coal. The industry was born in Texas, but quickly spread throughout North America. Northern Appalachia, which had more natural gas and is much closer to its destination markets, was a primary beneficiary. Even with efficiency gains, jobs such as trucking, construction, and drilling are still very labor intensive and will be a source of employment for years to come. But further technological change may soon lead to renewables displacing natural gas, so the seeds of the industries’ demise have already been sewn.

The ownership of companies and mineral rights in the fracking industry are no different than coal. As demonstrated in Appendix D.1, out of the 17 companies that have drilled more than 250 wells in the region, which in total account for over 70 percent of the drilling in Northern

Appalachia, only two of them are local: EQT Energy (Pittsburgh, PA) and CNX Company

(Waynesburg, PA). The rest are multinational energy companies, which are mostly based out of

Texas or Oklahoma, and maintain only regional or field offices in the region [Appendix D.2 for office locations]. Workers now travel to Appalachia to work seasonal shifts in the fracking industry, before returning to from where they came. Fracking has flipped the script on migrant workers.

Embodying West Virginia’s state motto “mountaineers are always free”, the region strongly opposes any environmental regulation of the fossil fuel industry – for either coal or fracking.

Although environmental activism has had some success in clamping down on the worst excesses of the industry, it has divided Appalachian communities because of the importance of extractive industries to employment (Fisher, 1993). Companies have responded with the phrase “beauty is a biscuit”, meaning affording food was more important (Kirby, 2013). Nowadays, the green movement has few allies. Although the national Democratic Party maintains environmental objectives in its platform, the local Democratic politicians prioritize jobs. Purdy (2014) explains:

“Democratic Governor Earl Ray Tomblin promised, in his last State of the State address, that he would “never back down from the E.P.A.” The state’s junior senator, Joe Manchin, a Democrat, was elected after he ran an ad in which he pumped a bullet into a copy of the (failed) 2010 cap-and-trade bill, to show his contempt for the regulation of coal.”

Furthermore, six days after a coal-processing chemical spill left nine counties and 300,000 West

Virginians without drinking water, Senator Joe Manchin (D-West Virginia) criticized calls for more regulation, “Coal and chemicals inevitably bring risk — but that doesn’t mean they should be shut down… To err is human…. But you’re going to stop living because you’re afraid of making a mistake?” (Gabriel et al., 2014). Governor Tom Wolf (D-Pennsylvania) successfully ran on a platform of taxing fracking as opposed to banning it as preferred by the left flank of his party, even going as far as having his Department of Environmental Protection (DEP) sue townships who are attempting to block the industry on environmental grounds (Woodall, 2017).

His position is nearly identical to his Republican counterpart in Ohio, John Kasich: tax and regulate on private land, prohibit on public land. When Kasich vetoed legislation that would allow fracking in state parks, the Republican legislature joined with enough Democrats to

72 override the veto (Suddes, 2017). These politicians’ positions reflect the interests of those they represent, people who care more about jobs than environmental risks. Although people do worry about their water, they seem much more preoccupied with the thoughts of newcomers who do not share their opinions or values moving into their communities and upsetting their way of life

(Morrone, 2015).

Though far from perfect and not intentional, fracking is unleashing one of the biggest unheralded environmental accomplishment of this generation. Natural gas is by far superior for local environmental air quality (Lueken et al., 2017) and somewhat better for climate change (Center for Climate and Energy Solutions, 2013; Hausfather, 2015) than the coal that it is displacing – which is helping the US meet its international obligations of global climate treaties even if it is not currently a signatory member to them (Sohngen, 2017). Cesur et al. (2016) finds that the particulate matter released into the air by burning coal is responsible for over 60,000 deaths a year, whereas natural gas is less than 1/10th of that. Reducing the number of deaths by particulate matter by 90 percent is a huge environmental and health achievement.

Those living on the surface near the mining are much better off with fracking than coal, especially mountain-top removal. Coal mining has long polluted local streams with mine runoff and made living near the surface unbearable with its degree of noise and air pollution (Reece,

2006; Burns, 2007; McNeil, 2010). Mining is a long-term investment, so the disturbances to the surface may go on for years. Modern mountaintop removal mining destroys the entire ecology and topography of the region, turning this region into “a national sacrifice area in the quest for energy independence” (Fox, 1999; Ellen, 2008: 9). Fracking does pose environmental risks to the local underground water table, particularly if the cement casing breaks or there is an industrial accident, but the odds of such an event are considerably lower in comparison (EPA, 2015). Air,

73 noise, and light pollution are problems the local governments attempt to mitigate [more discussed in Chapter 5], but as the process takes less than 6 months – the disturbance to the surface is only temporary. Furthermore, much of the surface is completely undisturbed as drilling takes place with narrow pipes approximately a mile beneath the surface. Earthquakes caused by fracking are a unique environmental risk but can be solved with regulation on wastewater disposal (Regan, 2016).

The fracking industry is far from perfect and the need for regulation is apparent, but for these reasons, natural gas has taken on the moniker of a ‘bridge fuel’ between our dirty energy past and our clean energy future.

2.6 The Exception that Proves the Rule: Collegetowns

The struggles of Appalachia are real, and the stereotypes are mostly true. In the 2016 New York

Times’ Bestseller Hillbilly Elegy, J.D Vance (2016) autobiographically describes his upbringing in Appalachia; writing that his personal miracle was not that he became a somebody, but he – unlike the rest of his friends and family - overcame his social and economic environment to not become a nobody. Dreher (2016) called it “the book of the year… [doing] for poor white people what Ta-Nehisi Coates’s book did for poor black people: give them voice and presence in the public square.” Krause and Reeves (2017), of the Brookings Institute, called the book a "raw, emotional portrait of growing up in and eventually out of a poor rural community riddled by drug addiction and instability"; noting that the book reinforced their independent research findings – which concurred with Chetty et al. (2014) - that “family stability, greater social capital, lower income inequality, and less residential segregation” were key predictors of intergenerational mobility up the social ladder. Communities in Appalachia are infamous for the majority of families lacking one or more of these attributes, instead many get caught in ‘mobility traps’ –

74 where disadvantaged children are unable to overcome their circumstances. Vance (2016) attributes his upward climb to the stability provided by his grandmother during his formative teenage years, and then his decision to join the marine corps after becoming of age; noting that many of his peers lacked any familial support, and become unable to resist risks including alcohol, drugs, obesity, and teenage pregnancy.

There are places in Northern Appalachia where those who are ability to overcome ‘mobility traps’ congregate to further improve their future socioeconomic standing: college-towns. Gertler and Vinodrai (2005) emphasize the positive effect universities have by attracting and retaining talented students and academic staff. Munro et al. (2009) show that universities draw domestic and international students – migrants - who contribute to the local economy through spending and provide flexible part-time labour.

Beyond acting as a talent aggregator, the academic literature praises the innumerable benefits of universities in their ability to act as ‘anchor institutions’ – large, immobile employers who act as stabilizers of local economies. Universities are significant purchasers of local goods and services that, magnified by multiplier effects, have considerable direct and indirect impacts on their wider local economy (Siegfried et al., 2007). All this economic activity increases the linkages within the local economy” (Malizia and Feser, 1999: 183), acting as a regional magnet of consumer spending and investment from the hinterlands.

Further, universities create new knowledge and new work, diversifying local economies [an idea more fully explored in Chapter 3]. Cohen et al. (2002) emphasize the importance of university– industry knowledge transfer. Cohen and Levinthal (1989) say that universities increase a local economy’s ‘absorptive capacity’ – the ability to capture increase knowledge spillovers and

75 commercialize research. New industries often arise out of college-towns, as universities and supporting organizations are “critical components of the cluster” and “crucial factors to the cluster’s competitiveness” (Austrian, 2000: 103). Feldman (2005:219) writes, “anchor firms located in bounded knowledge rich environments are expected to realize higher rates of innovation, increased entrepreneurial activity, and increased productivity due to the localized nature of knowledge creation and deployment.”

Since college-towns are (a) aggregators of talent, (b) attractors of regional investment, and (c) generators of new work/knowledge, they represent the exception that proves the rule since no other industry/employer is no longer playing these role in Appalachia [the contrast of collegetowns was exhibited in Table 1.4]. While the rest of the region is dependent upon a single industry – first, agriculture and presently resource extraction, whether it be coal or natural gas –

Collegetowns have exhibited the urbanization, import-replacing, and economic diversification that are the basis for economic growth. Jacobs (1969:32-43) said:

“The problem of poor economics [is] that [they] do not produce amply and diversely for their own people… Import-replacing is now, as it was in Grady's time and always has been, a city process... Cities can build up on versatility, often very rapidly, in part as a result of their already existing export work, in part as a result of their previous simpler achievement in import-replacing, and in part through the complex symbiotic relationships formed among producers... Any settlement that becomes good at import-replacing becomes a city.”

Interpreted within a Jacobsian context, the “stereotypical story” of Appalachia – natural resource curse and external ownership of assets – may not matter, because all rural regions are economically stagnant. The problem is not a lack of industry, but a lack of cities.

2.7 Chapter Conclusion

When I drove through Northern Appalachia in the summer of 2016, the first thing that stuck me was the sheer number of Trump 2016 yard signs. Every open field had at least one sign, and many barns did too – half of which were abandoned and the other half which were in such dilapidated shape that they should have been, for safety reasons, long ago. A close second in yard signs was “Fracking Provides Jobs”. Every third vehicle that passed us was a heavy truck, carrying containers filled with anything from concrete to fracking fluid. Pickup trucks, some new and others well-worn showing their mileage, made up most of the remaining vehicles. These were people at work.

Yet these people were not the caricature that is seen on TV; no one talked about politics in the way that the media back home portrayed. The people I talked to had smiles on their faces and wrinkles around their eyes. Some were hopeful, others distressed, but all trying to get by in a world full of uncertainty. They could have easily been confused with urban hipsters, wearing t- shirts and blue jeans and speckled with tattoos; they expressed concerns about their health care, their families, and – most importantly – the lack of jobs. Some were optimistic that the future held a brighter tomorrow; others filled with despair. They were normal folk; no different than those back in Toronto. But unlike Toronto, the past few decades had not been kind to them. They wanted change. Fracking, for all its faults, gave them hope.

Towanda, PA (population 2,850) is a two-stoplight town off the Susquehanna River where State

Highway 6 and State Highway 220 come together. This is the ground zero of fracking country in

Northern Pennsylvania, as Bradford County has the highest drilling activity in the region

[discussed in detail in Chapter 4]. A rusted out old railroad car in front of the closed-up old US

Post Office greets you as you drive in on Main Street. The old Towanda Iron and Metal factory –

77 the bygone linchpin of the town – is now being used as a landfill. Older painted wood homes are boarded up, some with shattered windows. The newer houses, most of which were built decades ago, are covered with vinyl siding and charcoal roof shingles. Materials manufactured elsewhere, but purchased cheaply from the local Ace’s Hardware.

A quarter of the main drag are empty storefronts. The American Legion and Elks Lodge had seen better days, but their American flags still waved. ‘The County Peddler’ and other antique shops were selling off the town’s history at bargain bin prices. Strangely, too many lawyers’ offices line the street up and down from the County Courthouse, ready to negotiate mineral rights and settle land disputes on the people’s behalf, for a hefty fee, of course. The only brand-new brick and glass storefront was the Social Security Administration; processing the government retirement checks, allowing those who grew up here to survive another day. One of the largest employers in the area is the State Correctional Institute Muncy, which was built in 1913 and employs over 500 people to secure 1,300 inmates (PA.gov, 2017). Before fracking, it was government money – money made elsewhere – that kept this town alive.

As I sat stood outside the ‘Red Rose’ diner, eating a hot dog overstuffed with sauerkraut and pickles and drinking a Coke – a meal locals take great pride in – I realized that all the ingredients were made somewhere else too. Lundy (2016:211) discusses the idea of ‘aspirational eating’ in the context of Appalachia, that the way people eat “is not simply about availability, convenience, inexpensive price, or taste preference, but is also largely fueled… [by who] they aspire to be… like those they’ve seen selling food on billboards and on TV.” The irony is that the modern

Appalachian diet consists heavily of processed foods including soda pop, Wonder Bread, and potato chips to be more like their image of the rest of America, whereas some city folk – who are

78 their customers at farmers’ markets and road-side stands – want to buy their traditional jars of homemade preserves and pickled vegetables looking for an ‘authentic experience’.

Proud of who they are, while desiring something better. Hopeful for the future, yet nostalgic for the past. Beautiful land, human poverty. Northern Appalachia is a land of contradictions, while being a perfect case study of the larger narrative of neoliberalism’s cycles of investment, exploitation, abandonment, decline, and – just maybe – renewal. This research is intended to find out whether fracking can provide long-term economic growth to a region defined by decay.

Fracking may provide a new hope, but it also may be another wave of an exploitative industry that will leave the people and land worse off than they were before. These are not mutually exclusive possibilities. What we do know is that the region wants these jobs [with exceptions discussed in Chapter 5], and are willing to take the environmental tradeoff to get them. Though the jobs may not be forever, it is something for the next decade. Yet this sroey is not new.

Northern Appalachia has gone through cycles of natural resource investment and disinvestment.

A boom of capital investment and migration, and then a decline sets in as technology makes the new work more efficient, offering less jobs than before. First agriculture, then coal, now natural gas; the similarities are eerie. One participant in Morrone et al. (2015) said:

“When you hear about Appalachia you immediately think, poor people who’ve been repeatedly exploited by the lumber industry, the mining, coal mining industry, and left in great poverty. [They’ve been] left with the health problems and with the poverty of an industry coming in, taking resources, and leaving. It’s just so odd to me that Appalachia doesn’t remember what’s been done [to it] and [the] repeated promises [companies have made] and then look at where we are after all those waves and waves of exploiting industries who’ve come

79 through here taking the resources and leaving the mess. I just don’t know how we get people to remember [this history].”

Chapter 3 Testing the Local Natural Resource Curse Hypothesis: A Case Study of Fracking in Northern Appalachia

Theoretical Contribution Chapter

3.1 Chapter Introduction

“The long shadow cast by history over location is apparent at all scales, from the smallest to the largest” (Krugman, 1991:80). Path dependence theory posits that a region’s current economic state can be explained by its history (Boschma and Frenken, 2006); based on self-reinforcing processes and institutional arrangements, past decisions continue to resonate on future potential local and regional growth opportunities (Martin, 2010). New industries are more likely to sprout from current attributes, including the human and physical capital of a region (Simmie, 2012), but an external shock can bring in new unrelated resources and capabilities that support the construction of new pathways (Boschma et al., 2016), as contractors seek new work and new markets for their goods and services (Jacobs, 1961)

Using the economic resilience literature as a framework, this chapter tests whether a new natural resource boom, through the case study of fracking in Northern Appalachia, reinforces old processes of making regions more dependent upon extractive industries, in line with the local natural resource curse hypothesis, or if the new investment represents an external shock that may bring about new pathways for future economic development by diversifying the local economy.

An external shock can cause the disintegration of old pathways, but it is far from guaranteed to forge new ones. For local communities, the lasting question is whether the fracking industry – widely acknowledged to be a short-run disruption – will make these regions better or worse off in the long run. The concept of ‘hysteresis’ has recently become a popular topic in economics

(Cross et al., 2009; Cross et al., 2010; Setterfield, 2010). Hysteresis refers to an event in the economy whose impacts persist far into the future, long after the event has ended. In the context of the fracking industry, will the lasting economic impact of the industry lead to positive or negative hysteresis? Some scholars (Michaels, 2011; Alcott and Kenniston, 2014) find that agglomeration economies based on the fossil fuel extraction industry may provide a solid foundation for future economic growth even after the extraction ends – positive hysteresis.

Others (Christopherson, 2011) argue that resource extraction occurs in boom-bust cycles, which may crowd preexisting industries, making future economic development more difficult in exchange for a short-lived economic boom – negative hysteresis.

Auty (1993) coined the phrase the ‘natural resource curse’ to describe the pattern through which nations with significant natural resource wealth, particularly oil, have experienced slower economic growth than those without. Sachs and Warner (1995, 1999, 2001) quantitatively show that nations with more natural resources exhibit lower growth even after controlling for geographical, demographic, political, or economic differences. Despite the extensive literature on the natural resource curse on the national-scale, there is relatively little written on its application at the local level (Borge et al., 2013); exceptions are covered in the literature review section of this chapter. However, the typical sources of the natural resource curse on the national scale –

Dutch Disease, civil war, corruption – are not directly applicable to the local level. For a local natural resource curse to exist, a simple correlation between natural resource extraction and underperforming economies is insufficient (Brunnschweiler and Bulte, 2008); a specific explanatory mechanism is needed.

The study of economic resilience, how and why regions bounce back from adversity, has become increasingly popular among economic development scholars. At the heart of this discussion is

82 the idea of economic diversification; more diverse regions are more resilient economies, whereas less diverse regions are more vulnerable (Cowell, 2013; OECD, 2016). This literature provides a framework and an explanatory mechanism – the measurement of economic diversity – to test the local natural resource curse hypothesis. Because of the newness of fracking and the public availability of US data, this specific industry offers a rare opportunity to quantitatively determine whether a local natural resource curse exists by measuring changes in economic diversity over time in Northern Appalachia. To do so, I employ the use of multiple economic diversity indices:

Hirschman-Herfindahl (Salaman-Sigfried, 1977), Locational Gini Coefficients (Krugman, 1991), and Ellison-Glaeser (Ellison and Glaeser, 1997).

The first section of this chapter reviews the literature on the impact of natural resource extraction on local economies, in two parts: (a) negative hysteresis, where local natural resource development negatively impacts a region’s future economic growth potential; and (b) positive hysteresis, where local natural resource development positively impacts a region’s future economic growth potential (at best) or has no impact (at worst). The prior would provide evidence for a local natural resource curse, while the latter would negate it. The next section explains the methodology, which is rooted in the economic resilience and agglomeration literature.3 The third section reviews the results. The chapter concludes that the effect of introducing a new natural resource industry on economic diversity is small and, in the most

3 There is an inherent tension between the economic diversification and agglomeration/specialization literature. This dissertation does not attempt to explore this tension in-depth (as that could be a dissertation on its own, which the methods used in this chapter could potentially be repurposed for), but does cite different scholars on both sides. My personal hypothesis is that rural places need diversification (a low-risk strategy to fend off decline), while cities need specialization (a high-risk strategy geared towards growth).

83 intense fracking regions, offers a slight positive contribution to economic diversity, but not enough to significantly change the fortunes of the region.

3.2 Literature Review 3.2.1 Negative Hysteresis

The negative hysteresis school would believe that the introduction of the natural resource industry hurts future growth prospects. The natural resource curse, on the international scale, is attributed to factors including: (1) long-term downward trends in world commodity prices, (2) volatility of resource prices, (3) crowding out of manufacturing, (4) armed conflict, (5) poor institutions, and/or (6) the Dutch Disease (Frankel, 2011). There is a particular emphasis on poor institutional quality, lack of governmental transparency, and corruption (Mehlum et al. 2002;

Cust and Harding, 2013). Some authors (Humphreys and Sandhu, 2007; Sinnott, 2009) find that resource extraction-dependent national governments tax-and-spend closely in line with international commodity prices and therefore fuel boom-bust investment bubbles, creating an environment too volatile for business investment. Van der Ploeg (2011) describes how resource extraction makes industrial sectors less competitive by encouraging rent seeking, corruption, and conflict. More recent authors add the lack of investment into education and accumulation of human capital (Humphreys et al., 2007) as well as knowledge generation in extractive industries to the list (Maleki, 2013; Djeflat and Lundvall, 2016). The exact mechanism ranges from one to many of these issues depending on the country, thus there tends to be significant variation between countries in relating the quantity of resource wealth and the rate of economic growth/stagnation (Humphreys et al., 2007).

Not every issue identified manifests on the subnational scale, but patterns of history and econometric panel data suggest that at least some might. Papyrakis and Gerlagh (2007) use empirical data to show that the resource curse also holds at the state level in the United States, resulting in decreased transparency as well as spending in education and research and development. James and Aadland (2011) found, when investigating long-term growth at the county level in Wyoming and Maine, that places with greater natural resource wealth experienced more anemic economic growth between 1980 and 1995. Jacobsen and Parker (2014) found that counties with resource booms had lower employment and income than equivalent counties for decades after extraction ended. Michaels (2011) found that counties with high oil production were slower to develop other industries and accumulate human capital. Perhaps this is because, going back to Smith (1776), capital is flightly when market conditions change.

A significant part of local natural resource curse literature focuses on coal mining in Appalachia, a geography that overlaps with the Marcellus Shale. Black et al. (2005a) report positive employment spillovers into local non-traded sectors – locally produced and consumed services

(e.g., haircuts) – during the 1970s coal boom, but losses in the 1980s bust were even larger and more persistent. Black et al. (2005b) also find that local educational attainment falls during coal booms, which in turn may reduce long-term economic growth. Deaton and Niman (2012), using decennial census data to analyze the effect of coal mining employment on poverty rates, found a relationship between coal mining one decade and the poverty rate the next. Black et al. (2003) found that coal boom-busts are associated with higher welfare program expenditures. Partridge et al. (2013), using data encompassing all US counties, found the association between coal mining and poverty was stronger in Appalachia than the rest of the nation. These local studies are

85 consistent with findings from the international development literature (Corden, 1984; Sachs and

Warner, 2001; Van der Ploeg, 2011).

The impact of natural resource extraction being detrimental to industrial competitiveness – the ability of local industries to compete on price on international markets (e.g., Marshallian competition) – is the most applicable mechanism of the resource curse on local economies in developed countries. Corden and Neary (1982) discusses how increased demand for labor in booming markets causes wage appreciation, which increases local incomes but may erode the competitiveness of adjacent industries. Companies can raise their prices for non-tradable goods

(e.g., land rent) and services can rise as they are being sold in a local market against local competition facing the same constraints, but companies cannot similarly raise prices of tradable goods and services (e.g., foodstuffs and manufactured goods) cannot as they are being sold on international markets against global competition who does not face the same constraints.

Christopherson (2011) applies this idea to fracking, discussing how local prices of inputs (e.g., land, labor, capital, etc.) are driven up for preexisting industries, which then struggle to compete.

For example, agriculture production is reliant on truck drivers to move goods to market. As these truck drivers can make significantly more money working for the oil and gas companies, labor shortages form in the agriculture industry in reaction to a boom. Farmers, unable to pay the higher going wages as the sale price of their goods is fixed, are left with the choice of either going bankrupt or leaving. Over time, the economy becomes increasingly reliant on the extractive industries [a problem that the economic history describes in the coal fields of

Appalachia in Chapter 2]. Similarly, Borge et al. (2013) find support for what they call the

“paradox of plenty” hypothesis – that higher local government revenues in boom towns is

86 correlated with higher production costs of public goods; the same output is now more expensive to produce as going wages are now higher.

3.2.2 Positive Hysteresis

The Positive Hysteresis school would argue that, at worst, fracking would have no long-term effect on the regional economy, while at best it would provide additional pathways for future economic growth. Some scholars (Brunnschweiler and Bulte, 2008) argue that the ‘natural resource curse’ was never anything more than a statistical aberration of correlation without causation. The boom-bust cycle of resource extraction is merely bouts of short-term volatility, which will self-correct in time. Statistical studies, which dive deeper than a prima facie correlation, find no evidence of a natural resource curse on the national scale (Delacroix, 1977;

Davis, 1995; Herb, 2005). For example, studies that use other metrics instead of total mineral reserves or total mineral output, such as reserves per capita or the level of natural resource exports per worker, do not find a negative association that the theory is predicated upon

(Maloney, 2002; Stijns, 2003). Kuralbayeva and Stefanski (2013) found that resource-rich economies have relatively productive manufacturing sectors. Boyce and Emery (2011) find some evidence of a positive relationship between resource abundance and income levels. Although

Krugman (1987) finds evidence for crowding out of manufacturing during booms, he believes that the market will correct itself when the boom ends and therefore balance out in the long-run.

Other scholars find a relationship between local natural resource extraction and growth in adjacent industries, particularly in the energy extraction sector, which would suggest that extractive industries are in fact the key to growth. Michaels (2011), studying the long-term effects of resource abundance in the southern US, found that oil production leads to “higher incomes and increased population, which increased the provision of local public goods, which in

87 turn increased output in agriculture and manufacturing.” Black et al. (2005a), focusing on

Appalachia, found that the coal industry had neither positive nor negative spillovers to manufacturing employment. Betz et al. (2015) looks at coal-mining counties versus non-coalmining counties in Appalachia, finding little difference in terms of several broad-based indicators over decades. Peach and Starbuck (2010) found that oil and gas extraction had a positive long-term relationship with income, employment, and population in New Mexico between 1960 and 2000. Marchand (2012) analyzes the effects of oil and gas extraction in

Western Canada on employment and earnings in the energy sector. He finds that, though some of the gains are lost during the bust, there is a net positive employment and earnings spillover effect into non-energy industries such as construction, retail trade, and the service sector. This finding is also supported by Alcott and Kenniston (2014) who found that oil and gas extraction has a positive impact on local manufacturing:

"Manufacturing employment and output are actually pro-cyclical with oil and gas booms, because many manufacturers in resource-abundant counties supply inputs to the oil and gas sector, while many others sell locally-traded goods and benefit from increases in local demand. Manufacturers' revenue productivity also grows during booms, especially in linked and local industries, but there is no evidence that output prices rise. The results demonstrate how a meaningful share of manufacturers produce locally traded goods, and they highlight how linkages to natural resources can be a driver of manufacturing growth."

Looking at fracking specifically, a couple of studies found a positive correlation between resource extraction and local economic development. Weber (2012) investigates the employment, income, and poverty effects of shale oil and gas drilling in the western US states of

Colorado, Texas and Wyoming. He finds the value of gas produced has positive effects on employment, wages, and median household income over the 1998-2008 boom period. He

88 concludes that there is no local natural resource curse as each gas-related mining job created more than one non-mining job, indicating that counties did not become more dependent upon the mining industry. Using a similar instrumental variable approach, Brown (2014) found that communities situated near oil and gas shale booms also experience positive income and employment effects, but the employment effects are concentrated within the mining sector.

Similarly, Dubé and Polèse (2015) found no evidence that wages rise in adjacent sectors to resource extraction, negating the idea that other industries can be crowded out. Alcott and

Kenniston (2014) caution that the increased local economic growth that accompanies oil and gas booms can be quickly reversed during a bust if the economy fails to diversify.

3.3 Methods 3.3.1 The Resilience Framework

Outlined in the two schools set out above, there is a bevy of academic literature that explores connections between resource extraction outputs to macroeconomic indicators (e.g., wages, employment, etc.), while both sides discuss potential impacts on adjacent industries. Applying the economic resilience literature, which stresses the need for economic diversification to bounce back from stresses, would see job creation in adjacent industries as the primary benefit of engaging in new economic activity – like fracking – rather than merely a secondary effect.

Jacobs (1969:35-42) said:

“People have long observed that poor regions… typically import more than they can afford or else are terribly deprived because they fail to produce wide ranges of things for themselves… goods for export – the work that pays for the imports – helps feed the import replacing process… the root of all economic expansion.”

Jacobs (1969) then goes on to describe how import-replacing in one field can create new work in other fields as firms look to expand their products to new markets; leading to a more diversified economy. Furthermore, several more contemporary scholars (De Ferranti et al., 2002; Lorenzen,

2006; Frankel, 2011) have argued that these upstream and downstream linkages are key to escaping the natural resource curse, but the extent that spillover employment affects economic diversification has never been measured – much less so on local economies.

Both scholars (Cowell, 2013) and policy experts (OECD, 2016) have emphasized the importance of economic diversity to increasing regional resilience. Dawley et al. (2010) understands resilience as an alternative measure to job growth, valuing success over the long(er) term over short term job growth. Scholars have proposed, then measured the effectiveness, of different policy interventions governments could undertake. Some scholars look at offering ‘hard incentives’ like cash payments or infrastructure to entice firms to relocate (Halkier and Danson,

1997; Huggins and Izushi, 2007), others (Acs and Szerb, 2007; Glaeser et al., 2011) sees creating a local environment conducive to entrepreneurship as the key, while Dawley (2010) understands increasing resilience as a political project of coordinating actors across spatial levels and industries to attract and embed major institutional anchors.

Overall though, there is “little understanding of how regions diversify into new growth paths, and to what extent public policy may affect this process” (Asheim et al., 2011: 894). No one has yet tested the intervention – or rather, the natural experiment – of the introduction of natural resource extraction on local economic diversity, mainly because, prior to fracking, the imminent rise of a single new resource industry in many different established municipalities simultaneously was unimaginable.

