The Secret of the Great American Fracking Bubble


The Secret of the Great American Fracking Bubble

By Justin Mikulka, Originally published by DeSmog. April 20, 2018

                                                                    Shale production in Wyoming’s Jonah gas field. Credit: EcoFlight

In 2008, Aubrey McClendon was the highest paid Fortune 500 CEO in America, a title he earned taking home $112 million for running Chesapeake Energy. Later dubbed “The Shale King,” he was at the forefront of the oil and gas industry’s next boom, made possible by advances in fracking, which broke open fossil fuels from shale formations around the U.S.

What was McClendon’s secret? Instead of running a company that aimed to sell oil and gas, he was essentially flipping real estate: acquiring leases to drill on land and then reselling them for five to 10 times more, something McClendon explained was a lot more profitable than “trying to produce gas.” But his story may serve as a cautionary tale for an industry that keeps making big promises on borrowed dimes — while its investors begin losing patience, a trend DeSmog will be investigating in an in-depth series over the coming weeks.

From 2008 to 2009, Chesapeake Energy’s stock swung from $64 a share under McClendon to around $17. Today, it’s worth just $3 a share — the same price it was in 2000. A visionary when it came to fracking, McClendon perfected the formula of borrowing money to drive the revolution that reshaped American energy markets.

An Industry Built on Debt

Roughly a decade after McClendon’s rise, the Wall Street Journal reported that “energy companies [since 2007] have spent $280 billion more than they generated from operations on shale investments, according to advisory firm Evercore ISI.”

As a whole, the American fracking experiment has been a financial disaster for many of its investors, who have been plagued by the industry’s heavy borrowing, low returns, and bankruptcies, and the path to becoming profitable is lined with significant potential hurdles. Up to this point, the industry has been drilling the “sweet spots” in the country’s major shale formations, reaching the easiest and most valuable oil first.

But at the same time energy companies are borrowing more money to drill more wells, the sweet spots are drying up, creating a Catch-22 as more drilling drives more debt.

“You have to keep drilling,” David Hughes, a geoscientist and fellow specializing in shale gas and oil production at the Post Carbon Institute, told DeSmog. But he also noted that with most of the sweet spots already drilled, producers are forced to move to less productive areas.

The result? “Productivity goes down and the costs remain the same,” he explained.

While Hughes understands the industry’s rationale for continuing to drill new wells at a loss, he doubts the sustainability of the practice.

“I don’t think in the long-term they can drill their way out of this,” Hughes told DeSmog.

While politicians and the mainstream media tout an American energy “revolution,” it is becoming clear that — like the housing bubble just a few years earlier — the American oil and gas boom spurred by fracking innovations may be one of the largest money-losing endeavors in the nation’s history. And it caught up with McClendon.

In 2016, the shale king was indicted for rigging bids at drilling lease auctions. He died the very next day in a single car crash, leading to speculation McClendon committed suicide, a rumor impossible to confirm. However, the police chief on the scene noted: “There was plenty of opportunity for him to correct and get back on the roadway and that didn’t occur.”

The same could be said of the current shale industry. There is plenty of opportunity for these energy companies to correct their path — for example, by linking CEO pay to company profits rather than oil production volumes — but instead they are plowing full-speed ahead with a business model that seems poised for a crash.

But Hope Springs Eternal

Of course, business media and conservative think tanks are still selling the story that the fracking industry has produced an economic and technical revolution.

In 2017 Investors Business Daily ran an opinion piece with the title, “The Shale Revolution Is A Made-In-America Success Story.” It was authored by Mark Perry of the American Enterprise Institute — a free market-focused think tank funded in part by the oil and gas industry.

How does the author measure success? Not via profits. The metric Perry uses to argue the success of the fracking industry is production volume. And it is true that the volumes of oil produced by fracking shale are increasing and currently at record levels. But here is the catch — when you lose money on each barrel of oil you pump and sell — the more you pump, the more money you lose. While it is true that the industry has been successful at getting oil out of the ground, its companies have mostly lost money doing it.

