Gas Politics Are Polluted

Introduction

Recent concerns about the human and environmental health risks associated with gas drilling have led to a growing interest in the rules governing the gas industry’s behavior. Public outcry over instances of water contamination, air pollution and improper handling of dangerous drilling wastes has not yet led to necessary reforms in oversight of this industry. Instead, gas operators remain largely protected—and in some cases exempted—from the same oversight measures designed to hold other polluting industrial sectors in check, protections intended to prevent damage to public health and America’s remaining wild lands.

Efforts to hold gas companies accountable for damage to the communities they drill in have been stonewalled by an out-of-date and inept regulatory system. Documents recently revealed by The New York Times show that attempts by lawmakers to notch up federal oversight have been stifled, scientists have been silenced and voices of concern from throughout government and industry have been hushed under the enormous pressure exerted by one of the nation’s most rapidly growing industries.

As a result, gas drilling has accelerated across America while piecemeal state regulation has failed to keep up. While some states have made progress with drilling requirements and oversight, a nation-wide picture demonstrates the immediate need for a deeper look.

Some insight into the history of gas oversight in the U.S. reveals how a well-orchestrated effort to misinform the public and officials has created the perfect recipe for the gas industry to grow much too fast, and to remain essentially unaccountable for many of its practices.

Historical Perspective Prior to the Bush/Cheney Years

Though much criticism of the gas industry has emerged recently, The New York Times investigation shows a long debate surrounding the regulation of oil and gas beginning during the Reagan administration in the 1980s. Over pressing concerns to regulate the industry, Congress sought the counsel of the Environmental Protection Agency (EPA). Though the EPA concluded that some of the drillers’ waste was toxic and hazardous and advised Congress to tightly control the industry, Congress never heard those recommendations.[1]

This led to the perpetuation of categorical exemptions for the gas industry from the oversight of federal agencies. One exemption held in place after EPA withheld these findings excluded “drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of…natural gas” from the Resource Conservation and Recovery Act (RCRA).[2]

Many recommendations were eliminated from the final reports that were seen by lawmakers in 1987. The findings were altered, it is said, because of pressure from the Office of Legal Counsel in the Reagan White House. As it turns out, this was not an isolated incident of political interference. More than a quarter-century of efforts by lawmakers and public safety agencies to force the federal government to better police the gas industry have been thwarted, as EPA studies have been repeatedly narrowed in scope and important findings removed.

Bush, Cheney and the Halliburton Loophole

The George W. Bush Administration received intense criticism from environmentalists for catering to entrenched fossil fuel interests and increasing America’s reliance on dirty energy sources, missing a golden opportunity to pursue American leadership in developing clean energy technologies. The Bush/Cheney Administration was well known for its aggressive efforts to increase development of domestic fossil fuel resources, conducting massive land sales and leases for fossil fuel extraction, while simultaneously discouraging enforcement of existing public health, environmental and workplace safety protections.

A 2001 report in the L.A. Times[3] revealed that the Energy Task Force headed by Vice President Cheney courted industry leaders and welcomed input from lobbyists, resulting in the infamous National Energy Policy document.[4] Among the provisions included were taxpayer funds to reimburse oil companies for the costs of complying with the National Environmental Policy Act, suspension of Gulf of Mexico oil royalties, and opening the Arctic to drilling.[5]

The task force document also stated that “enormous advances in technology have made oil and natural gas exploration and production both more efficient and more environmentally sound…Yet the current regulatory structure fails to take sufficient account of these extraordinary advances, excessively restricting the environmentally safe production of energy from many known sources.”[6]

Four years later, the resulting Energy Policy Act of 2005[7] - called one of the “most pro-oil, anti-environmental pieces of legislation in history,” and noted for its rampant attempts at deregulation[8] - officially exempted hydraulic fracturing from EPA oversight under the Safe Drinking Water Act.

The Energy Policy Act was also responsible for creating “categorical exclusions” from the National Environmental Policy Act, a key rollback that led to expedited oil and gas drilling on federal lands.[9] A 2009 investigation by the Government Accountability Office (GAO) faulted the Bureau of Land Management for engaging in widespread abuse of categorical exclusions during the Bush/Cheney administration.[10]

The rampant deregulation under Bush/Cheney has been blamed for the careless handling of drilling permits that led to the BP oil disaster in the Gulf of Mexico.[11]

The Center for American Progress released a report in 2004 accusing the Bush Administration of “altering scientific information to advance an oil and gas development practice known as ‘hydraulic fracturing.’”[12] This report entitled “Special Interest Takeover: The Bush Administration and the Dismantling of Public Safeguards” describes how in 2002 the EPA briefed congressional staff about the dangers of hydraulic fracturing, especially concerning benzene contamination in drinking water.