This chapter tests whether fracking is changing patterns of economic decline in Northern

Appalachia by measuring changes in economic diversity, as an indicator of future economic growth potential. The Friedman (1988) model of economic resilience assumes that the effects of shocks are temporary and have no lasting effect on an economy’s basic structures and fundamentals, unless it is so pronounced that it leads to a permanent shift in a region’s

‘maximum feasible growth ceiling’ and therefore diverges from its historic growth trajectory.

When these disruptive moments do occur, more successful regions will be able to reorient their human and capital resources to adapt by structurally changing (Martin, 2010) by creating new work (Jacobs, 1969) and forming new clusters (Porter, 1990). The more diverse a region’s economy, the more resilient it will be to external shocks because the region will have a larger portfolio of industries with different elasticities of demand, different labor and capital necessities, different export orientations, and different levels of internal and external competition

(Davies and Tonts, 2010; Martin and Sunley, 2014). The cyclical fluctuations of one industry can be offset by the cyclical fluctuations of another. For this reason, Frankel (2011) recommends that governments have a “deliberate policy-induced diversification out of primary products… [that] could help bring about [permanent] economic development,” while warning that without doing so “a permanent commodity boom that crowds out manufacturing could retard it.” The question becomes whether fracking leads to local economic diversification or increased dependence on a single sector.

3.3.2 Data and Economic Diversity Indices

Because most fracking occurs mostly in rural areas and consistency of borders through multiple time periods are a necessity for temporal comparisons, counties were used instead of urban places and metropolitan areas accordingly. The sample area in this chapter is larger than

Northern Appalachia because additional comparable counties - where no drilling occured - are needed as control cases in order to measure whether fracking is having an impact on economic diversity. Here all counties in the four states that overlap with the Marcellus Shale (Ohio,

Pennsylvania, West Virginia, and New York) excluding the counties that are in the New York

City, Long Island, and Philadelphia metropolitan statistical areas (MSAs) are used. These are excluded because they have their own economic engines and are outliers in population densities, which may confound results. Maryland, despite having a few counties of the Northern Marcellus as included in the definition in the Introduction, has had zero drilling during the sample period and was not included [detailed more in Chapter 5].

These counties were then separated into four categories by the number of wells drilled within their boundaries between 2005-14; categories were determined by natural breaks in the data. ‘No fracking’ counties represent a control group, whereas those above 350 wells during this 10-year period represent the most intense drilling counties. To make comparisons across time, data was obtained from the 2000 Census and the 2011-15 (abbreviated as ‘2013’ from here on) American

Community Survey (ACS) using SocialExplorer. SocialExplorer uses NAICS industry data; taking the 19 sectors (2-digit codes) classified by the US Census, and groups them into 13 industries.4 Of all data that is publicly accessible, this is the smallest unit at the smallest scale.

This data cannot be taken directly from the US Census because the original 19 sectors are not consistently available at the county-level due to data suppression for privacy concerns. Fracking falls into “Sector 11-21: Agriculture, Forestry, Fishing and Hunting, and Mining”, which is from

4 SocialExplorer was able to obtain slightly more detailed data from the US Census than what is publicly available.

92 now on referred to as “mining” because of the inclusion of other industries. Results of descriptive statistics, found in Table 3.1, show that the intensity of the fracking industry was the main driver of change in this category.

To prevent results from being dependent upon a single measure5, this paper uses three similar measures of economic diversity: the Hirschman-Herfindahl Index (Salaman-Sigfried, 1977),

Locational Gini Coefficients (Krugman, 1991), and the Ellison-Glaeser Index (Ellison and

Glaeser, 1997). These three inequality measures originated in different disciplines for different applications, but all of them have become standard tools in economic geography to measure economic diversity. In each index, higher values indicate that employment in a region is more concentrated into few industries while lower values would indicate that a region is more economically balanced. Perfect equality (a zero value) and perfect inequality (a one value) are theoretical possibilities, but all practical values should lie somewhere in between. In this paper, time differences were calculated for all indices by subtracting the 2000 Census results from the

2013 ACS results (First Differences). An index above zero indicates that the county economy became more concentrated into fewer industries over this period, while negative values of the indices indicate that the county economy became more diversified over time.

5 The validity of a single measure may be in question if another equally valid measure of economic diversity arrives at different, and possibly contradictory, results. This paper addresses this issue by uses multiple measures without preference to increase the validity of results. All three indices end up pointing to similar results, albeit with slightly different strength of findings.

Table 3.1: Descriptives of Study Area Counties Number of Population Average Average Average Category Counties Density per Percent Percent Percent (Percent of sq. mile in Population Change in Change in wells) 2000 Change Total ‘Mining’ Employment Employment No Fracking 117 (0%) 252.63 4.48% 2.28% 0.18% (0 wells) Low 111 (14.6%) 188.46 0.08% -1.76% 16.87% Fracking (1-100 wells) Moderate 21 (27.7%) 82.69 -1.24% -1.91% 45.29% Fracking (101-350 wells) Intense 8 (57.5%) 105.10 -0.03% 1.01% 30.05% Fracking (351+ wells) Overall 257 (100%) 206.44 1.97% 0.15% 12.01%

When attempting to measure inequality in the early 20th century, most social scientists were comparing absolute values to each other, which made comparisons between areas difficult

(Roberts, 2014). Gini (1912), building off work from Lorenz (1905), solved this problem by comparing magnitudes of differences between the expected and observed values instead of comparing absolute values. His solution, now known as Gini Coefficients, is commonly used to measure income inequality or other differences between population groups. Krugman (1991) first applied it to industries over space – giving it the name of Locational Gini Coefficient. Gini coefficients (Gini) are calculated as the area of difference between the Perfect Distribution Line, a 45-degree angle, and the Lorenz Curve, the actual of the data [visualized in Figure 3.1] When there is no area in between the Perfect Distribution Line (also known as the Line of Equality) and the Lorenz Curve, then the corresponding Gini coefficient is 0. The theoretical maximum of a perfectly unequal society is 1. In practice, most Gini coefficients are between .30 (low inequality) and .70 (high inequality). In the formula below, sigma is the cumulative value of the industries arranged in an ascending order of employment; Y is the observed value for each industry ‘i’, and X is the expected value for that same industry. For all indices, a value is calculated for each county ‘c’.

푖

퐺푐 = 1 − ∑(휎푌푖 + 휎푌푖−1)(휎푋푖 − 휎푋푖−1) 푖=1

Figure 3.1: Visualization of How Gini Coefficients are Calculated

Image Source: Wikipedia (2017)

Hirschman (1945) criticized the use of Gini Coefficients for use in business contexts as the number of participants may change over time and/or the exact number of participants at any given time may be unknown. Instead of measuring against perfect equality as a baseline,

Hirschman’s formula focuses on measuring the impact of the largest firms on the entire market; making the identification of the number of smaller firms unnecessary. Herfindahl (1947) independently reached a similar conclusion with a similar formula around the same time. The

Herfindahl-Hirschman Index (HHI) has become the standard test for market concentration of an industry within a single geographical unit, with its most common application in anti-trust to show whether a market is being monopolized by one or more players, which would erode competition. This paper uses this formula to show whether one industry is monopolizing county economies instead. A simplified version of the formula is given below, where ‘s’ is the percentage share (e.g., 0.17) of one industry of the entire employment (1.00) in an area.

2 퐻퐻퐼푐 = ∑ 푠푖

In order measure economic agglomeration, Ellison and Glaeser (1997) believed that companies co-locate to be near other market participants because of (i) upstream and downstream supply linkages, (ii) to share employee and customer bases, and (iii) to take advantage of shared infrastructure, amongst other reasons. They believed that the solution was to balance out HHI and Gini Coefficients, taking both the effect of larger players in a market and the total number of participants into account. Their formula maps out all locations of all market participants in a single industry within a larger region, but here, as the subject of interest is the distribution of regional employment by county, the formula below treats each county (instead of company) as a

97 market participant and the regional employment as the total market size.6 Variables include both the Locational Gini Coefficient (‘G’) and the Hirschman-Herfindahl Index (‘HHI’), where ‘x’ is the county percentage share employment of overall regional employment.

퐺푐 2 (1 − 푥푐 ) − 퐻퐻퐼푐 퐸퐺푐 = 1 − 퐻퐻퐼푐

These three indices are the most commonly used to calculate economic diversity on the local scale; yet they are far from the only ones used by economists to measure inequality (e.g., Theil

Index) and/or economic agglomeration (e.g., K-density). Some indices have different uses and are applied to different situations depending on what is being measured and data available. But, as these three are perfectly usable for the purposes of testing a localized natural resource curse and the debates over which index is the ‘best’ is not the focus of this research (for more, see

Kominers, 2008), this chapter sets this topic aside.

These three indices are used as descriptive statistics for changes in economic diversity. The next step in the methods to see whether there is a relationship between economic diversity and the number of well sites. A quick look at the residuals show a curvilinear relationship between the indices and the number of fracking wells, so first a one-way ANOVA is used to prove the difference between groups. Then least-squares regression models, where fracking activity is recoded as dummy variables to account for nonlinearity of fracking intensity, are used to see how much the change in the indices can be attributed to the number of fracking wells (direct effects)

6 2 2 The formula is slightly modified in this research to take its application into account. It makes ∑푥푐 into simply 푥푐 because there is only one value in that set.

98 or changes in the local labor market (indirect effects). Finally, to check whether fracking and changes in economic diversity are related over space, choropleth maps show the spatial distributions of the variables and then Anselin’s (1995) Bivariate Local Indicators of Spatial

Autocorrelation (Bivariate LISA) is used to find statistically significant relationships between the indices and fracking well counts. All resulting maps are attached in the appendix.

3.4 Results

Table 3.1 shows the descriptive statistics of Northern Appalachia. The presence of the fracking industry is not a dichotomy, but rather a spectrum of degrees of intensity. The four categories of fracking counties, as divided by natural breaks in the data, show that their experiences with the industry differ. Slightly more than half of counties had at least some fracking activity, but in only eight counties (3.1 percent of sample) was the fracking activity intense, defined as over 350 wells drilled during the study period. These eight counties accounted for 57.5 percent of all wells drilled in the Northern Marcellus! This chapter will discuss the findings by looking for patterns in the data, but urges caution of overgeneralizing the findings because of the small sample size of high intensity drilling counties.

Some of the least dense parts of Northern Appalachia were also where moderate and intense drilling occurred. Interestingly, intense fracking countries had an increase in employment despite a stagnant population. As discussed in the previous chapter, rural decline has taken hold in

Northern Appalachia; part of a larger global trend of an emptying out of the countryside as people relocate to nearby urban areas. Yet the descriptive statistics imply that intense fracking can mitigate this to a degree, increasing total employment in these rural counties as the ‘mining’ industry plays center stage. Moderate fracking saw a larger growth in mining employment, but also works off a smaller population base compared to intense counties. In contrast, the zero

99 fracking counties saw no change in ‘mining’ employment over this 15-year period, indicating that fracking has been the driver for additional ‘mining’ sector employment even though it was clumped together with the agriculture, forest, fishing, and hunting industries.

Table 3.2 shows the distribution of job percent changes by industry, broken up by intensity of fracking activity. Noticeably, all counties experienced a dramatic drop-off in manufacturing and information employment across the board. Yet the most intensive fracking counties tended to have disproportionately higher growth rates in a number of different industries compared to all other categories, including: (1) agriculture and mining (fracking category); (2) construction; (3) wholesale goods; (4) transportation and warehousing; (5) finance, insurance, and real estate

(FIRE); and (6) arts and hospitality. No sector in intensive fracking counties had a disproportionate decrease, or slower growth, compared to less intensive fracking counties. This shows that (a) job gains from fracking were well spread out between different industries, contributing to economic diversity; and (b) there is no evidence that any industry was ‘crowded out’ in aggregate.

Figure 3.2 (HHI), Figure 3.3 (Gini), and Figure 3.4 (EG), show distributions of the indices broken up by the fracking well categories. As expected, the mean change for all indices is close to zero throughout the region, indicating little change in economic diversity overall but with some significant variation. Simple correlations show that more fracking activity is negatively correlated with the diversity indices; meaning that fracking is associated with local economies becoming more diverse. The smoothed interpolation lines on all three figures show that this relationship holds between all states in the sample. However, the relationship is weak

(approximately -.13 r-value for all three). Low and no fracking have very similar distributions,

100

Table 3.2: Percentage Change in Industries by Fracking Intensity Category Agriculture Construction Manufacturing Wholesale Retail Transport, Information FIRE Professional Education Arts, Other Public and Mining Trade Trade Warehousing and and Hospitality Services Admin and Utilities Scientific Health No 0.66% -2.84% -23.31% -23.24% 4.24% 0.48% -25.34% 3.01% 30.41% 23.71% 22.87% 2.66% 4.84% Fracking (0 wells) Low 16.87% -5.26% -25.00% -22.91% -4.76% -2.29% -22.22% 2.08% 21.12% 16.37% 15.52% -4.41% 8.94% Fracking (1-100 wells) Moderate 45.29% 1.09% -35.52% -8.01% 1.69% 6.58% -30.12% -1.66% 33.60% 13.91% 2.17% -12.39% 7.71% Fracking (101-350 wells) Intense 30.05% 9.75% -28.36% -13.71% -3.00% 11.54% -36.49% 15.18% 39.13% 14.00% 19.26% -5.79% 3.69% Fracking (351+ wells) All 12.14% -3.17% -25.18% -21.57% -0.05% 0.13% -24.73% 2.61% 26.96% 19.47% 17.93% -1.85% 6.79% Counties

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showing that the industry needs to reach a certain intensity before it noticeably impacts the economic diversity of the county.

Table 3.3, further complicating the picture, shows the data to appear curvilinear – weakly positive for counties with few wells, becoming strongly positive for moderate drilling activity, and then a medium negative correlation for high drilling. Between this and what is indicated in

Table 3.1, inertia seems to have taken hold in the region; larger economic forces continue to play a dominant role unless a significant outside force (fracking) acts upon them. In this case, the more urban that counties are by population density in 2000, the more economically diverse they became by 2013 as more people continued to migrate into them. The more rural that counties were in 2000, the less economically diverse they became in 2013 as they continue to depopulate.

Intense fracking has been a counterforce that, at least partially, offsets this trend of rural decline by bringing in new employment opportunities, instigated by mining, but resulting in the increasing presence of a variety of industries.

Taking the non-linear relationship established in the previous tables, Table 3.3 uses a One-Way

ANOVA to show changes in indices by the categories of fracking intensity. All three indices show that an increasing intensity of fracking leads to more economic diversity, but only the Gini

Coefficient was found to have differences between groups large enough to be statistically significant at a 95 percent confidence level. Ellison-Glaeser is close at a p-value of .071, but misses the (somewhat arbitrary) threshold of .05. Percent population change was the most statistically significant variable between groups.

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Figure 3.2: Distribution of HHI Index by Fracking intensity.

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Figure 3.3: Distribution of Gini Coefficients by Fracking Intensity

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Figure 3.4: Distribution of Ellison-Glaeser by Fracking Intensity

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Table 3.3: Simple Correlations Between Well Counts and Economic Diversity Indices HHI Gini EG Category No Fracking ------(0 wells) Low Fracking 0.1367 0.0023 0.0392 (1-100 wells) Moderate Fracking 0.5317 0.6223 0.5935 (101-350 wells) Intense Fracking -0.3032 -0.3423 -0.3534 (351+ wells) All Counties -0.1035 -0.1519 -0.1340

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Table 3.4 shows the results of least-squares regression models using each of the indices as the dependent variable, testing the impact that fracking intensity had on the county’s economic diversity. An adjusted R2 value is shown, as opposed to normal R2, as it accounts for additional predictors in the model to prevent researcher bias of adding unnecessary variables that could

‘game’ the result. Standardized Beta coefficients are shown to compare the effect size between independent variables; the further the absolute value is from zero, the stronger the effect is and more relatively important the independent variable is.

Variables were entered in three blocks to measure their isolated effects. Only the results of the third block, with all variables, are shown in Table 3.5. First, as a control variable, population density in 2000 is used to account for the effect that urban density has on diversifying the regional economy; densifying economies will be more diverse. Second, fracking intensity was added as four categorical dummy variables, to test whether location of wells mattered (direct effects). Finally, the third block tested whether changing characteristics of the county caused by fracking (indirect effects) mattered, and percent population change, percent employment change, and percent mining change were added to see how change in each impacted the economic diversity accordingly.

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Table 3.4: One-Way ANOVA Results Between Categories of Fracking Intensity, 2000 to 2013 Percent HHI Change Gini Ellison-Glaeser Categories Population Coefficient Index Change Change Change No Fracking 4.48% 0.0028 0.0185 0.0265 (0 wells) Low Fracking 0.08% 0.0032 0.0135 0.0210 (1-50 wells) Moderate -1.24% -0.0009 0.0022 -0.001 Fracking (51-350 wells) Intense Fracking -0.03% -0.0055 -0.0090 -0.0198 (350+ wells) Overall Average 1.97% 0.0024 0.0141 0.017 Sig. .002* .257 .022* .071 * indicates statistical significance at a .05 alpha value

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All models were statistically significant at least at a 99 percent confidence level if not higher, but only accounted for a very small amount (less than 10 percent) of variation in the indices as indicated by the adjusted R2 scores. Unsurprisingly, as indicated by the tables 3.3 and 3.4, population density in 2000 was consistently a statistically significant predictor in changes in economic diversity; but as the Beta coefficient was positive, it would indicate that a denser population would decrease economic diversity. The second block, testing location of well intensity, did not add much to the model with only the most intense drilling counties having a statistically significant (at a .05 alpha value) difference on two of the three economic diversity indices. The Beta coefficient was negative, indicating that it added to economic diversity, but the effect size was relatively small. Most of the R2 change came in the third block, indirect effects.

Percent population change and percent employment change were both statistically significant and had relatively large effect sizes, whereas ‘mining change’ was not. This would indicate it is where the workers live that matters more to economic diversity than where the location of the well sites are. Interestingly, employment change was positively associated whereas population change was negatively associated with the indices. This would imply that the counties with the largest increases to economic diversity, as a negative dependent variable, would be those with shrinking employment and growing populations.

This result implies that not all employment is created equal. Using Gini Coefficients as an example, because all variables are statistically significant at a 0.05 alpha value, if a worker moved to a region, their job (.343) would take away from economic diversity, but that would be partially offset by adding to the population count (-.270). Whether the total contribution of that individual would then add or subtract to economic diversity would highly depend on other factors. For example, as ‘mining’ employment (-.130) carries a negative coefficient, it implies

109 that the added fracking worker then have a net benefit (equals -.057) to economic diversity. Yet the indirect multiplier effects of fracking employment may take away from the increased diversity as it may attract other workers in other industries.

To note though, as most fracking in Appalachia is done by international companies [as demonstrated in Appendix D] and that the industry often employs a non-local workforce

[discussed further in Chapter 4], it is quite possible that a significant number of workers are not being added to either population counts or employment, in accordance with the American

Community Survey Design and Methodology (2014). Because of this, changes in “mining” employment and other figures are best understood as conservative estimates.

To visualize the spatial distribution of the data above, choropleth maps were made for the indices using natural breaks (Figure 3.5)7. To test for the assumption of no spatial autocorrelation, which may invalidate the least-squares regression analysis, a bivariate LISA analysis was run between each of the indices and the well counts (Figure 3.6). Two major clusters of fracking intensity emerge (darker brown), one in Northeast Pennsylvania along the New York border [which is the study area investigated more deeply in Chapter 4] and the other in the tri-state area where southwest Pennsylvania, southeast Ohio, and the northwest tip of West Virginia come together.

The HHI index shows two main clusters of more economic diversity (green), one along the New

York-Pennsylvania border that aligns with the fracking activity and the second in northwest Ohio near Toledo, far away from any fracking activity. The Gini and EG indices find a third cluster in

7 Note the Least Squares Regression Analysis was intended to be exploratory in nature only. Checking the assumptions of regression were not performed.

110 that tri-state area where fracking is occurring. Clusters of less economic diversity (red) are found near most cities (e.g., Cleveland, Pittsburgh) in this region, which may indicate that their urban economies are developing specialties, as well as the heart of coal country in West Virginia.

The Bivariate LISA, between each of the three indices and the number of fracking wells conducted with a {Queen,1} weight, verify with statistical significance what the choropleth maps show. Reds indicate high positive changes in the indices, which means less economic diversity, with the darker red (High-High) being near fracking wells with the light red (High-Low) being farther away. Blues indicate negative changes in the indices, which means more economic diversity, with the lighter blue being near fracking wells (Low-High) and the darker blue (Low-

Low) not. The Moran’s I of all three tests is very low, with the absolute value of the greatest absolute value being the Gini coefficient at -.115, which means that there is not significant spatial autocorrelation throughout the region. The implications of this are (1) that there are statistically significant localized effects but not a significant pattern throughout the study area, and (2) the assumption of the least-squares regressions performed in Table 3.5 continue to hold.

The resulting tests find, with statistical significance, that the biggest clustering of counties with increases in economic diversity is where fracking is occurring along the Pennsylvania-New York border. The Pittsburgh area, in southwestern PA, has a significant clustering of reduced economic diversity that is partially counteracted by the fracking west of it, resulting in a region of high fracking and mixed changes in economic diversity. Significant changes are happening in western Ohio and eastern New York, but this chapter does not investigate this any further as they are far away from the fracking area. Many rural areas are facing declines in economic diversity.

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Table 3.5: Standardized Beta Coefficients for Linear Regression Model (Block#) Variable HHI Gini Ellison-Glaeser Sample Size 257 257 257 Adjusted R2 Model .069** .094*** .090*** (1) Population .149* .155* .162** Density in 2000 (2) Low Fracking .063 -.032 .010 (2) Moderate -.032 -.093 -.069 Fracking (2) Intense Fracking -.098 -.145* -.122* (3) Percent Total -.199* -.270** -.250** Population Change (3) Percent Total .349*** .343*** .357*** Employment Change (3) Percent ‘Mining’ -.056 -.130* -.124 Employment Change Note: ‘No Fracking’ was excluded by the model in every iteration * indicates statistical significance at a .05 alpha value, ** .01 alpha value, ***.001 alpha value

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3.5 Chapter Conclusion

Fracking provides an interesting case study because the newness of the industry allows for a natural experiment in whether the introduction of a natural resource industry can add to economic diversity, making a region more economically resilient. Earlier works found statistical connections between local natural resource development to both economic growth (Peach and

Starbuck, 2010; Marchand, 2012; Alcott and Kenniston, 2014) and stagnation (Papyrakis and

Gerlagh, 2007; Partridge et al., 2013), but could not explain why. This chapter looks specifically at whether the introduction of fracking has ‘crowded out’ adjacent industries as discussed by

Christopherson (2011) and Dubé and Polèse (2015), finding this to be incorrect by testing three different economic diversity indices (HHI, Gini, Ellison-Glaeser) between 2000 and 2013 in

Northern Appalachia. Rather, the introduction of fracking seems to have increased economic diversity. This increase indicates that future economic growth prospects are better with the presence of the industry than without!

But I urge caution of overgeneralizing the implications of these results to other situations and other regions. Although the results are statistically significant, the explanatory power of the overall R2 is small and sample size of high intensity fracking counties is limited. Running these same tests in other regions may conclude with different results. Furthermore, counties that have only a few to a medium-sized number of wells do not necessarily have the same benefits.

My personal interpretation of these findings is that the introduction of fracking has little bearing on the long-term economic resilience of a region; neither positive hysteresis or negative hysteresis is strongly implied by the data. This is not to say that fracking may not have specific impacts on specific businesses, particularly those that have upstream or downstream business linkages to fracking or those that are in direct competition for industrial inputs, but merely the

113 effect in the aggregate is close to negligible. Some industries will grow, others will decline, but overall economic diversity does not change much (slightly increasing, if anything). Fracking should not be accused of hurting future economic prospects, nor should it be hailed as a solution to breaking the current path dependent trends of rural decline

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Figure 3.5: Maps of Fracking Intensity and Indices

Fracking Intensity HHI Index

Gini Coefficients Ellison-Glaeser Index

Figure 3.6: Maps of Bivariate LISA Between Indices and Well Counts

HHI Index – Well Count Cluster HHI Index – Well Count Significance

Moran’s I = -.031

Gini Coefficient – Well Count Cluster Gini Coefficient – Well Count Significance

Moran’s I = -.115

Ellison-Glaeser Index – Well Count Cluster Ellison-Glaeser Index – Well Count Significance

Moran’s I = -.085 116

Chapter 4 Fracking and Regional Growth: A Case Study of the Residential, Employment, and Commuting Patterns along the New York- Pennsylvania Border

Economic Development Chapter

4.1 Chapter Introduction

Long-term economic resilience is not the foremost political argument in favor of fracking, but rather short-term job growth is. Former Pennsylvania Governor Tom Corbett, called this budding industry “extremely important” to the state’s economy, claiming that “nearly 240,000

Pennsylvanians are employed within our oil and natural gas industries in Pennsylvania... Our domestic energy resources are benefiting our entire state and, in turn, fueling a rebirth of the

American petrochemical and oil refining industries” (Corbett, 2012). He explained that this was his long-term growth vision for the state, “in the beginning I was looking at 20 years for this to develop. When we get to 2031, you're going to a see a completely different Pennsylvania, and you're going to have a lot of jobs, and hopefully you're going to have a lot of industry” (Woodall,

2015). Many of these predictions have fallen short, or focus on helping people who are outside the local community where fracking takes place. White (2012) argues that the changes in national and state employment from unconventional gas development have little bearing on the welfare of the counties that most directly bear the costs of drilling activity.

In contrast to most studies that look at statewide or national job creation, this chapter argues that the true calculus of whether a local community is deriving long-term economic benefits from fracking is: (1) the number of jobs created locally instead of at the state-wide level; (2) whether those jobs are going to locals instead of those from further away; and (3) if those local jobs are not going to local residents, then whether these non-locals permanently in-migrate to the region,

117 generating regional growth. In this chapter I assess these paramerters using multiple quantitative planning techniques: Economic Base Analysis to calculate the number of jobs created,

Commuting Data Analysis to find out where workers are coming from and to where they are working, and Gi* Hot Spot Analysis to look for changes in patterns in housing and employment.

Informed cost-benefit analysis, made even more vital by the localized environmental risks of the fracking industry, is the underlying query in “making sure that the [local] community isn’t left holding the bag” noted Tim Kelsey, Co-Director of the Center for Economic and Community

Development at Penn State.

Using a small case study region along the New York-Pennsylvania border [identified in Chapter

3 as the region gaining the most in terms of economic resilience], I find that (1) the number of local long-term jobs created is much lower than politicians or input-output models suggest; (2) the ‘fly-in fly-out’ (FIFO) academic literature does not accurately represent this case, rather many workers ‘drive-in drive-out’ (DIDO) from the larger area; and (3) there is little evidence that that fracking workers permanently in-migrate, rather the evidence shows a net population loss during the sample period; however, there is no evidence that fracking is the cause of this population loss, on-going deindustrialization is more likely. I conclude that the long-term economic impact of this industry is minimal, as few additional local jobs for local workers are created, and the industry is not upending larger patterns of rural decline.

4.2 Literature Review

Academic studies focusing on Pennsylvania portion of the Marcellus Shale have assessed fracking-related job numbers as much lower than Governor Corbett’s figures, but with estimates that vary widely. Considine et al. (2011) findings suggest that natural gas was at least partially associated with 140,000 jobs in Pennsylvania during 2010. Looking at the same state and

118 timeframe, Kelsey et al. (2011) estimates the direct employment generated by the fracking industry grew by more than 23,000. Weinstein and Partridge (2011) found that between 10,000 and 20,000 direct, indirect, and induced jobs were created between 2004 and 2010 in

Pennsylvania. Cruz et al. (2014) analyze Bureau of Labor Statistics data and come up with a total of 15,114 for all of Pennsylvania. Other studies have generated similarly conservative estimates

(Brundage et al., 2011; Herzenberg, 2011). Yet the total number of jobs generated statewide, including induced jobs up and down the whole supply chain, is immaterial to the impact of the specific local economy where fracking takes place. Jobs produced in Pittsburgh do not matter to the workers in Scranton; though they would to the governor of the state.

A more fundamental issue with many of these studies is that they have been conducted using input-output modeling without questioning whether the underlying assumptions are correct

(Kinnaman, 2011; Rousu et al., 2015). Kinnaman (2011) goes on to argue that these input-output studies, which are rarely peer-reviewed, often overstate the benefits of fracking by not considering the short-term live-work patterns of these workers. Wrenn et al. (2015) find that the industry requires specialized skillsets, while the shortage of such employees causes them to commute between counties, never taking up permanent residence where they work.

