How Earthworks Missed the Mark on State Regulation
Last week, Earthworks released a report that attempted to show lax state regulation of oil and gas development. The purpose was clear: build a case for more federal regulation, and by extension delay approval for additional production – if not ban it outright. Unfortunately for Earthworks, anyone with an Internet connection has access to information that proves Earthworks’ goal was not to shine on a light on a problem, but rather to repeat its old talking points in a new way.
That objective was hardly buried or hidden in the document, either. On the second page of the report, Earthworks says, “this work could not have been undertaken without the generous support of The Heinz Endowments.” For those unfamiliar with Heinz, they – along with the Park Foundation – have been one of the chief financial backers of efforts to stop natural gas development. To put this in poker terms, Earthworks revealed its hand before the betting even began.
What’s more amazing, though, is the sheer lack of understanding of the oil and natural gas industry that Earthworks put on display for everyone who read their report. From mischaracterizing state regulatory systems to failing to account for the fact that well pads often have multiple producing wells, Earthworks’ latest report stands high as a monument to mediocrity in the world of anti-drilling activism.
Below you’ll find a list of some of the biggest problems with Earthworks’ report. Feel free to add any other discrepancies or problems in the comments section at the end of the post.
PROBLEM 1: Manipulates and misstates data to achieve predetermined result.
- Earthworks: “Every year hundreds of thousands of oil and gas wells – 53 to 91% of wells in the states studied (close to 350,000 active wells in the six states in 2010) – are operating with no inspections to determine whether they are in compliance with state rules.” (p. 8)
FACT: A single inspection of a particular well pad can include multiple wells, and an honest look at the appropriate numbers tells a different story than the narrative Earthworks wants us to believe.
- Colorado – A Multi-Well Pad Represents a Single Field Inspection. According to the COGCC, multi-well pads result in “improved efficiency” for inspections, and they allow COGCC to “inspect multiple wells, separators and tanks at one time, in one stop.” (COGCC, May 31, 2012)
- Earthworks claims that in 2010 there were “more than 43,000 active wells” in Colorado, and there were a “total of 16,228 inspections.” They took the difference in those numbers to claim that “63% of Colorado’s oil and gas wells were not inspected in 2010.” They assumed that each inspection “was conducted at a different well site” – which of course runs counter to what COGCC says it is able to do thanks to multi-well pads!
- One would expect there to be fewer inspections listed than total wells, since several wells would be inspected on a single visit (COGCC describes an eight-well pad in this document, and COGA has a diagram for a six-well pad here). This is an important fact that Earthworks either doesn’t understand, or deliberately refused to acknowledge. In any event, it renders false their calculation on wells “not inspected.”
- Ohio – Earthworks Used Flat Out Wrong Inspection Data. According to Earthworks, in 2010 Ohio conducted 10,472 inspections. But according to the Ohio Department of Natural Resources, regulators performed “more than 13,138 site inspections” in 2010. (Ohio DNR, Accessed on October 2, 2012)
- Pennsylvania – Former DEP Secretary Says Report ‘Manipulates’ Data. John Hanger, the former head of the Pennsylvania Department of Environmental Protection under Gov. Ed Rendell (D), said the Earthworks report used “many manipulations” in the way it presented data. He notes: “For example, the reader will be told repeatedly in the report that Pennsylvania conducted 15,000 inspections, the 2010 number, and most of the Report’s analysis uses the 15,000 inspection number for Pennsylvania. Yet, buried in an Appendix, one learns that the 2011 inspection number jumped again–up to 22,670. … Again, the analysis in the Report uses the much lower inspection and inspector numbers of 2010, because they produce a “better” result for the authors.” (John Hanger’s Facts of the Day, Sept. 27, 2012)
- Texas – Earthworks Doesn’t Understand State’s Inspection Process. “[Railroad Commissioner Barry] Smitherman said the number has grown to 153 oil and gas field inspectors. He said they conducted 118,484 inspections in fiscal year 2012, which ended Aug. 31, and identified 55,960 violations. He noted that the commission inspects by lease, rather than by well.” (Houston Chronicle, Sept. 25, 2012)
- RRC: Multiple Wells Per Lease. The Texas Railroad Commission also cautions on its website: “Since oil leases can include multiple wells, there may be multiple API numbers associated with one RRC oil lease number.” (RRC, Accessed on October 3, 2012)
PROBLEM 2: Claims state regulatory bodies are ill-equipped and “unprepared” for future or even existing development.
