Legal Issues in Hydraulic Fracturing

Demand for energy shows every promise of remaining high, and supplies of natural gas and oil worldwide are dwindling. Renewable and alternative energy sources – for example, wind-generated electricity, or nuclear power – are being developed and considered at the national level; however, at the time of writing more than half of the total energy consumed in the United States comes from oil and natural gas sources. Specifically, natural gas was – in 2011 – providing fully a quarter of the total energy consumed in the United States (Obama, 2013). Hydraulic fracturing, also known as “fracking”, provides a means of exploiting the reserves of natural gas within United States territory. These natural gas reserves are positioned in such a way that they cannot typically be exploited by traditional methods, and instead are produced by a process of hydraulic fracturing. This means of oil and gas production is relatively new, and it remains controversial in terms of economics, safety and environmental cost. In addition to ecological, sociological and political considerations, there are many legal issues involved in the production of energy via hydraulic fracturing (Hagstrom and Adams, 2012).

Regulation
The actual activity of hydraulic fracturing is carried out by private corporations; however, the process is governed by multiple State and Federal regulations and laws. As the field of hydraulic fracturing is developing quickly and recently, legislation and regulation are likewise in a state of development. Significant public discomfort with the idea of hydraulic fracturing – and its potential environmental consequences – places pressure on legislators to pass regulations that protect the environment while allowing economic development via the hydraulic-fracturing industry. According to President Barack Obama’s April 13, 2012 Executive Order relating to hydraulic fracturing, onshore oil and gas production are primarily regulated and overseen by the individual States. Off-shore operations naturally do not take place on any specific state’s actual land; hydraulic fracturing happens on land, and involves significant local use of water resources in the production process (Tiemann & Vann, 2012). Therefore, States have a strong interest in regulating the on-shore activity that happens within their state lines (Obama, 2013). Federal legislation regulates on-shore hydraulic fracturing when this takes place on public land, or on Indian trust lands. In April 2013, President Obama stated the need for greater coordination and cooperation between State, Federal and other agencies in regulating and supporting safe and responsible hydraulic fracturing operations on-land in the United States.

Water Concerns and Regulation
Hydraulic fracturing can be used to produce natural gas from either sand formation or from shale formations. The latter is the fastest-growing means of domestic on-land gas production at the time of writing. Shale-gas hydraulic fracturing involves creation of a shale-gas well via drilling. The well is then finished and cased; once the well is complete hydraulic fracturing is used to stimulate the well to produce. The process of hydraulic fracturing necessarily creates disturbance; there are naturally concerns that surrounding groundwater may become contaminated as an unwanted side-effect of this process (Tiemann & Vann, 2012). The potential for contamination is significant, because creation of the shale-gas well typically involves drilling through the aquifer that lies closer to the ground’s surface. Even if the aquifer is not disturbed sufficiently to cause contamination, it is possible that later stimulation of the well for production could cause contamination of drinking water in the surrounding area. Any kind of leakage from the well’s operations, or from the initial creation of the well, has the potential to contaminate local water. Legislation and regulation is very necessary with regards to the drilling fluids used in shale-gas well production, and also in dealing with any accidental spills or leaks. Water usage and changes are key issues relating to hydraulic fracturing in general, and the legislation affecting this industry. The fracturing process itself involves significant water usage – water can be displaced or withdrawn from area lakes, rivers, streams and from the aquifer (Tiemann & Vann, 2012). The land surrounding a fracturing site may be temporarily or permanently changed; the operations can potentially have negative effects on local and regional air quality.

Disclosure and Accountability
The Emergency Planning and Community Right to Know Act (EPCRA) does not presently include requirements that companies producing oil and gas disclose the exact chemicals that are present in the fluids used for hydraulic fracturing. Public opinion could push states to change this regulation, so that companies are required to disclose the fluids they use in hydraulic fracturing as a part of the process leading to permits to conduct hydraulic fracturing on land (Hall, 2012).

