Wise Advice on the Regulation of Natural Gas Drilling/Fracking

Jody Freeman, Harvard Law School

Jody Freeman, a Harvard law professor, was the White House counselor for energy and climate change in 2009 and 2010. Here is her letter to the New York Times entitled “The Wise Way to Regulate Gas Drilling:”

AMERICA’S energy future has been transformed by the production of natural gas made possible by hydraulic fracturing. This gas is a much cleaner source of electricity than coal. The problem is that the fracturing process used to extract the gas can, if done improperly, pollute surface and drinking water and emit dangerous air pollution.

States like Texas, Pennsylvania and New York are now rushing to impose their own rules. But what we really need is a system of federal oversight that will promote confidence in this technique and provide the industry with uniform standards without overregulating it.

The federal government has the power to regulate some but not all the risks. For example, the Environmental Protection Agency has set standards to control emissions of toxic and greenhouse gases from the drilling process and is considering new rules for polluted wastewater. But in 2005, Congress exempted the fracturing process itself — a process in which huge quantities of water, sand and toxic chemicals are injected into tight shale rock, to force open the rock and capture the gas trapped within — from federal regulation.

The states have moved forward with a patchwork of regulations — some specific and prescriptive, others vague and general. Many states require some disclosure of the chemicals the drillers use, but in some states drillers decide which chemicals constitute proprietary secrets and therefore do not have to be disclosed. Some states allow operators to store toxic wastewater from the fracturing process in open pits, risking surface or groundwater contamination. Some states simply lack the experience or resources to enforce their standards.

The uneven approach is bad not only for the environment but also for industry, because under the current system, mistakes by a few bad apples could lead to overregulation or even outright bans on drilling.

A better approach is one already reflected in many environmental laws: cooperative federalism. The federal government sets baseline standards, which states can exceed but not fall below. Ideally, these would be general “performance standards” rather than detailed specifications, giving the states flexibility to meet them.

States might be required to develop comprehensive plans to manage environmental risks. These plans could account for regional differences and would be based on best practices for disclosure, drilling location, well construction and wastewater treatment. States would implement and enforce the rules and issue and oversee the operating permits. The federal government could step in if states abdicated their responsibility. Such a regulatory system — with minimum federal standards as well as state plans — has been in place for coal mining since 1977.

For this to work, Congress must lift the regulatory exemptions for hydraulic fracturing. This would allow the E.P.A. to set minimum requirements for the drilling process, which states would implement through federally approved programs. The E.P.A. and the Interior Department, which regulates gas drilling on federal lands, could then establish a clear, comprehensive and consistent federal framework for hydraulic fracturing. The cost would be reasonable: the International Energy Agency recently estimated that adequate environmental protections could increase drilling costs by 7 percent.

Some might say that a federal role isn’t necessary. But pollution risks go beyond state borders. If natural gas extraction is a national priority, its safety and efficacy should be of national concern, too. The Obama administration has taken some initial steps to coordinate the federal government’s approach but has been timid about calling for a stronger federal role. Only a national regulatory system can strike the right balance, simultaneously realizing hydraulic fracturing’s energy promise and minimizing the risks while respecting state authority.