Consequently, much of the economic impact associated with hiring and industry spending can occur outside of the counties where drilling occurs and offer no permanent benefit to the local region. Input-output modeling assumes most job creation is permanent (with construction being the exception), while this industry sees permanent employment as the exception.

Furthermore, all input-output job creation forecasting relies on multiplier effects. It is true that all economic activity has ancillary benefits which creates indirect jobs through new money being introduced into the local economy [as discussed as ‘positive hysteresis’ in Chapter 3], yet a

119 standard issue in all economic impact studies is determining what the correct multiplier to use is.

Hughes (2003) discusses the limitations of the application of multipliers in general, noting that multipliers above 2.5 are highly questionable. The U.S. Bureau of Economic Analysis (BEA,

2010) uses a direct employment multiplier of 1.4743 for the oil and gas industry. Barth (2010) summarizes other studies on the oil and gas industry finding multipliers as low as 1.4, while

Brown (2014) finds a slightly higher multiplier of 1.7 for fracking specifically. Kelsey et al.

(2011) finds an economic multiplier between 1.86 and 1.90, based on income generated, for the fracking industry in Pennsylvania. Through these studies this study establishes a low estimate of

1.4 and a high estimate of 1.9, then uses both to calculate a total job creation range, which the true number is believed to fall somewhere in-between.

To note, the variation of multipliers is determined by the amount of ‘leakage’ in a local economy, defined as the portion of goods and services that are purchased outside the area

(Beattie & Leones, 1993). This leakage is incredibly important to the fracking industry because of its use of mobile labor. As Kelsey et al. (2009) report, 37 percent of workers in the shale gas industry in Pennsylvania are out-of-state residents, and workers retaining an out-of-state permanent residence typically will spend their income differently with a larger share immediately leaving the state, so a lower multiplier would be expected. Furthermore, the challenge for regions is not only to attract workers from elsewhere, but to retain them as well

(Florida, 2002, 2005; Gertler et al., 2002; Hansen et al., 2003; Glaeser, 2004; Waldorf, 2009).

Because of the shifting nature of the industry towards FIFO employment-residential relations

(Houghton, 1993; Haslam-McKenzie, 2011), the in-migration to new industrial districts is only fleeting.

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Though production of a gas well may last decades, the labor necessary is front-loaded to the first few months as most of the labor is needed in the preparation and construction of the well-site

(Jacquet, 2009). Afterwards, the well is drilled by a small team and then fracked by an even smaller one. Each step of the well is often contracted – or sub-contracted – out to a specialized firm. The owner of the well-site typically plays the role of general contractor, but that job is sometimes contracted out as well (Gold, 2015). These contractual arrangements – particularly the high-skilled, highly-technical functions – are measured in hours and days instead of weeks.

Although over 400 workers set foot on a well-site, the total employment impact is only approximately 13 full-time employees for one year (Brundage, 2011). Therefore, the regional boom in employment is not due to a single well-site, but rather the cumulative effect of hundreds to thousands of wells being constructed, drilled, and fracked within a relatively short timeframe.

Resource boomtowns are defined by “too many unfilled jobs and not enough empty beds”

(Jacobsen and Parker, 2014). Storey (2010) discusses that the new normal organizational structure for extractive industries is FIFO in which workers spend a certain number of days working on site after which they return to their home communities for a specified rest period.

Most of the FIFO literature has focused on industrial mining in Western Australia (Haslam-

McKenzie, 2011; Haslam-McKenzie and Hoath, 2013; Perry and Rowe, 2014), but this live- work arrangement began with offshore oil workers in Mexico (Gramling, 1995) and has since been applied to other extractions situations including mining in northern Canada (Storey 2010;

Finegan and Jacobs 2015) and fracking in the United States (White, 2012; Ruddell et al., 2014).

New construction is typically not undertaken as the shorter lifecycle of the extraction process means that capital outlays to build anything more than a temporary camp no longer makes financial sense because spatially fixed, expensive upfront housing investments are poor

121 investments for a temporary industry (Storey and Shrimpton, 1988). Houghton (1993) explains that industrial firms choose to bring in temporary employees using the FIFO approach because

“large scale capital outlays on urban infrastructure are replaced by transport costs” which are distributed across the lifespan and productivity levels of the project. Higher compensation to workers, allowing them to find their own food and housing, and the free market and local government to respond in kind. As most mining projects take place in rural regions that have little in the way of preexisting infrastructure, FIFO is a necessity. The applicability of the FIFO academic literature to more urbanized regions is unknown, but leakage may occur through less travel intensive means (e.g., driving from nearby states).

Although they often do not see themselves as such, FIFO workers are a form of economic migrant labor. Migrant workers are hired for their perceived willingness to work hard, follow management instruction, and work long hours when the firm requires (MacKenzie and Forde,

2009). Gibson (1994) found that 12-hour shifts are common-practice in FIFO arrangements and they negatively impact work-life balance compared to a ‘normal’ work day. In their interviews with industrial migrant workers, Haslam-McKenzie and Hoath (2013) found that most participants in FIFO regret the time they must work away from home, but almost always did so for the financial rewards it afforded them and their families. To explain why these jobs are so popular despite the many drawbacks, Gold (2015:47) states that:

“A rig worker, often with a high school education and a willingness to work long hours, can earn a nearly six figure income. Other than drilling and fracking wells, this kind of paycheck is practically impossible to find in central Pennsylvania.”

Meanwhile, the families of FIFO workers often choose to locate in metropolitan areas with better access to services, infrastructure, and alternative job opportunities instead of permanently re-

122 locating to isolated communities (Storey, 2010; Haslam-McKenzie, 2011). Without job and residence being tied, disenfranchised workers are more likely to choose ‘exit’ from the industry instead of attempting to gain a ‘voice’ in it (Perry and Rowe, 2014). Unsurprisingly, the mining industry maintains exceptionally high labor turnover rates in relation to the average wages being paid (Peetz and Murray, 2011). Because of this, permanent relocation for a temporary job may not make financial sense for many workers; others may be thankful for any employment opportunity and are willing to make personal sacrifices.

Furthermore, economic migrants often view their precarious work-life situation as merely passing, an ‘imagined temporariness’, as their plans include to either move back home or move on to elsewhere (Piore, 1979; Anderson, 2010). Although it is common for people to regard their migration as a temporary arrangement, many do settle into permanent residency (Knocke, 2000;

Korniek et al., 2005) finds that migrants are more likely to settle into permanent residency if they generate strong social ties with the community in which they live. Although the workplace can provide opportunities for engagement by interaction with colleagues, the sense of community may be curtailed in workplaces where the majority of their colleagues are also migrant workers

(Korniek et al., 2005). Because of the expectation of a temporary stay coupled with the long hours in anti-social environments, workers may forgo social pleasures and forming social ties in their new communities (Anderson, 2010). Logically, this problem should be more acute in places that are reliant on work-camps instead of more permanent housing. If these workers move out, then the region will lose these individuals’ potential to contribute to the social and human capital, which is a prerequisite for economic growth.

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4.3 Study Area

Within the larger Marcellus Shale, the fracking industry is looking for ‘sweet spots’ where geological, political, and economic considerations make drilling the most profitable. This leads to an uneven landscape within the shale play where there is clustering of well-sites in some areas and few to none in others (e.g., the 8 intense fracking counties identified in the previous chapter).

Most studies investigate fracking on the statewide level, either by looking at it as a whole, or by comparing all counties in that state, based on the number of wells drilled over a certain period.

This chapter takes a different approach. As regional planners care about how fracking will affect their local region, I focus on the actual geography of the industry by choosing the largest sweet spot in the Marcellus Shale as a case study.

As seen in Figure 4.1, the sample in this chapter focuses on 351 census tracts that fall inside twelve counties8 along the New York State–Pennsylvania border. Within these 12 counties lies slightly under half (2542 out of 5175) of all wells that were completed in the Marcellus Shale between the earliest fracking wells in 2005 and the end of 2010 (6-year period); in addition there are another few hundred wells within 50 miles of this study area.9 Even within this sweet-spot region, there is significant variation as smaller clusters of fracking occur. In the four corners of this study area lie five small to mid-size cities within four metropolitan statistical areas10. This case study area was chosen as the study area is near a number of small cities. The presence of

8 NY: Broome, Chemung, Steuben, Tioga PA: Bradford, Lackawanna, Luzerne, Lycoming, Steuben, Susquehanna, Tioga, Wyoming

9 New York passed a moratorium on fracking in 2011, but this does not affect the study period.

10 Elmira, NY; Binghamton, NY; Williamsport, PA; Scranton, PA. and Wilkes-Barre, PA; Each city has its own MSA, except for Scranton and Wilkes-Barre which are part of the same MSA.

124 pre-established communities, unlike other fracking areas, means that permanent housing opportunities, social services, and employment alternatives are available to workers. This allows for testing whether these small cities can draw in these workers to their cores, which would indicate a stronger likelihood of permanent relocation. Locating near well-sites in temporary housing conditions would indicate a low likelihood of permanent relocation.

Scholars (Colby, 1933; Hartshorne, 1950; Cohen, 1963) have long argued that the development of a region involves two competing types of forces: centripetal forces that pull populations together to the center into cities and centrifugal forces that pull populations apart. Jacobs (1984) and Bairoch (1985) suggest that the economic growth of a region is dependent upon the ability of a region’s cities to integrate the population and economic activity in its hinterlands. By mapping the change in employment and housing patterns in this region, this study tests whether there is statistical evidence that those who work in the fracking industry within the study region intend to permanently reside in the region through being pulled into the surrounding cities instead of residing near the employment area near the fracking well-sites. A lack of physical integration into the cities would also indicate a lack of social integration as well. Those under temporary live-work arrangements near the wells would be more likely to head home, or to move on afterwards, at the expense of establishing roots in the region.

As shown in Figure 4.2, Feyrer et al. (2016) find that within 100-mile radius of the fracking counties, approximately 25.7 percent of funds invested show up in wages. Out of that 25.7 percent, 60.5 percent ends up in the mining industry, 23.8 percent ends up transportation industry, 14 percent in the construction industry, and the remainder is spread out amongst all other industries. The employment effects similarly reflect the occupation data with the largest gains in mining, transportation, and construction. For this reason, this chapter focuses on

125 employment changes within these three industries (mining, transportation, and construction) as well as the corresponding occupation groups as found in the US Census. Additionally, Feyrer et al. (2016) find that another 28.6 percent of money directly invested ends up as royalty payments and non-wages business income. Over half of all money directly invested ends up as income to individuals and businesses within the local economy where fracking takes place.

4.4 Methods 4.4.1 Descriptive Statistics

The first source of data comes from the GeoLytics Neighborhood Change Database

(NCDB).11,12 The first method used was to find difference and percent difference were then calculated for each county. During this 10-year window, the population of the region stayed approximately flat but the population of foreign-born individuals increased by almost 14,000.

The study area experienced little job growth overall, gaining slightly over 10,000 jobs (1.8 percent growth over a decade) but over 70 percent of these were in Lackawanna and Luzerne

Counties where little-to-no fracking is taking place. The larger story of this region continues to be deindustrialization as employment in the manufacturing industry declined by nearly 20 percent (-20,510 jobs), and production and maintenance occupations along with it (-13,746

11 This database contains standardized Census tracts, backdated to 1970 data, based on the 2010 Census boundaries to make cross-decade comparisons possible. GeoLytics did this, with help from the Census bureau, by reconstructing the districts in older datasets and then summing the results. It has become a widely used source in urban geography for decade-over-decade comparisons.

12 Sums were calculated for the census tracts for the total study area and for each of the counties. For the housing price variables, the means were calculated instead. The 2000 median house value and median rent values were inflation-adjusted to 2010 using the Consumer-Price Index (CPI) on the Bureau of Labor Statistics (2017) website.

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Figure 4.1: Cities, Counties and Well-Sites (2005-2010) in the Study Region

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Figure 4.2: Fracking Industry Breakdown of Total Spending

Source: Feyrer et al., 2016

128 jobs)13. Each of the industries (mining, construction, trucking) and the occupation groups

(construction and extraction; transportation and material moving) associated with fracking gained between 1,175 and 2,658 workers a piece in the study area.

Total housing units increased in this 10-year period by 2.2 percent, which can be interpreted as staying approximately flat. The housing characteristics show a slight movement away from home-ownership and to renting instead. This may be due, in part, to the rising costs of homeownership (11.79 percent) relative to that of renting (5.82 percent). Apartment buildings with 50 or more units showed almost a 10 percent increase during this period.

Three variables were used as indicators to potentially find and assess reliance on work camps, for which the overall descriptive statistics showed mixed results. Mobile homes and non-institutional group quarters strongly decreased, -10.2 percent and -31.87 percent accordingly. But housing units without kitchen facilities grew by an astonishing 82 percent. These numbers may be explained by a variety of reasons, from the presence of work camps to the construction of college dormitories, and therefore the author cautions interpreting this finding until the spatial distribution of these units is mapped later in this chapter.

With these variables, it’s not so much the total number for the region that matters but rather the spatial distribution within the region. These numbers vary considerably on the county level, with some counties gaining or losing an outsized number of workers in some industries (e.g.,

Lackawanna County gained over 800 mining residents, while Luzerne County lost just as many) as well as outsized changes in housing (e.g., Lackawanna and Luzerne counties both gained

13 The deindustrialization of the region would decrease economic diversity; making the results of Chapter 3 even more striking that economic diversity increased in fracking areas only.

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Table 4.1: Study Area Descriptive Statistics

2000 2010 Dif. % Dif. Basic Information Fracking Well-sites 0 2542 +2542 100.00% Total population 1275713 1270958 -4755 -0.37% Foreign born population 29619 43470 +13851 46.76% Employment variables Total Employed 574902 585433 10531 1.83% Occupation: construction and 28576 29881 +1305 4.57% extraction Occupation: transportation and 43907 46565 +2658 6.05% material moving Industry: mining 1513 2688 +1175 77.66% Industry: construction 33164 35035 +1871 5.64% Industry: transportation and 22317 23619 +1302 5.83% warehousing Occupation: production14 64685 50939 -13746 -21.25% 6 Industry: manufacturing 109915 89405 -20510 -18.66% Housing variables Total housing units 575732 591959 16227 2.82% Total renter-occ. housing units 150991 160941 +9950 6.59% Total owner-occ. housing units 357840 357100 -740 -0.21% Building with 5 or more units 45672 46913 1241 2.72% Building with 50 or more units 11462 12561 1099 9.59% Median value of housing $98,313.35 $109,908.28 $11,594.93 11.79% Median rent $575.28 $608.76 $33.48 5.82% Work camp indicators Out-of-state workers15 152716 2524 997 65.29% Mobile home or trailer 46803 42028 -4775 -10.20% Housing units without kitchen 9723 17729 8006 82.34% facilities Other non-institutional group 7166 4882 -2284 -31.87% quarters

14 The production occupation and manufacturing industry are not directly associated with fracking, but they are included in this table to portray the ongoing deindustrialization of this region.

15 This variable comes from (LEHD, 2016). The rest are GeoLytics Census data.

16 The first available LEHD data is from 2002. The rest of the variables are from 2000.

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2,098 and 2,940 housing units without kitchen facilities). The spatial relationships between these numbers matter as this research focuses on whether these fracking workers intend to stay as indicated by their housing choices and location. This is further analyzed in the next sections.

4.4.2 Economic Base Analysis

Dinc (2015) defines how location quotients can be used in economic base analysis to quantify the total economic contribution of an industry. Location quotients (LQs) are used to control for cyclical and structural changes in the national economy. LQs were first used by Haig (1928) to describe the changing economy of the New York region. They are a measure of the percentage of employment in an industry of the local area controlled for the percentage of employment of that same industry within the nation. To calculate the change in the LQ between 2010 and 2000 data, the LQ from one period was subtracted from the previous. By looking at the change in LQ between 2010 and 2000 data, the economic change of an industry within a region can be seen.17

Table 4.2 shows the overall LQ change in the study area for the fracking industries. This paper is interpreting a LQ change between 2010 and 2000 as: (a) an LQ decrease of -0.10 or more to be interpreted as a relative decrease in importance and increase in import-orientation, (b) -0.10 to

.10 no real change, and (c) an increase of 0.10 or greater as a relative increase in importance and increase in export-orientation.

This shows that only mining – the industry where direct employment in fracking is registered – exhibited a significant increase, in both the raw difference (0.25) and the percentage difference

17 In general, an LQ of approximately 1.00 means that the industry produces enough for local consumption; a LQ less than 1 for an industry indicates that it does not produce enough for local consumption and therefore imports are needed, an LQ greater than 1.00 or indicates that the industry for that local area is exported-oriented. With LQs, a decrease in one industry ceteris paribus would result in an increase all others and vice versa. For this reason, some authors prefer a farther cut-off (e.g. ±0.10) before assuming a change in import-export orientation.

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Table 4.2: Location Quotients for Study Area

2000 2010 Dif. % Dif. Fracking-related Occupation: construction and 0.90 0.89 -0.01 -0.01 extraction Occupation: transportation and 1.24 1.30 0.06 0.05 material moving Industry: mining 0.69 0.94 0.25 0.36 Industry: construction 0.85 0.84 -0.01 -0.01 Industry: transportation and 0.90 0.96 0.05 0.06 warehousing Deindustrialization-related Occupation: production 1.33 1.38 0.06 0.04 Industry: manufacturing 1.36 1.39 0.03 0.02

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Table 4.3: Job Creation Estimates

Fracking Occupation Industry Low High Well-sites Change Change Estimate Estimate Full Study Area 2542 2694.28 1965.81 2752.14 5119.13 Broome County, NY* 0 45.43 0.00 0.00 86.31 Chemung County, NY* 45 0.00 39.66 0.00 75.35 Steuben County, NY 51 193.60 94.67 132.53 367.84 Tioga County, NY 16 93.46 0.00 0.00 177.58 Bradford County, PA 1169 188.01 520.35 263.21 988.66 Lackawanna County, 19 687.48 115.80 162.12 1306.22 PA* Luzerne County, PA* 2 859.19 636.14 890.59 1632.47 Lycoming County, PA 173 3.53 0.00 0.00 6.71 Sullivan County, PA 69 61.40 29.29 41.00 116.66 Susquehanna County, 319 299.81 378.11 419.73 718.40 PA Tioga County, PA 590 32.67 67.99 45.74 129.19 Wyoming County, PA 89 229.69 83.82 117.34 436.41 * indicates urban county on the periphery of the study area

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(0.36) of its LQ for the study region. The regional economy is still very much specialized in manufacturing and transportation, indicating a reliance on the primary sector amidst deindustrialization. Surprisingly the LQ change for the manufacturing industry and production occupations were positive, albeit small, indicating that the industry is shrinking slower in the study area in comparison to the entire nation. This may be due to upstream and downstream supply linkages instigated by the fracking industry, but to validate or dispute this hypothesis would require further investigative research.

The variation within the region is even more striking. The mining industry18 LQ increased by

1.75 in Bradford County (PA), 1.11 in Chemung County (NY), and 1.21 in Tioga County (NY).

In the latter two, mining went from barely existing in the county to becoming an economic specialization within 10 years. These are the counties were the most drilling took place in the study area. The transportation industry saw increases of 0.10 in Bradford County (PA), 0.20 in

Sullivan County (PA), and 0.14 in Luzerne (PA) and Lycoming (PA) counties. Bradford County

(PA) – by far the most drilled county in Northern Appalachia [shown in Chapter 2] – also saw increases in the manufacturing industry (0.13) and production occupations (0.19). Considering that natural gas is difficult to transport, this may indicate that new manufacturing was drawn to the area to use inexpensive natural gas as an industrial input – but further research is needed.

In economic base analysis, any local industry that has a location quotient greater than 1 means that excess goods and services produced must be consumed outside the local region (Dinc,

18 Note that ‘Mining’ in this chapter refers solely to the mining industry. GeoLytics separates mining out from other primary industries, unlike the

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2015). All employment greater than 1.0 therefore generates new money for the region. This

Basic Employment (BE) in export-oriented industries thus has employment multiplier effects that generate jobs, non-basic employment (NBE), outside their own industry.19 Drawing from

Dinc (2015), the following formulas capture the total change in BE in the region from 2000 to

2010 by summing the change in fracking-related industries within the study area counties:

푛 푛 Δ퐵퐸푟 = ∑푐=1 ∑푖=1(퐵퐸푡+1 − BE푡) where,

1 퐵퐸푖푐 = (1 − ) × Eic LQ푖푐 > 1.0 LQ푖푐

The results in Table 4.3 indicate that the basic employment change in the study area with the industries associated with fracking is between 1,966 for the industry data and 2,694 for the occupation data. If those numbers are then multiplied by the low and the high economic multiplier estimates – 1.4 (Barth, 2010) and 1.9 (Kelsey et al., 2011) – of this industry accordingly, the total job creation (including indirect employment) for this region for fracking would be between 2,752 and 5,119. It’s worth noting that where the fracking wells are located does not strongly correlate20 with the residential locations of these additional workers, implying that, within this study area, there is a difference between where people live and work. This leads to a larger question: where

19 Like all economic projection methods, economic base analysis is limited by its assumptions. These assumptions are not perfectly representative of reality, but are a theoretical construct that still have useful and practical applications. Economic Base Analysis assumes that any LQ > 1.0 means that the excess labor is engaged in export creation, but it could simply be natural variation of the community. Furthermore, it fails to look into money flows within the community, institutional arrangements, and other characteristics that might affect the local economy (Pfouts and Curtis, 1958)

20 A simple correlation between the number of well-sites in the county and job change with occupation data (-0.175) and the industry data (+0.442).

135 do workers in this industry live? And what can that tell us about their long-term residential intentions?

4.4.3 Commuting Analysis

“When the companies moved in, we weren’t ready,” said Lisa Neil of Southwest Training

Services Inc. Companies originally “came in with a base” of out-of-state workers, but that came at a much higher cost. Ms. Neil continued, “but, of course, [demand for local labor] grew quickly. The drilling phase was so critical, they needed to get the wells opened and moving”

(Moore, 2016). Industry groups, such as Marcellus Shale Coalition, partnered with state and local economic development organizations, such as Pennsylvania CareerLink (a semi- government organization), to train workers and connect them to employers. “We built our curriculum around what industry told us they want these workers to have,” said Tracy Brundage,

Vice President for Workforce Development at Penn College in Williamsport, PA (Moore, 2016).

ShaleNET (2017), in 2011, received a grant of nearly $15 million through the Trade Adjustment

Assistance Community College and Career Training program by the US Department of Labor

Employment and Training Administration. Their website reads:

“ShaleNET Certification courses can be completed in as little as three weeks and give you the basic skills you need to get one of these jobs… They follow a standardized curriculum approved by the oil and gas industry… require participants to complete an intensive three-week course.”

Although early workers might have come from far away, evidence suggests that employment became more regional as time went on. To gain insight into the spatial relationship of where frackers work and reside, and whether they plan on staying or not, as indicated by their declared permanent residency, data was obtained from the US Census Longitudinal Employer Household

Dynamics’ (LEHD) Origin-Destination Employment Statistics (LODES) main and auxiliary

136 databases from 2002 and 2010 (LEHD LODES, 2016) and then mapped out, as seen in Figure

4.44. This data is typically used to quantify commuting patterns as it is based on employers’ business addresses and employees’ mailing addresses as found on their paychecks, and can be downloaded as Census block groups corresponding with an origin (home address) and destination (work address). The data was then cut down to look at the study area but will not give a complete picture because: (1) employers may declare their business office at a different address than the worksite where the worker is employed (particularly an issue as the individual fracking sites do not have addresses), (2) workers may declare a local address as their temporary mailing address (such as a P.O. Box), and (3) workers may obtain in-state residency for a temporary stay.

These factors make it likely that the numbers presented are conservative estimates.

The study area is outlined in black, whereas the light pink is the urbanized areas within it. The counties that are successively browner indicated a loss in residents who are employed in the study area, whereas counties that are successively bluer indicate an increase in residents who are employed in the study area. This data shows that the counties where the cities are located is have lost a significant number of residents who are employed in this region on aggregate, while the surrounding rural counties in Pennsylvania and New York have gained in employment. As opposed to the FIFO literature, the data gives the impression that workers are engaging in a

DIDO live-work relationship from mostly nearby rural counties. Based on the distribution, these workers are not coming from any single location per se – except for perhaps the neighboring counties in Pennsylvania of Wayne, Pike, and Monroe, adjacently east of the study area – but rather are scattered throughout Pennsylvania and New York State. There are small clusters of workers coming from Erie County (Buffalo), NY, Allegheny (Pittsburgh), PA, and the suburbs of Philadelphia, PA.

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The spatial relationship of this data, combined with the descriptive statistics and the literature on the operations of the industry, creates the impression that: (1) the ongoing deindustrialization of the region is leading to significant employment losses in the cities irrespective of the fracking boom happening outside their door, and (2) the fracking industry does not appear to be buffering this deindustrialization in the cities as most of these workers are residing near the wells in the cities’ hinterlands. If workers in the fracking industry are permanently relocating to this region, it is not showing up in this data.

The foundation of spatial autocorrelation is based on Tobler’s (1970) First Law of Geography, which states “everything is related to everything else, but near things are more related than distant things.” In this analysis, a spatial relationship between location quotients were mapped using ArcMap first by generating choropleth maps and then by using the spatial-statistic of

Getis-Ord (1992), also known as Getis Gi* Hot Spot Analysis, to find patterns within the study area.21 The null hypothesis would be that there is no clustering. The research hypothesis would test whether there is statistically significant ‘hot spot’ clustering of workers in the fracking industry, as indicated by the change in location quotients, in the nearby cities. This result would

21 The idea behind this statistic is that for each feature, by considering geographical values of neighboring features, a weighted mean and standard deviation can be calculated based on a spatial weight in relationship to a given distance as a part of a larger region. The test statistic of the output is a Z-score, based on where that weighted score falls within the larger distribution, which is then translated into a p-value indicating the probability of that outcome occurring by random chance. The produced map shows ‘hot spots’ of clustering positive z-values, areas where no clustering is occurring, and “cold spots” of clustering of negative z-scores. To test the given statistics, the analysis was run using a distance using a Zone of Indifference Band. A Given Distance Band weighs all features within the given radius equally. An Inverse Distance Band decreases the weight of features the farther they get away the center point on an inverse squared basis. A Zone of Indifference Band combines both: features within the given radius are weighed equally, while all other features are weighed on an inverse squared basis. In this analysis, 25 miles was chosen as it would represent an average commuting time of 30 to 60 minutes. Within this radius, it is assumed that workers would be indifferent to where they lived in relation to their work-site. Outside this radius, it is less likely on an inverse squared basis, for workers to commute farther distances.

138 indicate that the centripetal forces are pulling workers into a location where they are more likely to integrate into the social fabric of the community and therefore take up permanent residence in the area. No clustering of employment, ‘cold spot’ clustering in the nearby cities, or ‘hot spot’ clustering of employment in the rural regions where the fracking well-sites are located, would imply the opposite. Clustering of the housing variables would indicate where there has been a change in demand for housing and for what kind. Maps produced as part of this analysis that contained substantial statistically significant clustering can be found in Appendix C.

As shown in Figure 4.4, the two maps that showed the most clustering were for the change in workers for the mining industry (top) and the change of out-of-state workers (bottom). Not only do they show a strong correlation with each other, but both also align well with where the fracking well-sites are. The map on the left shows that miners are residing near the well-sites and not in the nearby cities, except perhaps for Elmira (NY). The map on the right shows that many frackers are coming from out of state. Combining this map with the commuting-residency data in the previous section paints a picture that out-of-state residents are not permanently migrating into the study area. None of the other occupation or industry variables showed statistically significant clustering, including total change in employment.

The maps of the housing characteristics echo those for employment, but show relationships that are less stark. The ‘hot spots’ of increases in total housing units, homeownership rates, and median housing units are away from the cities and closer to the fracking well-sites. Rents also increased in Wilkes-Barre and Scranton as homeownership rates fell. Variables that represent work-camps do not show a significant clustering pattern in the region. This is not to say that they do not exist, but perhaps this study area, with less of an employment boom than other fracking regions in the country, is able to absorb the workers into its current housing supply.