Case Study: Louisiana
Water use is one of the reasons Louisiana has implemented state-level legislation relating to the industry and environmental protection. Louisiana’s Act 955 requires the state to enact legislation that protects water quality within the state, alongside other natural resources. The state is not allowed, under current legislation, to donate water to any project or corporation – this is grounded in the doctrine of water itself being a publicly-owned resource (Springer, 2011). Under Act 255, Louisiana may not allow large quantities of running water to be withdrawn from lakes, streams and the like – if this occurs, the net result is a technically unconstitutional donation of publicly-owned water resources (Springer, 2011).

In 2011, Springer (2011) stated that 90 percent of the gas wells in operation in the United States – a total of some 450,000 wells – were using the process of hydraulic fracturing to produce gas. Any individual fracking well may use millions of gallons of water during its operation. In the Haynesville Shale operations, the Louisiana Ground Water Resources Program found that 80 percent of the total water used was drawn from surface-level water sources (Springer, 2011). The Haynesville Shale wells used 1.5 billion gallons of water in under a year, at the time water use was measured by the LGWRP. Louisiana’s state Constitution legally requires water, and other natural resources, to be ‘protected, conserved, and replenished insofar as possible and consistent with the health, safety, and welfare of the people.’

Case Study: Pennsylvania
Pennsylvania’s Marcellus Shale provides a reserve of natural gas that had been inaccessible before the advent of hydraulic fracturing. As the Marcellus Shale site has been developed for fracking use, there have been challenges and some conflict relating to Pennsylvania’s existing state-level property laws. Title 58 covers oil and gas regulation within the state of Pennsylvania. In February 2012, Pennsylvania’s governor signed House Bill 1950, a law amending Title 58 specifically with regards to hydraulic fracturing practices within the state. HB1950 seeks to protect Pennsylvania’s natural resources and environment via a structured permitting process, while raising additional state-level revenue by charging specific fees for exploitation of oil and gas wells at Marcellus Shale (Sabino, 2012). Chapter 23 of the bill outlines this as an Unconventional Gas Well Fee. Each drilling of an unconventional well requires payment of a fee – the fee schedule is structured to take into account the current price of natural gas. The annual fee was set on a scale of between $40,000 and $50,000 per well, with the higher prices being charged when the prevailing annual price of natural gas was relatively high (Sabino, 2012). The per-well fee is highest in each well’s first year of operation, with fees decreasing annually for older wells. The intention of this provision is not immediately clear – it may be tied to the idea that wells become gradually exhausted over time, with newer wells likely to be producing more gas than wells that have been in operation for several years. Perhaps there is also some recognition of the fact that older wells may require more regular, and potentially costly, maintenance than new wells. The money raised from Pennsylvania’s unconventional gas-well fees is distributed via a central fund, with the state’s conservation districts first in line to receive monies from the fund (Sabino, 2012). Pennsylvania’s agencies dealing with fish and wildlife, emergency management and fire response also receive money from the fund. Overall, the new legislation in Pennsylvania appears designed to maximize exploitation of the Marcellus Shale, while raising significant revenue for state-funded conservation and emergency-response agencies and departments.