However, much like with the U.S. housing boom, this false narrative persists that the fracking industry is a money-making, rather than money-losing, venture.

Wall Street Journal headline published in early 2018 projected this eternal optimism about the fracking industry: “Frackers Could Make More Money Than Ever in 2018, If They Don’t Blow It.”

This headline manages to be, at the same time, both very misleading and true. Misleading because the industry has never made money. True because if oil and gas companies make any money fracking in 2018, it would be more “than ever.”

However, the nuance comes in the sub-headline: “U.S. shale companies are poised to make real money this year for the first time since the start of the fracking boom.”

Poised to make “real money” for “the first time.” Or to put it another way, the industry hopes to stop losing large amounts of real money for the first time this year.

In March 2017, The Economist wrote about the finances of the fracking industry, pointing out just how much money these businesses are burning through:

With the exception of airlines, Chinese state enterprises, and Silicon Valley unicorns — private firms valued at more than $1 billion — shale firms are on an unparalleled money-losing streak. About $11 billion was torched in the latest quarter, as capital expenditures exceeded cashflows. The cash-burn rate may well rise again this year.

Some historic money-losing has been going on, and is expected to continue, as reported by the Wall Street Journal: “Wood Mackenzie estimates that if oil prices hover around $50, shale companies won’t generate positive cash flow as a group until 2020.” However, Craig McMahon, senior vice president at Wood MacKenzie, notes, “Even then, only the most efficient operators will do well.”

U.S. oil produced via fracking is priced as West Texas Intermediate (WTI), which averaged $41 a barrel in 2016 and $51 in 2017. The consensus is that WTI should average over $50 a barrel in 2018, thus providing the industry another reason to keep pushing forward. However, even in 2017 with the average over $50 a barrel, the industry as a whole was not profitable.

Irrational Exuberance

In the introduction to The Big Short, Michael Lewis’ book-turned-movie about how the 2008 financial crash unfolded, he describes the finances of the housing bubble:

“All these subprime lending companies were growing so rapidly, and using such goofy accounting, that they could mask the fact that they had no real earnings, just illusory, accounting-driven, ones. They had the essential feature of a Ponzi scheme: To maintain the fiction that they were profitable enterprises, they needed more and more capital to create more and more subprime loans.”

If you substitute “shale oil and gas development companies” for “subprime lending companies,” it becomes an apt description of the current shale industry. These companies are losing more money than they make and can only sustain this scenario if lenders continue to bankroll their efforts, allowing the fracking industry to drill more wells as it points to production increases, rather than profits, as progress. Which — for now — Wall Street continues to do in a big way.

This article is the first in a series investigating the economics of fracking and where the vast sums of money being pumped into this industry are actually going. The series will look at how fracking companies are shifting these epic losses to the American taxpayers. It will review the huge challenges facing the industry even if oil and gas prices rise: the physical production limits of fracked wells, rising interest rates, rising water costs, competition from renewables, OPEC’s plans, and what happens if Wall Street stops loaning it money.

The oil industry has always been a boom or bust industry. And during each boom someone inevitably declares that “this time is different,” assuring everyone there won’t be a bust. The sentiment about the early 2000s housing bubble was much the same, with critics being drowned out by the players claiming that, this time it was different, arguing “Housing doesn’t go down in value.”

And what about for shale production? Is this time really different? Some in the industry apparently think so.

“Is this time going to be different? I think yes, a little bit,” energy asset manager Will Riley told the Wall Street Journal. “Companies will look to increase growth a little, but at a more moderate pace.” There is little evidence of restraint or moderation in the industry. Until analysts and investors start talking about profits instead of growth, however, this time is likely to end, at some point, in a completely familiar and predictable way: bust. A fate even Aubrey McClendon, the highest-paid CEO, the shale king, eventually met.

David Hughes summed up his take on the industry’s financial outlook: “Ultimately, you hit the wall. It’s just a question of time.”

Follow the DeSmog investigative series: Finances of Fracking: Shale Industry Drills More Debt Than Profit

Theme for Earth Day 2018 is to solve our plastics problem.