However the EPA inexplicably revised their position, saying fracturing would not contaminate drinking water with levels of benzene above federal standards. EPA claimed the change in position was due to information from an ‘industry source.’ As a result, Cheney’s Energy Task Force removed any mention of these concerns from its energy plan.[13]

Numerous investigations into the federal agencies that oversee the nation’s natural resources have revealed corruption and unethical behavior, noting the close ties between the oil and gas industry and the agencies charged with holding it accountable. The Bureau of Land Management (BLM), the now defunct Minerals Management Services (MMS) and the Department of the Interior (DOI) have all come under severe criticism, punishment and restructuring following probes into alleged unethical conduct. [14][15][16][17]

The Halliburton Loophole

The Halliburton Loophole[18] is the title given to a small provision inserted within the 2005 Energy Policy Act which exempts hydraulic fracturing, a technology pioneered by Halliburton for the extraction of gas, from the regulatory oversight of the EPA and specifically the Safe Drinking Water Act. Currently the gas industry is the only industry allowed to pump undisclosed chemicals directly into the ground, even when adjacent to underground sources of drinking water.

Halliburton first employed hydraulic fracturing in the 1940s and is today one of the largest suppliers of fracking technologies and chemicals.[19]

Industry-funded support groups such as Energy in Depth deny the exemption granted through the Halliburton Loophole, suggesting that hydraulic fracturing has never been regulated under the Safe Drinking Water Act.

However, the Underground Injection Control (UIC) program of the Safe Drinking Water Act included hydraulic fracturing under its auspices until the 2005 Energy Policy Act inserted new language to exempt “the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.”[20]

Industrial, legislative and lobbying pressures dating back to the 1980s have successfully enabled numerous other exemptions and favors for oil and gas companies.[21] Federal breaks enjoyed by the gas industry include full or partial exemptions from the Clean Water Act, the Clean Air Act, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund Act), the Resource Conservation and Recovery Act, the Toxic Release Inventory and the National Environmental Policy Act.[22]

Flawed Earlier Studies Underscore Need For Revisiting Fracking Oversight

In 2000, the EPA began a study to determine the risks posed to drinking water by hydraulic fracturing. This controversial study,[23] completed in 2004, concluded that hydraulic fracturing in coalbed methane “poses little or no threat to drinking water.”

This study was largely used to justify the “Halliburton Loophole” exemption and is still currently cited by the gas industry to assert the safety of hydraulic fracturing and to deny allegations of water contamination.[24] [25] [26]

The study has since been discredited after widespread criticism from independent experts, as well as internal criticism among EPA scientists who noted the faulty study neglected to test water samples in contaminated areas. Both EPA and independent experts noted the study was compromised due to the involvement of industry groups who were consulted throughout the process, posing a clear conflict of interest.[27] [28]

A 2005 report released by the Oil and Gas Accountability Project documents how the EPA removed essential findings from the study, included insubstantial data and partial findings and failed to address serious concerns relevant to the study’s conclusion.[29]

The EPA study was also extremely limited in scope, focusing solely on coalbed methane fracturing and the potential for the underground migration of chemicals through rock layers.[30]

After the report was released, EPA scientist Weston Wilson cautioned Colorado representatives[31] that “based on available science and literature, EPA’s conclusions are unsupportable.”[32] [33]

Benjamin Grumbles, then assistant administrator at the EPA, told ProPublica that the study was never meant to be a “bill of health” for hydraulic fracturing. The EPA, says Grumbles, urged Congress to avoid permanent exemptions. “Whether it’s hydraulic fracturing or any other type of practice that can have an impact on the environment, one single report shouldn’t be the basis for a perpetual, never-ending policy discussion,” and, Grumbles goes on, “we certainly did not ask Congress to exempt hydraulic fracturing.”[34]

But when Congress decided to force through a catch-all exemption for hydraulic fracturing from the Safe Drinking Water Act, the EPA was directed to keep their opposition silent. As Grumbles recounts, “We opposed the language” of the exemption but “what came across clearly to the EPA was that the [Bush] administration did not want us to take a formal position of opposition to the exemption.” As assistant administrator, Grumbles was “disappointed” that Congress chose to ignore his proposal for additional safeguards. The exemption was pushed through without recourse to a “broader recapture position” to address futureproblems or industry abuse, even though this is standard practice.

Congress made no plans to revisit “what additional science is needed to justify the continuation of the exemption.”

