In my last column, I preached patience for those who question the safety of extracting shale gas via fracking. In this month’s column, I profile the growing trend of states and localities electing to ban fracking in response to fears that it might cause groundwater contamination. The availability of cheap, plentiful shale gas is a potential game-changer for the U.S. economy. But that potential could be jeopardized if fracking phobia causes this ban trend to expand.
Hydraulic fracturing – aka “fracking” – is a natural gas extraction technique in which a mixture of water and sand, leavened with a tiny amount of chemical additives, are pumped deep underground through a well-bore to fracture shale rock and release trapped natural gas. This operation requires millions of gallons of water. How to manage the returning flow of this fracking fluid (“flowback”) is one of the central challenges of natural gas fracking. The flowback is briny; it may contain elevated levels of naturally occurring radioactive materials, methane and of course there are those tiny amounts of chemical additives. Some operators dispose of the flowback by injecting it into underground injection wells which are regulated under EPA’s “Underground Injection Control” program. Others treat the flowback to remove contaminants and then discharge the treated flowback, as authorized under Clean Water Act permits issued by EPA or a state environmental agency. The environmental protection that these federal laws promise, however, has not stopped opponents from attempting to ban fracking in their backyards through state legislation and local ordinances. The following summary of such legislative strategies in New Jersey and Ohio illustrates a broader trend of hostility toward fracking.
New York. In December, 2010, the outgoing Governor David Paterson vetoed legislation that would have banned fracking, but then issued an executive order imposing a six-month moratorium on fracking. That moratorium has been extended twice by Governor Andrew Cuomo, pending issuance of regulations by the Department of Environmental Conservation. Meanwhile, one town after another has enacted zoning ordinances permanently banning fracking. The New York Supreme Court recently upheld one of these local ordinances based on the authority vested in town and cities to regulate use of their lands. Anschutz Exploration Corporation v. Town of Dryden, 2012 NY Slip Op 22037 (Feb. 12, 2012).
New Jersey. In August 2011, New Jersey Governor Chris Christie imposed a one-year moratorium on fracking, pending more research into its safety. The Governor’s decision came on the heels of his veto of legislation that would have permanently banned fracking in New Jersey. In February 2012, the New Jersey Senate Environment and Energy Committee approved yet another bill to ban fracking.
Vermont. On May 4, 2012, Vermont became the first state to pass legislation banning natural gas fracking. Spokesmen for Gov. Peter Shumlin said that he will sign the measure into law. The measure also prohibits the import of fracking waste from other states. The House had earlier approved a moratorium, but the state Senate called for an outright ban on fracking, and the Senate’s view prevailed during negotiations to reconcile differences between the two bills. There have not been any fracking operations in Vermont, but there are shale gas formations in northwestern Vermont.
Ohio. Ohio may be the next state to ban fracking. In a March 9, 2012 report, the Ohio Department of Natural Resources (“DNR”) concluded that a dozen earthquakes in northeastern Ohio were “almost certainly” caused by injection of fracking fluids into underground permeable rock formations. The theory is that injected fracking fluids “lubricated” a previously unmapped geologic fault and contributed to seismic activity. The Ohio DNR has proposed a ban on fracking, and is requiring geological reviews before any new wells are approved for disposal of fracking fluid.
If this ban boon broadens, it could threaten what appears to be a transformational source of clean energy for this country. Natural gas is widely viewed as a less carbon-intensive alternative to coal as a power sector fuel (provided fugitive methane emissions are captured rather than released). According to data compiled by the National Energy Technology Lab and Sierra Club, plans for more than 160 coal plants have been shelved, partly due to the growing supply of cheaper natural gas. Cheap natural gas is also a potential game-changer for producers of chemicals, fertilizers and plastics, which use natural gas as an energy source and/or raw material.
But if attempts to ban fracking gain momentum, it could undermine the potential of shale gas to spur economic growth as we transition to renewable fuels. Bans are wild cards; they can render worthless a valuable investment in mineral rights. Such uncertainty is anathema to businesses considering an investment in shale gas development. The potential for bans to spread should not be underestimated; it appears to be a movement and it is getting organized. Every day, it seems another website appears, containing libraries of successful anti-fracking legislation and ordinances and educating communities how to adopt fracking bans. Check out “Food & Water Watch” (http://www.foodandwaterwatch.org/water/fracking/fracking-action-center/local-action-documents/).
States that are passive risk losing control of the debate to the “ban fracking” advocates, and missing out on the jobs and tax revenue that shale gas fracking can create. States hoping to head off anti-fracking advocates must be proactive: they must educate the public on the scientific advances in fracking and encourage adoption of responsible regulatory schemes, rather than outright bans. Proactive states may even garner support from members of the shale gas exploration industry who are beginning to recognize that such regulation could help level the playing field.
Peter L. Gray is a partner with McKenna Long & Aldridge LLP, where he chairs the Environment, Energy and Product Regulation Department.