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President Obama explains why he didn’t invade Syria

Occupy Democrats

Obama's BRILLIANT answer when asked why he didn't invade Syria

👏👏👏 This will make you miss Pres. Obama terribly.Shared by Occupy Democrats, LIKE our page for more!

Posted by Occupy Democrats on Sunday, April 9, 2017

Locked and Loaded: What Fresh Pretext Will Trigger US in Syria?

MintPress News

Locked and Loaded: What Fresh Pretext Will Trigger US in Syria?

Between the imminent arrival of thousands of U.S. troops, Israel’s continued military action against Syria, and the Syrian rebel’s poised to stage a false-flag attack, it seems that last weekend’s strikes were only the kickoff for an expanding U.S.-led military operation targeting the Syrian government.

By  Whitney Webb       April 18, 2018

A U.S. Marine fires a howitzer in the early morning in Syria in support of the SDF (Syrian Democratic Forces), June 3, 2017. (Marines Corps Photo)

DAMASCUS, SYRIA – Though U.S. Secretary of Defense James Mattis called the recent strikes targeting Syria a “one-time shot,” recent evidence suggests that the U.S. will likely strike Syria again in the coming weeks and months. Indeed, after the U.S. — along with the U.K. and France – chose to attack Syria based on “evidence” from social media and YouTube purporting to show a chemical weapons attack, U.S. officials warned that the U.S. would not hesitate to attack Syria again if similar evidence suggesting Syrian government use of chemical weapons were to emerge, regardless of how flimsy or controversial such evidence might be.

“I spoke to President Trump this morning and he said if the Syrian regime uses this poisonous gas again, the United States is locked and loaded,” stated U.S. Ambassador to the United Nations Nikki Haley this past Sunday.

As several analysts have noted, this essentially flings open the door for rebel groups throughout Syria to stage chemical-weapons attacks, knowing that even a single YouTube video will be enough to trigger a military response from the United States that would benefit the rebels’ bid to topple Syrian President Bashar al-Assad. In the wake of the recent strikes, rebel groups chided the U.S. for doing insufficient damage to the Assad-led government, calling the strikes a “farce.” Surely, the rebels would consider staging a chemical-weapons attack if it would result in a much more significant strike targeting the Syrian military and government.

Such actions on the part of the rebels would not be unprecedented. For instance, recently released information – as well as the testimony of Western journalists on the ground in Douma – suggest that the chemical attack in Douma was staged.

Less than a month prior to the alleged attack in Douma, Russian officials warned that Syrian rebel factions were planning to stage a chemical attack in order to push the U.S. and its allies to attack the Syrian government. “New provocations with the use of chemical weapons are being prepared — performances will be organized in Eastern Ghouta, among others,” Russian Foreign Minister Sergei Lavrov stated on March 14th to a group of reporters.

U.S. troop movements belie Mattis’ “one-time shot” line

In addition to the high likelihood that Syrian rebels will attempt to bring about further U.S. military action in Syria, the U.S. military already seems to be preparing for that eventuality. Prior to the strikes, but after the U.S. announced that it was considering military action against Syria, the U.S. Navy stated that the Harry S. Truman Carrier Strike Group (HSTCSG) would leave the U.S. and be deployed to the Middle East, focusing particularly on Syria.

Charles Lister: In addition to USS Donald Cook, the U.S has now dispatched USN Carrier Strike Group 8 to the Mediterranean/# Syria:

– USS Harry Truman aircraft carrier
– Carrier Air Wing VII
– USS Hué City missile cruiser
– x6 Arleigh Burke-class Destroyers
– x1 Oliver Hazard Perry-class frigate

The strike group, which consists of 6,500 sailors, is still traveling to Syria and is expected to arrive within the next week. According to the Navy, the group’s mission is set to include “maritime security operations and theater security cooperation efforts alongside allies and partners” and the group will “provide crisis response capability and increase theater security cooperation and forward naval presence.” Even though Mattis has claimed that U.S. military action targeting Syria was a one-time event, the HSTCSG’s deployment to Syria has not been canceled, suggesting that the U.S. is anticipating more strikes against Syria in the near future.