In response to growing concern over instances of water contamination, a bill called The Fracturing Responsibility and Awareness of Chemicals Act (FRAC Act) was introduced in the House and Senate. The FRAC Act would have required gas companies to disclose what chemicals they use in the fracturing process and require the regulation of fracturing activities under the Safe Drinking Water Act. The twin bills were introduced in 2009 but, despite growing support, died in committee.[35] In March 2011, the FRAC Act was reintroduced to Congress and still stands as the only credited, legislative attempt to close the cavernous “Halliburton Loophole.”[36] The bill’s supporters followed this reintroduction with a second bill, the Bringing Reductions to Energy’s Airborne Toxic Health Effects Act (BREATHE Act), which is a response to the gas industry’s exemptions from the Clean Air Act.[37]

In late 2009, after President Barak Obama signed the Interior and Environment Appropriations Bill, the EPA was congressionally mandated to launch a new investigation into hydraulic fracturing. This new report will address more extensively the threats posed by hydraulic fracturing to drinking water and human health.[38] The scope of the report was recently expanded by the EPA Science Advisory Board to include additional research into the lifecycle of gas drilling, especially hydraulic fracturing and the potential impacts on drinking water.

This study will include a focused review of the potential impacts on drinking water, ten in-depth case studies conducted across the U.S., and will include stakeholder participation throughout the research.[39] The proposed research includes an increased scope of study including water acquisition, fracking fluid mixing, hydraulic fracturing, post-fracturing, and flowback and wastewater management. The initial results of the study are due in 2012 and the full report is due in 2014.[40]

Scant State Oversight

Although gas companies and pro-industry groups insist that gas extraction is adequately monitored by the states,[41] much criticism has been levied against state agencies for failing to keep pace with the rapidly growing shale gas industry. The Oil and Gas Accountability Project reports instances where regulators in numerous states failed to adequately respond to citizen complaints of water contamination leading to botched investigations.[42]

State regulators have been accused of pandering to gas drillers, with critics insisting that “the primary mission of these agencies has been to facilitate natural gas extractions and increase revenues for the states.”[43] The close relationship between industry and state officials has also come under scrutiny by the EPA, which has criticized state regulators for insufficient response to complaints of water contamination.[44][45] The EPA has also come under fire for its own failure to adequately oversee the booming shale gas industry, although pressures from industry and politicians friendly to the industry have certainly contributed to this failure.[46]

Even the best state-level efforts to monitor the industry are not matched by adequate enforcement. In some states the ratio of gas wells to monitoring agents—for example, there are 12 inspectors to 59,000 wells in West Virginia - demonstrates the need for an increase in oversight and enforcement powers.[47] When regulatory structures do not evolve quickly enough to meet the challenges posed by a rapidly growing industry, states are often unable to adequately address issues, leaving the public at risk. At times states have been without the necessary framework to deny drilling permits to operators with poor records.[48]A number of state officials have cautioned against the rush to drill for gas, admitting to the enormous struggle that keeping up with the industry can be.[49]

Reporting requirements are often not stringent enough to keep a rigorous account of drilling activities in many states. Earthworks reports that many states do not require that companies reveal detailed information on drilling chemicals, the amounts of fluid used in drilling operations and how much of it remains underground, or whether fractures remain within targeted areas.[50] When a recent congressional investigation revealed that numerous companies were illegally injecting diesel fluid in hydraulic fracturing operations, state officials admitted they had no knowledge of the practice.[51]

Recommendations made to state regulators by the State Review of Oil and Gas Environmental Regulation (STRONGER)[52] reveal the glaring voids in existing regulatory structures:

• Baseline testing is not always mandatory prior to drilling activities.
• Cement job logs are not always maintained by operators.
• Potential underground migration pathways which could act as a conduit for fluid migration into groundwater, such as abandoned wells, do not have to be identified before drilling in all states.
• The depth of surface casings when drilling near groundwater do not have to be included in drilling permit applications to ensure groundwater protection.
• Not all states have adequately addressed how information on fracturing chemicals will be made available to medical responders in the event of an emergency.
• Not all operators are required to notify state officials when drilling operations will commence.
• Waste storage and pits do not always undergo inspection or certification.
• Operators are not always required to report hydraulic fracturing fluid volumes or fracture pressures.

Attempts to increase state oversight of drilling operations have at times been met with hostility. When regulators in Colorado mandated fracture fluid disclosure in April 2010 the industry sued to have the new rule overturned.[53]

Major gas producers have pressured lawmakers to keep oversight of drilling at the state level and not increase federal participation.[54] The Colorado Petroleum Association, for example, has been working overtime to keep the EPA away from oversight of drilling wastes, referencing legal amendments and exemptions dating back to 1980.[55] Federal involvement, the CPA argues, would introduce a “host of practical and legal problems for the oil and gas industry.” EPA’s response[56] shows the Agency’s efforts to enforce interpretative limits on what have become out of control historical exemptions. The CPA arguments also demonstrate a disregard for the EPA’s more recent efforts to clarify out-of-date legislation, describing exemptions from thirty years ago as more “authoritative.”[57]

