Report: Shale group has undisclosed industry ties - Shale Reporter : Industry

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Report: Shale group has undisclosed industry ties

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Posted: Thursday, June 13, 2013 8:24 am

PITTSBURGH -- The Center for Sustainable Shale Development finds itself in a tough place once again.

Since its March launch, the center has been hailed as both a worthy, it’s-about-time-collaboration between the natural gas industry and environmentalists, while also being called a “greenwashing,” pseudo-environmentally conscious effort fueled by big energy.

And now, a new report points to the latter.

According to a recent Public Accountability Initiative report, “Big Green Fracking Machine,” the Heinz Endowments -- a major CSSD sponsor -- and various environmental groups represented on the center’s board of directors have “extensive undisclosed ties” to the very industry the center is trying to regulate.

The report cites two ties between CSSD and the industry: Heinz Endowments President Robert F. Vagt is also a director of natural gas pipeline company, Kinder Morgan, and owns $1.2 million in Kinder Morgan stock, a connection not disclosed on the Heinz Endowments or CSSD websites, the report says.

CSSD’s board seats, even those chaired by environmental groups, also are connected to the industry, the report says. Five environmental groups were involved in creating the center’s drilling standards, but only three were granted board seats, including the Pennsylvania Environmental Council, half of whose own board seats come from the Marcellus Shale Coalition, an industry group.

In May, The Beaver County Times reported that CSSD’s interim director, Andrew Place, was also the corporate director of energy and environmental policy at EQT Corp., a company that had nearly 80 billion cubic feet of natural gas production in the Marcellus shale in the first quarter of this year. This connection was also included in the PAI report.

Place also openly shared his EQT ties with The Times and said that ultimately his position as interim director of CSSD “should not be held by someone whose paycheck is written by a gas company.”

SO WHO IS CSSD?

CSSD, called an “unprecedented collaboration” between the industry and their environmental opponents, is made up of four gas companies, two philanthropies and five environmental groups. CSSD was announced in March and has since touted its creation of a set of voluntary best practice standards and certification for the industry.

Among its founding members are Chevron, Clean Air Task Force, Consol Energy, Environmental Defense Fund, EQT Corp., Group Against Smog and Pollution, Heinz Endowments, PennFuture, Pennsylvania Environmental Council, Shell and the William Penn Foundation.

The 12-person board is equally divided, with four industry representatives, four from the environmental or philanthropy side and four with no affiliations. Board members range from the president of the Clean Air Task Force to the president of Chevron to the president of Carnegie Mellon University.

UNFLATTERING COMPARISONS

The PAI report also compared CSSD to other industry groups -- what the report calls “front groups” for oil and gas companies.

“The industry has created faux grassroots public relations campaigns, sponsored university research downplaying fracking’s environmental effects and extolling its economic benefits, and founded green-sounding non-profit front groups to give the appearance of environmentalist support for natural gas,” the report says. “(CSSD) appears to be a recent development in this campaign, combining elements of other industry efforts to assuage public fears about fracking.”

The report also draws similarities between CSSD and industry groups such as Energy in Depth, created in 2009 by the Independent Petroleum Association.

“CSSD seems to be a sophisticated effort to brand fracking as environmentally friendly,” said Robert Galbraith, a PAI analyst and co-author of the report. “The Center for Sustainable Shale Development combines these tactics in order to greenwash hydraulic fracturing.”

And PAI has a major problem with what it describes as a lack of disclosure on CSSD’s part.

“The failure to disclose and manage Vagt’s blatant conflict of interest is a significant violation of the public trust,” said Kevin Connor, report co-author and director of PAI.

Galbraith agreed.

“I can say that beyond being led by a public policy director for EQT (Place), Vagt is a director of one of the largest midstream companies in the country and has a fiduciary duty to Kinder Morgan shareholders,” he said Wednesday. “The fact that this went undisclosed by both the Heinz Endowments, where Vagt is president, and by the CSSD, which is attempting to foment an image of independence from the gas industry, is extremely damning and calls into question what exactly CSSD is actually trying to achieve.”

He also called into question the center’s certification process: “Since the CSSD hasn't started certifying drillers yet, it's hard to say how its ties to the gas industry will affect its effectiveness; however, these deep conflicts do not portend well.”

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