A Town Supervisor’s Letter to IOGA

Dear IOGA: I am not Mr. LaFountain. I am the Supervisor of the Town of Lebanon. We have had gas drilling of one form or another in this township since the 1940s. My planning board chair, Gary Will, Colgate Professor of Geology Bruce Selleck, a local resident and planning board member at the time, and myself met with Mr. Gil and Mr. Holko of Lenape Resources for three hours in 2006 at the request of IOGA and Assemblyman Magee. Mr. Gil, as Executive Director and Mr. Holko as a board member, attended to represent their views. No other group, organization and entity has ever been granted this amount of direct discussion time with relevant town officials regarding any issue in my 10 years and it was only done at the time because Assemblyman Magee had requested we meet, and he had sponsored legislation allowing the Town of Lebanon authority to consider a fuel production tax as opposed to the existing system of taxation on natural gas, which was and has been an issue supported by our town board and a majority of our constituents in multiple surveys since I have been in office. Several days later, Mr. Gil sent a letter to Assemblyman Magee and State Senator Valesky that remarkably misstated and misrepresented the result of the meeting and discussion at the time, as well as how much the industry contributed to the tax base of the town and the county at the time. Norse Energy Inc., the principal gas developer and lease holder in our town, operator of about 60 conventional gas wells, has had the opportunity to present at multiple town meeting forums to the public alongside the DEC, PSC, Attorney General, Ag and Markets and other relevant state and county agencies on multiple occasions since 2002 including being present at public hearings on seismic testing and road bore requests. Mr. Gil of IOGA has also been present for several of those meetings and is well aware of how well

informed we are about the development of natural gas in our town and statewide. The town has also held or participated in meetings in co-sponsorship with the Farm Bureau and land coalition supporters in the past to educate the public as to appropriate, legal and advantageous lease negotiation approaches as well as ensuring sound drilling practices on a property owner’s land. In fact, it would be accurate to state that where our town has been the most negligent historically is in granting a fair and equal time forum to those who are opposed to drilling on the basis of environmental, public health, land value and local farming/economic development/farm to market concerns historically. While this was never our intention, it occurred simply because at the time, and we were much early in this process than other towns in the region, and no such organizations or direct spokespeople or technical experts were known to us. The allegations and complaints against Norse and its contractors or affiliates forwarded to my office from constituents and property owners over the past 10 years, many of which I or other town officials received and have been forwarded to the office of the Attorney General, the DEC, our state representatives and the PSC include the following: 1. Unethical leasing practices including threats of eminent domain, intimidation, misrepresentation of state laws and leasing, late evening visits to pressure lease signings, misrepresentation of contractual distinctions between mineral rights and gas rights, and even the forging of leasing and seismic testing documents. 2. Seismic trespass on private property and failure to accurately represent which properties has signed off on permission to allow seismic testing and which did not. 3. Questionable and unethical tactics regarding the use of compulsory integration to avoid having to negotiate fairly with landowners or respect landowners refusal to permit drilling, and at least one spacing unit in our

township that turned out to have been permitted without the requisite 60 percent landowners signed up- essentially an illegal spacing unit. 4. Failure to consistently comply with provisions of our road repair contract agreement which included a 14 day notification related to natural gas development activity. The most notable of these was a low volume hydraulic fracturing effort of a well in our township at dusk and nighttime on a Labor Day holiday Weekend two years ago without prior notification, when our agreement is very specific as to any activity. The argument was that the DEC permitted the activity but the agreement (with the town) is separate from (the DEC permit) and requires notification of any natural gas development activity and hydrofracking of a well (that) would meet that criteria. 5. Delays in paying out royalties, and questions regarding gas measurement activities. 6. Unsupervised open brine storage containers and brine pits where the public and animals had access. 7. Deliberate puncturing of open brine pits to permit drainage of brine rather than having to arrange for disposal. 8. A gas well rig fire and diesel fuel spill where adjacent property owners still say they can smell the diesel and where no water testing has been done to verify if there is any groundwater pollution, and repeated problems with the sloughing off of hillside and sediment pollution into a vital trout stream and the Lebanon Reservoir on exceptionally rainy days since the incident five years ago. 9. Dumping of sediment in violation of DEC regulations in bodies of water or streambeds. 10. Attempting to extract water from sources without consent or notification. 11. Promises of providing brine to mix with town sand to extend salt use on town roads in winter that were never followed up on even after obtaining DEC approval.

12. Significant delays in contracting with road vendors to repair town road impacts. 13. Failure to coordinate, communicate or cooperate with town officials on a consistent basis with regard to any and all activities that had impacts on the town’s separate ongoing scheduled road maintenance program. 14. Misrepresenting activities related to gas drilling and compulsory integration at public meetings. 15. Near miss accidents reported to the Sheriff’s office of heavy trucks that were driving too fast and in too risky a way on town and county roads. 16. Failure to notify the highway supt. of routes to gas wells that resulted in excessive and unnecessary damage to town roads and infrastructure that also cost the company unnecessary extra dollars. 17. Complaints of negatively impacted water sources, foundations and property values in the township allegedly due to seismic testing or drilling activities. 18. Inconsistent pre testing practices of adjacent water wells and water sources and no post testing of water wells to assess potential impacts. 19. Threats of intimidation to shut down wells and attempts to violate contractual agreements and leases with landowners with gas wells who had signed up expressly so that some gas could be utilized in home and farm activities. 20. Opposition to attempts by local government to be granted the option to consider a local fuel production tax as a replacement for the current system of local property assessment of natural gas production that prevented such measures from going forward to give local governments this choice. There are other complaints I have not listed but these represent the general categories of concerns or allegations. The AG’s office has attended meetings on these concerns and met with impacted landowners at times or taken complaints.