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Figure 4.3: Net Change in Workers’ Residency Between Counties, 2002 to 2010

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Figure 4.4: Mining Industry and Out-of-State Workers Comparison

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4.5 Discussion

The employment numbers found in this chapter are substantially lower than politicians’ claims and lower still than those that use input-output modeling, but - assuming that job growth is evenly geographically distributed based on well-site location – then job figures would align well with the academic literature that uses other methods. Studies have shown lower total employment (Kelsey, 2011; Weinstein and Patridge, 2011; Cruz et al., 2014) of less than 20,000 for all of Pennsylvania including all direct, indirect, and induced jobs. This study would align well with these as a local employment increase of between 2,752 to 5,119 only accounts for (1) slightly less than half of drilling activity in the state, and (2) does not capture employment and multiplier effects of non-primary industries, as specified by Feyrer et al. (2016), as these jobs are not concentrated in the drilling area (e.g., management jobs in Pittsburgh). A crude calculation, taking the total job creation numbers from those three just-mentioned studies22, and comparing it to the results of this study would imply that approximately half of jobs created by fracking are created from upstream and downstream supply linkages that do not manifest where drilling takes place.23 This non-local job creation may be a benefit to the broader state economy, but does not help the local community, which has to grapple with the social and environmental costs of this new industry.

Studies that have broken down their findings to the county level have often found uneven employment, concentrated to where drilling activity is the highest. Wrenn et al. (2015) finds that

22 As mentioned previously, job estimates for Pennsylvania include: Kelsey et al (2011) found 23,000; Cruz et al. (2014) found 15,000; Weinstein and Partridge, (2011) found between 10,000 to 20,000.

23 Percent of all jobs that are local = ((Local jobs in study area *((all well-sites in Pennsylvania / well-sites in study area) / All fracking jobs in Pennsylvania → ((5,119 * (5175/ 2542)) / 20,000 = 0.52

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1,196 jobs per county are created, but only had a statistically significant positive effect on employment for counties in which 90 or more wells were drilled in a year. Weber (2012) finds that 1,780 jobs were created in each boom county; those with the top 20 percent in change in gas production but substantially less in other counties. This chapter finds similar results using economic base analysis, but more importantly helps explain all of these studies by showing that workers do not necessarily live where they work. Counties that had significant drilling activity tended to have increases in residents who work in the fracking industry (e.g., Bradford County,

PA), but other counties did not. The LEHD commuting data and the Getis Gi* Hot Spot analysis reveal that many workers commute from other places, whether that is from their home communities or a more centralized location in the middle of the hot spot. This can also be explained by the DIDO work-live arrangements of this industry that has many short-term jobs.

Other studies have concluded (Ballard and Banks, 2003; Black et al., 2005a; Obeng-Odoom,

2015) that many jobs are filled by out-of-state workers, and this chapter expands upon that to find many more jobs are filled by non-local in-state workers and that fracking behaves like a

“regional employment magnet” for nearby states (Zwick, 2017). In addition, based on their housing and commuting patterns, this study did not find evidence that workers in this new industry signal to permanently in-migrate to the region, which would have added their human and social capital to its economic base. As such, taken with Brundage’s (2010) research that shows very few workers are needed after the initial drilling stage, any claims on long-term benefits of this industry for the local economy should be considered dubious.

4.6 Chapter Conclusion

Many attempts have been made to estimate the employment effects of the fracking industry, mostly on the statewide and national scales and using input-output modeling. I believe this

143 method is erroneous in this industry as it does not properly account for (a) most jobs in this industry are short-lived, (b) unintentionally including jobs created outside the target area, and (c) the local regional economy is unable to capture most benefits considering that mining is heavily reliant on DIDO live-work arrangements. This chapter uses a different method by focusing on over timer variations in employment and housing data within a single ‘sweet spot’ area along the

New York-Pennsylvania border and uses economic base analysis techniques, mapping of LEHD origin-destination data, and Getis Gi* Hot Spot analysis to look at employment, housing, and commuting patterns.

Using other studies as an approximation for state-wide job creation, this paper also implies that approximately half of total jobs created by the industry are not located in the local area. Rather, as compared to state-wide studies, this paper finds a lower number of local job creation of between 2,752 to 5,119 jobs in the New York-Pennsylvania border area; far short of offsetting the loss of over 20,000 manufacturing jobs during this same time; therefore, fracking seems unable to change the current patterns of economic decline by itself.

The final finding is this chapter is that there little to no evidence that the local regional economy will derive a long-term economic benefit from this new industry as there is little evidence that workers plan on permanently relocating to the area – as they locate in more temporary housing near the wells – which would have allowed them to contribute human and social capital to other economic development initiatives.

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Chapter 5 Municipal Responses to Fracking in Northern Appalachia

Planning/Governance Chapter

5.1 Chapter Introduction

For a complete understanding of how the fracking industry has an impact on local communities, the job creation of the industry [Chapter 4] must be weighed against its externalities.

Unfortunately, lenient federal and state regulations of fracking have allowed the negative environmental externalities of the industry go largely unchecked (Wiseman, 2015). As such, local governments are put in the position of being the primary regulator to protect their communities, invoking their limited zoning, police, and revenue powers to mitigate the impacts on residents (Christopherson et al., 2013). This chapter contributes to the literature by (a) investigating what planning decisions municipalities make to pre-empt and respond to these risks, and (b) discussing why local governments choose to take regulatory action or not.

The academic literature on municipal implementation of environmental sustainability initiatives focuses on why – or more commonly, why not – cities plan for and act to address slow moving

(e.g., rising sea levels) or amorphous (e.g., greenhouse gas emissions) ecological challenges, where the effectiveness of individual action may be in doubt, so collective action is a necessity.

In comparison, the arrival of fracking has presented municipalities with an industry that has rapid and palpable local environmental consequences, which all have (mostly) effective regulatory remedies that can be taken by individual municipalities to protect their communities. As will be discussed in the findings, collective action would be helpful but is not a necessity.

Because of this, there is reason to believe that municipal responses to fracking may differ from other environmental sustainability initiatives. For some examples of why, Betsil (2001) finds

145 that local action against greenhouse gas emissions is more likely when it is framed around local air quality, which is a real externality in the fracking industry as various airborne emissions are toxic. Sippel and Jennsen (2009) find that the ‘tragedy of the commons’ continues to undermine local climate action, whereas unilateral zoning and setback ordinances can successfully mitigate human health consequences of fracking. This paper asks, because of the unique nature of the challenge, do municipal governments take a more proactive response to the fracking industry? Or do municipal governments face the same hurdles in planning and implementation for fracking as other environmental initiatives?

Although federal (Brady, 2011; Tiemann and Vann, 2015; US EPA, 2017) and state (Richardson et al., 2013; Shenk et al., 2014; and Zirogiannis et al., 2016) government regulatory responses to the fracking industry have been well-documented, only a few studies (Christopherson et al.,

2013; Minor, 2014; Loh and Oswald, 2013) have looked at municipal responses, which are discussed in the next section of this chapter. Minor (2014) writes:

“Questions about what mechanisms local governments can use to regulate fracking, the scope of local authority over fracking, and which aspects of the fracking boom local government regulations can and should target remain largely unanswered.”

This chapter differs from previous studies as it (a) takes a multi-method approach to paint a more complete picture of municipal responses, and (b) looks at comparative responses within a single shale play that spans multiple states.24 Using the Marcellus Shale in Northern Appalachia as a

24 This research was originally undertaken to categorize municipal responses to the fracking boom for (a) municipal regulatory actions and (b) the municipal public finance implications – the costs and the revenues of the fracking boom. The results of the regulatory responses are found here in the dissertation. The results of the public finance

146 case study, this chapter explores how municipal governments are tackling the planning and public finance challenges caused by the fracking industry. The literature review section is divided into two parts. The first reviews literature on the challenges of planning and implementing environmental sustainability initiatives, including the framework of policy innovation, as the second reviews how municipal governments use zoning powers to regulate water, light, and noise pollution. This chapter uses a mix-methods approach including: conducting a survey of urban planners and city administrators, following up with in-depth interviews, reviewing official plans, and performing a comprehensive local news search. To help interpret the results, this chapter additionally uses industry and employment figures from the

2011-15 American Community Survey.

Considering that the number of fracking wells in Northern Appalachia increased by more than a factor of 10 between 2009 and 2010 alone (shown in Table 5.1), regulatory regimes were often unprepared to handle the speed, size, and scale of this new industry (Carter and Eaton, 2016).

The boom of employment was heralded by some state political leaders, while environmental worries made others take pause. These mixed responses were echoed by the local government; caught on the frontlines of mitigating the impacts of this new industry, some municipalities turned to banning it outright while others embraced the new revenues it brought. This chapter, looking at the political economy literatures, tries to explain such mixed responses.

Table 5.1: Number of Fracking Wells per State (2005-14) States 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total MD 0 0 0 0 0 0 0 0 0 0 0 NY 34 45 44 56 42 16 20 8 9 6 280

implications can be found in Zwick (forthcoming), published by the Institute of Municipal Finance and Governance (IMFG).

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OH 31 29 46 36 49 34 82 259 528 740 1834 PA 2 2 3 46 75 3719 3079 1383 1136 1535 10980 WV 0 16 72 380 183 215 273 330 320 303 2092 Total 67 92 165 518 349 3984 3454 1980 1993 2584 15186

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Table 5.2 Oil and Gas Pre-empt Home Rule in New York

Home Rule New York State Municipal Home Rule Law § 10(11), (12) vests towns with

Provision the police power to enact laws relating to the “protection and

enhancement of its physical and visual environment” and for the

“protection, order, conduct, safety, health and well-being of persons or

property therein.”

Superseding New York State’s Department’s Oil, Gas and Solution Mining Law

Home Rule supersedes all local laws relating to the regulation of oil and gas

development except for local government jurisdiction over local roads or

the right to collect real property taxes. Likewise, ECL §23-1901(2)

provides for supersedure of all other laws enacted by local governments

or agencies concerning the imposition of a fee on activities regulated by

Article 23.” § 8.1.1

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At the heart of these challenges is the interaction between the concept of municipal ‘home rule’ and state pre-emption (Figure 5.2).25 Most US states maintain home rule, which allows local governments to pass any laws and ordinances that they see fit to operate their own governance functions within their jurisdictional boundaries, unless a specific state law preempts that action.

Where municipal governments have banned fracking, they have been typically overturned by state legislatures employing their pre-emptive powers, or by state courts that ruled that municipalities have overstepped their bounds as established by state constitutions.

The result is that local governments do not have a choice whether fracking comes to their communities or not, but they do possess discretion over taxation and regulation of the industry’s externalities within their backyards. Furthermore, as most states allow fracking to proceed given the drilling companies comply with local regulations – giving leeway for municipal governments to exercise their zoning, police, and revenue powers – municipalities can choose to work with drilling companies to “pave the way” or “gum up the works” to make it either easier (cheaper) or more difficult (expensive) to establish within certain municipalities. In this scenario, even though municipal bans are technically prohibited by state law, they can serve as a powerful signaling mechanism of the local government’s intent. Respectively, drilling companies have acted to “sideline” – using a combination of regulatory compliance and political influence to minimize state inference – municipal governments whenever possible (Loh and Oswald, 2013).

If they are unable to do so, drilling companies may choose to pursue more lucrative opportunities elsewhere. If they do, municipal bans may be successful even if they are not legally enforceable.

A decision tree is drawn in Figure 5.1.

25 This chapter treats “home rule” as a legal concept, as treated by each respective US state; not as a theoretical concept as discussed by political science literature.

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This paper finds – in accordance with the environmental sustainability literature – that local governments rarely acted to regulate the fracking industry because the political argument in favor of jobs is too strong. This is particularly true in places with a disproportionate percentage of blue-collar industries (e.g., manufacturing). Compared to Walsh et al. (2015), this paper argues that preexisting industries and their corresponding employment alternatives are a much better predictor of whether municipalities will regulate fracking than political party voting history. When local regulation does occur, it almost always is for infrastructure maintenance

(e.g., roads) versus any other planning issue, as there is both local consensus and state mandate to do so. This shows that, despite the lack of environmental regulation, local governments are acting in response to the fracking boom instead of merely ignoring the industry.

5.2 Literature Review 5.2.1 Implementation of Environmental Sustainability Initiatives

Policy innovation is the study of why some governments adopt policies while others do not

(Berry and Berry, 1990; Feiock and West, 1993; Glick and Hays, 1991). Berry and Berry (1990,

1999) identify two perspectives from which policy innovation is typically studied. The first is the political, economic, and social characteristics of the adopting government, with the second being emulation of similar policies by adjacent horizontal and overlapping vertical governmental units.

Furthermore, despite the widespread calls for local action to address environmental concerns

(Berke et al. 2006; Svara et al., 2013), American local governments have a poor track record of planning and implementing environmental sustainability initiatives (Brown, 2008; Esparza and

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Figure 5.1 Decision Tree of Local Governments Considering Fracking

Describes situation circa 2009-11 • Black boxes indicate intermediate step Companies apply for permits to begin • Green boxes indicate the industry proceeds operations with fracking without municipal regulation

• Yellow boxes indicate the industry proceeds with fracking under municipal regulation

• Red boxes indicate that fracking is halted

Local governments Local governments take no regulatory regulate or ban action fracking

Companies Companies comply Companies challenge withdrawal, seeking with local regulations local bans / regulations other opportunities in state courts

State courts rule in State courts rule in favor of companies favor of municipalities

Companies are legally Companies comply banned or withdrawal with local regulations

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McPherson, 2009; Svara et al., 2013). Lurian et al. (2017) defines environmental sustainability initiatives as:

“The deployment of all strategies that avoid, remedy or mitigate environmental impacts, policies, incentives, programs and regulations used by local government to protect, preserve and sustain the natural environment (air, water, soil quality, land, waste, and energy management), whether or not they are labeled as sustainability initiatives per se.”

This definition would include addressing the local environmental risks of fracking. But the literature gives us reason to doubt that that local governments will take as action, especially as small- to mid-sized cities and counties tend to fare worse than their larger, more urban counterparts (Francis and Feiock, 2011; Svara et al., 2011; Lurian et al., 2017). Drawing upon the policy innovation and environmentally sustainability literatures, this chapter highlights three reasons why fracking, as a pressing sustainability initiative, may be particularly difficult initiative to regulate on the local level: (1) lower institutional capacity, (2) the lack of political and social consensus, and (3) the lack of political leadership.

First, some scholars (Lubell et al., 2009; Krause, 2011) find that institutional capacity – financial resources, sufficient staffing, and expertise – is the key predictor of whether municipal governments adopt sustainability policies. Lubell et al. (2009) found that smaller municipalities need “substantial technical, financial, and planning assistance to move toward greater sustainability”, which they often lack. Moreover, municipalities need to dedicate resources to building expertise, monitoring of participants, and evaluation of programs (Brown, 2005). Larger cities tend to have more administrative and fiscal resources to dedicate planning, generating greater planning capacity, than do smaller municipalities (Burby and May, 1998).

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Second, Dalton (1989) found that the lack of community consensus, coupled with pro-growth attitudes, made sustainability implementation more challenging. Baglioni and Vicari (1995) found that many factors affect plan implementation, including conflicts between economic and political actors, the economic interests of the political elite, and the level of public support for local government planning agencies, amongst others. When these efforts are successful, it is almost always as a result of framing the action in terms of localized benefits, such as economic development gains (Bulkeley and Betsill, 2003; Lindseth, 2004), with which fracking would be at odds. Zahran et al. (2008a) find that communities that have industries with high greenhouse gas emissions (e.g., manufacturing) are less likely to engage in sustainability initiatives, whereas

Zahran et al. (2008b) finds that those with high human capital industries (e.g., education) are more likely to engage in sustainability initiatives.

Finally, some scholars (Daniere, 1995; Betsill and Bulkeley, 2003) identify the lack of political leadership as the key impediment to plan implementation. Political and bureaucratic actors conduct ‘business as usual’, as opposed to engaging in ‘policy entrepreneurship’ which includes engaging in strategic planning around issues like fracking, because inertia is the politically and socially safe thing to do (Eckel et al., 1999; Pels, 2002; Dunphy, 2003). State mandates can trigger commitment – or at least compliance – at the local level, but can also provide political cover to those who wish to show leadership on the issue (Berke and French, 1994; Burby and

May, 1998). Lurian et al. (2017) finds that building political consensus around environmental sustainability as a “core value and priority is a strong predictor of implementation outcomes”, summarizing the literature that:

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“Politicians and bureaucrats, including planners, juggle tensions between economic constraints and political agendas, values and priorities, the need to innovate and the safety of business-as-usual… The most common environmental practices are low hanging fruits and/or dictated by national mandates.”

5.2.2 Municipal Regulatory Challenges of Fracking

5.2.2.1 Zoning Powers to Regulate Water, Air, and Light/Noise pollution

When municipal regulations have stood up against local political and state legal scrutiny, they have built from their preexisting land use, police, and revenue powers, instead of trying to create new ones (Greenblatt, 2017). Municipalities have used these powers to regulate industrial wastewater, control air pollution, and mitigate light and noise pollution from adversely affecting their communities.

Wastewater is the single largest source of health and environmental concern caused by the fracking industry. Fracking fluid, which is mostly sand and water, contains traces of toxic slickwater chemicals. Furthermore, the fracking fluid picks up naturally occurring salts, metals, and radioactive elements as it flows underground. Faulty cement casing can compromise the structural integrity of the borehole, resulting in groundwater contamination (Ingraffea et al.,

2014; Darrah et al., 2014), which is particularly problematic for residents reliant on well water.

Though only approximately 10 percent of fracking fluids return to the surface, which then need to be disposed of, this can total into hundreds of millions of gallons (Hansen et al., 2013). All disposal options have environmental implications. Municipal wastewater treatment facilities proved far too risky of mixing contaminants with municipal tap water, so the federal EPA banned the practice in June 2016 (EPA, 2016). Before this rule, municipal governments could choose whether to accept or reject wastewater produced by fracking companies. Injection

155 wastewater wells, the storing of toxic liquids deep underground in porous geological formations, have proven popular as a cost-effective and mostly safe method regulated under the EPA IIB well type. But it does come with additional risks of groundwater contamination through relying on well casing, further compounded by such wells causing minor earthquakes by changing the viscosity of the underground geology (US DOE, 2015). Municipal governments have attempted to use their zoning powers to ban wastewater wells within their jurisdictions with mixed results

(Philips, 2015), and even then, the ban does not extend to the county outside municipal borders.

There also have been numerous incidents of illegal dumping of wastewater off the sides of roads and in abandoned coal mines that have resulted in corporate fines and criminal charges (Silver,

2011; Leber, 2013; Kelly, 2014).

Air pollutants – dust, volatile organic compounds, nitrogen oxides, sulfur dioxide, and methane – are produced from emissions throughout the natural gas extraction process, including “engines used to power drill rigs, compressor stations, and other equipment; venting of gas; flaring of excess gas; the heavy trucks used to carry equipment, gas, or water to or from the well; and impoundment pits in which wastewater is stored [prior to disposal]” (Goho, 2012). Homes near well-sites have been associated with increased risk of leukemia and other cancers (McKenzie et al., 2012; Fryzek et al., 2013; McKenzie et al., 2017). Natural gas is highly flammable and has the potential to set off explosions if ignited, known as blowouts (Nguyen, 2010). Blowouts have caused numerous evacuations of nearby residents (Nguyen, 2010; Detrow, 2012, CBS

Pittsburgh, 2014; Arenschield, 2014), in the most severe cases, up to a mile away.

Municipalities have the authority to set noise and light standards within their boundaries, requiring fracking companies to abide by abatements to protect quality of life. Noise and light caused by natural gas rigs, compression stations, trucks, and wastewater facilities may be

156 bothersome to local residents (Peduzzi et al., 2013). Noise standards are set at a certain decibel

(dB) level to residential properties; the EPA (1979) considers 70 dB to be safe for residents, but above that with the potential to cause damage to eardrums and even deafness. Hays et al. (2016) found incidents of noise from fracking negatively impacted the health of people within nearby communities, including increased stress, sleep disturbance, and cardiovascular disease. Light regulations are typically time-of-day (e.g., no flood lights after 10pm), height restrictions targeted at rigs (e.g., no lights taller than 50 feet), and a ban on flaring, a common practice to dispose of excess natural gas. These limitations, though not particularly onerous, may be enough for companies to decide to locate their facilities outside of municipal boundaries. Municipalities that do not have fracking wells or accessory buildings (e.g., compression stations) within or immediately outside their boundaries may not be concerned with these issues.

Municipal governments’ single best regulatory power, to protect residential properties and public facilities from almost all the dangers listed above, is to invoke setback ordinances from well- sites, which most municipalities already have in place for a multitude of other building types. A setback is defined as “a line established by local government ordinance, within a property, defining the minimum distance between any building or structure or portion thereof to be erected or altered, and an adjacent right-of-way, street or property line” (PIPA Report, 2010). When it comes to fracking, Fry (2010) describes:

“The purpose of setback distances can be understood as a mechanism to protect the health, safety, and welfare of residents; the rights of property owners; safeguard environmental quality; and promote efficient gas extraction.”

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Most states – including all in this region – maintain minimum setback ordinances for oil and gas drilling, but they are far from adequate on their own.26 In practice, most municipal ordinances are created through political compromise without considering scientific opinion, resulting in setbacks of 500 feet or fewer (Fry, 2010). The Maryland Institute for Applied Environmental

Health (2014) found that a minimum setback distance of 2,000 feet would be considered a safe distance for human health. Rabinowitz et al. (2015) found that setbacks ought to be at least 1 kilometer (3281 feet), if not double that, to maintain the prevalence of respiratory disease at near-normal levels. Brown et al. (2016) conducted a survey of medical professionals and environmental health experts and found that 89 percent believed the minimum setback ought to be at least one-quarter mile (1,300 feet) and that a simple majority agreed that it should be over one mile (5,280 feet) from residential structures. Haley et al. (2016) find that “Unfortunately, there is no defined setback distance that assures safety,” but recommends much larger setbacks than current regulations accompanied by controls on the fracking process, which would minimize exhaust. Most municipalities have the power to unilaterally increase setback distances, an effective solution to most local environmental consequences, leaving the question of why they choose (or choose not) to do so.

5.2.2.2 Revenue Powers and Expenses

Resource extraction communities are infamous for struggling with inadequate social and health services to deal with overarching community crises of depression, family stress, violence toward women, and addiction issues (Shandro et al., 2011). Furthermore, with the rapid influx of mostly

26 All setback ordinances in this dissertation refer specifically to setbacks from residential properties. Most states have greater minimum setbacks to natural water sources (e.g., rivers, lakes, etc.).

158 young and male migrant workers, crime tends to be much higher in resource communities. Local governments may need to increase police and public safety staffing to keep up (Fershee, 2012).

Beyond the considerable administration, monitoring, and enforcement of the health and environmental risks mentioned in the previous section, other planning challenges include property assessment, zoning, settling land rights disputes, and more. As municipalities grapple with these challenges by using rising tax revenue to add administrative capacity, the boom-bust cycle becomes reflected on their balance sheets, putting their fiscal health at risk. Christopherson and Rightor (2012) write:

“The consistent theme is that local governments — counties, cities, townships, villages — are subjected to a wide range of demands for new services or increased levels of service, and that the administrative capacity, staffing levels, equipment, and outside expertise needed to meet those demands are beyond anything that has been budgeted.”

Fracking is felt first and foremost as truck traffic, both by residents and by municipal accountants, since the boom in the fracking industry creates a boom in the trucking industry

(Peduzzi et al., 2013); dust, noise, and road damage from industry truck travel top the list of citizen complaints (Randall, 2010). Heavy trucks carrying fracking fluid and water for pumping can cause severe damage to local roads, particularly those rural roads that were not designed for industrial use (Randall, 2010; Holeywell, 2011). To bring materials to rural well-sites and then clean up the site afterward, each well requires somewhere between 1,800 and 2,600 truck trips during the drilling phase. Without considering increase personal vehicle traffic, truck traffic alone can cause thirty years of wear-and-tear to roads within a single year (Reynolds and

Northrup, 2012). Abramazon et al. (2014) estimated that each hydraulically fractured well in

Pennsylvania caused between $13,000 and $23,000 of damage to the roads. Some municipalities must deal with hundreds to thousands of wells being built within a few short years. Without a

159 dedicated funding source, municipalities can be liable for millions of dollars in road maintenance. Municipalities can respond to truck traffic by imposing restrictive road-use measures against heavy industrial vehicles, come to a road-use and maintenance agreement

(RUMA) with fracking companies in the area, or force companies to post bonds for road damage.

Critics argue that these bonds (a) regularly do not cover damages operators do to third-party property, (b) may be insufficient to cover the damage to roads in worst-case scenarios, and (c) often have loopholes and exemptions that limit operators’ liability (Ditzik et al., 2013). In Ohio, where the construction and maintenance of state highways passing through a municipality is a local responsibility, municipalities are given leeway to negotiate and enforce Road Use and

Maintenance Agreements (RUMAs) with oil and gas companies; some of which require operators to post bonds up to $250,000 per mile (Locher, 2012).

Revenue to pay for these costs can come from a variety of sources, including new fees on the oil and gas industry, rising property tax revenue, or intergovernmental transfers from the state government. How each state in Northern Appalachia decided to address this issue can be found in the Findings section of this chapter. For a more in-depth discussion of revenue costs and responsibilities in relation to fracking, see Zwick (forthcoming).

5.3 Research Process

Expert surveys are useful for understanding complex social phenomena where alternative sources of information may be scarce, as expert judgement captures “observable realities” that may not be documented elsewhere (Schedler, 2012). Such research is conducted in a case study manner meant to gain insight into an issue (Stake, 1995). Case study research is generally understood to have results with typically limited transferability (Baxter and Jack, 2008), but is

160 able to “tease out relationships, to probe issues, and to aggregate categorical data” (Stake, 1995,

77). By looking at a small sample size of communities in a constrained geographic area, quantitative findings were not a goal of this research; rather this approach was taken to compare cases and unveil emerging themes (Creswell and Miller, 2000). Most other studies on local government responses to fracking have relied exclusively on expert surveys (Christopherson et al., 2013; Loh and Oswald, 2013), whereas Minor (2014) uses a single state case study. This study combines both methods; a mix-methods case study by supplementing expert surveys with in-depth interviews, employment and occupation data, official plan reviews, and a comprehensive local news search. The goal was to create a complete understanding of municipal challenges and responses to fracking in Northern Appalachia.

According to the 2010 Census, twenty-six municipalities spread out over five states were identified as having populations greater than 25,000 people in Northern Appalachia [case study city selection discussed in Chapter 1]. All municipalities discussed in this chapter are part of this case study unless otherwise notes. This sample provides variation in population (Table 1.4), economic bases (Table 5.5), and state regulatory frameworks, but all the cities in this region remain interconnected through geographic proximity, a shared socio-economic history and geology. Focusing on a single region allows for the study of policy transfer as “innovations are disproportionately copied by neighboring jurisdictions” (Robertson and Waltman, 1993) and common problems are met with common solutions (Dolowitz and Marsh, 1996).

The first task was to find the number of well-sites within 25 miles of each city in each year between 2005-14 (found in Table 5.3). This was done to see how much fracking activity was occurring nearby; 25 miles was chosen to be consistent with methods in Chapter 3. Almost all fracking was conducted outside of municipal boundaries, therefore municipalities are unable to

161 regulate it, but fracking occurs still within range of the cities being impacted by its the externalities. The range of the number of fracking wells within this distance varies considerably; some municipalities had no wells within that distance (e.g., Hagerstown, MD; Hazleton, MD;

Erie, PA) while others had wells in the thousands (e.g., Bethel Park, PA; Williamsport, WV;

Wheeling, WV).27 The theory was that more nearby well-activity would create a greater likelihood of municipal regulation; this is not what was found.

A short survey (12 out of 26 responded; 46 percent response rate) was sent to the director of planning or equivalent in each municipality; when the municipality did not have such a position, the municipal administrator was chosen as the alternative. This survey inquired about which externalities the municipalities took actions to regulate and, if they did so, to explain in more detail (including as Appendix E). In both the cover letter and the survey itself, it was specified to answer questions only in context of their professional capacity of their positions; a method indicated by Dean Sharpe, Manager of the University of Toronto Research Ethics Boards (REB), as not needing ethics approval.28 Surveys were completed through Google Forms between May and September 2017.

27 The cities that had zero wells within 25 miles are kept in the sample as control cases. This is consistent with the procedure carried out in Chapter 3 for counties. In that chapter, it was done for statistical analysis to compare no fracking to intense fracking. Here, it is used to show how municipalities that do not have fracking immediately in their area are acting as compared to ones that do. Likewise, some states have banned fracking (e.g., Vermont) that have no shale deposits, but proceed with a ban as a political statement. Local municipalities do the same. In addition, some municipalities that have zero fracking nearby during the study period, have had fracking nearby since then (e.g., Erie, PA).

