Speakers debate states’ oil, gas role at GMU conference

States are better qualified than federal and local governments to regulate hydraulic fracturing and other unconventional oil and gas activities, two speakers agreed at an energy and environment conference at George Mason University’s School of Law. But a third speaker argued that some states’ performances as the primary US oil and gas regulator are unsatisfactory and needs to be reevaluated.

Rapid growth of US oil and gas production from tight shale formations is bringing new scrutiny to regulation at all levels of government, all three speakers agreed during a panel discussion at a day-long conference, “Old Fuels, New Technologies, and Market Dynamics,” at the law school’s campus in Arlington, Va., on Apr. 7.

“There’s no convincing basis for the federal government coming in and trying to regulate fracing,” said Michael L. Krancer, a partner at the law firm Blank Rome LLP in Philadelphia who formerly led Pennsylvania’s Department of Environmental Protection. “But it’s not a Republican or Democratic issue. Folks of all political stripes are getting involved.”

US Environmental Protection Agency investigations in Dimock, Pa., Pavilion, Wyo., and Parker County, Tex., found no contamination of drinking-water supplies which could be traced to nearby gas wells which had been fraced, he said. “EPA spent millions of dollars which could have been used to clean up environmental wastes on this troika of fumbles,” Krancer maintained.

Interstate impacts

Thomas W. Merrill, Charles Evans Hughes Professor at Columbia University’s Law School, noted that while one legal theory suggests that infusions of outside capital from outside interests can influence states’ environmental rules, regulation at this level is most effective, except when it comes to potential interstate environmental impacts.

“If you have something with transboundary implications, it theoretically should be federally regulated,” Merrill said. Companies involved in fracing consider tort law’s potential and act accordingly, he said, adding that establishing the cause of drinking or groundwater contamination can be difficult when unconventional oil and gas production is involved, which has led some states to require groundwater tests before any fracing commences.

“Tort law is state law in this country,” Merrill said, adding, “I think most of these problems should be left to the states, with the exception of methane leaks” and other potential environmental impacts.”

Sharon Buccino, who directs the Land and Wildlife Program at the Natural Resources Defense Council, conceded states can be effective oil and gas regulators when they have strong programs. Colorado does a good job of notifying landowners of pending drilling applications, but other states don’t, she said. The federal government does because it’s required under the National Environmental Policy Act, she said.

“States are on the front lines of ensuring enforcement people can count on,” Buccino said. “But many don’t have the necessary resources. There were 500 spills last year in Wyoming, and no fines. One solution is to incorporate environmental monitoring costs into drilling permit charges.”

Krancer responded that state oil and gas regulation is far from failing, particularly with the State Review of Oil and Natural Gas Environmental Regulations (Stronger) where stakeholders from the industry, state environmental agencies, and environmental and public interest groups review state oil and gas waste management programs against guidelines developed and agreed to by all of the participants.

EPACT exemptions

Buccino questioned exemptions for oil and gas producers from the federal Safe Drinking Water Act and stormwater runoff control requirements established under the Energy Policy Act of 2005. But Krancer said EPACT recodified that oil and gas regulation should be left to the states.

“The states can require advanced notice, set NEPA-like rules, and increase enforcement,” said Merrill. “The federal process is slow and cumbersome. States can respond more quickly.”

Buccino reiterated that states can do certain regulatory jobs well, but added, “When we’ve done enough, we won’t have the fear and outrage that’s out there. I’ve sat across the kitchen tables of people who have a drilling rig on the property of a neighbor who’s getting the royalties while they get all the noise and pollution.”

Contact Nick Snow at nicks@pennwell.com.

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