- Earthworks: “Unfortunately, as this report shows, states are dangerously unprepared to oversee current levels of extraction, let alone increased drilling activity from the shale boom.” (p. 8)
- Earthworks: “[I]nspectors are rarely provided with the equipment necessary to catch all of the problems that may be occurring at oil and gas facilities.” (p. 9)
FACT: Experts have confirmed that state regulatory bodies are well-managed and have the tools necessary to do their jobs – and do them right.
- Ohio Regulatory Structure is ‘Well-Managed,’ ‘Meeting Its Program Objectives’. The State Review of Oil and Natural Gas Environmental Regulations (STRONGER) found that “the Ohio [regulatory] program is overall, well-managed, professional and meeting its program objectives.” STRONGER added that regulators have “an arsenal of enforcement tools” to assure compliance. (STRONGER, January 2011, p. 4-5)
- Colorado Regulatory Program is ‘Well Managed,’ Meets Guidelines. STRONGER’s most recent assessment of Colorado’s regulations – for which Earthworks’ own Bruce Baizel served as an official observer – made this observation: “The review team has concluded that the Colorado program is well managed and professional and generally meets the 2010 Hydraulic Fracturing Guidelines.”
- STRONGER: Colo. Inspection Program Doing Just Fine. Contrary to Earthworks’ claim that the state is “unprepared” in terms of inspection and enforcement, STRONGER’s Colorado review noted: “The COGCC management staff demonstrated a high level of experience and competence. They have provided field inspectors with the levels of training and types of equipment to enable them to properly perform their duties. They appear to properly prioritize field inspector work. The managers demonstrated high standards of performance.”
- Pennsylvania Laws Have Been Strengthened in Recent Years. Former Pennsylvania Governor Ed Rendell (D) and former DEP Secretary John Hanger wrote recently in the New York Times: “As the two people who enacted four regulatory packages strengthening drilling regulation and led the enforcement of the rules in Pennsylvania until January , we strongly disagree that there is lax regulation and oversight of gas drilling there.”
- EPA: States Doing ‘Good Job’. Here’s what EPA Administrator Lisa Jackson said recently about state regulation of oil and gas: “States are stepping up and doing a good job. It doesn’t have to be EPA that regulates the 10,000 wells that might go in.”
- Jackson: No Federal Regulation Necessary. Lisa Jackson also recently said: “We have no data right now that lead us to believe one way or the other that there needs to be specific federal regulation of [hydraulic fracturing].”
PROBLEM 3: Pushes for legal system defined by guilty until proven innocent.
- Earthworks: “Until there is a shift in the burden of proof requiring industry to prove that they have not caused harm, or at least a decrease in that burden, state agencies will not be able to fully use the enforcement tools available to them, citizens will be left with little recourse, and the bad industry actors will continue to get away with practices that harm human health and the environment.” (p. 16)
- Earthworks: “Changes should be made to regulations to reduce the burden of proof that must be met before agencies can take enforcement action against operators that violate oil and gas rules.” (p. 16)
FACT: Evidence doesn’t support accusations made by opponents, and the presumption of innocence has been a hallmark of the American legal system for more than 100 years.
- AP: Critics’ Claims Based on ‘Bad Science’. A report from the Associated Press earlier this year noted that “scientists say opponents sometimes mislead the public” with their accusations, adding that “some of their claims have little – or nothing – to back them.” The AP noted that claims linking hydraulic fracturing to breast cancer have been refuted by health officials and cancer experts, and that fears spread about air and water contamination “aren’t being confirmed by monitoring” in the areas where those claims are often made.
- EPA: No Water Contamination from HF. Despite “water contamination” being one of the most common talking points among opponents, including Earthworks, EPA’s Lisa Jackson has stated publicly: “In no case have we made a definitive determination that [hydraulic fracturing] has caused chemicals to enter groundwater.” State regulators from across the country have similarly affirmed that fact.
- Study: No Significant Health Risks from Shale Development. “An air quality study of natural gas drilling sites in Fort Worth found no significant health threats, the city said Thursday. The long-awaited study by Eastern Research Group Inc. looked at the impact of natural gas exploration and production on Fort Worth’s air quality. According to the study, emissions do not reach levels that cause adverse health effects, although five sites have emission rates that exceed regulatory thresholds.” (NBC News, July 14, 2011)
- Shifting Burden of Proof to Industry is Common Opposition Tactic. During a recent hearing in front of the Dallas City Council, Terry Welch – tasked with giving the “environmentalist” viewpoint – tried to justify additional regulations on a hypothetical situation (i.e. rigs impacting water supplies in floodplains) that has never happened before. The purpose: force the industry to prove a negative, which is impossible. At the heart of Mr. Welch’s statement is the presumption of guilt, and that the baseless claims made by opponents are automatically valid.
