This client alert is part of an ongoing series by DLA Piper attorneys on the legal, regulatory and policy issues related to hydraulic fracturing and shale gas production in the US and internationally.

The US Environmental Protection Agency has issued a long-awaited draft report on hydraulic fracturing (or fracking) which concluded that there is no evidence that fracking has “led to widespread, systemic impact on drinking water resources in the United States.” 

The report found that while there are several mechanisms by which fracking-related activities “have the potential to impact drinking water resources,” and there are anecdotal instances where one or more of those mechanisms led to contamination, the “number of identified cases” was “small compared to the number of hydraulically fractured wells.”

Following a request from Congress in 2010, EPA took almost five years preparing the nearly 1,000-page report, which is entitled “Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources.”  The assessment represents a meta-analysis in which EPA attempted to review and synthesize the existing universe of scientific reports and evidence about fracking but without performing original research of its own.

“It is the most complete compilation of scientific data to date, including over 950 sources of information, published papers, numerous technical reports, information from stakeholders and peer-reviewed EPA scientific reports,” said Dr. Thomas A. Burke, EPA’s Science Advisor and Deputy Assistant Administrator of EPA’s Office of Research and Development.

The report evaluated and made findings for each stage of the water cycle used in hydraulic fracturing activities, from water acquisition, chemical mixing at the well pad site, well injection of fracking fluids, the collection of hydraulic fracturing wastewater and wastewater treatment and disposal.  The report then identified several “potential mechanisms” by which hydraulic fracturing activities could adversely impact drinking water sources, including: inadequately cased or cemented wells resulting in underground migration of gases and liquids; hydraulic fracturing conducted directly into formations containing drinking water resources; inadequately treated wastewater discharged into drinking water resources; spills of hydraulic fluids or wastewaters; and water withdrawals in areas with lower water availability. 

Notably absent from this list of potential mechanisms of contamination is the hydraulic fracturing process itself.  The EPA report thus corroborates the consensus that has developed over the past several years among academics, engineers and state regulators that fugitive gas or fluid migration through fractures at depth – i.e., the actual hydraulic fracturing process – cannot result in groundwater contamination.

The EPA report estimates that between 25,000 and 30,000 new wells were drilled and hydraulically fractured annually in the US between 2011 and 2014.  While Dr. Burke of the EPA noted “instances where fracking-related activities have impacted the drinking water resources,” the “number of documented impacts to drinking water resources is relatively small when compared to the number of fractured wells.”

The EPA report explained that the low number of identified contamination events attributable to fracking-related activities “could reflect a rarity of effects on drinking water resources, but may also be due to other limiting factors,” including “insufficient pre- and post-fracturing data on the quality of drinking water resources; the paucity of long-term systematic studies; the presence of other sources of contamination precluding a definitive link between hydraulic fracturing activities and an impact; and the inaccessibility of some information on hydraulic fracturing activities and potential impacts.”

The fracking boom that has taken place over the last decade has made the US the world’s largest producer of both oil and gas.  States have jurisdiction over oil and gas drilling on private and state-owned lands, where the vast majority of fracking is done in the US.

According to Dr. Burke, the “draft assessment will give state regulators, tribes and local communities and industry around the country a critical resource to identify how best to protect public health and their drinking water resources.”

Without attempting “to identify or evaluate comprehensive best practices,” the EPA report describes “ways to avoid or reduce the impacts of hydraulic fracturing activities as they have been reported in the scientific literature.”  For example, with respect to well construction, the report notes that proper implementation of accepted industry well casing and cementing standards “prevents the movement of brines, gas, or hydraulic fracturing fluids along the well into drinking water resources.”  The report also recommends against treatment of hydraulic fracturing wastewater by publicly owned treatment works (POTWs), which are generally not designed for the high total dissolved solid (TDS) content of Marcellus shale wastewaters.

The draft EPA report was released for public comment and peer review.  The EPA Science Advisory Board will conduct the peer review, which is unlikely to be concluded before 2016.

Differing reactions by industry and anti-fracking activists

Reactions to the EPA’s hydraulic fracturing report were immediate and varied, with industry representatives generally hailing the agency’s findings as vindication of the technique, while the responses of environmental advocates were more mixed or negative.

