Sensible Development of Shale Energy Resources

Is it possible that a billionaire who gave the Sierra Club $50 million to combat air pollution would support shale gas development?   On July 21, 2011, the New York Times reported that former New York City Mayor Michael Bloomberg announced he would donate $50 million to the Sierra Club to help address climate change concerns. The following year, Mr. Bloomberg co-authored an article with George P. Mitchell (pioneer of economic shale gas extraction a/k/a “Father of Fracking”) entitled “Fracking is Too Important to Foul Up” in the August 23, 2012 edition of the Washington Post. Mr. Bloomberg teamed with Environmental Defense Fund President, Fred Krupp, to post an article on April 29, 2014 in the New York Times entitled “The Right Way to Develop Shale Gas.”

Mr. Bloomberg has consistently recognized the value of sensible development of shale gas, noting in his 2012 article: “First, it’s good for consumers’ pocketbooks by helping to reduce energy costs. In the Northeast alone, fracking has helped stimulate major infrastructure investments that will soon bring the first new interstate natural-gas pipeline to New York City in decades.” On the other hand, his successor, current NYC Mayor Bill de Blasio, is firmly opposed to hydraulic fracturing, advising reporters following a speech at the U.S. Conference of Mayors in Washington, D. C. in January 2014, “The one thing I am firm about is that I don’t see any place for fracking. The science simply isn’t reliable enough.” Mayor de Blasio’s view is consistent with New York’s continuing moratorium on hydraulic fracturing.

Other states that can benefit by the development of shale gas have been developing regulatory programs which enable the responsible development of shale gas reserves. Developing an effective regulatory framework often involves input from all stakeholders- industry, government and environmental groups. In February 2014, Colorado enacted stringent methane regulations after industry leaders Anadarko Petroleum, Noble Energy and Encana agreed with the Environmental Defense Fund on measures to address leaks from tanks, pipes and other equipment. One incentive for Colorado energy companies to collaborate with environmentalists on regulatory initiatives is to avoid local control by cities seeking to impose bans on drilling. The Colorado Oil and Gas Association has successfully challenged bans by Longmont, Lafayette, and Fort Collins while bans by Boulder and Broomfield remain in effect. To the extent that state regulations adequately address environmental risks, there should be little need for additional controls by local authorities. Therefore, industry actually benefits by an effective regulatory regime.

Marcellus Shale Gas production in Pennsylvania continues to increase, placing Pennsylvania second only to Texas in total domestic gas production. However, the Gubernatorial election in November and aftermath of the Pennsylvania Supreme Court decision in Robinson Township make it difficult to identify or plan for regulatory changes. The Pennsylvania Department of Environmental Protection has been developing a package of revisions to the oil and gas regulatory program through a process that has included public participation and feedback from industry trade groups including the Marcellus Shale Coalition and the Pennsylvania Independent Oil and Gas Association. That process will be greatly influenced by the election results.

One regulatory development that is certain is the continued focus on reducing methane emissions. The Sierra Club and the Center for Biological Diversity, along with over 120 other state and national environmental organizations, urged President Obama in a letter dated October 16, 2014 to undertake rule-making to reduce methane emissions from shale gas extraction. The group argued “the best way to curb air pollution from fossil fuels development is to leave it in the ground” but urged for the promulgation of regulations to address methane which President Obama labeled a “transition fuel.” The NGOs’ letter follows a letter from 15 U.S. Senators sent to President Obama on September 26, 2014, urging the establishment of “national standards to reduce methane pollution from the oil and gas sector” which President Obama had identified as a potential regulatory feature of his methane reduction strategy (which also included voluntary steps by industry).

Mr. Bloomberg has outlined a practical approach to future regulation in his most recent op-ed piece:

Now the Obama administration is developing a methane-reduction strategy. We’re confident the Environmental Protection Agency will recognize, as Colorado did, that sensible rules are necessary and affordable, and will work with states to write them. And we hope that as in Colorado, industry leaders, elected officials and environmentalists will work together to make shale gas development safer. Doing so will not only help the industry meet reasonable pollution limits, it will help the industry regain public trust.

While some may lack Mr. Bloomberg’s confidence in EPA’s ability to develop sensible rules, experience shows us that sensible rules are more likely to be developed through the collaborative efforts of stakeholders.   States that can develop sensible rules will continue to benefit by responsible shale gas development.

Stephen Smith focuses his practice on environmental and energy-related matters including regulatory counseling and litigation, administrative law, governmental affairs and lobbying. He represents clients before federal and state courts and administrative agencies. He provides client counseling and advice on compliance, permitting and agency communications as well as business transactions.
» See more articles by Stephen C. Smith
» Read the full biography of Stephen C. Smith at Steptoe & Johnson