Beyond the imminent arrival of the Truman Strike Group, the U.S. is also amassing thousands of troops along the Syrian-Jordan border. An estimated 4,000 U.S. troops are set to arrive in Jordan for a military exercise called “Eager Lion,” which will last for 12 days – coinciding with the arrival of the USS Truman. The exercise will take place around Jordan’s capital of Amman, which lies 62 miles (100 km) from the Syrian border. Among the war scenarios to be included in the drill is a simulated attack with chemical weapons.

US Army Central: Senior military leaders from @ArmedForcesJO and @CENTCOM announced the beginning of Exercise Eager Lion 2018 on Sunday.

Israel wastes no time

Furthermore, along with apparent U.S. preparations for war, the U.S.’ staunchest ally in the region seems already to be involved in a hot war with Syria. The day after the strikes launched by the U.S., U.K. and France, Israel bombed the T4 airbase near the Syrian city of Homs — killing 14, including Iranian soldiers. Since then, Israel has continued to bomb Syria, with the latest taking place on Monday when the Shayrat airbase – also near Homs – was bombed.

Israel’s latest bombings seem to be aimed at provoking a wider conflict, given that they have targeted both Iranian and Syrian assets located within Syria. Israel, whose influence over U.S. foreign policy has arguably reached unprecedented levels under Trump, has also been actively pushing for a wider war in Syria over the past year – with Israeli officials calling for the murder of Assad and bombing of the Presidential Palace in Damascus.

Between the imminent arrival of 6,500 Navy sailors and 4,000 U.S. army ground troops around Syria, Israel’s continued military action against Syria, and the Syrian rebels poised to stage a false-flag chemical weapons attack, it seems that last weekend’s strikes against Syria were only the foundation for a more significant U.S.-led military operation targeting the Syrian government.

Whitney Webb is a staff writer for MintPress News and a contributor to Ben Swann’s Truth in Media. Her work has appeared on Global Research, the Ron Paul Institute and 21st Century Wire, among others. She has also made radio and TV appearances on RT and Sputnik. She currently lives with her family in southern Chile.

 Stories published in our Daily Digests section are chosen based on the interest of our readers. They are republished from a number of sources, and are not produced by MintPress News. The views expressed in these articles are the author’s own and do not necessarily reflect MintPress News editorial policy.

First-time judge appointed by Trump issues his very first opinion. It’s a doozy.


First-time judge appointed by Trump issues his very first opinion. It’s a doozy.

This is not how judges are supposed to behave.

Ian Millhiser     April 19, 2018

Credit: Tom Williams/CQ Roll Call

Judge James Ho has been a federal judge for only a few months. Until Wednesday, he had never handed down a judicial opinion in his life. But the Trump appointee’s very first opinion, a dissent calling for a sweeping assault on campaign contribution limits, is a doozy.

More than just an ideologically radical opinion, Judge Ho’s dissent from the full United States Court of Appeals for the Fifth Circuit’s decision not to rehear Zimmerman v. City of Austin is a monument to conservative political rhetoric and right-wing historical myths. It’s the sort of commentary one would expect to find in an especially strident political magazine — perhaps one of the publications one of Ho’s current law clerks used to write for. It is emphatically not the sort of writing one expects to find in a judicial opinion.

Newly confirmed judges — or, at least, newly confirmed judges who aren’t named “Neil Gorsuch” — are typically more careful than this. They don’t use their very first opinion to burn down the distinction between law and political myth-making.

The core issue in Zimmerman involves an Austin, Texas ordinance prohibiting candidates for mayor or city council from accepting campaign donations greater than $350. It is constitutional, even after the Supreme Court’s Citizens United decision, to limit contributions directly to candidates — the federal contribution limit of $2,700, for example, is constitutional even under the Roberts Court’s reading of the Constitution.