28 Dean Sharpe pointed me to Section 2.1 of Canada’s Panel of Research Ethics (2017), which reads “one may collect information from authorized personnel to release information or data in the ordinary course of their employment about organizations, policies, procedures, professional practices or statistical reports. Such individuals are not considered participants for the purposes of this Policy. This is distinct from situations where individuals are considered participants because they are themselves the focus of the research. For example, individuals who are asked for their personal opinions about organizations, or who are observed in their work setting for the purposes of research, are considered participants.” As the research was designed explicitly to ask about their municipal policy

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Table 5.3: Number of Fracking Wells drilled within 25 miles of Case Study Cities City State 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Altoona PA 0 0 0 0 0 7 23 1 1 2 34 Austintown OH 11 1 10 9 8 5 6 39 42 75 206 Bethel Park PA 0 0 1 18 34 302 467 149 213 261 1445 Binghamton NY 2 3 1 8 2 228 290 150 129 118 931 Boardman OH 11 1 9 8 8 5 8 52 57 75 234 Charleston WV 0 5 11 110 11 16 2 0 0 0 155 Elmira NY 16 25 26 17 5 564 259 90 41 33 1076 Erie PA 0 0 0 0 0 0 0 0 0 0 0 Hagerstown MD 0 0 0 0 0 0 0 0 0 0 0 Hazleton PA 0 0 0 0 0 0 0 0 0 0 0 Huntington WV 1 7 3 2 2 0 0 0 0 0 15 Ithaca NY 6 9 19 10 2 0 0 2 0 0 48 Jamestown NY 0 0 0 0 0 0 0 0 1 1 2 Monroeville PA 0 0 0 2 5 127 124 70 61 114 503 Morgantown WV 0 0 2 6 38 310 384 156 164 244 1304 Parkersburg WV 0 1 11 16 2 1 1 0 8 9 49 Pittsburgh PA 0 0 0 16 20 238 271 85 128 228 986 Plum PA 0 1 0 0 6 140 144 82 87 82 542 Scranton PA 0 0 0 1 2 116 149 52 108 114 542 State College PA 2 0 0 1 10 101 40 6 7 4 171 Warren OH 11 1 10 8 11 5 2 19 32 45 144 Wheeling WV 0 2 2 30 70 532 608 504 542 854 3144 Wilkes-Barre PA 0 0 0 0 0 20 31 7 7 5 70 Williamsport PA 0 0 2 8 9 131 403 260 144 143 1100 Youngstown OH 11 1 9 8 8 5 6 41 52 80 221 Zanesville OH 1 3 3 0 0 1 6 2 9 3 28 Total 72 60 119 278 253 2854 3224 1767 1833 2490 12950

responses, not to inquire on personal opinions, the interviewees were not considered human subjects for the purposes of Research Ethics.

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The last question of the survey asked whether the respondent was willing to engage in a follow- up interview to discuss their experience in more detail (5 of 12 responses; 42 percent). If they chose to do so, then it was assured that their identity – as well as the municipality they work for

– would remain anonymous to allow for open and candid feedback. Again, at the beginning of the interview, they were reminded to only to speak in context of their professional opinion; but what that specifically included was open to interpretation. Semi-structured questions were used to provide participants opportunity to discuss their experiences with the goal of uncovering underlying themes (Creswell, 2003). All interviews were conducted over the phone between May and September of 2017. Notes from background information derived from these conversations helped inform research throughout the dissertation.

If the municipality had a posted official plan during this period (2005-14) on their city’s official website (24 out of 26 municipalities; 92 percent) this was reviewed as an additional source of information; in some instances, planning was conducted by either the county or a regional agency. The purpose of this planning policy review was to fill in gaps that were not answered during surveys and interviews to see whether, and to what extent, they discussed how planning changed in reaction to the industry; few official plans did in any meaningful way (three out of

26; 12 percent). Nearly a quarter of official plans (6 out of 26; 23 percent) had not been updated since the inception of the industry in 2005. An example (Warren, OH) of current zoning code regulating drilling last updated prior to fracking (1994) is included in Appendix F, and an example (Murrysville, PA) of newly passed municipal regulations in response to fracking (2017) is included as Appendix G.

A Lexus-Nexus search for news articles from local newspapers was used as an important supplemental source of information, allowing timelines to be reconstructed without bias of more

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Table 5.4: Description of Municipal Regulation of Fracking City Wells State Status State Min. Municipal Municipal Regulations within Setback from Description 25 miles Residential Use (in feet) Altoona, PA 34 Tax & 500 Rural No new municipal regulation Regulate, Home Working Rule Class Austintown, 206 Tax & 200 Suburban, Classified as a ‘township’ instead of a OH Regulate, Home Youngstown ‘city’, they lack ability to enact municipal Rule regulation according to Ohio State Law Bethel Park, 1445 Tax & 500 Suburban, No new municipal regulation PA Regulate, Home Pittsburgh Rule Binghamton, 931 Banned 100 Rural Banned, then overturned in lawsuit, no NY college current municipal regulations town Boardman, 234 Tax & 200 Suburban, Classified as a ‘township’ instead of a OH Regulate, Home Youngstown ‘city’, they lack ability to enact municipal Rule regulation according to Ohio State Law Charleston, 155 Tax & 625 Small City No new municipal regulation WV Regulate, State college Municipal Law town Elmira, NY 1076 Banned 100 Rural No new municipal regulation college town Erie, PA 0 Tax & 500 Rural No municipal regulation, open question on Regulate, Home industrial whether federal prohibitions on drilling in Rule town the Great Lakes watershed applies Hagerstown, 0 Banned 1,000 Rural town / No new municipal regulation MD commuter Exurb Hazleton, PA 0 Tax & 500 Rural town No new municipal regulation Regulate, Home Rule Huntington, 15 Tax & 625 Rural No new municipal regulation WV Regulate, State college Municipal Law town Ithaca, NY 48 Banned 100 Rural Municipal ban on fracking college town Jamestown, 2 Banned 100 Rural town No municipal regulation NY Monroeville, 503 Tax & 500 Suburban, Current debate on municipal regulations PA Regulate, Home Pittsburgh Rule Morgantown, 1304 Tax & 625 Small City, Attempted to ban fracking, overturned by WV Regulate, State college state Municipal Law town Parkersburg, 49 Tax & 625 Rural town No new municipal regulation PA Regulate, State Municipal Law Pittsburgh, 986 Tax & 500 Major City, (Illegally) banned, has not been PA Regulate, Home several challenged in court by fracking companies Rule universities Plum, PA 542 Tax & 500 Suburban, Current debate on municipal regulations Regulate, Home Pittsburgh Rule Scranton, PA 542 Tax & 500 Small City, No new municipal regulation Regulate, Home Industrial Rule

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State College, 171 Tax & 500 Rural Municipal ban on fracking, State College PA Regulate, Home college sits right outside the shale play – so no Rule town fracking is possible Warren, OH 144 Tax & 200 Small City, No municipal fracking regulations, federal Regulate, Home Industrial EPA intervention stopped Warren from Rule continuing to be a voluntarily wastewater dumping ground Wheeling, PA 3144 Tax & 625 Rural town No new municipal regulation Regulate, State Municipal Law Wilkes- 70 Tax & 500 Rural town No new municipal regulation Barre, PA Regulate, Home Rule Williamsport, 1100 Tax & 500 Rural town No new municipal regulation PA Regulate, Home Rule Youngstown, 221 Tax & 200 Small City, Several attempts to ban fracking, none OH Regulate, Home Industrial successful. No municipal ban on fracking Rule Zanesville, 28 Tax & 200 Rural town No new municipal regulation OH Regulate, Home Rule Note: “No new municipal regulation” does not imply that there is zero municipal regulation, only that municipalities did not take any new regulatory actions in response to the fracking industry. Prior regulation on land use, zoning, and drilling still apply, as do statewide regulations on the industry.

166 recent events. This was conducted by using the name of the municipality in combination with each of the following seven keywords: “fracking”, “hydraulic fracturing”, “drilling”, “setbacks”,

“zoning”, “natural gas”, and “oil”. Excerpts and quotes from these news articles can be found throughout the dissertation. EarthJustice (2015) mapped all fracking accidents that had occurred since 2005, with internet links to local news stories as proof.29 Complaints to the Department of

Environmental Protection are mapped tracked and mapped by FracTrackAlliance (2017) in

Figure 5.1. 30 Complaints are too numerous, and often too minor, to derive any findings beyond demonstrating that there is a connection between fracking and environmental risks.

5.4 Findings

This section looks at municipal responses as organized by state. The results of all the above methods cumulate into a table of municipal characteristics and regulatory responses in Table 5.4.

To help understand findings, the distribution of industries in each of the 26 cities is included as

Table 5.5.

5.4.1 Maryland

Maryland had no fracking activity; nor a chance for a municipal response. Although shale reserves do exist in the western edge of the state, the elevation and mountainous terrain make it

29 These maps show that fracking accidents are widespread, but most incidents are relatively minor in scope. Examples include trucks breaking down resulting in road-side leakage of fracking fluid, blowouts that result in a handful of homes being evacuated for a short duration, or a couple of fracking workers dying in an industrial accident. Though numerous, these are often not large enough in scale or duration to overturn public sentiment in these places; rather they are understood to be a cost of the industry.

30 These figures are included to show that there is a relationship between fracking and environmental complaints, both a correlation over time and spatially, though the purpose of this paper is not to test this relationship. It is worth noting that: (1) not all environmental complaints are about fracking, (2) even for those where fracking is a suspect, do not mean that it is the culprit, (3) when fracking is found to the culprit, the DEP determines that the incident is not harmful to human health, and (4) where the DEP does find everything above to be true, financial settlements typically occur.

167 difficult to drill. Drilling companies sought permits, but no wells were drilled before Governor

O’Malley (D) enacted a two-year moratorium in 2015 to conduct an environmental and regulatory study. In December 2016, the responsible commission came back with the recommendation of allowing fracking to proceed under a system of taxes and environmental protections. Instead of implementing the commission’s recommendations, Governor Hogan (R) instituted a statewide ban on fracking in April 2017. The only city in the sample, Hagerstown has not had any drilling nearby.

5.4.2 West Virginia

West Virginia is one of few states that do not allow home-rule; instead municipal policy is set at the state level while giving specific tasks/responsibility to local commissions. In December 2011,

Governor Tomblin (D) passed HB401, which included (a) chemical disclosure, (b) 30-day notice of drilling, (c) a $10,000 per-well fee, and (d) increased setbacks from natural water sources. In

March 2016, Tomblin (D) passed legislation that would reduce the severance tax to 4 percent in

July 2017 and then to 3 percent in July 2018. Reflecting West Virginia’s lack of municipal ability to take regulatory action, the entirety of Huntington’s Municipal Zoning Code (2012) with regards to drillings reads:

“All oil and gas exploration shall be subject to the Oil and Gas Laws, Chapter 22, Article 4, Official Code of West Virginia and the regulations of the West Virginia Department of Mines.”

Beyond that, most municipalities in West Virginia do not even have zoning. Beard (2016) interviews Jesse Richardson, Professor of Law at West Virginia University, who ties it back to the rural, working class population in a region with history of heavy industrial activity:

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“First, most of West Virginia…hasn’t experienced much development pressure. Second, zoning is perceived as anti-property rights. Third, there just hasn’t been the culture or infrastructure for zoning.”

Because of these limitations, not a single municipality in the state was able to enact municipal regulation with regards to fracking; but that’s not to say a couple did not try. Two cities in the sample, the state capital (Charleston) and the home of University of West Virginia

(Morgantown), both passed fracking bans – which were then overturned by state law. Fayette

County, WV attempted to ban fracking waste disposal, rooted in the state code which allows county commissions to “to develop regulations to eliminate hazards to public health and to abate nuisances.” The commission was defended in court pro bono by a local environmental not-for- profit organization, Appalachian Mountain Advocates. After delaying construction for 18 months while lawsuits played out, the State’s 4th Circuit Appeal Court concluded the matter:

“We agree with the district court that the West Virginia Legislature, in enacting its complex regulatory program for injection wells, did not leave counties with the authority to nullify permits issued by the state” (Marcellus Drilling News, 2017).

West Virginia law requires operators to meet with highway engineers to discuss maintenance needs and provide bonds either per mile, or across an entire district or the state. The state caps single bonds at $100,000 per mile of paved road or $25,000 per mile of gravel road (Mattox,

2012).

5.4.3 New York

New York is the only state that banned fracking while having an active fracking industry. Prior to 2009, fracking operations were treated in the same manner as all other oil and gas extraction.

Responding to environmental protests, in 2009, Governor Patterson (D) proposed a framework

169 that regulated the fracking industry and charged a 5 percent severance tax, while maintaining significant leeway in passing their own rules. Opposition from the Democratic legislature failed to garner the necessary support to pass the bill; New York City councilors demanded a ban on the industry statewide, protecting the city’s watershed – the largest unfiltered municipal water system in the world – from contamination. As an alternative, Governor Patterson (D) signed an executive moratorium on fracking in July 2010 to give the state more time to study the health and environmental implications. The commission recommended a statewide ban in June 2015.

Prior to the results being publicly released, Governor Cuomo (D) turned the temporary moratorium into permanent ban in December 2014. The Manhattan Institute (2011) estimates that the state ban prevented $11.4B in statewide economic activity and $1.4B in tax revenues.

New York’s home rule law [Table 5.1] has been interpreted by state courts to grant a wide latitude to pass additional local regulations in the scenario that the state ban is rescinded.

Though state law prohibits outright fracking bans, it does allow for localities to use the zoning code in a manner than would be a de-facto ban. Residents in Dryden, NY31 (pop. 14,435) began organizing into the Dryden Resources Awareness Coalition (DRAC) and, in partnership with environmental organization, lobbied their local council to institute a fracking ban. In August

2011, Dryden became was one of the first municipalities in the state to ban fracking, and the first whose ban was challenged in court by Anschutz Exploration Corporation (Sheppard, 2013).

31 Not in the sample as it is smaller than 25,000 people.

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Other bans and similar lawsuits started to begin to occur statewide. In total, there are now 159 municipal bans in effect. In May 2013, the New York’s third appellate court32 ruled:

“Thus, we hold that the OGSML (Oil Gas Solution Mining Law) does not preempt, either expressly or impliedly, a municipality’s power to enact a local zoning ordinance banning all activities related to the exploration for, and the production or storage of, natural gas and petroleum within its borders.”

Looking at the case study cities, two (Ithaca and Binghamton) of four instituted municipal bans in addition to the statewide ban. These cities are also home to Cornell University and SUNY-

Binghamton accordingly. Opinion in the other two cities is much more mixed. Elmira Mayor

Susan Skidmore (D) who supported a fracking ban – but could not muster the votes for one – lost re-election in 2015 to Daniel Mandell (R), who supports the industry,along with his colleague

Chemung County Executive Tom Santulli (R) who called the statewide ban a “lost opportunity” and proposed seceding from New York and joining the state of Pennsylvania over the issue

(Axelson, 2015).

Lawsuits and local bans have prevented any sort of municipal legal framework for fracking to take hold. Binghamton’s official plan (2015) reads33:

32 Anschutz Exploration Corp. v. Dryden found in Dryden’s favor at the trial court level; the plaintiff did not appeal the case. As such the ruling was not precedent setting outside of the local jurisdiction. This ruling comes from a similar lawsuit of Norse Energy Corp. v. Dryden, where the plaintiff did appeal to a statewide court and lost – establishing a statewide precedent.

33 In December 2011, prior to the newly-elected Republican majority Binghamton City Council taking the oath of office, Mayor Matthew Ryan (D) passed a city-wide fracking moratorium with outgoing Democratic city councilors. Five months later, a group of homeowners filed a lawsuit against the City of Binghamton calling for the law to be invalidated on three technical grounds that: (1) state law preempted municipal law and therefore it was unnecessary; (2) zoning amendments must be referred to the City Planning Commission for its advisory opinion prior to enactment, which did not occur; and (3) zoning amendments must be referred to the Broome County Planning Commission for its advisory opinion prior to enactment, which did not occur. Broome County Judge Lebous agreed with the City that (a) state law did not preempt local law; and (b) the four-month statute of limitations had already

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“Fracking was not addressed in this plan because of litigation that was pending throughout the entire study process of the project, up until January 2014. In the near future, the City should amend Blueprint Binghamton with a follow up study that explores fracking-related opportunities for economic growth, such as industrial development to accommodate materials storage and transport.”

5.4.4 Pennsylvania

Most fracking activity during the study period occurred in the state of Pennsylvania. Fueling this growth, the fracking industry was largely unregulated from its inception until February 2012, when Governor Corbett (R) passed Act 13. This piece of legislation (a) created an “impact fee” based on the wellhead price of natural gas and the consumer price index, (b) redistributed the vast majority of the proceeds to local governments, and (c) established statewide zoning ordinances for fracking that overruled local ordinances. Explaining public and industry support for this legislation, Yeoman (2013) says:

“Pennsylvania isn’t New York. It lacks the liberal home-rule laws that give broad powers to local governments. Its state officials are more conservative, and its long tradition of extraction has led to greater public comfort with it. There’s also the economic argument: More than half of Pennsylvanians still say the benefits of fracking outweigh the problems.”

passed on the other two points of contention. However, he ruled in favor of the plaintiffs because he decided that the law passed was a de facto moratorium and not a zoning amendment, and therefore the City did not prove why such a moratorium met the legal standard of ‘dire necessity’. The City appealed the ruling on the grounds that the judge’s ruling was not a matter of dispute specified in the plaintiff’s original complaint and therefore was beyond scope of the lawsuit. In January 2014, Republican Mayor Richard David took office and proceeded to drop the appeal (Huston, 2014). In my opinion, none of this precluded the City of Binghamton from planning for the social and fiscal costs of the fracking boom that was occurring just south of them in Pennsylvania.

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In December 2013, the State Supreme Court in Robinson Township v. Commonwealth overturned sections of Act 13 that limited the zoning power and land use plans with regards to resource extraction. Commenting on the decision, Thomas Linzey of the Community Legal Defense Fund said, “For years, the state legislature has sought to eliminate local authority on extraction and other activities, including forestry and coal, which the court referenced in its decision” (Beans,

2013). A follow-up decision in September 2017 ruled that the state is a “trustee” and not a

“proprietor” of natural resources, severely curtailing the state legislature’s right to limit environmental rights (Philips, 2017). But this does not grant municipalities absolute power to ban fracking and its ancillary activities, Nicholson and Marcum (2017) write about a separate ruling that overturned a municipal ban:

“The judge ruled that the ban was preempted by the federal Safe Drinking Water Act and Pennsylvania’s Act 13, which prevents municipalities from passing ordinances that regulate oil and gas activity except through limited channels, namely the state’s Municipalities Planning Code and Flood Plain Management Act.”

Even with many of these relatively newly granted powers, over half of the case study cities in

Pennsylvania (7 of 12) have not taken any regulatory action. Two cities – Pittsburgh and State

College – have implemented municipal bans that have not been challenged in court; the prior is a large metropolis that has negligible open land, while the latter sits right outside the shale play and the ban is merely symbolic. No drilling near the city of Erie has occurred as its remains an open legal question whether federal laws prevent resource extraction in the Great Lakes watershed. The remaining two cities – Monroe and Plum – in the sample have passed updated regulatory ordinances to limit the externalities of the industry.

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In 2017, Murrysville34 (pop. 18, 872) became the first city in the Marcellus Shale to pass a new comprehensive regulatory framework concerning fracking (Appendix G). The city addresses issues including traffic, noise, and light pollution. The most important change is increasing the setback ordinance to 750 feet from the statewide minimum of 500 feet, but “you're measuring from the edge of the well pad… so your real setback is closer to 950 or, in some cases, probably

1,000 feet” said Councilor Tony Spadaro said (Varine, 2017). Monroeville soon passed similar rules, including the 750-foot setback ordinance, but also:

“• Obtain a one-year permit for $1,000 and notify the municipality 30 days before any testing begins. The company must also put $5,000 in escrow to cover costs associated with granting a permit.

• Have a $500,000 performance bond guaranteeing completion of the work and a $2 million general liability insurance policy covering the municipality.

• Notify property owners within 150 feet of testing, 100 feet of vibrating tests and 300 feet of explosive charge tests 30 days before any work occurs. (Carr, 2017a)”

Plum passed a more limited ordinance in December 2017, which restricted fracking to lands that are classified as “rural residential” or “industrial” only with the intent of keeping fracking away from the center of town (Carr, 2017b). Most municipalities have not even done that. Doug

Shields, a former Pittsburgh Councilman, says that the majority of municipalities in Allegheny

County are unprepared for the rebound in drilling, as 56 out of 130 municipalities in the county have no zoning ordinance in relation to oil and gas (Hopey, 2017). This is problematic as the

34 Not in the sample as it is smaller than 25,000 people.

174 rebound in oil and gas prices has caused a rebound in drilling permit applications. Patricia

McGrail, a municipal law attorney in Allegheny, recently said:

“A lot of municipalities haven’t considered or anticipated an unconventional oil and gas operation… But this drilling is a different type of animal than what we’ve been used to, so it’s important for municipalities to have a plan and at least some general guidelines when an industry request comes in (Hopey, 2017).”

When it comes to paying for road damage, Pennsylvania law is similar to West Virginia. Local governments – using Pennsylvania Department of Transportation protocols – can post truck weight limits, then require bonds and special permits for the use of overweight trucks

(Christopherson and Rightor, 2012). Municipalities use their administrative agencies to employ this revenue tool.

5.4.5 Ohio Before 2012, fracking was regulated by previous oil and gas law. In 2012, Governor Kasich (R) passed Senate Bill 315 that (a) prohibited municipal bans, (b) made drilling companies carry insurance for up to $3 million in coverage per well for externalities caused, and (c) put minimal environmental protections into place concerning chemical disclosure and groundwater testing.

Since then, Governor Kasich (R) has unsuccessfully called for the state’s severance tax to be raised to 4.5 percent in 2015 and 6.5 percent in 2017 – proposing to use this revenue tool to cut state income taxes – as well as tougher environmental regulations on the industry. In March

2017, regulators began to require companies to publicly disclose fracking chemicals used.

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Municipalities in Ohio have little legal leeway to regulate the industry. Strang (2015) discusses how Monroe Falls35 (pop. 5,052) in 2011 was the first municipality in Ohio to pass a municipal ordinance that restricted fracking, by requiring oil and gas wells to obtain a municipal permit in addition to the state permit. The city used its police powers to stop work on an oil well until proper permits were issued. Beck Energy sued arguing that the city did not have the authority to impose municipal permits, whereas the city argued that it was a valid use of their home-rule powers (see Table 5.5 for the tension in the state law). The trial court found in favor of Monroe

Falls, but the Appellate Court ruled in favor of Beck Energy. In 2015, nearly four years after the well-site drilling first began, the state Supreme Court ruled 4-3 on Morrison v. Beck Energy

Corp that requiring a municipal permit violated the Ohio Department of Natural Resources’

(ODNR) “sole authority” on oil and gas permitting, but added that the decision “make[s] no judgment as to whether other ordinances could coexist with the General Assembly’s comprehensive regulatory scheme.”

Out of the five municipalities in the case study, zero regulated the fracking industry. Two of them – Boardman and Austintown – have legal status as ‘townships’ according to the Ohio state constitution, which do not have the home-rule authority to make municipal regulations. Two others – Warren and Zanesville – welcomed the fracking industry with open arms as they sought jobs from the industry and related industrial activity.

In Youngstown, opinion has been fiercely mixed. Youngstown, OH brought a municipal fracking ban to a vote five times between May 2013 and November 2015, and it was defeated each time (WKBN Staff, 2016). Many of these attempts came in the form of a “Community Bill

35 Not in the sample as it is smaller than 25,000 people.

176 of Rights”, a symbolic measure that declares the city’s right to ‘home rule’ in regard to fracking.

Opposition cut across the political spectrum, even urban black churches – typically associated with left-wing Democratic causes – opposed the measure (Russo, 2014). “Despite not being enforceable, if the amendment is passed it will greatly harm the city’s reputation as a place that is business-friendly to the oil and gas industry,” said Youngstown Mayor (D) John A. McNally

(Solnick, 2014). Fracking here is not simply a Democrat versus Republican issue.

In 2012, Broadview Heights36 (pop. 19,400) voters passed a “Community Bill of Rights”. When two oil companies and the state sued in Mothers Against Drilling in Our Neighborhood v. Ohio, the judge struck down the ordinance citing Morrison as precedent. But as the community secured an injunction against drilling until the case played out, the “Community Bill of Rights” was able to slow down drilling within its municipal boundaries.

To cover road damage, Senate Bill 315 inserted a requirement that obtaining a state fracking permit requires that companies must submit either:

“(i) a copy of a road use maintenance agreement “containing reasonable terms” with the relevant local government officials; or (ii) an affidavit indicating that the applicant was unable to enter such an agreement despite good-faith efforts. R.C. 1509.06(A)(12).”

36 Not in the sample as it is smaller than 25,000 people.

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Table 5.5 Oil and Gas Pre-empt Home Rule in Ohio

Home Rule Municipalities shall have authority to exercise all powers of local self-

Provision government and to adopt and enforce within their limits such local police,

sanitary and other similar regulations, as are not in conflict with general

laws.

Superseding R.C. Chapter 1509 provides the Ohio Department of Natural Resources

Home Rule sole and exclusive authority to regulate the permitting, location, and

spacing of oil and gas wells and production operations.

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5.5 Discussion

Most municipalities are not proactively regulating the industry, which coincides with Loh and

Osland (2013) who concluded that “the most common policy is no policy.” What makes this different from other environmental initiatives – the speed, scale, and the ability to unilaterally

‘solve’ the environmental issue – did not matter; the literature on the lack of implementation of municipal sustainability initiatives still holds true (Brown, 2008; Esparza and McPherson, 2009;

Svara et al., 2013).

Before getting too far, it’s worth clarifying that this chapter does not mean to imply that municipalities who took no new municipal action had no regulation. Some municipalities felt that, between state regulations – including their minimum setback laws – and municipal noise and light bylaws, current regulations were sufficient to address the externalities of this new industry; in other words, current administrative and bureaucratic processes were sufficient means. Other municipalities mentioned that fracking was not happening within municipal jurisdiction, and thus they felt it was not a priority. This can be interpreted that some cities may not have been impacted by fracking at all, particularly those that were further away (e.g.,

Hazleton, PA), while other municipalities who expressed this sentiment had hundreds of fracking wells within 25 miles (e.g., Huntington, WV); a predictable ‘business as usual’ response (Eckel et al., 1999; Pels, 2002; Dunphy, 2003). Some cities banned fracking that had zero possibility of fracking within their jurisdiction because of the local geology (e.g., State College, PA). Contrary to the original research hypothesis of this chapter, geographic distance – determined by the number of wells within a 25-mile radius – was not a significant factor.

Some municipalities mentioned lack of municipal powers to address issues even if they wanted to, including all respondents in West Virginia. In Pennsylvania as part of Act 13 in 2011, the

179 state government preempted municipal authority in setting setback distances, creating a standardized statewide 500-foot setback. One planning director said that the state government

“takes and takes and takes… not letting us clean up the mess… we act like the [fracking] industry doesn’t even exist. What [other] choice do we got here?” Other planning directors echoed similar sentiments; important decisions were being made far away in the state capitals, where they did not understand the needs of local residents, planners wished the state government granted them flexibility.

Studies on the fracking industry have come to different conclusions as to why municipal choose not to regulate. Loh and Osland (2013) find that previous incidents of environmental damage make a municipality significantly more likely to adopt restrictive measures towards fracking. Yet

– unlike their survey approach – a brief review of where recorded complaints of environmental contamination took place and where municipalities attempted to implement environmentally sustainability initiatives show no clear relationship37, as shown in Figure 5.2.

37 This chapter made no effort to statistically compare municipal regulatory locations to fracking accidents, because – though the number of environmental complaints is incredibly numerous - it remains incredibly difficult to quantify the validity and severity of these complaints.