- 1895 Supreme Court Case Affirmed Innocence Until Proven Guilty. In Coffin v. United States (156 U.S. 432), the Supreme Court held that “a presumption of innocence in favor of the accused is the undoubted law, axiomatic and elementary, and its enforcement lies at the foundation of the administration of our criminal law.”
PROBLEM 4: Claims spills and violations are increasing.
- Earthworks: In a chart associated with its report entitled “Colorado Oil & Gas Related Spills,” Earthworks claims spills in Colorado have increased every year since 2004.
- Earthworks: “Even though a shale gas and oil drilling boom has not yet occurred in Ohio environmental impacts are on the rise. As seen here, in 2011 oil and gas pollution related violations were at their highest level in years.” (p. 21)
- Earthworks: “As seen in Chart 7, since 2008 there has generally been an increase in the number of violations found at oil and gas wells in Pennsylvania. In 2011, there were 4,069 violations found during inspections.” (p. 38)
FACT: Spills in Colorado are decreasing, while violations in Ohio and Pennsylvania are on the decline.
- Colorado Regulators: Spills Declined from 2010 to 2011. “The frequency and number of spills and releases connected to the oil and gas industry dropped significantly in 2011 compared to 2010, a state official said on Thursday. The reduction of incidents led Chris Canfield, an environmental protection specialist with the Colorado Oil and Gas Conservation Commission (COGCC) to praise the industry for improving its record.” (Glenwood Springs Post Independent, Feb. 4, 2012)
- Ohio Regulators: No Violations at Wells. “Utica Shale exploration has started without a hitch, according to a thorough review of well-inspection reports, but those against the fracking process say it’s too early to draw conclusions regarding Ohio’s first foray into massive horizontal resource extraction. The Ohio Department of Natural Resources through the end of April had conducted 254 on-site well inspections at Utica Shale wells. ODNR has yet to cite any energy companies with a violation.” (Youngstown Vindicator, May 28, 2012)
- Violations Decreasing in Pennsylvania. “Out of 4,000 wells, the report’s authors studied close to 3,000 violations reported to the state’s Department of Environmental Protection between January 2008 and August 2011…As time went on, however, the number of violations in relation to the number of gas wells dug started falling, decreasing by 58.2 percent in 2008 to 40.3 percent in 2009, and to 30.5 percent in 2010. By the first eight months of 2011, the report found the number of violations dropped further to 26.5 percent.” (IB Times, May 15, 2012)
PROBLEM 5: Wants to punish oil and gas development for government deficits.
- Earthworks: “In these times of budgetary deficits, with legislatures scrambling to find revenue sources, the fact that proposals to increase penalties for violations have not been successful in several states is disappointing, and suggests a strong influence of the oil and gas industry on legislators.” (p. 47)
FACT: Rules and regulations are designed to prevent problems, not merely to increase government funding. Additionally, oil and gas development is already a major source of public revenue.
- North Dakota: Budget Surplus Thanks in Large Part to Shale. According to the Bismarck Tribune, North Dakota will have a budget surplus of $1.6 billion, due in no small part to development of the Bakken shale. The Tribune added that tax collections from oil and gas are more than $3.8 billion, considerably higher than the $2 billion originally projected.
- Texas: Sales Tax Growth Driven by Oil and Gas Development. Texas Comptroller Susan Combs recently credited the oil and natural gas sector in the state with contributing heavily to state sales tax revenue growth of more than $2 billion. (San Antonio Business Journal, June 6, 2012)
- Oil and Gas Industry Pays High Effective Tax Rate. In 2010, U.S. oil and natural gas companies paid an effective incomes tax rate of just over 41 percent. Other S&P Industrial companies paid an effective rate of 26.5 percent.
- ExxonMobil Pays Millions in Taxes Every Hour. In 2011, ExxonMobil – the largest natural gas producer in the United States – paid more than $12 million in taxes every hour.
So, in summation, the Earthworks “report” was essentially a rehash of common talking points used by critics of oil and gas development, many if not all of which have been widely debunked. Given that lack of seriousness, it’s unsurprising that the report arrived at conclusions contradicted by easily accessible data.
Did Earthworks think those who read the report would be unable to find that information, or were they merely hoping that readers wouldn’t?
The report is riddled with transparently baseless accusations, and its central recommendation that those accusations be considered valid by decree is absurd by any legal standard. Given these facts, perhaps the bigger question is how so many news outlets allowed themselves to be used as a promotional vehicle for Earthworks’ activism, all without giving the report the kind of critical analysis – or even cursory review – that one would expect.