Shale “Exempt” From Federal Laws? Um, Not Even Close.

For years, opponents of hydraulic fracturing have perpetuated the claim that shale development is somehow “exempt” from federal laws. One of the most persistent exponents of this talking point is Amy Mall of the Natural Resources Defense Council (NRDC), who constantly pushes the fallacious assertion that oil and gas corporations “enjoy exemptions from critical protective environmental provisions in the Safe Drinking Water Act and Clean Water Act.” Dr. George Peridas of the NRDC, in opening remarks at last year’s SXSW Eco Conference, echoed Mall’s sentiments, characterizing shale development as “an unregulated free for all,” claiming that the “industry is exempt from RCRA, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act.”

First of all, the idea that any industry would be allowed to run amok as an “unregulated free for all” is just absurd.  Second, while states have (and have always had) primary regulatory authority over hydraulic fracturing, oil and gas producers also have to abide by a whole host of federal laws – in fact, every step of the way they are regulated at the federal, state, and local levels, often at multiple levels simultaneously.

A report released by the Government Accountability Office (GAO) in September 2012 should finally set the record straight on opponents’ claims. In it, the independent agency makes clear that oil and gas developers are required to comply with no fewer than eight federal regulations. From that report:

As with conventional oil and gas development, requirements from eight federal environmental and public health laws apply to unconventional oil and gas development. For example, the Clean Water Act (CWA) regulates discharges of pollutants into surface waters.  Among other things, CWA requires oil and gas well site operators to obtain permits for discharges of produced water – which includes fluids used for hydraulic fracturing, as well as water the occurs naturally in oil- or gas-bearing formations – to surface waters.  In addition, the Resource Conservation and Recovery Act (RCRA) governs the management and disposal of hazardous wastes, among other things.

The report goes on to cite the specific federal environmental and public health laws that govern the development of oil and gas, which include: the Safe Drinking Water Act (SDWA) (for disposal wells); Clean Water Act (CWA); Clean Air Act (CAA); Resources Conservation and Recovery Act (RCRA); Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA); Emergency Planning and Community Right-to-Know Act (EPCRA); Toxic Substances Control Act (TSCA); and Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) – all laws that opponents continually claim are, somehow, “exemptions.”

So, not only do oil and gas producers have to comply with overarching federal laws, they must do so on top of a slew of stringent state regulations.  To cite one example, let’s look at Ohio: after going through the process required to obtain the initial permit from the Ohio Department of Natural Resources (ODNR), companies must then acquire a number of additional federal and state permits before they can even think about drilling the well.  Our EID colleague in Ohio, Shawn Bennett, has the full story, but just to summarize a few points here:

First, operators must be approved by the Army Corps of Engineers and the U.S. EPA for Clean Water Act 401 and 404 permits for wetlands and water quality.  If they receive the green light on these permits, then ODNR begins a technical review of the drilling permit to ensure the cementing plan is sufficient.  If this plan is approved, water testing is completed for all homes within 1,500-feet of the wellhead, with results distributed to the landowners, ODNR and the company. Next, the company must work with the U.S. EPA and the Ohio EPA to file a Spill, Prevention, Control and Countermeasure (SPCC) plan.  Then, companies must also file a permit to install and operate (PTIO) with the Ohio EPA for their production facilities that will be onsite.  The PTIO regulates emissions from a production site under the Clean Air Act.  Only after companies jump through all these hoops successfully can they begin to think about actually drilling a well.

Of course, since opponents’ claims about the Clean Air Act and the Clean Water Act have turned out to be a pretty hard sell, they continue to recite their talking points on the Safe Drinking Water Act ad nauseum.  So let’s clear the air one more time on that: hydraulic fracturing was not “exempted” from the Safe Drinking Water Act.  The SDWA became the law of the land in 1974, long after the first use of hydraulic fracturing, which occurred in the 1940s. Since then, the Act has been amended and updated more than a half-dozen times – and still has very little to say about hydraulic fracturing. How can a process be “exempt” from something that never covered — and was not designed to cover — it in the first place? Your guess is as good as ours.

This fracturing process is, however, aggressively regulated by the states, and this regulatory framework has resulted in a successful record of enforcement for over sixty years.  Even officials from the Obama administration have admitted that state regulators are far more capable in this task than the federal government.  As Carol Browner, President Clinton’s EPA Administrator said in 1995, “EPA does not regulate – and does not believe it is legally required to regulate – the hydraulic fracturing of methane gas production wells…”  President Obama’s former EPA chief Lisa Jackson has also recognized the effectiveness of states taking the lead.  As she said in 2011, “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 the fracking process” – and in February last year, she reaffirmed this position saying, “Let me speak really plainly: There is no EPA setup that allows us to oversee each and every well that’s drilled.”

What have been the results?  Going back to our example of Ohio, of the 329 wells that have already been developed in the Utica shale, there hasn’t been a single environmental violation.  Ohio is simply building on the record of success that has been repeated throughout the country for decades.

So, far from being “exempt,” shale producers have been held to even higher standards, complying with overlapping federal and state regulations, and held accountable by state regulators who are far better equipped to oversee the process.


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