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Figure 5.2 Complaints to Pennsylvania to Department of Environmental Protection, 2004 – 2016

Source: FracTrackAlliance (2017)

Table 5.5: Distribution of Industries in Case Study Cities City State Agriculture Construction Manufacturing Wholesale Retail Transportation, Information FIRE Professional Education Arts, Other Public and Mining Trade Trade Warehousing, and and Hospitality Services Admin and Utilities Scientific Health Altoona PA 0.43% 5.10% 9.37% 3.16% 16.35% 6.49% 1.76% 3.60% 6.03% 27.83% 10.91% 4.44% 4.52% Austintown OH 0.15% 6.15% 12.79% 3.00% 14.00% 4.20% 2.10% 4.19% 8.98% 25.70% 11.03% 3.62% 4.08% Bethel Park PA 0.61% 4.88% 7.50% 2.83% 12.30% 3.90% 2.95% 12.09% 15.12% 24.15% 7.98% 2.88% 2.81% Binghamton NY 0.41% 4.63% 7.36% 2.26% 11.51% 3.72% 1.99% 4.57% 9.48% 31.59% 11.05% 6.63% 4.80% Boardman OH 0.24% 5.23% 11.56% 2.55% 17.58% 4.06% 3.24% 6.57% 7.65% 25.10% 8.86% 3.80% 3.55% Charleston WV 2.17% 4.11% 4.05% 1.17% 11.03% 3.25% 1.78% 7.43% 14.78% 25.68% 9.48% 4.22% 10.86% Elmira NY 1.16% 3.70% 11.44% 2.24% 12.62% 4.03% 0.66% 3.43% 7.07% 34.59% 9.53% 4.90% 4.64% Erie PA 0.43% 3.88% 14.90% 1.93% 12.08% 3.00% 1.24% 5.75% 6.82% 28.19% 13.26% 5.24% 3.27% Hagerstown MD 0.44% 5.15% 7.59% 1.82% 13.56% 6.89% 2.80% 8.24% 9.42% 20.34% 12.32% 4.31% 7.13% Hazleton PA 0.65% 4.05% 19.98% 5.37% 16.34% 8.26% 2.22% 2.46% 9.81% 16.13% 9.16% 3.17% 2.41% Huntington WV 0.52% 3.79% 5.55% 2.46% 14.69% 2.64% 2.18% 3.62% 8.36% 37.14% 12.05% 3.97% 3.04% Ithaca NY 0.67% 1.40% 3.66% 0.26% 9.23% 2.54% 1.28% 3.15% 7.52% 50.44% 13.81% 3.96% 2.09% Jamestown NY 0.93% 4.91% 18.97% 1.72% 13.52% 2.86% 0.97% 5.16% 6.79% 25.43% 10.19% 6.16% 2.39% Monroeville PA 0.28% 3.42% 8.85% 3.54% 11.96% 5.41% 1.82% 8.73% 12.82% 26.21% 9.20% 4.09% 3.68% Morgantown WV 1.52% 2.70% 4.87% 1.75% 10.02% 0.66% 2.69% 2.63% 10.88% 41.01% 14.93% 2.84% 3.52% Parkersburg WV 1.91% 5.02% 9.05% 1.92% 15.37% 4.49% 1.97% 5.69% 8.16% 24.42% 12.75% 3.63% 5.62% Pittsburgh PA 0.49% 3.81% 5.46% 1.67% 10.09% 3.63% 2.22% 7.54% 11.85% 33.05% 11.46% 4.43% 4.30% Plum PA 0.18% 6.69% 8.66% 3.80% 13.82% 3.45% 2.16% 6.76% 10.98% 27.54% 7.52% 6.35% 2.09% Scranton PA 0.57% 5.00% 10.12% 3.83% 13.81% 4.74% 1.80% 5.53% 6.94% 29.72% 9.38% 4.11% 4.45% State College PA 1.00% 2.50% 3.36% 1.08% 9.43% 0.63% 1.85% 3.22% 7.39% 44.56% 20.42% 2.67% 1.90% Warren OH 0.12% 3.65% 19.18% 1.25% 11.35% 3.95% 1.63% 4.24% 10.30% 24.35% 10.06% 4.72% 5.21% Wheeling WV 2.42% 3.81% 6.19% 3.18% 14.24% 4.95% 1.34% 5.85% 8.60% 26.87% 12.87% 3.89% 5.79% Wilkes- PA 0.31% 3.66% 11.52% 3.50% 16.11% 5.20% 2.21% 4.66% 7.58% 22.31% 13.18% 4.95% 4.81% Barre Williamsport PA 1.53% 3.28% 13.16% 1.78% 13.10% 3.93% 1.50% 3.94% 8.58% 30.74% 10.51% 5.24% 2.70% Youngstown OH 0.10% 4.25% 14.09% 1.95% 12.34% 4.84% 1.16% 3.00% 8.61% 26.59% 13.74% 5.75% 3.58% Zanesville OH 2.47% 5.25% 10.29% 3.28% 17.44% 3.54% 1.67% 3.32% 5.83% 26.41% 13.86% 4.14% 2.50% Christopherson et al. (2013) understood municipal responses as the willingness to “assert local control”, implying that the lack of local political leadership was at fault, akin to Daniere (1995) and Betsill and Bulkeley (2003). This chapter found that local leaders were willing to have a political fight within their communities (e.g., Youngstown and Binghamton) to do what they believed was in their municipalities’ best interest, thus this chapter finds no shortage of willing actors to show leadership. Environmental organizations (e.g., Dryden Resources Awareness

Coalition) often provided leadership (and lawyers) when needed.

Walsh et al. (2015) understood it as a political fight between Democrats and Republicans. Yet the political lines are not so clear cut. Governor Hogan (R) of Maryland and Governor Cuomo

(D) of New York both banned fracking within their state. Governor Corbett (R) of Pennsylvania and Governor Kasich (R) of Ohio both pushed for stronger state regulation and taxation of fracking, but so did Governor Wolf (D) of Pennsylvania. West Virginia Governors Joe Manchin

(D) and Earl Ray Tomblin (D) both chose not to strongly update West Virginia’s state regulation of oil and gas in response to fracking. In Youngstown, OH, a series of Democratic mayors rebutted efforts to regulate the industry; whereas numerous Republican mayors in New York state signed municipal bans.

Though it may be true that small and midsize cities often struggle with technical and administrative capacity and therefore often defaulted to more simplistic solutions (Hanna, 2005), this study finds that it was often some of the smallest cities – too small to be included in the case study sample – that were on the forefront of fracking regulation (e.g., Murrayville, PA) and prohibition (e.g., Monroe Falls, OH). Yet there is truth that larger cities have more resources at their disposal and therefore have had more success implementing sustainability initiatives

(Francis and Feiock, 2011; Svara et al., 2011; Lurian et al., 2017) in the sense that fracking 183 companies have been so far unwilling to legally challenge the municipal ban of the city of

Pittsburgh. The second largest city in the study area (Erie, PA) also has had no fracking since it would require challenging the federal government’s environmental protection policy on the

Great Lakes. Picking legal fights against smaller municipalities, who do not have the same access to resources, seems like a better strategy for companies.

This chapter postulates a different hypothesis. Aligning with political-economy literature of

Dalton (1989), Baglioni and Vicari (1995) and Zahran et al. (2008a; 2008b), planning responses

(or lack thereof) are deeply intertwined with the political-economic composition of the preexisting community; the employee-resident-voters of current industries largely shape how municipalities respond to new industries.

When political-economic consensus was pro-fracking, occurring in nearly exclusively blue-collar and rural/industrial towns, no regulation was the preferred municipal response – exhibiting a popular will for jobs. Cities with more traditional industries did not attempt to regulate fracking in any meaningful way. A few examples include Youngstown (OH) at 14 percent, Warren (OH)

18 percent, Williamsport (PA) 15 percent, and Wilkes-Barre (PA) 12 percent. In comparison, within most other municipalities manufacturing makes up approximately 7 percent of the workforce. Many municipalities may have chosen not to ban fracking, or voted against the measure. The fracking workers themselves are not numerous enough to decide the outcomes of local voters. Even in cities with a high number of nearby wells, fracking workers did not compose a large part of any city’s workforce; Zanesville (OH) had the highest percentage of its workforce in the mining industry – which includes fracking – at 3.1 per cent and even then, most of them worked in coal (Gottsacker, 2017). All other cities were much lower. Despite a low

184 percentage of the workforce employed, these communities feel political pressure not to take regulatory action as alternative job prospects are scarce.

When political-economic consensus was anti-fracking, occurring exclusively in white-collar cities and college towns, municipal action was defined by attempts to ban the industry – exhibiting a popular will for environmentalism. Only a handful of municipalities attempted to ban the fracking industry (e.g., Ithaca, Binghamton, Morgantown). More specifically, this chapter suggests that it is the presence of universities – and the jobs that they provide – which explains the relationship, as every municipality that passed a fracking ban was also a college town (e.g., Cornell, SUNY-Binghamton, West Virginia University). Pittsburgh (Carnegie

Mellon, University of Pittsburgh, Indiana University of Pennsylvania, and more) banned fracking within their borders, which is illegal according to state law, but no fracking company has yet challenged the city in court. Residents of these municipalities have better alternative job prospects than cities without a major university present. Data from the 2011-13 American

Community Survey indicates that these college towns in Northern Appalachia have approximately 35 percent of the workforce employed in the education industry, whereas it is closer to 25 percent for all others. Beyond better job prospects, chapters 1 and 2 discuss how these college towns are much wealthier than the rest of this rural region.

Interestingly, ex-urban cities caught between (a) their commuter-residents to their economically diverse urban cores and (b) workers of the rural hinterland, were the only places in the study area where a real debate is occurring on the proper municipal role in the regulation of the fracking industry. Only in these cities (e.g., Monroeville, Murrysville, Plum) was there a genuine attempt to find the middle ground between municipal bans and no regulation, resulting in moderate

185 municipal regulation, which tried to curtail externalities while still allowing for the industry to prosper.

The reason this chapter includes brief mentions of road maintenance38 is to show that most municipalities – despite not discussing fracking in their official plans, passing new municipal ordinances, updating their zoning codes, or participating in legal challenges – have not ignored the existence of the industry. Rather, their action only went as far as using as using state procedure to cover their largest fiscal cost imposed by the industry: road maintenance and repairs. How this is done varies: Pennsylvania enacted taxes and transfer payments; Ohio empowered local governments to negotiate and enforce RUMAs; and West Virginia created a bond and repair system. The choice to regulate or not goes only as far environmental sustainability initiatives are concerned, whereas a universal political consensus for maintaining local infrastructure exists.

5.6 Chapter Conclusion and Policy Recommendations

The political power of the fracking industry is far greater than the number of jobs it provides.

Addressing the central issues surrounding fracking typically crosses traditional political party lines. This chapter finds that the local economic industries determine politics when it comes to legalizing fracking, rather than the other way around. States chose to either ban fracking or to regulate it. Then local municipalities find themselves, almost pre-deterministically, where on the planning spectrum to regulate the industry concerning pollution from noise, light, and water; responses ranged from no action (industrial communities) to outright bans (college towns); true

38 More fully explored in Zwick (forthcoming).

186 debate over the role of municipal regulation was rare and found in the places caught in-between.

This chapter demonstrates this relationship through the presence of other industries. Places where more traditional industries (e.g., manufacturing) were still dominant were more welcoming toward the fracking industry, whereas places that had employment alternatives (e.g., education) were likely to take an anti-industry stance. This is only one case study region, and therefore transferability may be limited.

There is some irony to this as the overwhelming opinion of local planning directors was that the state needs to allow cities more flexibility to manage their own affairs. Considering that few municipalities incorporated fracking into their official plans, the author warns municipalities to be careful what they wish for. At this time, municipalities appear to be unprepared – or at least, unwilling – to handle the full scope of challenges that come with the industry. Professional planners, being somewhat insulated from local politics, should not worry themselves with being labelled as “anti-fracking” or “anti-job”, but rather be directed to prepare their municipalities for all externalities – and the corresponding fiscal costs – imposed by the fracking industry. There are several examples, both inside the Marcellus Shale and others throughout the US, which municipalities can look to for examples on how to properly regulate the industry.

Here I offer a handful of policy recommendations, based off the research in this chapter, regarding what professional planners should consider when forming their own plans:

1. Consult with local stakeholders on how fracking fits into the economic and environmental

vision for the community, including its fiscal and opportunity costs. Build these findings

into the official plan to guide future decisions.

187

2. Establish a road use and maintenance plan in line with state law. This may include setting

bonds, instituting tolls, and/or negotiating RUMAs with fracking companies. Failure to do

so may lead to significant fiscal capital costs.

3. Increase setback ordinances to a minimum of 1000 feett from residential properties. This,

like all other setback ordinances, is an arbitrary number, but – when it comes to protecting

the health and well-being of residents – it represents an improvement over current laws.

This will help address light, noise, and air pollution concerns.

4. Work with the county government to create county-wide rules regarding zoning of wells

and ancillary activities, standards requiring notification of residents, and legal fines for

non-compliance. Empower municipal and county police to enforce these laws.

All of these policy recommendations can occur on the local scale. More regional policy recommendations are made in the next (and concluding) chapter of the dissertation.

Chapter 6 Conclusion

Concluding Chapter

During the USAir bankruptcy proceedings, the company wrangled out of its contract to use the

Pittsburgh International Airport as its primary East Coast hub. Sixty-two out of its 75 brand new gates, which Allegheny County had recently built and paid for, remained vacant and 42 cents on every dollar were then used by the county to pay off debt. Bankruptcy seemed unavoidable, until they discovered natural gas – captured in shale rock –6,000 feet underneath the surface. “It’s like finding money,” said Rich Fitzgerald, the county executive of Allegheny County. “Suddenly you’ve got this valuable asset that nobody knew was there.” Currently 22 percent of the

Pittsburgh airport’s operating budget is covered by oil and gas royalties, compared to the next largest, which is Dallas-Ft. Worth International Airport at about 1.3 percent (Wald, 2014).

Similar stories are found throughout Northern Appalachia, where after decades of economic stagnation caused by deindustrialization, along with the decline of employment in the natural resource extraction industry, which raised unemployment and poverty to some of the highest rates in the country, fracking brought hope. In the short-run, drilling oil and gas rigs would be a band-aid for blue-collar employment. In the long-run, economic diversity – along with the additional money generated from this new resource boom – could begin to pave a pathway toward economic revitalization. The “only” cost was the numerous environmental and health risks. Many places might turn down this deal, but it’s a tradeoff that Northern Appalachia has made for generations. Only college towns, who have not been left behind by the transition to a modern economy based on education and innovation, protested by passing municipal fracking bans. 189

Returning to the original underlying research question, using Northern Appalachia as a case study, what are the planning and public policy implications of the fracking boom for local governments? Performing this dissertation research added both a practical and academic contribution by challenging the conventional wisdom – as opposed to the original of simply measuring it – through quantitative results that sharply contrasted with earlier qualitative work.

This was achieved by answering several interrelated questions through a variety of mixed- methods, including [Chapter 1] mapping and interpreting the economic geography of the region as related to oil and gas, [Chapter 2] reviewing the economic history, [Chapter 3] calculating changes in economic diversity, [Chapter 4] measuring job growth along with corresponding housing and commuting patterns, and [Chapter 5] surveying the state of municipal regulation throughout the region.

Each chapter aided our understanding of how fracking is affecting Northern Appalachia by drawing from – and employing novel combinations of – methods and literatures from several different academic disciplines, including geography, history, economics, public policy, and planning. In Chapter 2, the economic history of the region aids our understanding of the mixed social reactions and municipal responses uncovered in Chapter 5. Chapter 3’s application of the economic resiliency literature, along with economic diversity formulas, contributed to our theoretical understanding of the ‘localized natural resource curse’ phenomenon and its corresponding implications for long-term growth. Chapter 4 supplemented a standard economic- base analysis model with a novel approach of measuring FIFO commuting patterns using the

LEHD home-work database, finding that that the typical literature does not hold as the regional pattern of employment more closely resemble a DIDO pattern. Chapter 5 augmented our current understanding of the local implementation of environmental sustainability initiatives by testing

190 the literature in a more pressing, concrete situation; finding that it did not make a difference, municipalities struggle to engage in environmentalism no matter the police issue. This research culminated in planning recommendations directed at local municipalities toward the end of

Chapter 5 that can be unilaterally implemented.

During my master’s degree, I participated in a small group workshop – overseen by Susan

Christopherson – which was tasked by local government leaders (e.g., county executives, municipal planners, and not-for-profit organizers) to write a report on what the Southern Tier of

New York should expect when the fracking moratorium ended. My dissertation research shows that the results that postulated in my masters’ report, drawing from academic literature on other resource industries and early discussions with planners in other regions, did not hold up in the aggregate in this region. My quantitative findings confound the earlier anecdotal evidence.

The conception that this new industry is disruptive to preexisting communities by industrializing a countryside turned out to be inaccurate, as they were already industrialized with their biggest fears being deindustrialization – not environmental degradation. It was a tradeoff they had already been making for generations [Chapter 2]. This research also briefly shows that the overwhelmingly majority of wells are owned by entities located outside the region [Appendix

D], much like the coal industry that came before. The theory of a localized natural resource curse, the ‘crowding out’ of adjacent industries, did not hold. The fracking industry is adding to economic diversity in an otherwise economically stagnant region, almost the sole counterforce to a larger wave of urbanization [Chapter 3]. The framework that the industry created a lot of jobs that mostly went to outsiders may have been true for a moment in time but did not hold in the long-run. Most jobs went to regional workers, while economic development agencies and

191 community colleges trained the locals to work in the industry [Chapter 4]. Finally, the belief that it is a lack of political leadership that is preventing communities from protecting themselves from the health and environmental externalities of the industry may be true to an extent, but it is far from complete. The lack of political leadership echoes the local public’s lack of political- economic consensus, as the majority of locals in these communities support the industry rather than opposing it [Chapter 5].

Though the industry’s long-term economic implications seem to be slightly positive – providing some jobs and generating some economic diversity – it does not seem to be enough to change the overall trajectory of this declining region. It is no silver bullet. It is merely a drop in the ocean compared to the tsunami of deindustrialization and the declining coal usage, which show no indication of letting up. Lingering questions remain: if fracking isn’t the answer to revitalize

Northern Appalachia, then what is? If this region is not greatly benefiting from fracking, then exactly who is (e.g., where are the upstream/downstream business linkages located)? As most economic development now occurs in cities, what can be done to promote economic development in rural regions that lack major urban centers but rather are composed of many small towns? Finally, given that its residents continue to vote for politicians who continue to promote fossil fuels as the economic answer, as opposed to those who may offer tough medicine of urbanization, what do we think is just in resource-dependent regions when democracy and sustainability conflict? These questions pave the way for future research, but – from what I’ve learned so far – I’ll offer a couple final policy recommendations.

First, despite the long history of socially and economically isolated communities, Northern

Appalachia cannot solve its problems by burrowing in with decentralized governance. Fracking has made apparent that current local and regional government structures are completely

192 inadequate to address the sheer scale, spatial distribution, and temporal challenges of current economic and fiscal problems (Zwick, forthcoming). For Appalachia to move forward, planning on the local level will no longer do; there are too many municipalities with too many divergent economic and political interests – who, at times, seem more interested in scoring short-term political victories than advancing a long-term agenda. Political divides prevent future progress; the solution is coming together for their common good.

Therefore, to ensure that fracking works in the greatest benefit of the region, I strongly recommend shifting powers away from local and state government and to interstate regional planning organizations (RPOs), empowering them with the necessary fiscal and legal tools to engage in region-wide planning over the entirety of a shale play. These RPOs would then partner with local governments to collectively bargain and enforce regulations on their behalf, creating a relatively smooth regulatory landscape for drilling companies to comply by. Beyond the municipal planning powers that local governments have, additional state government powers should be shifted as well: (i) environmental regulation and enforcement, (ii) negotiation of

RUMAs and traffic controls, (iii) severance tax revenues, (iv) infrastructure responsibilities, and more. They could work with the local governments to implement the local policy recommendations listed in Chapter 5.

Though I acknowledge this is politically fraught, there are several advantages to this approach.

First, local governments would have increased administrative capacity, as the RPO would have administrative professionals on staff, who have experience with the same companies in the same industry in other parts of the shale play, mitigating the asymmetric information disadvantage that municipalities currently have in relation to fracking companies. Second, RPOs with revenue streams could directly address – or, indirectly by allocating money to municipalities – the

193 negative externalities of the industry; mitigating the gap between the level of government responsible for policy areas and the level of government receiving tax revenues. Finally, by pooling revenues from different parts of the shale play at different times, RPOs could act as an insurance fund to use fiscal benefits from fracking, generated over time and space, to compensate municipalities in accordance with their social and environmental risks. By extending its mission, responsibilities, and revenue streams, ARC would become an ideal entity to help local governments manage the fracking boom.

Second, since fracking is not the silver bullet to change the economic trajectory of Appalachia, a different strategy is needed. Unlike previous economic development plans for this region, the

Bipartisan Policy Center (2017) engaged with all kinds of stakeholders to lay out a plan. The

Appalachia Initiative: A Bipartisan Approach for the 21st Century, was chaired by Senators Joe

Machin (D-WV), David Perdue (R-GA), Thom Tillis (R-NC), and Mark Warner (D-VA), and included an advisory committee of 40 academics and practitioners from across Appalachia, from bureaucrats (e.g., ARC) to non-profits (e.g., Golden Leaf Foundation, U.S. Chamber of

Commerce) to unions (e.g., United Mine Workers) to for-profit corporations (e.g., Shell Oil

Company). Unsurprisingly, they concluded that there is no silver bullet. Instead, a program of small interventions that partner with local stakeholders is needed, including: providing resources and regulatory flexibility to empower local leaders, creating public-private partnerships to facilitate and formalize workforce-training partnerships, and expanding its energy portfolio – going from an ‘energy extraction’ region to an ‘energy creation’ region. Furthermore, the plan specifically identifies using its current advantage in natural gas – fracking – to create upstream and downstream supply linkages to diversify the local economy. Senators Manchin (D-WV),

Capito (R-WV), and Portman (R-OH) have introduced the Capitalizing American Storage

194

Potential (CASP) Act and the Appalachian Ethane Storage Hub Study Act to help develop the region into a chemical and chemistry hub.

Currently, the EIA (2017b) estimates that almost all new natural gas production and almost two- thirds of new oil production in the United States are due to fracking. Faith Birol, head of the

International Energy Agency, said that $70 a barrel could lead to a new US fracking boom in

2018 (Reuters, 2018). Though estimates vary considerably on how long this ‘bridge fuel’ will be around until renewable energy alternatives becomes dominant, it would be safe to say that fracking will be here for at least a decade and perhaps up to many times that; how municipal governments regulate this new industry will be an ongoing planning challenge for the foreseeable future.

Fracking, though thought of as primarily an American phenomenon, given this is where the technology was invented and quickly diffused throughout, will soon spread to wherever shale oil and gas is throughout the world (shown in Figure 6.1). In fact, American shale resources are only a small portion of the total global potential. Several Canadian provinces – including British

Columbia, Alberta, and Saskatchewan – already have active fracking industries where thousands of wells have been drilled. Governments in the United Kingdom, Argentina, Australia, South

Africa, and China are beginning to explore their resources.

The door is beginning to open for comparative international research on the fracking industry, as well as contrasting it to the local economic and governance implications of its green energy alternative. By learning about how American municipal governments have risen to the challenges through this dissertation process, I have begun to position myself as an expert on the local governance and public policy implications for the next generation of energy investments.

195

Figure 6.1 Global Map of Shale Resources

Image Source: Trevethan, C. (2013).

196

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Appendices Appendix A: County Economic Levels

County Economic Levels defined by Appalachian Regional Commission (2016)

Appalachian Regional Commission classifies all counties into one of five economic status designations, based on its position in the national ranking. These include:

Distressed: Distressed counties are the most economically depressed counties. They rank in the worst 10 percent of the nation’s counties.

At-Risk: At-Risk counties are those at risk of becoming economically distressed. They rank between the worst 10 percent and 25 percent of the nation’s counties.

Transitional: Transitional counties are those transitioning between strong and weak economies.

They make up the largest economic status designation. Transitional counties rank between the worst 25 percent and the best 25 percent of the nation’s counties.

Competitive: Competitive counties are those that are able to compete in the national economy but are not in the highest 10 percent of the nation’s counties. Counties ranking between the best

10 percent and 25 percent of the nation’s counties are classified competitive.

Attainment: Attainment counties are the economically strongest counties. Counties ranking in the best 10 percent of the nation’s counties are classified attainment.

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Appendix B: Fracking’s Exacerbated Boom-Bust Cycle

Fracking has brought the issue of local boom-bust cycles to the forefront, as output/employment in the industry operates on much quicker timelines in hyper-localized environments than most industries do. According to business lifecycle theory, industries follow a bell curve of employment/output over time that follows the stages of innovation, growth, maturity, and decline

(Friedrichs, 1993). The lifecycle of conventional oil and gas fields follows this same pattern where peak production occurs about halfway through the exhaustion of the reservoir (Hubbert,

1962). This typically last decades. Because this is what normally occurs (and because it looks like a normal distribution), I labeled this “normal curve” curve on the figure above.

In contrast, fracking operates on a much shorter timeline. Employment (Jacquet, 2006) and output (Lund, 2012) both follow a hyperbolic decline curve, which I label the “fracking curve” on the figure above. Employment is overwhelmingly frontloaded to the construction of the wellsite (3-6 months), then a smaller team is used to frack the well (2-4 weeks), and then a handful of people can service hundreds of wells (years). Output of a fracking well declines approximately 75 percent in production after the first year and an 86 percent decline after two years. A long-tail of little production and employment then follows for up to decades.

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On top of this, where the ‘sweet spots’ of production are geographically located – determined by investment by specific companies in specific locales – can shift dramatically within a couple of years; visualized in the figures below. Thousands of workers can show up to build fracking wells all at once, and then disappear just as quickly as they move on to the next location. The cumulative effect is a series of hyper-localized boom-bust cycles that municipalities now have to plan and manage.

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Appendix C: Additional Hot-Spot Maps from Chapter 4

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Appendix D: Ownership of the Fracking Industry

Table D.1: Companies that fracked more than 250 wells in Northern Appalachia, 2005 – 2014 Companies HQ (Parent Employees 2005 – 2014 2014 Total Revenue Total Assets (in Net Income (in Primary Secondary (Parent Company HQ, Wells Global (in $1,000s) $1,000s) $1,000s) NAICS NAICS Company, if if applicable) Drilled Net applicable) (Parent Wells Company HQ, if applicable) Anadarko The Woodlands, 5,800 459 17255.5 8,698,000 46,414,000 -6,692,000 211111 - 213112 - TX Crude Support Petroleum Activities for and Natural Oil and Gas Gas Operations Extraction Antero Denver, CO 480 472 761 3,954,858 11,573,495 941,364 211111 - N/A Crude Petroleum and Natural Gas Extraction Cabot Oil & Houston, TX 459 685 4195 1,357,150 5,261,899 -113,891 211111 - 211112 - Gas Crude Natural Gas Petroleum Liquid and Natural Extraction Gas Extraction Chesapeake Oklahoma City 4400 2697 18000 12,764,000 17,357,000 -14,685,000, 211111 - 213111-Drilling Crude Oil and Gas Petroleum Wells and Natural Gas Extraction Chevron Philadelphia, *** 373 (+0) *** *** *** *** *** *** Appalachia PA (Chevron) (San Ramon, CA) Chief Oil & Dallas, TX 75 441 *** 12,500,000 *** *** 213112 - N/A Gas Support Activities 241

For Oil & Gas Operations CNX Gas Waynesburg, *** 457 (+64) *** *** *** *** *** *** Company PA (CONSOL (Canonsburg, Energy) PA) EOG Houston, TX 2,760 276 9,107 8,757,428 26,975,244 -4,524,515 211111 - N/A Resources Crude Petroleum and Natural Gas Extraction EQT Pittsburgh, PA 1,914 867 12804 2,339,762 13,976,172 85,171 211111 - 221210 - Production Crude Natural Gas Petroleum Distribution and Natural Gas Extraction Exco Dallas, TX 315 258 3,088.40 328,331 954,126 -1,192,381 211111 - 213111 - Resources Crude Drilling Oil and Petroleum Gas Wells and Natural Gas Extraction Range Ft. Worth, TX 744 1177 4906 1,598,068 6,900,031 -713,685 211111 - 213112 - Resources Crude Support Petroleum Activities for and Natural Oil and Gas Gas Operations Extraction Seneca Houston, TX *** 354 (+2) *** *** *** *** *** *** Resources (Williamsville, (National Fuel NY) Gas Company) Southwestern Spring, TX 2,597 398 4,254 3,133,000 8,110,000 -4,556,000 211111 - 486210 - Energy Crude Pipeline Petroleum Transportation and Natural of Natural Gas Gas Extraction Swepi LP Houston, TX *** 505 (+0) *** *** *** *** *** *** (Royal Dutch (The Hague, Shell) Netherlands)

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Talisman Calgary, AB 2,302 899 (+0) *** 1,464,000 12,021,000 -3,106,000 213112 - 211111 - Crude Energy (Madrid, Spain) Support Petroleum and (Repsol) Activities Natural Gas for Oil and Extraction Gas Operations WPX Energy Tulsa, OK 1,040 276 5551 1,888,000 8,350,000 -1,727,000 211111 - N/A Crude Petroleum and Natural Gas Extraction

XTO Energy Fort Worth, TX *** 345 *** *** *** *** *** *** (Exxon -Mobil) (Irving, TX) *** = unavailable N/A = not applicable

Note: This information comes from each companies’ 2014 SEC 10-k form, which all publicly traded companies are required to produce. Subsidiaries and privately-owned companies do not have 10-k’s and therefore their information is missing from this table. The 2005 – 2014 Wells Drilled in Northern Appalachia comes from data used in the Maps in the Introduction Chapter.