Criticism and Lawsuits
Public opponents of the practice of hydraulic fracturing in the United States presently focus upon the risk of damage to the environment that the process poses. At the time of writing, lawsuits had been brought on grounds of contamination (Springer, 2011). Individual towns and regions in multiple U.S. states – including New York and Pennsylvania – have banned fracking. On a Federal level, the Legal Environmental Assistance Foundation brought a lawsuit regarding fracking and the safety of drinking water. Until the late 1990s, hydraulic fracturing had not been considered, under Federal law, to be regulated under the auspices of the (federal) Safe Drinking Water Act. The LEAF’s lawsuit led to a re-evaluation by the U.S. Environmental Protection Agency in relation to its stance regarding fracking, and regulation of the domestic industry (Virginia Environmental Law Journal, 1999). The Safe Drinking Water Act is clearly relevant to the regulation of hydraulic fracturing in the United States, as this Federal-level legislation requires the Environmental Protection Agency to oversee and regulate any injection of fluids, -- liquids, solids or gases included – under the ground. As discussed earlier, in many regions there is no legislation that even requires private operators to disclose what fluids they are using in underground gas-well operations. Therefore the EPA’s responsibility to regulate underground fluid injection is necessarily obstructed by the current legislative situation and the general handing of legislative oversight over to states rather than the federal government. Because it is possible that the injections used in unconventional gas well operations could contaminate water supplies, the friction between state-level legislation and the EPA’s responsibilities regarding safe water needs resolving via clarification of the law.
International Comparisons
Certain countries outside the United States have enacted laws banning hydraulic fracturing outright. In 2011, the French government banned fracking; at the time of writing this ban remained in place and France had no plans to overturn the ban before it could be fully proven that shale-gas fracking would not harm the environment. Bulgaria banned hydraulic fracturing in 2012, and revoked the permit that had already been granted to the U.S.-based energy company Chevron. The multinational nature of energy companies and the energy market makes permitting and international operations more difficult when local or national laws relating to hydraulic fracturing operations are in a state of flux and development. South Africa has also banned fracking, while multiple countries have enacted moratoriums until more can be understood about the potential dangers and benefits of hydraulic fracturing operations.
Canada
Land use concerns come into play in relation to the licensing and exploitation of fracking sites in Canada. In Alberta, for example, the land-level growth – trees and undergrowth – must be cleared from the site before the oil sands can be mined. The return of trees and forest to the land after oil-sand extraction is a very long-term process, and there is justifiable concern that oil companies involved in exploiting tar-sand deposits will not follow through with the required land reclamation efforts after the tar-sand is extracted (Smandych and Kueneman, 2010).
Air pollution concerns are also related to hydraulic fracturing operations in Canada. A governmental environmental protection order was issued in 2007, after hydrogen sulfide levels at an active site were found to exceed Canadian official standards (Government of Alberta, 2007). Environmental concerns relating to water use involve the sheer volume of water used, and potential pollution to water after it has been used at the site. There is justified concern that aromatic compounds are being introduced into the Athabasca River in Alberta, with potentially carcinogenic effects on both aquatic life and humans who drink water from this source (Kelly, Short, Schindler, Hodson, Ma, Kwan and Fortin, 2009).

Discussion
It is clear that tension presently exists between federal and state legislation and regulation, and the ideologies behind both. At the time of writing, most regulation of hydraulic fracturing operations is left to the states in which operations are permitted. This allows state-level oversight of the industry to be flexible to the specific landscape, environment, economic needs and structure of the local region or the state. However, it creates a kind of patchwork of local laws that often contradict or sit awkwardly alongside federal legislation and local constitutions. Federal legislation would likely be more consistent, and constant, than ever-changing state and local laws that may be economically biased in favor of allowing maximal exploitation of unconventional gas wells. If a state’s environmental, emergency-response and fire-management authorities become accustomed to receiving monies sourced from fracturing operations, this gives an impetus for those agencies to continue supporting fracking in their region. When any agency involved in oversight of hydraulic fracturing operations has an inherent financial interest in the continuation of those operations, objectivity is threatened.

References
Hagstrom, Earl and Julia Adams. “Hydraulic Fracturing: Identifying and Managing the Risks.” Environmental Claims Journal 24.2 (2012): 93-115
Hall, Keith B. “Hydraulic Fracturing – a Primer.” The Enterprise 41.11 (2011)
Kelly, E., J. Short, D. Schindler, P. Hodson, M. Ma, A. Kwan and B. Fortin. “Oil Sands Development Contributes Polycyclic Aromatic Compounds to the Athabasca River and its Tributaries.” Proceedings of the National Academy of Sciences USA 106(52), December 2009: 22346-22351.
Obama, Barack. (2012). EXECUTIVE ORDER: SUPPORTING SAFE AND RESPONSIBLE DEVELOPMENT OF UNCONVENTIONAL DOMESTIC NATURAL GAS RESOURCES. April 12, 2013.
Sabino, M. A. (2012). Pennsylvania takes lead in taxing and regulating fracking.Natural Gas & Electricity, 28(9), 1-5.
Springer, L. (2011). Waterproofing the New Fracking Regulation: The Necessity of Defining Riparian Rights in Louisiana's Water Law. La. L. Rev., 72, 225.
Tiemann, M., & Vann, A. (2012, July). Hydraulic Fracturing and Safe Drinking Water Act Issues. Congressional Research Service, Library of Congress.

Virginia Environmental Law Journal (1999): “Did the 11th Circuit Crack “Frack”?”. VELJ 18(4).