“The evidence gathered by EPA confirms what the agency has already acknowledged and what the oil and gas industry has known: Hydraulic fracturing is being done safely under the strong environmental stewardship of state regulators and industry best practices,” said Erik Milito of the American Petroleum Institute.  “Hydraulic fracturing has been used safety in over a million wells, resulting in America’s rise as a global energy superpower, growth in energy investments, wages and new jobs.”

A post from the Independent Petroleum Association of America sounded a similar chord: “With this new report, it couldn’t be clearer that the shale development is occurring in conjunction with environmental protection and the claims by anti-fracking activists have been thoroughly debunked.”

On the other side of the debate, the Sierra Club’s somewhat contradictory response to the report was representative of many groups opposed to fracking.  Michael Brune, executive director of the Sierra Club, at once claimed that the report “confirms what millions of American already know – that dirty oil and gas fracking contaminates drinking water,” while simultaneously criticizing the scope of the study: “Unfortunately, the EPA chose to leave many critical questions unanswered.  For example, the study did not look at this issue under the lens of public health and ignored numerous threats that fracking poses to drinking water.”

Notwithstanding the efforts by Sierra Club and other anti-fracking groups at spin control, an objective reading of the EPA report demonstrates that it is clearly a net positive for hydraulic fracturing.  The alleged adverse impacts of hydraulic fracturing on drinking water supplies has long been the crux of the opponents’ arguments against the practice.  The EPA report severely undercuts that argument.    

Based on what appears to be a rigorous and exhaustive analysis of substantially all existing data on the subject, the EPA report essentially confirms that with proper controls in place hydraulic fracturing does not pose a significant threat to drinking water resources.  While the report acknowledges the existence of isolated incidents of water contamination resulting from activities related to hydraulic fracturing, none of those incidents result from the hydraulic fracturing process itself, and the report describes proven methods to reduce or avoid contamination resulting from those ancillary activities.

A complex political landscape for fracking

While the EPA’s report does not recommend any specific action, it will likely factor prominently in the continuing debate over the role of shale gas and fracking in the nation’s energy strategy.  Environmental advocacy groups have increasingly called to ban fracking outright, a step that two states with shale gas resources – New York and Maryland – have recently taken.

In Maryland, Republican Governor Larry Hogan decided last week not to veto a ban on hydraulic fracturing passed by the Democratic controlled state legislature with veto-proof majorities.

Together with Governor Hogan’s inaction, the EPA report is another indicator that that the national political landscape for fracking is more complex than a simple Democrats versus Republicans issue.  The EPA report follows less than three months after the US Department of the Interior’s Bureau of Land Management released regulations permitting hydraulic fracturing on lands owned by the federal government and Native American tribes.  While the Obama Administration has taken several measures targeting the coal industry, the Administration’s position on natural gas and fracking is far more nuanced.   

In his 2014 State of the Union address, President Barack Obama praised the boom in US natural gas production – a stance that triggered grumbling from several anti-fracking groups.

“If extracted safely,” President Obama said, natural gas is “the ‘bridge fuel’ that can power our economy with less of the carbon pollution that causes climate change.”

Democratic presidential frontrunner Hillary Clinton echoed the president’s sentiments during a forum in September 2014.

“The boom in domestic natural gas production is an example of American innovation changing the game….  With the right safeguards in place, gas is cleaner than coal,” Clinton said, adding that expanding production also creates jobs.  “It’s crucial that we put in place smart regulations and enforce them, including deciding not to drill when the risks are too high.”

While nearly all Republicans in Congress endorse fracking, and most elected officials openly opposed to fracking are Democrats, many Democrats in Congress and the Obama Administration are increasingly taking a more moderate position on fracking – giving guarded support to the technique provided established best practices are followed to maximize protection of environmental resources.  This view will be reinforced by the findings in the EPA report.

However, it is less clear what if any impact the EPA report will have on fracking bans and moratoria at the state and local level.  At a minimum, the EPA report will call into further question the scientific and factual basis of New York State’s recent prohibition on hydraulic fracturing, which was ostensibly based on public health concerns.