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Table D.2: Offices of Drilling Companies with more than 250 wells in Northern Appalachia, 2005 - 2014 Company Headquarters Company Office Type Address City State Zip Location Type Anadarko Houston, TX Public Regional 33 West 3rd St. Suite 300 Williamsport PA 17701 Antero The Woodlands, TX Public Field 535 White Oaks Boulevard Bridgeport WV 26330 Antero The Woodlands, TX Public Field 981 E. Washington Ave. Ellenboro WV 26346 Antero The Woodlands, TX Public Field 2335 State Road 821 Marietta OH 45750 Cabot Oil & Gas Houston, TX Public Regional 2000 Park Lane Suite 300 Pittsburgh PA 15275 Cabot Oil & Gas Houston, TX Public Field 8207 S.R. 29 Montrose PA 18801 Cabot Oil & Gas Houston, TX Public Field 900 Lee Street East Suite 1500 Charleston WV 25301 Cabot Oil & Gas Houston, TX Public Field 6804 Lick Creek Road Danville WV 25053 Cabot Oil & Gas Houston, TX Public Field 102 3rd Street Glasgow WV 25086 Cabot Oil & Gas Houston, TX Public Field 2567 W. Little Kanawha Hwy. Grantsville WV 26147 Cabot Oil & Gas Houston, TX Public Field 628 River Drive Pineville WV 28474 Cabot Oil & Gas Houston, TX Public Field 12145 Derrick’s Creek Road Sisssonville WV 25320 Chesapeake Oklahoma City, OK Public Field 14 Chesapeake Lane Sayre PA 18840 Chesapeake Oklahoma City, OK Public Regional 3584 Beck Ave Louisville OH 44641 Chevron Philadelphia, PA Subsidiary Regional 1845 Walnut Street 10th Floor Philadelphia PA 19103 Appalachia (San Ramon, CA) (Chevron) Chevron Philadelphia, PA Subsidiary Field 700 Cherrington Parkway Coraopolis PA 15108 Appalachia (San Ramon, CA) (Chevron) Chief Oil &Gas Dallas, TX Private Field 5 Gravel Pit Rd Wyalusing PA 18853 Chief Oil &Gas Dallas, TX Private Regional 1720 Sycamore Rd Montoursville PA 17754 CNX Gas Waynesburg, PA Subsidiary National 1000 Consol Energy Dr Canonsburg PA 15317 Company (Canonsburg, PA) (CONSOL Energy) CNX Gas Waynesburg, PA Subsidiary Field 138 Blockhouse Rd Holbrooke PA 15341 Company (Canonsburg, PA) (CONSOL Energy)

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CNX Gas Waynesburg, PA Subsidiary Field 1 Dominion Dr Jane Lew WV 26378 Company (Canonsburg, PA) (CONSOL Energy) EOG Resources Houston, TX Public Regional 325 Southpointe Blvd Canonsburg PA 15317 EQT Production Pittsburgh, PA Public National 625 Liberty Avenue, Suite 1700 Pittsburgh PA 15222 EQT Production Pittsburgh, PA Public Field 474 Jeffers Street DeBois PA 15801 EQT Production Pittsburgh, PA Public Field 2400 Zenith Ridge Road, Suite Cannonsburg PA 15307 200 EQT Production Pittsburgh, PA Public Field 1710 Pennsylvania Avenue Charleston WV 25302 EQT Production Pittsburgh, PA Public Field 539 US Highway, 33 E Weston WV 26452 EQT Production Pittsburgh, PA Public Field 115 Professional Place, Bldg. I Bridgeport WV 26330 Exco Resources Dallas, TX Public Regional 260 Executive Dr Suite 100 Cranberry PA 16066 Township Range Resources Fort Worth, TX Public Regional 3000 Town Center Boulevard Canonsburg PA 15317 Seneca Resources Houston, TX Subsidiary National 6363 Main Street Williamsville NY 14221 (National Fuel Gas (Williamsville, NY) Company) Seneca Resources Houston, TX Subsidiary Regional 5800 Corporate Drive, Suite 300 Pittsburgh PA 15237 (National Fuel Gas (Williamsville, NY) Company) Seneca Resources Houston, TX Subsidiary Field 51 Zents Boulevard Brookville PA 15825 (National Fuel Gas (Williamsville, NY) Company) Southwestern Spring, TX Public Regional 917 PA-92 Tunkhannock PA 18657 Energy Southwestern Spring, TX Public Field 307 Valentine Rd Union Dale PA 18470 Energy Southwestern Spring, TX Public Regional 179 Innovation Dr Jane Lew WV 26378 Energy Swepi LP (Royal Houston, TX (The Subsidiary Regional 2100 Georgetown Dr Sewickley PA 15143 Dutch Shell) Hague, Netherlands) Swepi LP (Royal Houston, TX (The Subsidiary Regional 26 Nesbitt Rd New Castle PA 16105 Dutch Shell) Hague, Netherlands) Swepi LP (Royal Houston, TX (The Subsidiary Field 12880 US-6 Wellsboro PA 16901 Dutch Shell) Hague, Netherlands)

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Talisman Energy Calgary, AB (Madrid, Public Regional 50 Pennwood Pl Warrendale PA 15086 (Repsol) Spain) Talisman Energy Calgary, AB (Madrid, Subsidiary Field 3225 Steam Mill Hollow Rd Laceyville PA 18623 (Repsol) Spain) Talisman Energy Calgary, AB (Madrid, Subsidiary Field RR1 Troy PA 16947 (Repsol) Spain) WPX Energy Tulsa, OK Public Field 2426 Lackawanna Trail Nicholson PA 18446 WPX Energy Tulsa, OK Public Field 6000 Town Center Blvd Cecil PA 15321 XTO Energy Fort Worth, TX Subsidiary Regional 190 Thorn Hill Rd Warrendale PA 15086 (Exxon-Mobil) (Irving, TX) This information comes from each company’s website or SEC 10k public financial disclosure. Current as of April 22, 2016.

Table D.3: NAICS Code 21 (Mining) for Pittsburgh MSA, 2005 – 2014

Number of Number of First-quarter Annual Payroll Establishments Employees Payroll (in $1,000) (in $1,000) 2005 189 h N/D N/D 2006 209 h N/D N/D 2007 198 5,190 75,986 304,386 2008 218 5,118 86,529 351,634 2009 233 5,651 101,887 390,631 2010 237 5,695 97,799 490,238 2011 251 6,917 131,631 580,578 2012 263 8,832 195,794 772,142 2013 256 9,502 235,677 932,708 2014 286 10,025 272,374 1,029,790 h = 2,500 to 4,999 employees, specific data not disclosed by US Census for confidentiality reasons D = data not disclosed by US Census for confidentiality reasons

Appendix E: Survey Questions of “Municipal Government Responses to the Fracking Industry in Appalachia” Number Question 1 Please enter the name of your municipality 2 Did your municipal government pass a ban on fracking? Please answer the question even if state law pre-empted your municipality's decision (Yes/No). If yes, please describe. 3 Did your municipal government change any bylaws regulating wastewater in response to the fracking industry? (Yes/No). If yes, please describe. 4 Did your municipal government change any bylaws regulating air pollution in response to the fracking industry? (Yes/No). If yes, please describe. 5 Did your municipal government change any bylaws regulating light/noise pollution in response to the fracking industry? (Yes/No). If yes, please describe. 6 Did your municipal government change any bylaws regulating truck traffic in response to the fracking industry? (Yes/No). If yes, please describe. 7 Did your municipal government make changes to the zoning code in response to the fracking industry? (Yes/No). If yes, please describe. 8 Did your municipal government take any other actions to regulate the fracking industry? (Yes/No). If yes, please describe. 9 Did your municipal government change the way it conducted property taxes - in terms of assessment, classification or tax rates - in response to the fracking industry? (Yes/No). If yes, please describe. 10 Did your municipal government introduce any new types of taxation in response to the fracking industry? (Yes/No). If yes, please describe. 11 If you have any other professional opinions regarding the role of municipal government in the regulation of the fracking industry, please enter that information below. 12 f you would be open to a follow-up interview, please write your contact information below. If not, leave this question blank.

247 Appendix F: Example of Prior Municipal Regulation on Fracking

Codified Ordinances of the City of Warren, Ohio CHAPTER 731 Oil and Gas Wells

731.01 SOLICITING FOR OIL AND GAS LEASES.

No person, firm or corporation shall, within the corporate limits of the City, solicit residents for the purpose of obtaining a lease of mineral rights for gas and oil wells from the Clinton Sandstone formation, without first registering with the Planning Department.

For registration, the following shall be provided on a form provided by the City: the name of each person who will be doing the soliciting, the firm they are employed by and a picture of each individual that will be soliciting leases.

After the proper information has been received, the Planning Department shall issue a "Permit to Solicit for Gas and Oil Well Leases". The permit shall expire six months from the date of issue. On the same working day the permit to solicit is issued, the person, firm or corporation shall file a complete copy of the form(s) indicating the persons doing the soliciting, along with a copy of the permit with the Director of Public Service and Safety, and a complete copy with the Clerk of Council.

Each solicitor shall wear, in a visible position, a picture identification badge while soliciting for oil and gas leases. The Planning Department shall provide these badges at a cost of ten dollars ($10.00) each.

(Ord. 10175/90. Passed 10-24-90.)

731.02 ADOPTING STANDARDS.

The City hereby adopts the standards contained in Ohio R.C. Chapter 1509 for the drilling, constructing, reopening, converting, plugging back, plugging, operating, maintaining and abandoning of any oil or gas well within the limits of the City.

(Ord. 10175/90. Passed 10-24-90.)

731.03 STATE AUTHORIZATION AND FILING OF PERMITS, PLANS, ETC.

No person, firm or corporation shall, within the limits of the City, drill a new oil or gas well or drill into the City from a surface location outside the City limits, drill an existing oil or gas well any deeper, reopen an oil or gas well, convert an oil or gas well to any other use other than its original purpose or plug back an oil or gas well to a source of supply different from the existing pool, without first having obtained a permit to do so from the Chief of the Division of Oil and Gas of the State Department of Natural Resources, pursuant to Ohio R.C. Chapter 1509.

An exact and complete copy of the permit referred to in the preceding paragraph, along with an exact and complete copy of any application, plan, map and other documentation filed therefor with the Chief of the Division of Oil and Gas of the State Department of Natural Resources shall

248 be filed with the Director of Public Service and Safety at least five full business days prior to the commencement of any drilling, reopening, converting or plugging back as referred to in the preceding paragraph.

(Ord. 10354/92. Passed 2-12-92.)

731.04 CITY AUTHORIZATION.

No person, firm or corporation shall within the limits of the City, drill a new oil or gas well, drill an existing oil or gas well any deeper, reopen an oil or gas well, convert an oil or gas well to any use other than its original purpose or plug back an oil or gas well to a source of supply different from the existing pool, without first having obtained a permit that is, a "City permit", to do so issued from the Planning Director.

No person, firm or corporation shall drill into the City from a surface location outside the City limits, drill a new oil or gas well, drill an existing oil or gas well any deeper, reopen an oil and gas well, convert an oil or gas well to any other use other than its original purpose, or plug back an oil or gas well to a source of supply difference from the existing pool, without first obtaining a registration permit issued by the Planning Director.

The Planning Director shall issue such permit to any person, firm or corporation who has been issued a corresponding permit by the Chief of the Division of Oil and Gas of the State Department of Natural Resources, pursuant to Ohio R.C. Chapter 1509 and who has otherwise complied with the applicable requirements of this chapter. No person, firm or corporation shall be issued such a City permit until the fee of five thousand dollars ($5,000) has been paid to the City.

When the surface location of a gas or oil well is outside the corporate limits of the City, but enters or terminates inside the City limits, no person, firm or corporation shall be issued a registration permit until the fee of five thousand dollars ($5,000) has been paid to the City.

The following information shall be included when applying to drill or re-enter a well for gas, oil or other hydrocarbon within the corporate limits of the City.

(Ord. 10354/92. Passed 2-12-92.)

(a) Permit. Each application shall include a complete copy of the valid permit or permits issued by the State of Ohio for well or wells to be included in the conditional zoning. Such copy shall include the plan approved by the State for the disposal and storage of brine and other waste substances resulting, obtained or produced in connection with exploration, drilling or production of oil or gas.

(b) Plot Plan. Each application shall include a plot plan of the property involved in the application. Applicant shall develop the property in accordance with the plot plan. The plot plan shall have thereon:

(1) North arrow;

(2) Names, addresses and telephone numbers of record owner of property, applicant and driller;

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(3) Lot lines of all abutting properties;

(4) Location of all buildings and structures within a radii of 200 feet of the proposed well site;

(5) Locations of all wells and well appurtenances, that is, the well head(s), piping valves, tanks, tank batteries, sales lines and separators;

(6) A circle drawn on the plot plan at a radius of 500 feet from the proposed well site;

(7) The names and addresses of the owners of all properties shown on the plot plan, including the well site parcel;

(8) Location of all existing streams, ponds, lakes and other surface water bodies, including wetlands, within the 100 feet of the proposed well head;

(9) Locations of all pipelines from the well site or wells to tanks or tank batteries and of all pipelines from tanks to existing or new supply line or lines;

(10) Location of public and private utilities and easements within the lease area;

(11) Name, address and telephone number of individual whom may be contacted in case of emergency;

(12) A listing of the dates and times it is anticipated that site preparation, drilling erection, drilling and completion will take place;

(13) A permit fee of five thousand dollars ($5,000);

(14) The road bond referred to in this Chapter; and

(15) A certificate of liability insurance designating the City as an "additional insured" under the policy procured by the applicant.

(c) Brine Hauler. The application shall include the names, addresses, phone numbers and division registration number of each person who has been or will be contracted to haul brine, salt water or other waste from the well site.

(d) Emergency Information. The petitioner has complied with applicable oil and gas well emergency information.

(e) Site Analysis. After the above information has been received, the Planning Department shall conduct a site analysis before a City drilling permit is issued. It shall specify the conditions at the site, the types of vegetation, the topography and shall list any other important natural features.

(f) Restoration and Planting Plan. The petitioner shall submit a restoration and planting plan to the Department of Planning 99d Landowner and this plan is to be subject to their approval. The site shall be restored in accordance with such plan within thirty days after completion of drilling. Extensions may be requested and granted during poor weather conditions.

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(g) Fencing. Any person, firm or corporation who completes any well for production shall enclose the well, together with all surface facilities and storage tanks and any other facilities and appurtenances thereto, by a substantial fence properly built so as to ordinarily keep persons and animals out of the enclosure. All gates thereto shall be kept locked when the permittee or his employees are not within the enclosure. Nothing herein mandates all such facilities be within the same fenced area, and the Planning Director or his designate shall be authorized to approve any plan which he believes ordinarily protects persons and animals from danger, and is further defined as follows:

(1) A board-on-board fenced wall;

(2) A chain link fabric with 3-1/2 inch mesh interwoven with opaque materials for use with chink link fabric when such materials are compatible with surrounding uses and effectively screen the oil and gas facility.

(h) Landscaping. Landscaping shall be required in areas which are subject to public view or high traffic areas, in addition to fencing. It shall be of the evergreen variety.

(i) Storage Tanks. No permittee shall use, construct or operate in connection with any producing well within the City limits any crude oil storage tanks except to the extent of two steel or fiberglass tanks for oil or water storage, not exceeding 210 barrels capacity each, and so constructed and maintained as to be as vapor tight as possible or otherwise properly vented. Each tank shall be surrounded by an earthen fire wall at such distance from the tanks as will under any foreseeable circumstances hold and retain at least one hundred and fifty percent (150%) of the maximum capacity of such tank. Permittee may use, construct and operate a steel conventional separator and such other steel tanks and appurtenances as are necessary for treating oil, with each at such facilities to be so constructed and maintained as to be as vapor tight as possible. No such tanks may be located within 200 feet of a residence of a platted lot or parcel of land or within 200 feet of any building or structure unless permittee obtains a waiver releasing such 200 foot setback.

In areas that are visible to residential areas or visible from high traffic areas, the storage tanks shall not exceed six feet in height. Tanks shall be painted an inconspicuous color such as brown or green.

(j) Oil and Gas Facilities. All oil and gas facilities shall be painted and maintained in a good state of appearance. The facility shall have posted in a prominent place a metal sign no less than two square feet in an area upon which the following information shall be conspicuous;

(1) Permittee's name;

(2) Lease name;

(3) Location of the drill site;

(4) Identifying number of the permit issued by the State Department of Natural Resources Division of Oil and Gas;

(5) A number to contact permittee in case of emergency.

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(k) Maintenance of Premises. The premises shall be kept in a clean condition, free from rubbish of every character, to the satisfaction of the Planning Director or his designate, at all times during which the drilling operations or reworking operations are being conducted, and as long thereafter as oil or gas is being produced therefrom. The well site shall not be used for any other purpose except to conduct normal oil and gas production operations. The well site shall not be used for the storage of pipe, equipment, etc. (except for that equipment required for safety purposes), or materials, except during the drilling or servicing of the well or of the production facilities.

(l) Nuisance Condition Prohibited. All oil and drilling and production operations shall be conducted in such a manner as to eliminate, as fare as practical, dust, noise, vibration or noxious odors and shall be in accordance with the best accepted practices incident to the drilling for, and production of, oil, gas and other hydrocarbon substances. Proven technological improvements in exploration, drilling and production methods shall be adopted as they become, from time-to- time, capable of reducing factors of nuisance and annoyance in accordance with prudent practices in the industry.

(m) Fire Prevention.

(1) The permittee shall provide the City Fire Department a site plan indicating the location of the wellhead, tank battery, and or, any production facilities and the route of access.

(2) The permittee shall inform the City Fire Department as to all times the permittee shall be drilling, completing or reworking such oil and gas well.

(3) In case of an emergency, blow-out or the uncontrolled escaping of oil, the permittee shall immediately notify the City Fire Department, the Police Department, the Director of Service and Safety and the Planning Department.

(4) The permittee shall paint the main shut-off valve to the well red and supply the location to the Fire Department.

(Ord. 10175/90. Passed 10-24-90.)

(n) Maintenance and Security Bond. An annual maintenance and security bond in the amount of five thousand dollars ($5,000) shall be provided the City for each year the gas and/or oil well remains in existence to ensure the provisions of this chapter are adhered to. This bond shall be maintained in the office of the Engineering, Planning and Building Department.

Upon written notification by the City to the permittee of any discrepancies in regard to this chapter, the permittee shall correct same within thirty days of this notice or the City shall take the appropriate action, utilizing this bond, to correct the discrepancies.

(Ord. 10700/94. Passed 9-14-94.)

731.05 LIMITATIONS.

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Regardless of whether an appropriate permit has been obtained from the Chief of the Division of Oil and Gas of the State Department of Natural Resources, pursuant to Ohio R.C. Chapter 1509 and/or the Planning Director pursuant to this chapter, no person, firm or corporation shall:

(a) Drill a new gas or oil well in any zoning district other than a Manufacturing District; or

(b) Drill a new gas or oil well within the confines of any cemetery; or

(d) Drill a gas and oil well where an occupied residential structure(s) exists between a radius of 200 feet, unless a waiver is first signed by the owner of the property stating that the owner agrees to the well; but in no case shall a well be drilled between a radius of 100 feet.

(e) Drill a gas and oil well unless a "blow-out preventer" is utilized on the drilling rig.

(Ord. 10175/90. Passed 10-24-90.)

731.06 NUISANCES PROHIBITED.

No person, firm or corporation shall drill, construct, reopen, convert, plug back, plug, use, operate, maintain, repair, abandon or remove waste materials from any oil or gas well within the limits of the City in such a manner as to be injurious, noxious, offensive or dangerous to the health, safety, welfare, comfort or property of individuals or of the public.

(Ord. 10175/90. Passed 10-24-90.)

731.07 MOTOR VEHICLE USE OR OPERATION.

No person, firm or corporation operating within the limits of the City pursuant to Ohio R.C. Chapter 1509 and/or this chapter shall cause damage to any street, avenue, alley, lane or any public grounds within the limits of the City by virtue of the operation or use of any motor vehicle.

(Ord. 10175/90. Passed 10-24-90.)

731.08 BOND.

No person, firm or corporation shall, within the limits of the City, drill a new oil or gas well, drill an existing oil or gas well any deeper, reopen an oil or gas well, convert an oil or gas well to any use other than its original purpose, or plug back an oil or gas well to a source of supply different from the existing pool, until such person, firm or corporation executes and files with the Director of Public Service and Safety a surety bond. The bond shall be in an amount not less than twenty five thousand dollars ($25,000), conditioned on compliance with Section 731.06 and all other requirements of this chapter.

Each surety bond provided for in this section shall be executed by a surety company authorized to do business in the State. Any such bond shall be personally signed and acknowledged by both

253 principal and surety, or as to either by his attorney in fact, with a certified copy of the power of attorney attached thereto. Any such bond shall run to the City as obligee.

The bond shall remain in effect for a period of one year, renewable January 1st of each year, or until all oil wells covered under the bond have been plugged and abandoned in accordance with law and the site thereof properly restored.

(Ord. 10175/90. Passed 10-24-90.)

731.09 INSURANCE LIABILITY.

(a) Each permittee pursuant to this chapter shall obtain and keep in full force and effect liability insurance coverage for five million dollars ($5,000,000) combined single limit for bodily injury and property damage per occurrence, with the City named and maintained as an additional insured thereon.

(b) A permittee shall, whenever negligent whatsoever, indemnify and hold harmless the City from all damages, loss or liability of whatever nature or kind resulting to the City as a result of the erection, maintenance, or use of a well.

(Ord. 10175/90. Passed 10-24-90.)

731.10 USE OF CITY STREET RIGHTS OF WAY.

When not prohibited by law, ordinance, rule, regulation or otherwise, the Director of Public Service and Safety may permit, for due consideration, any of the City's street rights of way to be counted by any party seeking to have the same counted for purposes of securing the requisite acreage for obtaining of a permit(s) for the drilling of an oil and gas well.

Before giving any such permission, however, the Director of Public Service and Safety shall seek, and give due consideration to, a recommendation(s) from the Planning Director. Where impracticable, the Director of Public Service and Safety need not solicit bids in order to give such permission. The Director of Public Service and Safety may execute, on behalf of the City, any and all documentation necessary or useful to effectuate such permission.

Notwithstanding any foregoing provisions to the contrary, no permission shall be granted to count or include for purposes of this section, any streets, roads or drives within any of the City's parks, or any of the property or area of the City's parks.

(Ord. 10257/91. Passed 5-15-91.)

731.99 PENALTY.

Any person, firm or corporation who violates or fails to comply with, any provision of this chapter shall be fined not more than one thousand five hundred dollars ($1,500). Each day any violation of any provision of this chapter shall continue shall constitute a separate offense.

(Ord. 10175/90. Passed 10-24-90.

254 Appendix G: Example of New Comprehensive Municipal Regulation on Fracking

MUNICIPALITY OF MURRYSVILLE, WESTMORELAND COUNTY, PENNSYLVANIA

ORDINANCE NO. 930-15

AN ORDINANCE OF THE MUNICIPALITY OF MURRYSVILLE REPEALING AND REPLACING SECTION 220- 31(CC) OF THE ZONING ORDINANCE AND ADDING NEW USES TO SECTION 220-16, THE TABLE OF NON- RESIDENTIAL LAND PRINCIPAL LAND USES

WHEREAS, The Municipality of Murrysville has the duty and obligation to enact ordinances to protect the health and safety of its residents; and

WHEREAS, the Pennsylvania Municipalities Planning Code, Section 601, grants authority to The Municipality of Murrysville to enact Zoning Ordinances that protect and promote the health, safety and the general welfare of its residents; and,

WHEREAS, the Pennsylvania Municipalities Planning Code, Section 603 (i), requires municipalities with a zoning ordinance to provide for reasonable development of Mineral Resources; and,

WHEREAS, The Municipality of Murrysville believes the activity associated with Unconventional Oil and Gas Development without proper regulation may pose hazards to the health, safety and general welfare of the residents of the Municipality; and,

WHEREAS, The Council of the Municipality of Murrysville on October 5, 2011 adopted Ordinance 833- 11, establishing regulations for Unconventional Oil and Gas Drilling, Compressor Stations and Processing Plants, which were incorporated into its zoning ordinance as Section 220-31(CC), and

WHEREAS, on February 14, 2012, the Pennsylvania Legislature adopted, Act 13 of 2012, which established regulations for Oil and Gas Development operations, and severely limited the ability of Pennsylvania municipalities to utilize its zoning powers to regulate such activities in a manner consistent with their Comprehensive Plans; and

WHEREAS, Act 13 was challenged by Robinson Township, Washington County, and others and certain portions of Act 13 were invalidated; and

WHEREAS, Appeals were filed in the Pennsylvania Supreme Court, which by decision dated on December 19, 2013, the Commonwealth ruled among other things that Pennsylvania municipalities have the right to utilize their zoning powers to regulate oil and gas development operations consistent with their Comprehensive Plans, and in a plurality decision, held that Act 13 violated Article I, Section 27 of the Environmental Rights Amendment of the Pennsylvania Constitution; and

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WHEREAS, the Municipality of Murrysville Council reconvened its Marcellus Shale Task Force on April 2,

2014 for the purpose of reviewing the Supreme Court decision and to provide options to Council on improving the provisions of Section 220-31(CC) of the Zoning Ordinance and a Task Force Report was formally presented to Municipal Council on June 18, 2015; and

WHEREAS, the Task Force Report explored and analyzed many aspects of this type of development and it specifically addressed, including:

(i) Various land use options in order to determine appropriate locations for unconventional oil and gas drilling sites in the Municipality that would be consistent with its Comprehensive Plan and reasonably regulate the impact on the residents of the Municipality of Murrysville; (ii) the use of geospatial analysis to mitigate potential impacts to sensitive land uses; (iii) performance standards relating to oil and gas development; (iv) requirements to provide for the reasonable development of all land uses under Act 247; and (v) methods to protect the public health, safety and welfare as required under Article I, Section 27 of the Pennsylvania Constitution; and

WHEREAS, this proposed amendment maintains the existing zoning map that includes the Oil and Gas Recovery Overlay District established by the enactment of Ordinance 833-11; and

WHEREAS, this overlay district provides for the most appropriate areas for oil and gas drilling within the Municipality, based on the historic agricultural and rural resource recovery nature of the Rural Residential (R-R) district; and

WHEREAS, the underlying R-R zoned lands of the overlay district possess extremely low residential density as compared to the residential neighborhood zoning districts present in the R- 1, R-2 and R-3 districts, and the very high residential density surrounding the B, Business District, that permits industrial uses as a conditional use; and

WHEREAS, the future land use plan for the Municipality projects the overlay area as remaining low density and agricultural over the foreseeable time horizon; and

WHEREAS, in order to reasonably allow oil and gas development while balancing and mitigating potential impacts of drilling activity, this zoning amendment utilizes zoning tools authorized by the Pennsylvania Municipalities Code, such as yard requirements, setbacks, buffers and the conditional use designation with appropriate performance standards designed to place the burden on applicants for oil and gas development to demonstrate that their operations would mitigate impacts to the Municipality and its residents; and

WHEREAS, as a result of establishing this overlay district with the related zoning protections, the Municipality will provide for the reasonable development of this mineral resource; and

WHEREAS, on September 24, 2015, the Municipal Council established this ordinance as pending, and thereafter, published its action in the Penn-Franklin News; and

WHEREAS, per requirements of Act 247, the Pennsylvania Municipalities Planning Code, this pending ordinance was sent to the Murrysville Planning Commission and the Westmoreland County Department of Planning for the required 45-day review period; and

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WHEREAS, upon the completion of the 45-day review period, the Municipality will schedule the required public hearing with public notice for the purpose of seeking input from the public and other interested parties; and

WHEREAS, as a result of the Municipality conducting several public education sessions and meetings on issues associated with oil and gas drilling substantial revisions were proposed to the previously prepared Ordinance which requires that the newly drafted Ordinance be sent back to the Murrysville Planning Commission and the Westmoreland County Department of Planning for required 45 day review prior to conducting the public hearing for the proposed ordinance; and

WHEREAS, upon receipt of comments received by the Murrysville Planning Commission and the Westmoreland County Department of Planning, Council conducted a public hearing with public notice for the purpose of seeking input from the public and other interested parties on (Date of public hearing).

