Hydraulic fracturing – often referred to as “fracking” – developed in the United States in the late nineteenth century as a way to stimulate shallow rock formations to make natural gas extraction possible. Use of the process reached a twenty-year low in 1994, but its popularity increased at the beginning of the twenty-first century after gas prices increased and new drilling processes developed. However, along with the increased popularity of fracking have come mounting concerns over the practices safety.
Fracking has been linked to potential water contamination, earthquakes, and air pollution, stoking fears that fracking threatens human and environmental health. Despite these concerns, however, fracking remains scantily regulated, particularly at the federal level. State and local regulators have been scrambling (clumsily) to adapt to the boom in natural gas production, and federal regulators need to step in to supplant or supplement state regulation.
Although fracking dates back to the late nineteenth century, it was not until 1947 that modern fracking methodology began to rise in popularity. Pioneered by the Stanolind Oil and Gas Corporation (“Stanolind”), modern fracking is a method of extracting natural gas from rock formations through “rock fracturing,” which involves propelling a mixture of “frac fluid” – water, sand, low-gravity oils, and chemical additives at high pressures (a typical blend will use concentrations of between three and twelve chemicals) – into underground rock formations. The frac fluid breaks open the rock, and the proppants (i.e., the small granules of sand) keep the rock open and permit the oil to be extracted. Between 25% and 75% of the injected frac fluid is later removed, but the remaining fluid typically remains in the ground. In 1949, Stanolind licensed their fracturing technique to Halliburton Oil Well Cementing Company (“Halliburton”), the first company to commercialize the process.
Congress passed the Safe Drinking Water Act (“SDWA”) in 1974 to protect American drinking water from potential contaminants. After passage of the SDWA, drilling (including modern fracking methodologies) came under the purview of federal regulators. Under the authority of the SDWA, the Environmental Protection Agency (“EPA”) promulgated regulations for state Underground Injection Control (“UIC”) programs to prevent underground injection that endangers drinking sources. Historically, oil and gas injection wells – including so-called “enhanced recovery” wells like fracking wells – have been regulated under the UIC program’s Class II requirements. According to the SDWA, Class II wells may be used for three broad purposes: (1) to dispose of brines (salt water) and other fluids associated with oil and gas production; (2) to store petroleum natural gas; or (3) to inject fluids to enhance recovery of oil and gas from conventional fluids. Currently, there are roughly 172,000 Class II wells across the United States, according to the EPA.
In 2005, however, Congress enacted the Energy Policy Act, which amended the definition of “underground injection” in the SDWA to specifically exclude “the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations” (critics often refer this provision as the “Halliburton Exemption” or “Halliburton Loophole”). In doing so, Congress exempted fracking companies from the UIC program. Therefore, under current law, fracking operators are permitted to inject anything but diesel into the ground without obtaining a UIC permit.
According to David B. Spence, a professor of law at the University of Texas, Congress enacted the fracking exemption after an EPA study showed “that the injection of fracking fluids into coalbed methane wells pose[d] little or no threat to drinking water.” That is a convenient explanation. But it happens to be wrong. The real story is far more political.
In the early 1990s, the EPA took the position that fracking was “a well stimulation technique associated with production and therefore not subject to UIC.” That position was challenged in 1994, when the Legal Environmental Assistance Foundation (“LEAF”) petitioned EPA to initiate proceedings to withdraw approval of the Alabama UIC program. LEAF alleged that the Alabama UIC program was deficient because it did not regulate fracking activities associated with coalbed methane gas production. In 1995, EPA denied the petition because of its prior determination that fracking did not fall within the definition of “underground injection” under the SDWA. LEAF then petitioned the Eleventh Circuit Court of Appeals for a review of EPA’s order. In its ruling, the Eleventh Circuit mandated the EPA to regulate fracking, holding that the activity “obviously falls” within the class of activities Congress intended to regulate under the UIC program.
In 1999, after the Eleventh Circuit handed down its ruling, the EPA began a study on coalbed methane wells to evaluate the potential risks to underground sources of drinking water (“USDW”). This is the study to which Professor Spence is referring. In 2001, while the EPA was still investigating the issue, President George W. Bush took office and assigned Vice President Dick Cheney – who was also the former CEO of Halliburton – to lead the National Energy Policy Development Group (the so-called “Energy Task Force”). The Energy Task Force was tasked with preparing a “new national energy policy.” According to the Washington Post, government records showed that while drafting the new policy, Vice President Cheney “held at least 40 meetings . . . most of them [with representatives] from energy-producing industries” before meeting with a single environmentalist or environmental organization. Perhaps not surprisingly, then, the Task Force eventually “recommend[ed] that the president direct the Secretaries of Energy and the Interior to promote enhanced oil and gas recovery from existing wells through new technology.”