Obama, Jackson, Salazar and the Future of Gas Drilling Oversight

There is little evidence to suggest the present administration is equipped to exert the sort of command needed to rein in the gas industry. The Obama administration has vocalized support for gas in the mix of America’s clean energy portfolio, promising incentives for an increased use of the fuel.[58]

The administration also supported drilling in the watershed area supplying drinking water to New York City and Philadelphia despite an ongoing comprehensive environmental study and widely supported moratorium.[59]

As growing criticism of the gas industry is shining a spotlight on federal officials, House Republicans are using any excuse to pressure the Obama administration into expediting oil and gas drilling.[60] But despite Congressional pressure there is some indication that the Obama administration is not willing to repeat the mistakes of the past. Obama’s hand picked Secretary of the Interior Ken Salazar has shown intent to reform the oil and gas sector, saying that oil and gas companies would no longer be the “kings of the world” to whom public lands were a “candy store.”[61] Salazar is critical of the past administration’s irresponsible development, evidenced by the dramatic increase in legal battles resulting from rushed leases: 1 percent in 1998 up to 40 percent in 2008.[62]

Although Salazar has been cautious regarding his stance on domestic energy production, acknowledging the ready ire of the industry, he has worked to undo some of the irresponsible patterns of the Bush Administration. He has held back on leases, in some instances revoking leases, and has attempted to increase royalty rates, a plan not passed in Congress. Salazar has also voiced potential plans to mandate disclosure of fracturing fluids through the Department of Interior, most especially for drilling on public lands.[63]

In a testimony to the House Natural Resources Committee, Salazar warned that the continued secrecy surrounding fracturing chemicals could result in backlash from the American public.[64] However there are concerns that this move is orchestrated to placate environmentalists who will surely criticize increased drilling on public lands.[65]

Congress was quick to pressure Secretary Salazar to abandon any increase in federal oversight of gas extraction. The Congressional Natural Gas Caucus, a 32-member bipartisan group, urged Salazar not to introduce any “hastily proposed regulatory burdens” on the industry that will “increase energy costs for consumers, suppress job creation in a promising energy sector, and hinder our nation’s ability to become more energy independent.”[66] The group also encourages Salazar to respect the “legislative process and yield to the Congressionally-directed study that the Environmental Protection Agency is currently conducting.”

Secretary Salazar’s hint at increasing regulation has also been criticized by the House Energy and Commerce Committee and the House Natural Resources Committee,[67] suggesting that in the current political environment, it may be hard to oppose industry growth.

Other federal departments may have an equally hard time with attempts to overhaul the current regulatory regime. The EPA has been given little jurisdiction over gas drilling and, as outlined above, some states are actively involved in limiting federal involvement.

Although Congress has mandated the EPA launch new investigations into the health dangers of hydraulic fracturing and risks posed to drinking water, there has been little to signal Congress’ dedication to the federal body’s science or recommendations.

As the New York Times recent investigative reports have outlined, EPA’s involvement with the industry has been actively limited by regulators, lawmakers and industry groups alike.[68] But since these reports have exposed state failure to keep up with the industry, the EPA has been quick to voice its criticism, and launch an investigation of its own. After a top Democrat from the Natural Resources Committee demanded immediate action,[69] the EPA began an inquiry into wastewater disposal practices in Pennsylvania, asking the state to reveal internal documents and issued permits.[70]

But even if the EPA begins to ramp up its federal oversight and scrutiny of state practices, there is no guarantee, without stronger legislative directive, that state regulation will adequately improve. The EPA will continue to encounter an uphill struggle with the states that have nothing but the short term economic gains from gas development in view.

For example, the new governor of Pennsylvania, Tom Corbett, has given unprecedented authority to newly appointed director of the Department of Community and Economic Development, C. Alan Walker. Walker, a former energy executive and CEO of Bradford Energy Company and Bradford Coal, has been granted authority to “expedite any permit or action pending in any agency where the creation of jobs may be impacted.”[71]

With this type of state policy on the horizon, weakened federal departments like the EPA will need strong Congressional support to provide effective oversight for the rapid growth of domestic energy production - the kind of help, it appears, they are unlikely to receive in the current Congress.

In late March 2011, President Obama delivered an Energy Security speech at Georgetown University, where he heralded domestic gas production as not only the first solution to energy security, but also an “area of broad bipartisan agreement.”[72] However, at a town hall meeting in mid-April, President Obama acknowledged his own concerns about fracking, stating: “The problem is, is that extracting [gas] from the ground—the technologies aren’t as developed as we’d like and so there are some concerns that it might create pollution in our groundwater, for example. So we’ve got to make sure that if we’re going to do it, we do it in a way that doesn’t poison people.” [73]