I will pass your request on to my town board for a final decision as they are the final authority on this matter, but I find IOGA to be an unreliable source of information for an industry that my experience has informed me is riddled with conflicts of interest. You are simply a lobbying organization posing as a trade organization. I approached this issue with an open mind in 2002 when first introduced to a proposed pipeline and drilling in my township and have had 10 years of interaction with the industry and at times, your office. I have read many of your press releases and quotations in news articles and online posts. I have attended many workshops and presented besides pro-drilling advocates in the industry or related industries and have heard the technological and geological arguments in favor of HVHF. I have also heard the arguments against as well. I have shared as much information as I am able with my town board and my constituents. I remain someone dedicated to ensuring that all town residents are fairly represented on this issue and that responsible natural gas development requires that those who do not wish to be impacted are protected and will not have their property rights or quality of life violated, that those who choose to develop natural gas extraction on their property who have similarly minded neighbors and are fairly treated, compensated and protected and that the necessary oversight and best practices are employed by regulation and not voluntary compliance or hope of compliance to ensure this is assured and not assumed. There are clear arguments that natural gas drilling, when done properly, could benefit farmers and landowners in terms of signing bonuses and royalties in a struggling rural economy, and in some industries, create local jobs and improve economic conditions temporarily. There are also equally clear arguments as to why in the long run, natural gas development that involves the use of HVHF can produce long term consequences for property owners and residents that could negatively impact other business or farm activities, public health and safety, quality of life, land values and ability to sell or finance the selling of property, water supplies and even retirement plans of many current landowners.


I have had many discussions with natural gas industry representatives and municipal officials as well as state regulatory agencies, and after 10 years of addressing this issue on the local government level, my direct experience with the industry and many local complaints against it have helped me define what I think of your words and information vs. your actual practices. Your own organization tried to refer to the former Norse Energy as a bad actor during our meeting, which you repeatedly told Assemblyman Magee was the “poster boy for bad in the industry” and the remarkably short sighted and “novel” solution at the time offered by Mr. Holko was we needed “more drilling operators and companies in the township” to solve our problems with Norse even though Norse already had the massive majority of the leases. 10 years later, Norse has discontinued all drilling operating, sold its assets to the new Emkey Resouces which is run by the former Norse CEO. We are waiting to see what this will mean. Norse discontinued drilling due to being $90 million in debt, we were told, despite their former and new CEO boasting in a video to shareholders years ago that they had secured a very favorable position with regards to gas drilling in the region by signing people up quietly and cheaply and were well positioned for the Marcellus and Utica Shale plays. So, decisions made by Norse in a free enterprise system of what were identified at the time as high or long producing Herkimer and Medina sandstone wells in the towns of Lebanon and Smyrna, despite signing up many of our local residents very cheaply and with confidentiality agreements ensuring neighbors did not talk to neighbors, still failed to register a profit. I find it informative that despite those attempts to scapegoat Norse at the time as the “only bad operator” in the state of NY, years later one of their company representatives. Mr. Holbrook, is a frequent spokesman and member of your board and of course, quoted frequently and gave inaccurate representation to our road repair agreement with Norse on the Capitol Pressroom with Susan Arbetter several years ago. I heard the program live and called in to correct the inaccuracies and appeared over a month later with a town resident who had a very negative experience with the company.


As someone who has attended many local govt. workshops and meetings on this issue as well as attending state public hearings on proposed regulations on natural gas drilling, I trust my experience and the ability to sift through the information over IOGA’s PR campaign. It is my town board’s call. They are well aware of many of the arguments in favor and against moratoriums, road use laws and bans on natural gas development and are studying the issue in connection with our Town Attorney and other municipal legal authorities. Jim Goldstein, Supervisor, Town of Lebanon
From: Cherie Messore Sent: Friday, August 10, 2012 3:58 PM To: lebanon@citlink.net Subject: Natural Gas Industry in NYS Dear Mr LaFountain:: It has come to our attention that you may be hearing from citizens who are encouraging town governments to pass bans or moratoria to prevent or delay natural gas development. These citizens may be seeking more time and opportunity to learn about hydraulic fracturing and the impact it will have on their communities. We are concerned that citizens who oppose fossil fuels may be misrepresenting the current status of the Department of Conservation’s revised Supplemental Generic Economic Impact Statement as well as the role of local communities. To this end, IOGA of NY representatives are meeting with municipal leaders and citizens to answer questions and provide support in understanding the natural gas industry and its exploration processes. Before you make further decisions about local zoning or moratoria, we would like to meet with you and/or your staff to share important information regarding the industry, current NYS regulations and the possible community impacts (both positive and negative). Please call Cherie Messore at 716.202.4688 ext. 103 to schedule a meeting. Thank you for your consideration. Very truly yours,

Brad Gill Executive Director


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