The EPA ultimately published its report in 2004, finding that “the injection of hydraulic fracturing fluids into [coalbed methane] wells pose[d] little or no threat to [underground sources of drinking water] and does not justify additional study at this time.” EPA noted, however, that it was “committed to working with states to monitor this issue” and recognized that states “have the authority under SDWA to place additional controls on any injection activities that may threaten USDWs.” The EPA did not, in other words, recommend a categorical exemption for fracking. In fact, the EPA, in conversations with Bush Administration officials, opposed the Energy Policy Act’s broad language. According to Benjamin Grumbles, who oversaw the release of the 2004 EPA report, the report was merely meant to be “a snapshot in time . . . It wasn’t meant to be a bill of health saying, ‘well, this practice is fine. Exempt it in all aspects from any regulation.’” The Bush Administration, however, communicated “clearly” that it “did not want [the EPA] to take a formal position of opposition to the exemption.”
Allegations of political influence over the 2004 EPA report soon emerged. In October 2004, an EPA whistleblower pointed out that five of the seven members of EPA’s Peer Review Panel had clear conflicts of interest. The individuals identified as having conflicts of interest were Ian Palmer (a petroleum engineer with BP Amoco), Buddy McDaniel (a technical adviser for Halliburton Energy Services, Inc.), David Hill (an engineer with the Gas Technology Institute), Morris Bell (an engineer with the Colorado Oil and Gas Conservation Commission), and Jon Olson (a former employee of Mobil Exploration). Further, the whistleblower argued that EPA had “conducted limited research” and that its conclusions were “scientifically unsound and contrary to the purposes” of the SDWA. This claim was buttressed in 2011, when the Environmental Working Group uncovered a 1987 EPA report that concluded that fracking in a natural gas well in West Virginia had contaminated an underground drinking source. The EPA’s 2004 study, however, did not even mention the 1987 report, nor did Congress consider it during hearings concerning the fracking exemption in the Energy Policy Act.
In response to the EPA whistleblower’s letter, Representative Henry Waxman (D-CA) requested that the EPA Inspector General examine “whether political considerations influenced the agency’s conclusions.” But before EPA could even begin any investigation, Congress passed the Energy Policy Act – fracking exemption and all.
Since 2005, members of Congress have introduced bills to repeal this exemption. In 2013, for example, the Fracturing Responsibility and Awareness of Chemicals Act (“FRAC Act”) was introduced in the Senate. The FRAC Act would repeal the “Halliburton Exemption” and require disclosure of the “chemicals intended for use in underground injections before the commencement of such operations and the chemicals actually used after the end of such operations.” However, the FRAC Act, and similar legislation aimed at federally regulating fracking, has failed to gain wide support in Congress. In the absence of federal legislation, fracking is now exclusively regulated by the individual states.
The result, to put it bluntly, is a regulatory regime that is a complete mess. States have taken wildly different approaches to regulating fracking. Some states have sought to restrict fracking operations around specific fragile environmental resources (e.g., the Delaware River Basin Commission currently prohibits fracking along the Delaware River); some states prohibit specific fracking techniques (e.g., North Carolina bans drilling practices that “unreasonably vary from the vertical”); only one state, Vermont, statutorily bans fracking altogether. Other states permit fracking but have rules “requiring” chemical disclosure. These rules vary according to the degree of specificity in what companies must disclose. However, in virtually every state with such a requirement, companies can avoid disclosure altogether if the chemical mixture is a “trade secret” (which, according to the Supreme Court, is property under the Constitution), if the vendor does not disclose the chemicals, or if the chemicals are not intentionally added to the frac fluid.
Fracking is the reason American oil outputs are reaching historic highs. But it is, quite literally, hitting close to home. According to the Wall Street Journal, “At least 15.3 million Americans live within a mile of a well that has been drilled since 2000. That is more people than live in Michigan or New York City.” In fact, entire cities have essentially been turned into drill sites. In Johnson County, Texas, for instance, “some 99.5% of its 150,000 residents live within a mile of a well.”
As there are with any practice designed to extract natural resources from the earth, there are serious human and environmental risks associated with fracking. These risks probably do not justify a categorical ban of the practice. But they do require a comprehensive regulatory regime that appropriately balances the economic benefits of fracking and the human and environmental risks. Congress has already acted to federalize drinking water regulation and to regulate toxic chemicals, despite the fact that most contamination events occur entirely within a single locality. But thanks to Dick Cheney, there’s pretty much nothing the federal government can do about fracking, even though the practice fits squarely within the competencies of the respective federal programs.
The carve-out in the SDWA to the fracking industry is based on a political calculation that is outdated and unjustified. It’s time for this to change. There should be federal control over fracking, and Congress should pass a federal fracking statute bringing the practice back under the purview of applicable federal environmental regulations.