Natural Gas Politics

Published on
by
ProPublica

Natural Gas Politics

by
Abrahm Lustgarten

"I believe that developers may have legitimate concerns about the impact that removing the exemption may have on their ability to find and extract oil and gas," he said. "But ... the current regulatory approach is probably not sustainable and will probably need to be revised in some way," Salazar wrote in an emailed response.

Four years after Vice President Dick Cheney spearheaded a massive
energy bill that exempted natural gas drilling from federal clean water
laws, Congress is having second thoughts about the environmental
dangers posed by the burgeoning industry.

With growing evidence
that the drilling can damage water supplies, Democratic leaders in
Congress are circulating legislation that would repeal the
extraordinary exemption and for the first time require companies to
disclose all chemicals used in the key drilling process, called hydraulic fracturing [1].

The proposed legislation has already stirred sharp debate.

The
energy industry has launched a broad effort in Washington to fend off
this proposed tightening of federal oversight, lobbying members of
Congress and publishing studies that highlight what it says are the
dangers of regulation. In mid-May, the industry released a detailed
report asserting that the changes in current law would cost jobs and
slash tax revenues. A key advocate of past efforts to regulate gas
drilling, Rep. John Salazar [2] (D-CO), has declined to support the legislation, expressing concern about how it would affect the energy companies.

However,
with a strengthened Democratic majority in Congress and the party's
capture of the White House in last year's election, the fracturing
legislation is viewed as having its best chance at passage in years.
Its House sponsor, Rep. Diana DeGette (D-CO) [3],
aims to attach a bill to a larger piece of legislation with broad
support -- possibly a bill on climate change or a new energy policy
measure - where it would be shielded from industry resistance. On the
Senate side, according to congressional staff close to the effort, Sen. Bob Casey (D-PA) [4] has a companion bill ready to follow.

The
drilling process involves injecting millions of gallons of water and
sand mixed with tens of thousands of gallons of chemicals -- some that
are known to cause cancer -- deep into the ground, where as much as a
third of those fluids typically remain after the gas is removed.

Global
companies including Halliburton and Schlumberger have fought hard to
shield from public view the chemical recipes they use to drill, saying
that the formulas are valuable trade secrets. Scientists say that is
precisely the information they need to determine if drilling caused the
water pollution that has been reported in Colorado and elsewhere.

"The regulatory loophole for hydraulic fracturing puts public health at risk and isn't justified," said Henry Waxman (D-CA) [5], chair of the House Energy and Commerce Committee [6]
that will offer the bill, in an e-mail. "The current exemption for the
oil and gas industry means that we can't even get the information
necessary to evaluate the health threats from these practices."

The
industry argues that state laws and regulators are doing an adequate
job of regulating the hydraulic fracturing process, and that more
layers of regulation would be burdensome and expensive.

"We
don't think the system is broke, so we question the value of trying to
fix it with a federal solution," said Richard Ranger, a senior policy
analyst at the American Petroleum Institute [7].
"So proceed with caution if you are going to proceed with regulating
this business because it could make a very significant difference in
delivering a fuel that is fundamental to economic health."

Proponents
of regulation, including DeGette, the author of the bill, say
protecting water resources is worth the slightly higher gas costs that
might come with regulation, but that the industry's assessment of those
costs is dubious. The exemption, they say, has artificially lowered
drilling costs because it means the companies don't always have to
follow the safest practices.

"I find it kind of a novel argument
that it will be burdensome to comply with one federal law when they
could potentially have to comply with 50 state laws," she said. "I just
think that they don't want to have to do it."

A key question for
proponents and opponents alike is how strong a stance President Barack
Obama's administration will strike on this legislation. A White House
spokesman said that the administration hasn't yet taken a position.

The Safe Drinking Water Act [8],
enacted in 1974, governs what chemicals can be injected underground and
applies to essentially every industrial activity in the United States.
It limits what levels of pollution are allowed, but then permits states
to create more detailed regulations if they choose. The law also sets
minimum standards for well design and other protections of health and
safety.

"We are not aware of any other industries that have an
exemption," said Stephen Heare, director of the Drinking Water
Protection Division at the Environmental Protection Agency [9].

As
the law currently stands, the EPA is not allowed to set conditions for
hydraulic fracturing or even require states to have regulations of
their own.

States often look to the federal agencies for
guidance on how to craft environmental rules. And hydraulic fracturing
is an especially complicated process that scientists say warrants more
study. The current regime leaves state agencies -- which are often
understaffed and underfunded -- to do their own research and develop
their own best practices, according to EPA scientists.