There are also some Supreme Court decisions suggesting that an excessively low contribution limit might violate the Constitution. But a three-judge panel of the Fifth Circuit held that Austin’s $350 limit is not too low, and 12 of Ho’s 14 colleagues voted not to rehear this case. Judge Ho was one of only two judges who thought that the panel’s decision needed further review. As it happens, Ho spends much of his opinion arguing that the $350 limit is, in fact, too low.

But then he goes even farther. The newly minted judge suggests that all contribution limits “are simultaneously over- and underinclusive—defects that have been held fatal in other First Amendment contexts.” It appears that Judge Ho would even strike down the much higher federal limit.

The most striking part of Ho’s opinion, however, is his conclusion. There, he steps away from legal argument entirely to launch into a political rant against big government — complete with a gratuitous swipe at Obamacare.

To be sure, many Americans of good faith bemoan the amount of money spent on campaign contributions and political speech. But if you don’t like big money in politics, then you should oppose big government in our lives. Because the former is a necessary consequence of the latter. When government grows larger, when regulators pick more and more economic winners and losers, participation in the political process ceases to be merely a citizen’s prerogative—it becomes a human necessity. This is the inevitable result of a government that would be unrecognizable to our Founders. See, e.g., NFIB v. Sebelius, 567 U.S. 519 (2012).

There’s a lot to break down here, but let’s start with the citation. NFIB v. Sebelius was a mostly unsuccessful attempt to convince the Supreme Court to repeal the Affordable Care Act. It has literally nothing to do with any of the legal issues present in Zimmerman. NFIB claimed that a health regulation exceeded Congress’ authority under Article I of the Constitution; Zimmerman is a First Amendment challenge to a campaign finance law.

The only reason to cite NFIB to support the proposition that our government “would be unrecognizable to our Founders” is to take a political swipe at Obamacare and at the Supreme Court that disagreed with Ho’s view of this law.

(Ho’s implication that the Affordable Care Act is inconsistent with the framers’ understanding of the Constitution is also dubious — to the extent that it is even possible to claim that a group of Eighteenth Century political leaders with divergent views shared a common understanding. The very first Supreme Court decision interpreting Congress’ power to regulate interstate commerce provides a great deal of support for the Affordable Care Act.)

Ho’s suggestion that a modern regulatory and welfare state necessarily requires a lax campaign finance regime is also inaccurate. Canada, with its single-payer health care system, has both strict limits on donations to candidates and even stricter limits on campaign spending. In 2015, for example, the Canada Elections Act limited spending by candidates for the most expensive parliamentary race to about $210,000 US dollars. That’s not nothing, but it is far less than the $28 million raised by competing candidates for a US House race last year.

Great Britain, with its socialized medicine, has a similar regime limiting spending by candidates and parties.

Judge Ho’s appeal to the Founders is James Madison fan fiction. It bears no more resemblance to the original understanding of the Constitution than a Harry Turtledove novel resembles the Civil War.

And then there’s Ho’s suggestion that the Founding Fathers would be appalled by Austin’s limit on campaign contributions. Judge Ho begins his opinion with a flourish. “The unfortunate trend in modern constitutional law is not only to create rights that appear nowhere in the Constitution, but also to disfavor rights expressly enumerated by our Founders,” he writes, adding that “this case reinforces this regrettable pattern.”

But Judge Ho’s appeal to the Founders is nothing more than James Madison fan fiction. It bears no more resemblance to the original understanding of the Constitution than a Harry Turtledove novel resembles the Civil War.

For one thing, attempting to figure out how the framers understood the First Amendment is a fool’s game. As Jud Campbell, a young conservative legal scholar, writes in the Yale Law Journal, “after a century of academic debate . . . the meanings of speech and press freedoms at the founding remain remarkably hazy.” First Amendment scholar Rod Smolla is even more pointed — “One can keep going round and round on the original meaning of the First Amendment, but no clear, consistent vision of what the framers meant by freedom of speech will ever emerge.”

