Pipeline Permit Scandal Highlights Confusion Amid Push to Build Plastics Plants

Read time: 9 mins
Shell Cracker Plant

For the past 42 years, the Beaver County Conservation District in western Pennsylvania has hosted their Maple Syrup Festival, an annual all-you-can-eat pancake breakfast featuring syrup made from maple trees in a park in Beaver Falls.

It’s a huge event in this county, population 164,742; organizers expected up to 40,000 attendees at last year’s festival, which included a Civil War re-enactment, pony rides, and craft demonstrations like bobbin lace making.

But with the arrival of Shell and its $6 billion plastics manufacturing plant, currently under construction in Beaver County, the conservation district assumed more serious responsibilities than throwing a maple syrup festival — including permitting the fossil fuel pipelines feeding the massive plastics complex.

In a scathing audit issued on August 15 by state regulators, the Beaver County Conservation District (BCCD) earned exceptionally low marks, after auditors found troubling problems that may have played a role in a major pipeline explosion last year.

The Pennsylvania Department of Environmental Protection (DEP) audit highlights what can go wrong when state and local regulators are unprepared for the arrival of a powerful industry, illustrating the pressures when once-unobtrusive offices suddenly take on outsized importance amid a push to promote rapid development.

Its findings could also spell trouble for Shell, which currently relies on permits authorized by the district for at least two pipelines connecting the company’s plastics plant to natural gas wells that will supply it with the raw materials to make plastics from fracked gas in the Marcellus Shale.

Construction at the Shell plastics plant in Beaver County in 2018
Construction at Shell's $6 billion plastics manufacturing complex in Beaver County, Pennsylvania, in August 2018.
 Credit: Governor Tom WolfCC BY 2.0

The district, auditors wrote, “has shown a lack of sound judgement in recent years,” grading the program overall “unsatisfactory.” On August 20, the DEP yanked the Beaver County District’s authority to be involved in erosion and sediment control permits entirely, and said it would review the district’s authority over other permits.

DEP staff identified significant and consistent problems with BCCD’s recordkeeping, permit review, and inspections,” DEP Secretary Patrick McDonnell said in a statement announcing the termination of the district’s authority.

Environmental groups expressed outrage. “The improper issuance of pipeline construction permits in Beaver County without the proper review is an egregious offense,” said Joseph Otis Minott, executive director and chief counsel for environmental group Clean Air Council, “that put residents’ safety and the environment at great risk.”

One Beaver County District Commissioner came under fire in the local press for failing to attend the organization’s meetings. “I read all the minutes and I contacted them numerous times for different things, but the meeting is 9:00 a.m. on Monday mornings,” Commissioner Dan Camp told the BeaverCountian. “No, I haven’t been attending them.”

Eight Day-Old Revolution Pipeline Explodes

Auditors reported that the Beaver County District had “reviewed and authorized” an erosion and sediment control permit for the Revolution pipeline.

That pipeline was built by Energy Transfer, builder of the Dakota Access pipeline. Its job was to carry so-called “wet” gas, a mix of hydrocarbons such as methane, propane, and ethane, from fracked gas wells in Pennsylvania to a plant where “dry gas” (also known as methane, the primary ingredient in natural gas) could be separated, leaving behind the natural gas liquids prized by the petrochemical and plastics industries.

The problem? The district had no legal authority to authorize the permit, which “should have been reviewed by DEP’s Oil and Gas Management program,” auditors wrote. The Revolution pipeline is considered a “gathering line,” which gathers gas from individual gas wells, and not a “transmission line,” which carries gas long distances, auditors wrote — and the district had no authority over gathering lines.

Revolution pipeline hillside
The site of the Revolution pipeline explosion. Since the blast, Energy Transfer has struggled to restore the steep slope where the pipeline burst. Credit: © 2019 Laura Evangelisto

On September 10, 2018, the Revolution pipeline burst, unleashing a column of fire 150 feet tall, destroying a home, a barn, several cars, and prompting the evacuation of over two dozen homes. One family barely escaped with their lives, according to neighbors.

The pipeline had only carried fossil fuels for eight days before igniting.

Investigators immediately focused on recent heavy rainfall in the area. While an official investigation by the Public Utility Commission remains underway, reports indicate that the steep hillside where the explosion occurred had slipped, causing Revolution to rupture in Beaver County.

Erosion and sediment (E&S) control plans are designed to prevent pipeline leaks by keeping the ground stable by controlling rainwater and other runoff.

The explosion of the Revolution Pipeline on the morning of September 10, 2018 on Ivy Lane in Center Township makes clear the stakes of BCCD’s improper issuance of permits,” five area environmental organizations wrote in a letter to the DEP shortly after the audit’s findings were made public. “The public cannot afford to continue to rely on permits reviewed by BCCD for protection.”

Unreported 'Potential Conflict of Interest'

Auditors identified a wide range of other problems in Beaver County.

For one thing, the district had accepted an “expedited review” fee for permits that was “in direct conflict” with DEP rules, the DEP found.

Second, it failed to properly notify the DEP about a conflict of interest related to Shell’s plastics plant, specifically a pipeline that would carry ethane, the raw materials for plastic, to Shell’s plant, a project known as the Falcon pipeline.

