US Hydraulic Fracturing Policy: Options and Recommendations

Executive Summary

While the extraction of natural gas by means of hydraulic fracturing is a decades-long practice, it has witnessed immense development of late owing to advancements in horizontal drilling, which enables gas and oil operators to harness previously unprofitable natural gas reserves within rock formations. Existing extraction-related policies combine state-federal alliances and voluntary endeavors by private organizations. More impartial, scientific studies providing details on how fracturing and extraction potentially affect environmental media such as water and air are essential, as are studies focusing on the long-term effects of natural gas surges on local communities. Primary models and hypotheses may offer a basis for reasonably discussing possible effects.

Maintaining the current state of affairs with regard to free-market rules and governmental policies will potentially continue to check short-run public expenses; however, it will not sufficiently address concerns regarding hydraulic fracturing's possible negative impacts on communities and the natural environment. Supplies of natural gas will grow constantly, constraining growth of energy rates or lowering them and possibly generating income from foreign exchange. If community and environmental concerns go unsubstantiated, economic growth will not be impacted and public expenditure will have been curbed. However, substantiation of these concerns will render existing policies "too little too late," leading to potential acute environmental damage or the financial collapse of communities addressing boom-bust impacts. Relevant policy alternatives include federal laws, mandatory conditions for fracking operators, chemical disclosure requirements, Environmental Protection Agency (EPA) supervision and monitoring, drilling site limitations, water supply-linked requirements, and the procurement of a sufficient number of competent regulators.

Numerous implementable policies have been put forward. Decisions pertaining to the degree of regulation of extraction must balance public safety and health, energy requirements, and the unavoidable associated bureaucracy. Research reveals that horizontal drilling, shale-gas extraction, and hydraulic fracturing would, on the whole, benefit from: (1) more organized, sustained scientific research; (2) consideration of more robust federal or state law; (3) review of hydrocarbons' (including methane's) likely health impacts if they enter drinking water supplies; and (4) industry-specific strategies for the development of safer, more consistent extraction techniques.

Introduction

Fracking, or hydraulic fracturing, constitutes a major issue in America's energy industry over the last ten years (Clark et al., 2012). It may be described as a method of increasing natural gas and oil well production by opening or breaking rock formations through the use of high-pressure fluid injections (Finkel, Hays, & Law, 2013). This extraction method has garnered significant attention within America as it allows extraction of gas and oil from shale rock. The process has elevated gas and oil yield in the nation, rendering it one of the world's largest natural gas and oil producers. Estimates suggest it will eliminate the nation's reliance on other countries for energy by the end of this decade. This paper addresses America's fracking policy through a review of the problem's background, presentation and analysis of potential policy alternatives, and recommendation of a suitable policy.

Policymakers have given much emphasis to fracking, with the federal government in particular initiating numerous administrative and legal fracking-related programs over more than ten years (Clark et al., 2012; Finkel et al., 2013). Coal-bed methane gas fracking went unregulated under the 1974 Safe Drinking Water Act (SDWA), which regulates underground injection activities via an Underground Injection Control Program covering Class II natural gas and oil-production-related wells. Fracking constitutes a national-level problem but is not currently integrated into SDWA requirements and federal environmental regulation (Finkel et al., 2013). Given this exemption, fracking regulations have largely been shaped by state governments. America's energy industry has nonetheless demanded amendments to fracking legislation, providing the political and historical basis for formulating federal laws on the subject.

Legislative History of Fracking Policy

A majority of federal laws proposed on the topic of fracking have not been ratified. Sponsored by a number of senators and House representatives, these laws have been taken up by appropriate committees. Committees have received referrals of recommended fracking-related resolutions, which were discussed before being forwarded to the full chamber. Ever since the first introduction of the 2009 Fracturing Responsibility and Awareness of Chemicals Act, it has not been ratified despite being reintroduced four more times (Cotton, 2017). Challenges linked to the implementation of federal rules may be attributed to state policy establishment and control over drilling activities (Spence, 2014).

The SDWA exemption has driven proposed laws and policies on fracking. As demonstrated by legal analyses, this policy problem's development entails proposals introduced by numerous sponsors, floor discussions in both congressional chambers, and committee discourse and outcome reporting (Cotton, 2017; Spence, 2014). Lawmakers have encountered several challenges and have, thus far, remained unsuccessful in implementing fracking-related federal legislation.

Fracking legislation within the nation dates to 1974, the year the SDWA was enacted, which instituted new rules and standards for the protection of underground drinking water sources. Despite fracking's 25-year commercial utilization by that point, the SDWA failed to address it. In 1994, the Legal Environmental Assistance Foundation (LEAF) appealed to the EPA for the withdrawal of authorization to conduct underground injection control in Alabama, contending that the SDWA required EPA regulation of fracking (Rahm, 2011).

The 2005 Energy Policy Act provided for the unintentional codification of fracking regulation under the SDWA. Three years later, large-scale sampling and examinations by the Colorado Oil & Gas Conservation Commission (COGCC) indicated no drinking water effects from gas and oil operations (Davis, 2012). In 2009, a number of House representatives, led by Democratic Colorado Representative Diana DeGette, introduced the FRAC Act, intended to rewrite SDWA goals. It was defeated by opponents who claimed the proposal aimed at creating a potentially intrusive new regulatory initiative (Heikkila et al., 2014).

In 2010, Wyoming ratified legislation requiring disclosure of additives used in the fracking process. In the same year, Arkansas implemented new regulations requiring similar disclosure, a step subsequently taken by Pennsylvania, Louisiana, Michigan, and Montana. During President Obama's 2012 State of the Union address, natural gas production from shale was strongly supported. A few months later, the EPA issued a draft report claiming no evidence existed that fracking had contaminated drinking water (Konschnik & Boling, 2014).

Conclusion

Natural gas in America has been used as both industrial and domestic fuel for a century or more. It is a more efficient energy source than coal, producing almost zero mercury, sulfur dioxide, or other particulates that coal burning generates. Natural gas does not require destructive mining practices such as mountaintop removal, which coal mining often demands. Natural gas possesses a host of desirable qualities — particularly in the face of a future inclined toward constraining carbon emissions. While these benefits are apparent, there remains a need for further research to establish how water is contaminated and how methane is lost to the atmosphere. Additional oversight is also needed to protect the environment and communities from water contamination in areas bordering disposal and extraction sites.

The policy recommendations above are made with the intention of making natural gas extraction consistent and safer among extracting companies at all times and locations. Decisions relating to the extent of natural gas extraction regulation must incorporate safety, public health, energy needs, and regulatory bureaucracy. Research shows that hydraulic fracturing, horizontal drilling, and shale-gas extraction would benefit from: (1) better scientific study and coordination; (2) review of the possible health consequences of methane and similar hydrocarbons found in drinking water; (3) industry-guided approaches for the development of safer and more consistent extraction technologies; and (4) possible strengthening of federal and state regulation. Other related areas not discussed in this paper that would benefit from further research include the disposal and treatment of wastewater — practices that include treating wastewater and releasing it into rivers and surface streams, or injecting waste into the earth.

As the USA continues to develop new methods of accessing previously untapped energy resources, and as methods such as hydraulic fracturing increase in usage for the extraction of oil and gas reserves, the questions raised in this paper will be asked with greater frequency. A holistic approach to industry regulation and supervision — using empirical data and grounded in relevant federal and state oversight — will chart a positive direction for energy extraction technologies in the future.

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