Judge Ho, in other words, is claiming a level of certainty about the founding era understanding of the First Amendment that evaded scholars for generations. Ho is either a singular and transformative genius in the field of First Amendment history, or he is letting his political desires get ahead of what anyone actually knows.

But here’s something we actually do know about political campaigns at the time of the founding: Fans of the musical Hamilton may remember President Thomas Jefferson’s dismissive swipe at Vice President Aaron Burr near the end of the play — “Man openly campaigns against me, talkin’ bout ‘I look forward to our partnership.’” One reason this line is so biting is because, for much of American history, the idea that a presidential candidate would actively campaign for their own election was considered a vulgarity. Campaigns were typically conducted by surrogates.

As President Andrew Jackson once said to a friend, “I meddle not with elections. I leave the people to make their own President.”

And here’s something else we know about the founding era: they didn’t have television. Or the Internet. Or anything resembling modern political communications. The Founders and their contemporaries had no concept of what a modern political race would look like, or myriad of ways that contemporary technology allows big spenders to shape elections.

There is simply no way to know, in other words, whether modern campaign finance laws “disfavor rights” that the founding generation understood the Constitution to protect. As Doug Kendall and Jim Ryan once wrote of Justice Clarence Thomas’ originalism, asking how 18th Century figures would have reacted to such a transformed landscape is “as productive as asking an only child: Imagine you have a sister. Now, does she like cheese?

New Zealand PM Jacinda Arden first national leader in history to take maternity leave, while in office

Daily Kos

PM Jacinda Arden first national leader in history to take maternity leave, while in office

Leslie Salzillo      April 18, 2018

With an intentional positive diversion from the negative media about Trump’s sex scandals and corruption, we journey to New Zealand where things are quite different—especially for women.

New Zealand, much known for its breathtakingly scenic beauty, is on its third female prime minister. The current PM, Jacinda Arden, is 37, unmarried and about to give birth.

NBC reports:

In June, Ardern, the world’s youngest female leader, will become just the second woman in history to give birth while an elected head of state. She’ll become the first elected leader ever to take maternity leave.

Arden will be getting help from the baby’s father and partner of four years, Clarke Gayford. He’s planning to be a stay-at-home dad.

The Prime Minister is currently very popular with the people, even those who did not vote for her. Like the United States, New Zealand is a country divided politically, but unlike the U.S. their nation is not polarized.

After the Wall Street Journal tweeted a comparison of Arden’s immigration policies to Trump’s, she was “infuriated.”

“We’re campaigning to double our refugee quota,” said Ardern. “We are a nation built on immigration. The suggestion that I was leading something that was counter to that value made me extremely angry.”

Currently Arden is concentrating  on child poverty and climate change (how refreshing). She was critical of the recent U.S., French and British strike on Syria. Another mission of Arden’s is to see New Zealand become a its own republic. Currently, Queen Elizabeth is the Head of State.

You can read much more about Jacinda Arden and watch her in an NBC video, click here—it rates as some of the most jaunty news I’ve come across since the U.S. Election Day, November 8, 2016. Cheers to Prime Minister Arden and to New Zealand citizens for voting her in.

H/T Robin Romans

This once a year clinic is the only health care for many Virginians.

NowThis Politics

April 18, 2018

There is no excuse for this in 2018

Once-A-Year Clinic Is Only Affordable Health Care Option For S…

There is no excuse for this in 2018

Posted by NowThis Politics on Wednesday, April 18, 2018

Homebuilders paid for Pruitt’s Colorado hotel stay


Homebuilders paid for Pruitt’s Colorado hotel stay

By Lorraine Woellert          April 17, 2018

During his visit to Colorado Springs, EPA Administrator Scott Pruitt gave a speech to the builders and invited them to EPA headquarters in Washington, where he later told his staff to regard them as the agency’s “customers.” Pablo Martinez Monsivais/AP Photo

A group of Colorado home-builders paid for a luxury hotel stay last fall for EPA chief Scott Pruitt, eight months after the Trump administration began work on a major priority for their industry by unwinding an Obama-era wetlands regulation.