This project traversed the District’s property, where the District received a payment for an easement across their property,” auditors wrote. “The District should have contacted the DEP Regional Office for guidance related to the potential conflict of interest.”

Fracking for Plastics
This story is part of Fracking for Plastics, a DeSmog investigation into the proposed petrochemical build-out in the Ohio River Valley and the major players involved, along with the environmental, health, and socio-economic implications.

Shell had paid the Beaver County Conservation District $174,791 for an easement stretching roughly 1,500 feet across district property in Independence Township, according to NPR State Impact, a payment which works out to about $116.50 per foot. That’s higher than the $75-a-foot rate for Falcon pipeline easements which FarmProgress reported Shell had paid in 2017, and nearly triple the $40-a-foot rate that Shell reportedly initially offered to Pennsylvania landowners.

There are signs that the district had previously faced financial challenges. In 2017, a board member had resigned from Beaver County Conservation District, citing such difficulties, according to local press reports.

I can no longer be a part of a Board that doesn’t have a financial plan for the District,” Sandie Egley said as she resigned from the district’s board, according to the Beaver Countian. “For many years [the] Maple Syrup Festival has lost tens of thousands [of dollars] and with each passing year failed to developed [sic] a plan to improve financially.”

Not long after, Shell was under pressures of its own. In late 2017, the company had forged ahead with groundbreaking on construction of its $6 billion plastics manufacturing site, known as an ethane “cracker,” without first obtaining all the permits necessary for the Falcon pipeline.

In May 2018, environmental groups filed public comments objecting to Falcon’s application to neighboring Ohio for those two permits, calling Shell’s plans inadequate and warning that the permits were likely barred by state law.

The Beaver County District had been granted authority by the DEP to review and authorize two types of permits, Chapter 102 permits for erosion and sediment control and Chapter 105 permits, which relate to waterways and wetlands.

Land clearing for a shale gas pipeline in Pennsylvania
Land clearing for a shale gas pipeline in Pennsylvania in 2012.
Credit: Max Phillips/Jeremy Buckingham MLC, via Beyond Coal & Gas Image LibraryCC BY 2.0

The DEP ultimately issued Falcon’s Chapters 102 and 105 permits in December 2018, following what the agency called “an extensive review,” conducted “in consultation with the three conservation districts,” including Beaver County’s.

Falcon is not the only Shell pipeline where the district's role drew the ire of auditors. The district had told the DEP that it would work with state officials on permits for another pipeline, known as the National Fuel Gas project, intended to connect with Shell’s plastics plant, a pipeline which will cross the Revolution pipeline within a few hundred feet of the site where the latter exploded in Beaver County. Auditors wrote that the district nonetheless authorized erosion and sediment control and water permits without DEP’s green light.

In a statement, environmental groups called on the DEP to suspend all of the permits reviewed by the district and to invite the state attorney general to investigate “potential criminal violations.”

We need to proceed more carefully when reviewing permits for pipeline construction, because of the growing evidence that industry is not doing a thorough job when constructing pipelines,” said Matthew Mehalik, executive director of the Breathe Project. “The DEP must hold pipeline companies accountable to the highest standards for these risky projects and not allow them to be rammed through regulatory review.”

Hills and Valleys

One of the key concerns in the petrochemical industry about pursuing a build-out of plastics and chemical manufacturing sites in the Appalachian Ohio River Valley is the ground itself — the hills and mountains that make the region a polar opposite to the flat expanses of Texas and other Gulf Coast states where the American petrochemical industry has called home for decades.

Shell plastics plant construction site in hills of Pennsylvania in 2016.
Shell plastics plant construction site in Beaver County, November 2014. Credit: Governor Tom WolfCC BY 2.0

Wally Kandel, co-founder of Shale Crescent USA, which markets the Ohio River Valley to petrochemical manufacturers, described the problem in April at a West Virginia Manufacturers' Association industry conference.

“This is why we go to the executives, the CEOs of the companies,” Kandel said, “because instead of sending somebody out, 'go find a place to build a petrochemical plant' — because when they get off the airplane and look around, they go, 'Darn, there's way too many hills here,' what we do is we show that there's a billion dollar advantage by building a plant here and then the CEOs go 'Go find me a place in Shale Crescent USA for me to build my next plant.'”

Beaver County is not the only county in fracking-rich Pennsylvania where local conservation districts are granted authority over Chapter 102 and 105 permits. Every county except Philadelphia has that authority for erosion and sediment permits, and roughly half of the state’s counties have authority for the water and wetlands permits. A dozen of the state’s counties enjoy greater authority over permits than Beaver County had.

“I hope Gov. Wolf will shut down all pipeline construction projects and have a major investigation,” said Rev. James Hamilton, a retired United Methodist pastor who lives in Ambridge, Pennsylvania, “not only in this county but in other places where conservation districts are issuing permits.”

Jim Shaner, the district’s executive director, said after a public hearing on August 28 that the state should not have revoked the district’s authority. “We should be reviewing the permits, we have not done anything wrong, we just had a filing issue to where stuff wasn’t filed in hard copy,” Shaner said, according to State Impact.

Neither Shell nor the Beaver County Conservation District responded to requests for comment.

Main image: Construction of the Shell Cracker Plant along the Ohio River, Beaver County, Pennsylvania in January 2019. Credit: Drums600CC BY-SA 4.0
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