NOW, THEREFORE, be it ordained and enacted by the Council of the Municipality of Murrysville in meeting assembled, and it is hereby ordained and enacted by and with the authority of same as follows:

Section I: Repeal and Replacement of Section 220-31(CC) of the Zoning Ordinance

Section 220-31(CC) of the Zoning Ordinance is hereby repealed and replaced, in its entirety with the following text with the acknowledgement that the Oil and Gas Overlay District created as part of the Official Zoning Map by Ordinance # 833-11 shall remain.

CC. Exploration or production of oil or natural gas from shale reservoir or shale rock 1. Recovery of subsurface gas and oil deposits

These are activities limited to the recovery and removal of subsurface gas and oil deposits drilled with the intent to explore or produce oil or natural gas from a shale reservoir or source rock. This does not include the recovery and removal of any other subsurface minerals, such as coal, gravel, sand, clay, topsoil, stone or any other mineral other than oil and gas, from the shale rock reservoir or source rock. The foregoing use is permitted subject to the stated purpose of this Subsection CC and all of the requirements contained in this Subsection CC and the accompanying addendum, as pertaining.

2. Purpose

The purpose of this Subsection CC is to provide for the health, safety and welfare of the residents and their property in the Municipality of Murrysville, to insure compliance with the Charter of the Municipality of Murrysville; to provide the procedure for the issuance of zoning permits to enable the exploration or production of oil or natural gas from a shale reservoir or source rock; to protect the character of the community, facilitating beneficial and compatible land uses; and to further the Municipality's interest in the orderly development and use of land in a manner consistent with local demographic and land use concerns.

3. Definitions

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As used in this Subsection CC, the following terms shall be interpreted or defined as follows:

BEST MANAGEMENT PRACTICES

Best management practices (BMPs) are state-of-the-art mitigation measures applied to Oil and Gas Facilities and production to help ensure that energy development is conducted in a safe and environmentally responsible manner that protects air and water quality, landscapes and natural resources and public health.

BUNK HOUSE

A housing facility designed and intended to be used for a temporary period of time to house oil and gas exploration related workers. Such facility is not intended to accommodate families or school-aged children. A bunk house may be a travel trailer, camper, mobile home or a structure manufactured for this particular use.

COMPLETION OF THE WELL

The date 60 days after the end date of the drilling, re-drilling or reworking of the well site in which the well is properly equipped for production of oil or gas.

COMPRESSOR

A device used alone or in series to raise the pressure of natural gas and/or by-products to create a pressure differential to move or compress a liquid, vapor or gas.

COMPRESSOR STATION

An Oil and Gas Facility designed and constructed to compress natural gas, through the use of motors, that originates from an oil and gas well or collection of such wells and to operate as an upstream or midstream facility for delivery of oil and gas to a transmission pipeline, distribution pipeline, natural gas processing and/or treatment facility or underground storage field.

DRILLING

Any vertical or horizontal digging or boring of a new well or re-working of an existing well with the intention to explore, develop or produce oil, gas or other hydrocarbons or to inject gas, water or any other fluids or substances into the earth.

DRILLING AND STIMULATION EQUIPMENT

All parts and appurtenances to such structure and every piece of apparatus, machinery or equipment used, erected or maintained in connection with oil and gas drilling, as defined herein, as well as the completion and stimulation/workover equipment utilized to complete the well.

FLOWBACK WATER

The murky, salty water from fracking natural gas wells consisting of fracturing fluid which returns to the surface as well as produced water.

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FRACTURE or FRACKING

The process of injecting water, customized fracking fluid, steam, or gas into a gas well under pressure to improve gas recovery.

FRESH WATER

Water obtained from a potable water source of the Commonwealth such as a hydrant, stream, lake, water well, spring or other source that has not been treated or utilized in commercial or industrial operations.

FRESH GROUDWATER

Water in that portion of the generally recognized hydrologic cycle which occupies the pore spaces and fractures of saturated subsurface materials. Groundwater often supplies wells and springs and is often withdrawn for domestic, agricultural, municipal, industrial and other beneficial uses.

GAS WELL

Any well drilled for the intent of extracting gas or other hydrocarbons from beneath the surface of the earth.

IMPOUNDMENT, FRESHWATER

A depression, excavation or facility situated in or upon the ground, whether natural or artificial and whether lined or unlined, used to store freshwater.

IMPOUNDMENT, WASTEWATER

A lined depression excavation pit or facility situated in or upon the ground, whether natural or artificial, used to store waste water fluid including but not limited to brine, fracturing fluid, produced water, recycled water, impaired water, flow back water, or any other fluid that does not satisfy the definition of “fresh water”.

LOCAL STREET OR ROAD

A public street or road adopted by ordinance carrying a maximum of 2,000 AWDT and provides for no truck usage except for local deliveries. "AWDT" is defined as daily traffic count average over a one-week period.

MUNICIPALITY

The Municipality of Murrysville, Westmoreland County, Pennsylvania.

OIL and GAS

Crude oil, natural gas, methane gas, coal bed methane gas, propane, butane and/or any other constituents or similar substances that are produced by drilling a well of any depth into, through, and below the surface of the earth and defined as follows: Gas is a fluid, combustible or

259 noncombustible, which is produced in a natural state from the earth and maintains a gaseous or rarified state at standard temperature of 60 degrees Fahrenheit and pressure 14.7 PSIA or any manufactured gas, by-product gas or mixture of gases or natural gas liquids. Oil is defined as hydrocarbons in liquid form at standard temperature of 60 degrees Fahrenheit and pressure 14.7 PSIA, also referred to as petroleum.

OIL AND GAS DEVELOPMENT FACILITY or FACILITY

(1) NATURAL GAS COMPRESSOR STATION

A facility designed and constructed to compress natural gas that originates from an oil and gas well or collection of such wells operating as a midstream facility for delivery of oil and gas to a transmission pipeline, distribution pipeline, natural gas processing plant or underground storage field, including one or more natural gas compressors, associated buildings, pipes, valves, tanks and other equipment.

(2) NATURAL GAS PROCESSING PLANT

A facility designed and constructed to remove materials such as ethane, propane, butane, and other constituents or similar substances from natural gas to allow the natural gas to be of such quality as is required or appropriate for transmission or distribution to commercial markets, but not including facilities or equipment that are/is designed and constructed primarily to remove water, water vapor, oil or naturally occurring liquids from natural gas.

OIL AND GAS DEVELOPMENT or DEVELOPMENT

A land development which includes the well site preparation, well site construction, drilling, fracturing, and/or site restoration associated with an oil and gas well of any depth; water and other fluid storage; gas reservoir; impoundment and transportation used for such activities; and the installation and use of all associated equipment, including tanks, meters, and other equipment and structures, whether permanent or temporary; and the site preparation, construction, installation, maintenance and repair of oil and gas pipelines, not regulated by the Pennsylvania Public Utility Commission or United States Department of Transportation, Office of Pipeline Safety, and associated equipment; and all other equipment and activities associated with the exploration for, production of and transportation of oil and gas, including natural gas compressor stations and natural gas processing plants, structures defined as other support facilities or structures performing similar functions that operate as midstream facilities.

OIL AND GAS PROPERTY

Any surface property for which the underlying oil and gas rights are (1) leased for development and/or (2) under the control of the Operator.

OPERATOR

The person designated as Operator on the permit application and, if a separate entity from the Operator, the owner of the oil and gas development or facility which is the subject of the application.

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OWNER

A person who owns, manages, leases, controls or possesses a well property.

PERENNIAL STREAM

A perennial stream is a stream that has continuous flow in parts of its stream bed all year round during years of normal rainfall.

PERMANENT FACILITY AREA

Shall consist of the area designated by the Operator on the approved Plat detailing the outer boundary of the area where the Wellhead and permanent above-ground equipment and structures associated with the production and operation of oil and gas wells, post-hydraulic fracturing, are permitted.

PERSON

An individual, association, partnership, corporation, political subdivision or agency of the Federal Government, State government or other legal entity.

PLAT

A map, drawing or print, which shall be stamped by a Professional Engineer or registered surveyor, accurately drawn to scale showing the proposed or existing location of a Well or Wells, Well pad and Permanent Facility Area. The Plat must show Protected Structure setbacks.

PRIVATE WATER SUPPLY

Any water supply which is not provided by a water company and not delivered through water mains. The sources of the supply may be a well, borehole, spring, stream, river, lake or pond. The supply may serve just one property or several properties through a network of pipes.

PROTECTED STRUCTURE

Any occupied structure with walls and a roof within which persons live or customarily work, the attached portion of which is closer than seven hundred and fifty (750’) feet to the nearest portion of the boundary of a proposed well pad. This term shall not include: (1) any structure on which construction commenced after Operator filed an application for a conditional use pursuant to Subsection 220-31 (CC); or (2) any structure located on a property other than an Oil and Gas Property, where the surface owner of the property has signed a waiver relieving the Operator from implementation of the requirements of Subsection 220-31 (CC) (7). In the waiver, the surface owner must acknowledge that he has notified all residents on the property and that the Operator is explicitly relieved from complying with the regulations applicable to the Protected Structure. The waiver must be notarized and approved by the Municipal Solicitor.

RECREATION AREA

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An area of land owned and maintained by the Municipality, the Franklin Regional School District, the Westmoreland Conservancy or a non-public or private academic institution licensed by the State of Pennsylvania and used for active parks, playgrounds, athletic facilities and similar uses.

RE-DRILL

Deepening or sidetrack/horizontal drilling of the existing well bore extending more than 150 feet from said well bore.

RE-WORK

Re-entry of an existing well within the existing bore hole or by deepening or sidetrack/horizontal operations (which do not extend more than 150 feet horizontally from the existing well bore) or replacement of well liners or casings.

WASTE WATER

Water which has been previously used for industrial, municipal, domestic or other purposes including those associated with fracturing, drilling flowback, and other drilling related activities.

WATER IMPOUNDMENT - FRESH

A lined depression excavation pit or facility situated in or upon the ground whether natural or artificial and used to store fresh water.

WATER IMPOUNDMENT - WASTE

WELL

A bore hole drilled or being drilled for the purpose of, or to be used for producing or extracting gas, petroleum or another liquid related to oil or gas production.

WELLBORE

The hole that is drilled to aid in the exploration and recovery of natural resources including oil and gas.

WELLHEAD

The component at the surface of an oil or gas well that provides the structural and pressure- containing interface for the drilling and production equipment. The Wellhead is established after the completion of the hydraulic fracturing and is often referred to as the “Christmas Tree” within the industry.

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WELL PAD

Shall consist of the area designated on the approved Plat that includes the area accommodating all structures and equipment associated with or incidental to construction, drilling, fracturing and resource recovery prior to the establishment of the Permanent Facility Area, specifically excluding access roads.

WETLAND

Areas inundated or saturated by surface water or groundwater at a frequency and duration sufficient to support, and which normally support, a prevalence of vegetation typically adapted for life in saturated soil conditions, including swamps, marshes, bogs and similar areas.

4. Oil and Gas Recovery Overlay District

The Oil and Gas Recovery Overlay District is contained within the Official Zoning Map of the Municipality of Murrysville. The intent of the Oil and Gas Overlay District is to provide reasonable areas within the Municipality where mineral extraction may occur and to enact regulations regarding the activities associated with mineral extraction which are not otherwise within the jurisdiction of federal and state regulations and from which the Municipality is not preempted by the Pennsylvania Oil and Gas Act. The Municipality of Murrysville believes that mineral extraction activity without proper regulation may pose hazards to the health, safety, and general welfare of the residents of the Municipality. Therefore, the overlay district and associated regulations have been created in order to limit unconventional oil and gas recovery operations to areas of the Municipality identified in the Comprehensive Plan, based on historic agricultural and resource recovery areas and areas that permit short-term industrial uses such as quarrying and mining. The overlay area is also not targeted for development due to limited public infrastructure and had the least densities of households per square mile as identified in the Comprehensive Plan, thus excluding unconventional oil and gas operations from the more dense residential neighborhoods and commercial corridors in order to minimize impacts on these residential neighborhoods, public facilities, infrastructure, and the environment, and ensure that all operations comply with all federal, state and local laws.

5. Conditional Use a. Unconventional Oil and Gas Drilling shall be evaluated as a Conditional Use within the Oil and Gas Overlay District, subject to the procedures and provisions of this Section, Section 220- 31 of this Chapter.

6. Application Requirements

In order to be evaluated as a Conditional Use, the applicant shall be required to submit the following documents and information to the Municipality: a. A person or entity desiring approval of a conditional use application pursuant to this Subsection shall submit a written application. Before submitting an application, the applicant is strongly encouraged to meet with the municipal staff to determine the requirements of and the procedural steps for the application. The intent of this process is for the applicant to obtain

263 necessary information and guidance from the staff with regard to the site, plan preparation and governing laws. b. The application shall not be considered to be complete and properly filed unless and until all items required by this Subsection, including the application fee, have been received. Such application shall include the following information and plans:

(1) Fourteen (14) paper copies and one electronic copy of the completed application form supplied by the Municipality along with supporting documentation as identified in this section.

(2) Written permission from the property owner(s) who have legal or equitable title in and to the surface of the drill site or a demonstrable documentation of the applicant’s authority to occupy the surface for the purpose of mineral extraction.

(3) Copies of any and all permits and applications submitted to the various local, county, state and federal agencies. Permits and plans shall include but not be limited to the Pennsylvania Department of Environmental Protection well application and permit, ESCGP-1 or other erosion and sedimentation permits or approvals and all air, water and waste management permits.

(4) A survey of the Oil and Gas Development, prepared and stamped by a Professional Land Surveyor or Professional Engineer, showing the access road(s), Well pad, required yard setbacks, location and owners of the Protected Structures, the area where associated gas production equipment (tanks or other surface installations), the Well Bore, Bunk Houses, buildings, parking, staging areas, detention ponds and storage areas will be located.

7. Area, Yard, Height and Setback Requirements Applicable to Oil and Gas Developments

All area, yard, height, and setback requirements of the underlying zoning district as well as setback requirements established by the Commonwealth of Pennsylvania or United States Government shall apply, except for the following requirements below: a. The nearest portion of the outer boundary of the proposed Well Pad, as depicted on the approved Plat, shall be no closer than seven hundred and fifty feet (750’) from the nearest attached portion of a Protected Structure. b. Notwithstanding anything to the contrary contained in this ordinance or in any other applicable rules, laws or regulations, no Permanent Facility Area or Well Pad or any portion thereof shall be located less than three hundred feet (300’) from the nearest portion of the exterior boundary of a Recreation Area. c. Notwithstanding anything to the contrary contained in this ordinance or in any other applicable rules, laws or regulations, no temporary or permanent structures, equipment, materials or activities related to the use, development, construction, maintenance or modification of any facilities approved pursuant to these regulations, or any portion thereof including but not limited to an access road, shall be located less than three hundred and fifty feet (350’) from the nearest attached portion of a Protected Structure.

8. Performance Standards and Other Requirements

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The Applicant shall demonstrate compliance with the following performance standards that are associated with the development site and its impacts upon the Municipality and neighboring property owners: a. Traffic Controls

(1) The proposed routes must be designed to minimize the impact on streets within the Municipality. The Municipality reserves the right to designate alternate routes in the event that the applicant's proposed routes are deemed inadequate, unsafe or overly disruptive to normal vehicular traffic by the Municipal Engineer.

(2) Prior to the commencement of any activity at the development or facility, the Operator shall enter into a municipal roadway maintenance and repair agreement with the Municipality, in a form acceptable to the Municipality, regarding maintenance, repair and bonding of municipal roads that are to be used by vehicles for development activities. The municipal roadway maintenance and repair agreement will identify the responsibilities of the applicant to prepare, maintain, and repair municipal roads before, during and immediately after drilling operations associated with the development or facility. The operator shall take all necessary corrective action and measures as directed by the Municipality pursuant to the agreement to ensure the roadways are repaired and maintained during and at the conclusion of all development activities.

(3) The Operator shall take all necessary precautions to ensure the safety of persons in areas established for road crossing and/or adjacent to roadways (for example, persons waiting for public or school transportation). Where necessary and allowed, during periods of anticipated heavy or frequent truck traffic associated with the development or facility, the Operator will provide flagmen to ensure the public safety and include adequate signs and/or other warning measures for truck traffic and vehicular traffic.

(4) There will be no staging of trucks or equipment on local roads.

(5) The access driveway off the public road to the drill site shall be gated at the entrance to prevent illegal access into the drill site. The drill site assigned address shall be clearly marked.

(6) No idling of diesel powered motors or motor vehicles shall be permitted outside the well pad. b. Ponds and Pits

Best management practices are strongly recommended to be used during the drilling or completion of any Well. All facilities shall be allowed only on the parcel/property where the permitted drilling site is occurring. No off-site facilities shall be permitted. Impoundments shall not use surface aerators. All water impoundments shall be secured with a temporary fence with a secured gate as follows:

(1) The fence shall be chain link and a minimum of six (6) feet in height.

(2) The fencing shall be in place throughout the drill operation and until the impoundment is removed.

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(3) The chain link fence shall have a minimum thickness of eleven (11) gauge.

(4) Impoundments must comply with all state and federal laws in regards to leak detection and monitoring and must comply with EPA 9090 or any regulation that supersedes it.

c. Hours of Operation

Except for emergency and governmental compliance activity or during fracking or drilling, hours of operation are limited to Monday through Saturday, 7:00 a.m. to 9:00 p.m. All deliveries and pickups incidental to the oil and gas development or facility must occur during the defined hours of operation. d. Notice

At least 30 days prior to any activity at the development or facility, the Operator shall provide the following information to each property owner within 2,500 feet of the planned surface location of the development or facility:

(1) A general description of the planned operations at the development or facility and associated equipment to be used;

(2) The contact information for the Operator; and

(3) The date to hold a meeting locally with such residents to present the Operator's plans for the development or facility and to allow for questions and answers. The meeting shall be held prior to the commencement of development activity. e. Inspection and Monitoring

A duly authorized representative(s) of the Municipality, trained by the Operator or his agents, shall have the authority in relation to the enforcement of this Subsection CC, to enter upon the property of a development or facility for the purpose of inspecting the site, equipment and all other aspects of the site necessary to assure compliance with this Subsection CC.

f. Notification

The Operator of any development or facility shall notify the Emergency Management Coordinator, Municipal Zoning Officer and Municipal Engineer no less than 90 days prior to the startup and abandonment or shutdown of any well site.

g. Visual

The oil and gas development or facility shall be located, designed and constructed to minimize the removal of trees and shrubs, protect all natural resources, and minimize the amount of surface disturbance. The Operator shall not clear brush or trees by way of burning and shall chip, grind or remove all tree stumps from properties it clears for development purposes. The location and design of structures and site improvements shall be integrated with the natural color, form and texture of the surrounding area.

266 h. Hazards

Upon request of the Emergency Management Coordinator, the Operator shall, prior to drilling its first well in the Municipality, make available with at least 30 days' notice, at the applicant's sole cost and expense, one appropriate group training program for emergency responders and municipal code enforcement personnel. Such training shall be made available at least annually during any year that drilling activities take place at the oil and gas development or facility. Training should cover each phase of the development from site work to well completion. If additional Wells are drilled at the site, the Operator and Emergency Management Coordinator will determine if additional training is required.

j. Fencing, Screening and Buffering

(1) Galvanized chain-link security fencing shall not be required at the Well site, with the exception of fencing required pursuant to Section 8(b) above during the initial drilling or re- drilling operations, as long as manned twenty-four-hour on-site supervision and security are provided.

(2) Upon completion of drilling or re-drilling, security fencing consisting of a permanent, galvanized chain-link fence shall be promptly installed at all Well sites to secure Wellheads, storage tanks, separation facilities, water or liquid impoundment areas, and other mechanical and production equipment and structures on the Well site.

(3) Security fencing shall be at least six (6) feet in height, equipped with lockable gates at every access point, and having openings no less than 12 feet wide. Gates shall be kept locked except when being used for access to the site. Additional lockable gates used to access the Well site, fresh and waste water ponds or open pits by foot may be allowed, as necessary. The fence posts shall be set in concrete at sufficient depths to maintain the stability of the fence.

(4) The Municipality's first responders shall be given means to access the Well site in case of an emergency. It is recommended that a lock box be installed. The applicant must provide the Westmoreland County 911 Communications Center with necessary information to access the development or facility in case of an emergency.

(5) Warning signs shall be placed on the fencing surrounding the development or facility, providing notice of the potential dangers and the contact information in case of an emergency. During drilling and hydraulic fracturing, clearly visible warning signage must be posted on the well site.

(6) In construction of the oil and gas development or facility, the natural surroundings shall be considered and attempts made to preserve existing trees and other native vegetation. Existing trees and respective root systems should not be disturbed whenever possible.

(7) Oil and gas developments and facilities are subject to Chapter 220, § 220-51B, Landscaping and buffering, of the Code of the Municipality of Murrysville.

k. Bunk Houses

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(1) There shall be only one unit per development, with a maximum occupancy of six (6) individuals.

(2) The occupancy of the Bunk House shall not exceed 60 days at which time it shall be removed.

(3) The structure shall only be occupied during drilling, re-drilling, fracking or completion activities and only by employees or contractors responsible for such activities at the Well site.

(4) The Operator shall provide an enforceable alcohol and drug policy for occupants of the Bunk House.

(5) The Operator shall provide a firearms policy for occupants of the Bunk House.

(6) Occupants of the bunk house shall be required to sign in and out before entering or leaving the development.

(7) The Operator shall meet all state and local building code, water and sewage requirements.

l. Conditional Use Approval

Conditional Use approval shall automatically terminate, unless extended, if drilling is not commenced within one (1) year from the date of issuance of the written approval of the conditional use. The conditional use approval may be extended by Council, in its discretion, upon written request by the Operator. The Operator shall provide proof that the requested conditional use permit for such location has not changed. m. Developer’s Agreement

The applicant and any subcontractors associated with the development of the oil and gas well operation shall be required to sign upon receiving Conditional Use approval, a Developers Agreement, prepared by the Municipal Solicitor. Such Developers Agreement shall contain the conditions of approval as granted by Council and hold all parties responsible for compliance with those conditions.

9. Oil and Gas Development Facilities a. Oil and gas development facilities, which employ the use of compressors, motors or engines as part of the operations and/or produce air-contaminant emissions or offensive odors, gathering system facilities, Natural Gas Processing Plants and production facilities shall be listed as a Principal Use upon Conditional Use approval only in the B, Business Zoning District as a Conditional Use, subject to this Section CC, all applicable chapters of the Code of the Municipality of Murrysville and the following. In the event that any required provision of this section is otherwise regulated by the provisions of the Oil and Gas Act of the Commonwealth of Pennsylvania, the applicant shall submit documentation demonstrating compliance with the provisions of the Oil and Gas Act.

(1) The Applicant shall strive to consider locations for its temporary and permanent operations where prudent and possible so as to minimize interference with the residents’

268 enjoyment of their property and future Municipal development activities. The Applicant must present expert witness testimony to demonstrate the location of the facility will not unreasonably adversely affect lawful existing or authorized uses of adjacent properties.

(2) A Conditional Use application for an Oil and Gas Development Facility shall be accompanied with written permission from the property owner(s) who has legal or equitable title in and to the surface rights of the property or a court order recognizing the Operator’s authority to occupy the surface. If the Operator owns the property, proof must be provided.

(3) Conditional Use approval shall automatically terminate, unless extended, if substantial construction is not commenced and sustained within one (1) year from the date of issuance of the written approval of the conditional use. The conditional use approval may be extended by Council upon written request by the Operator. The Operator shall provide proof that the requested conditional use permit for such location has not changed.

(4) As part of the Conditional Use application, the Municipality and emergency management services shall be provided the name of the person supervising the compressor station and a phone number where such person can be reached twenty- four (24) hours a day. Also, a list of contact information for all sub-contractors associated with the operations of the station must be provided. The list shall include verification that all supervisors/Operators and sub-contractors at the site are aware and understand this ordinance.

(5) All Oil and Gas Development Facilities shall be completely enclosed by a building.

(a) The building shall be constructed such that the architectural character complements the existing character of the area. The building shall employ architectural features including but not limited to sloped roofs, stone and brick accents, steeples, cupolas, etc.

(b) The building shall employ sound proof type walls and all equipment associated with the compressor station shall be enclosed within the building. All acoustical structures shall be constructed of metal, masonry, or other structurally sound material as approved by the Municipality’s Planning Director.

(6) The access driveway off the public road to the station shall be gated at the entrance to prevent illegal access into the site. The site assigned address shall be clearly visible on the access gate for emergency 911 purposes. In addition, the sign shall include the station name and number, name of the Operator and the telephone number for a person responsible who may be contacted in case of emergency.

(7) Oil and Gas Development Facilities owners will evaluate the use of electric motors rather than internal combustion engines. Council may approve the use of internal combustion engines as part of the conditional use approval if deemed necessary based on evidence provided by the Operator. However, any exhaust from any internal combustion engine or compressor used in connection with the station, used by any production equipment, or used in development shall not be discharged into the open air unless it is equipped with an exhaust muffler or an exhaust box. The exhaust muffler or exhaust box shall be constructed of non-combustible materials designed and installed to suppress noise and disruptive vibrations. Moreover, all such equipment with an

269 exhaust muffler or exhaust box shall be maintained in good operating condition according to manufacturer’s specifications.

(8) A minimum parcel size of ten (10) acres is required. The front, rear and side yard requirements shall be a minimum of 250 feet.

(9) The site shall be designed utilizing natural topography and/or constructed earthen mounds so as to minimize visibility from adjacent streets and properties.

(10) No structure associated with oil and gas facilities shall be located less than 1,200 feet from any Protected Structure unless the owner has signed a waiver relieving the Operator from implementation of the measures established herein. In the waiver, the owner must acknowledge that the Operator is explicitly relieved from complying with the regulations applicable to a protected structure. The waiver must be notarized and approved by the Municipal Solicitor.

(11) The applicant shall provide a Noise Management Plan. The applicant shall provide an acoustics study as defined in Chapter 201, § 201-54R, of the Code of the Municipality of Murrysville.

(12) A security fence, as specified in Subsection 8 (j), Fencing, Screening and Buffering, shall be set back at least 10 feet from the property line and 20 feet from a public right-of- way.

(13) Drip pans must be placed in any location, under equipment, that has the potential to leak. All condensate tanks shall be equipped with vapor recovery and/or vapor destruction units.

(14) All Oil and Gas facilities, including but not limited to pumping units, storage tanks, buildings, and structures shall be designed to be compatible with the surrounding uses. Neutral colors shall include sand, gray, green and unobtrusive shades of brown, or other neutral colors, as approved by the Zoning Officer.

(15) Oil and Gas Development Facilities shall be inspected by the fire department prior to operation. During the active operation at the facility, Municipal Staff or consultants designated by the Chief Administrator shall have access to the site to determine continuing compliance with the conditional use approval.

(16) The Operator shall be required to provide notice of any spills and/or releases to the Municipality within twelve (12) hours of the discovery of the event.

Section II: Amendment to Section §220-16 of the Zoning Ordinance

The Nonresidential Zoning Districts Land Use Authorization Table contained is Section §220-16 of the Zoning Ordinance is hereby amended to include the following land uses: Natural Gas Compressor Station §220-31(CC) C Natural Gas Processing Plant §220-31 (CC) C

Section III: Reverter Clause

That if any section, subsection, sentence, clause phrase or portion of this ordinance is for any reason held invalid or unconstitutional by any court of competent jurisdiction, such shall be

270 deemed a separate, distinct and independent provision and such holding shall not affect validity of the remaining portions thereof.

Section V: Repealer

That all ordinances or parts of ordinances in conflict with this ordinance are hereby repealed.

Section VI: Effective Date

That this ordinance shall be in full force and effect from and after its passage and approval.