During his visit to Colorado Springs, Pruitt gave a speech to the builders and invited them to EPA headquarters in Washington, where he later told his staff to regard them as the agency’s “customers,” the head of the group told POLITICO.

The $409.12 hotel stay may have met federal legal requirements if EPA’s ethics officers had approved it ahead of time. But it’s likely to add to the storm of ethics controversies surrounding Pruitt, who faces scrutiny from EPA’s inspector general, the White House and members of Congress for his travel and security spending and a $50-a-night Capitol Hill rental he accepted from the wife of an energy lobbyist.

The $409 hotel room “might be the least of his problems, but it’s emblematic of all his problems,” said Virginia Canter, an ethics lawyer for Citizens for Responsibility and Ethics in Washington, a nonprofit watchdog group.

“It’s one thing when a head of an agency or senior official is engaged in legitimate outreach,” Canter added. “But to give a speech, accept a benefit of overnight lodging, then a few weeks later instruct your staff that these are your clients strikes me as inappropriate. At a minimum it raises an appearance issue.”

Pruitt is known to actively seek speaking slots at events with key groups with a stake in the agency’s actions. A former staffer, Kevin Chmielewski, has told lawmakers that Pruitt directed his staff to find places he could visit, congressional Democrats wrote in a letter last week. A former lobbyist also recalled Pruitt and his staff persistently asking for an invite to a conservative event that fundraisers frequently attend.

EPA spokesman Jahan Wilcox did not immediately respond to requests for comment about the travel arrangements.

Pruitt agreed to speak to the Housing and Building Association of Colorado Springs after it offered to cover his expenses, including his flights and $409.12 to put him up at The Broadmoor, a lakeside golf resort, on Oct. 4, according to the builder group’s chief executive officer, Renee Zentz. The hotel advertises itself as “a legendary Forbes Five-Star and AAA Five-Diamond resort with impeccable service and distinctive amenities.”

EPA never billed the trade group for his flights, Zentz said in an interview. And while Pruitt stayed at The Broadmoor as the group had agreed, his entourage spent the night at a different hotel, Zentz said.

“We didn’t pay for his team but we paid for him. That was the agreement when we talked to him,” Zentz said. “We just wanted to get him here, we were just so excited to have him.”

The trip’s headline event was a Pruitt speech to a lunch gathering of about 150 people on Oct. 5, Zentz said. In a stroke of good timing, board members from the National Association of Home Builders were meeting in nearby Santa Fe, N.M., and flew up for the event. NAHB President Jerry Howard hustled in from Washington to moderate Pruitt’s remarks.

The group’s invitation describes the event as “a rare opportunity to hear directly from the EPA administration” and “our chance to make sure the concerns of our industry are being listened to.”

“It just was an awesome opportunity,” Zentz said. “It was a pretty big feather in our cap locally.”

Builders rank among Pruitt’s biggest supporters, even amid his recent spate of negative headlines. They also have lauded the administration’s efforts to roll back regulations on clean water and storm runoff, including a sweeping Obama-era EPA regulation called Waters of the United States that several industries have denounced as a multibillion-dollar drag on the economy. Granger MacDonald, then-chairman of the National Association of Home Builders in Washington, was at the White House in February 2017 when President Donald Trump signed an executive order that took the first step toward undoing that rule, one of his first acts in office.

Pruitt, who attended the signing ceremony, has since set about crafting a much more limited regulation to protect waterways and wetlands. Environmental groups have said the move could leave 60 percent of U.S. stream miles and 20 million acres of wetlands unprotected and vulnerable to development or pollution.

Before the October lunch in Colorado Springs, Pruitt sat down to an invitation-only coffee with about 20 business owners and builders, who complained about EPA’s approach to stormwater controls and other regulations. At the end of that meeting, Pruitt instructed staff to arrange a meeting in Washington with industry representatives, Zentz said.

That meeting took place at EPA headquarters on Oct. 24, when Pruitt and his staff met with eight to 10 industry representatives, including a Colorado builder from Zentz’s group.