Natural
gas, used for heating, electricity and manufacturing, supplies a fifth
of the energy used in the United States and is an increasingly valued
resource. According to the Energy Information Administration [10],
domestic gas reserves, including those held in vast shale deposits that
underlie the Appalachian states, could meet the country's natural gas
needs for more than 100 years. Without hydraulic fracturing, which is
now used in almost all new gas wells, much of this supply would remain
beyond reach, according to the American Petroleum Institute.

Natural
gas is also widely viewed as an important transitional fuel in American
climate and energy policy -- emitting 23 percent less carbon dioxide
per unit of energy than oil. Its development has spurred jobs and
economic activity in some of the poorest and most rural parts of the
U.S.

But as gas drilling has expanded, a wave of reports have
emerged that the drilling is affecting water. In Colorado and Wyoming,
state and federal officials have concluded that benzene and other
contaminants have made their way into aquifers, streams and well water
as a result of drilling accidents or spills of drilling fluids.
Officials have linked methane gas in groundwater to drilling in Colorado [11] (PDF), Ohio [12] (PDF) and Pennsylvania [13].
Fracturing may or may not be to blame, EPA officials say; it's hard to
tell because they don't oversee the process and can't trace chemicals
that are unidentified.

"We're not talking about banning fracking here. What we're for is regulating it," said Rep. Jared Polis (D-CO) [14],
a co-sponsor of the House bill, emphasizing that his hope is to give
scientists the tools to measure, and to control, its impact on the
environment. "Other than oil and gas companies, I am not aware of
anyone that supports allowing that to continue in an unregulated way."

Even
so, DeGette will need to gather support from some representatives in
states that stand to reap substantial economic benefits from drilling.
The retreat of Salazar, a prominent moderate whose co-sponsorship
helped draw support for a similar measure in the House last year, is a
warning sign that the passage is not preordained.

"I think
Salazar is a very strategic target on all of this," said Sarah Tucker,
an analyst for Trout Unlimited, a sportsman's group that is lobbying
for more oversight of drilling. "He is from an oil and gas district ...
that gives him a lot more credibility when working on these issues ...
Those moderate Democrats are always the sticking point as to whether or
not a bill actually moves."

In an e-mailed response, Salazar
said he would still consider voting for the bill, but that he may
pursue an alternative compromise.

"I believe that developers may
have legitimate concerns about the impact that removing the exemption
may have on their ability to find and extract oil and gas," he said.
"But ... the current regulatory approach is probably not sustainable
and will probably need to be revised in some way."

Passing such
legislation has proved difficult in the past. This year's efforts to
reverse the exemptions will constitute at least the fourth effort by
Democrats to shore up protections against hydraulic fracturing since it
became a focus of the White House's Energy Task Force in 2001.
According to records of committee debates from 2003, the exemptions
were forced through against objections, without hearings by a
Republican majority and eventually tucked into the 2005 Energy Policy Act [15] (PDF). Ever since, in the face of intense lobbying, any efforts to address the topic have stalled in committee.

Last
year the bill's authors, including Salazar, received a flurry of
letters and phone calls urging them not to pursue the legislation. One,
addressed to DeGette from Jerry McHugh, president of Denver-based San
Juan Resources, said "Now is not the time to impede development of any
domestic resources. Please pull your sponsorship."

The industry
has spent millions of dollars lobbying Congress on issues including
fracturing since 2008, according to disclosure forms filed with
Congress. Now, it's circulating new research to bolster its arguments.

The
industry -- which has long argued that fracturing has never been proven
to have contaminated water -- points to a study published in April by
the Department of Energy [16], which asserts that state laws adequately regulate hydraulic fracturing. But that report, titled "Modern Shale Gas Development in the United States: A Primer [17]" (PDF), and written by the Ground Water Protection Council [18],
a broad consortium that includes industry groups, contains several
questionable statements. One passage notes that "the Safe Drinking
Water Act regulates the injection of fluids from shale gas activities,"
without mentioning that the exemptions have created significant
exceptions, and that on the whole the act does not regulate all
injections.

"You have very substantial economic elements that
are concerned about their abilities to do whatever they want to for
their own economic advantages," said Rep. Maurice Hinchey (D-NY) [19],
who is also sponsoring the bill. "They are going to do whatever they
can to ensure that there is not a majority of the members here voting
for something like this bill."

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