Pruitt “wanted to hear from our districts. He called a representative from every single district,” Zentz said. “He put his staff in the room and said, ‘This is our customer, this is who we’re going to listen to.’

“He told his staff, ‘These are our customers,’” Zentz said. “He listened.”

Federal law allows government officials to accept travel reimbursement, including hotel stays, with prior approval from agency officers. But even if the agency had approved the room, it was inappropriate, CREW’s Canter said.

“It appears to be abuse of the travel approval,” she said. “It’s not intended to be used to provide luxury accommodations to the head of the agency so he can turn around two weeks later and say we give these guys favorable treatment.

Emily Holden and Annie Snider contributed to this report.

Interior Secretary Ryan Zinke is pictured. | Getty Images

NLRB Becomes Anti-worker


NLRB Becomes Anti-worker

The confirmation of John Ring changes balance of the NLRB to favor management

by Guest Post           April 16, 2018

Management lawyer John Ring was appointed chairman of the National Labor Relations Board on Thursday, one day after the U.S. Senate narrowly confirmed him as an NLRB member.

Ring’s appointment returns control of the five-seat board to a GOP majority that has already shown its determination to destroy Obama-era rules protecting workers’ rights.

The board had been split 2-2 since the previous chairman’s term ended in mid-December. Until then, with the Republican chair and two of President Trump’s nominees in place, the board worked at near-record pace in the fall of 2017 to reverse eight years of progress.

“There is an agenda: fewer workers will have fewer rights,” Wilma Liebman, a former Democratic chair of the board told The Huffington Post in December.

The flurry of rulings “hobble the ability of millions of working people to organize, which goes right against the mission of the agency,” International President Lonnie R. Stephenson said in an IBEW report on the board’s assault on unions.

The board’s Republican majority comprises Ring, employer-side attorney William Emanuel and Marvin Kaplan, a former Capitol Hill staffer who worked on policies to strip workers of union right. Another management lawyer, Peter Robb, was appointed by Trump as NLRB general counsel.

Until his appointment, Ring was a partner at the law firm Morgan Lewis, where he represented “management interests in collective bargaining, employee benefits, litigation, counseling, and litigation avoidance strategies. He has an extensive background negotiating and administering collective bargaining agreements, most notably in the context of workforce restructuring and multiemployer bargaining,” according to the firm’s website.

In a February letter, the AFL-CIO implored senators on the Health, Education Labor and Pensions committee to scrutinize Ring’s record, saying Trump’s earlier NLRB nominees weren’t living up to their confirmation hearing promises.

“Despite their commitments to your committee that they brought no agenda or prejudgments to the agency, these appointees have carried out the agenda of the Chamber of Commerce and Republicans in Congress, ignoring established agency practice and, in one case ignoring a clear conflict of interest to reverse precedent and take other actions to undermine workers’ rights,” the letter stated.

One such ruling overturned the joint employer rule that gave workers employed by contractors or franchises more power to bargain with and hold parent companies accountable. The board was forced to reinstate the rule in February, however, in response to revelations that Emanuel had a conflict of interest and should have recused himself from the case.

Ring and the earlier nominees were approved on party-line votes in both the Health, Education, Labor and Pensions committee and in full Senate, with all Democrats opposed.

In a December column at, legal reporter Mark Joseph Stern said that in their zeal to “incinerate every Obama-era rule as quickly as possible,” Republicans are turning the NLRB’s mission on its head.

“The NLRB was not designed to veer wildly when the presidency changes hands,” Stern wrote. “Congress directed the agency to protect ‘the exercise by workers of full freedom of association’ and ‘self- organization.’ Although conservatives often accused Obama’s NLRB appointees of stretching the law, each of their decisions explicitly advanced this founding mission.

“Trump’s appointees, by contrast, are contracting the law in a manner that’s utterly incongruous with the policy of the board as prescribed by Congress. All indications are that they’ll succeed in this partisan mission, and American workers will pay the price.”

This article was written for the IBEW.