Toxic Tort Litigation Blog : Toxic Tort Lawyer & Attorney : Epstein Becker Green Law Firm : Product Liability, Contamination, Pollution

Recently, New York DEC issued its draft regulations for hydraulic fracturing based on the proposed requirements in the revised supplemental generic EIS released earlier this month. Public comment began yesterday and will run concurrently with the public comment period on the DSGEIS, which ends on December 12.  DEC  also released the proposed SPDES general permit for storm water discharges associated with hydraulic fracturing.  Public hearings will be held during November and here in New York on Nov. 30 at Tribeca Performing Arts Center. No permits can be issued for hydraulic fracturing until the SGEIS is finalized and the DEC issues the required Findings Statement.  The summary of express terms can be found on the DEC website at  http://www.dec.ny.gov/regulations/77373.html

At a recent Shale Gas Insight conference in Philadelphia, Aubrey McClendon, the outspoken Chairman of Chesapeake Energy, expressed optimism concernining progress made by industry to address methane contamination of drinking water supplies due to faulty gas well construction. According to McClendon, "Problem identified; problem solved".  However, according to the Times-Tribune writer, Laura Legere, DEP data concerning environmental violations demonstrates that McClendon's optimism may be premature and that problems with cemented steel well casings designed to protect groundwater from gas and fluids in Marcellus wells perist.  Of course, casing and cementing violations do not necessarily indicate that gas has migrated or will migrate into drinking water supplies. Moreover, methane is present in many water wells in PA from natural pathways unrelated to gas drilling.  However, the crux of environmentalists' opposition  to hydrofracking appears to center on the gas casing and cementing concerns.  In his comments, McClendon credited an "updated and customized casing system" included in PA state regulations which will hopefully prevent new instances of gas migration.  It is recognized, however, that the geology in Marcellus Shale is neither uniform nor predictable and that the geologic issues are complex.  In planning for Marcellus Shale natural gas exploration in New York, NYDEC personnel have taken to heart (we hope) the lessons of  PA's experience--good and bad--with hydrofracking and will craft a set of regulations in NY that will promote safe natural gas exploration on a sound economic footing. DEC's website contains a detailed discussed of DEC staffers' visit to PA in July '11 that detailed the environmental issues in PA that NY needs to address in its regulatory framework.

The Wall Street Journal reported today that Texas Governor Rick Perry signed into law Friday a bill that will require companies to make public the chemicals they use on every hydraulic fracturing job in the state.  Texas' law is significant because the oil and gas drilling industry, which is powerful in Texas, vocally supported the measure.  Opponents to fracking in the Marcellus Shale region of  New York and Pennsylvannia have long accused the drilling companies of secrecy for failing to disclose the chemicals used in hydrofracking.  Widespread support for this measure, and similar measures in other states, provide some indication of just how untenable the industry's former stance had been.  Fracking involves blasting millions of gallons of water, sand and chemicals into the ground to break up oil and gas-bearing rocks.  Environmentalists and residents in drilling areas fear that the fracking process may result in chemical contamination of drinking water aquifers.  Until now, industry's argument that fracking is safe has been hamstrung by drillers' refusal to disclose the chemicals used.  Going forward, the fracking debate can now refocus on the important issues, such as the likelihood that faulty well construction may result in contamination of an aquifer.  According to industry spokespersons, tens of thousands of wells have been drilled with relatively few problems.  In those rare instances where a problem has been reported, the industry believes that the problem is most likely attributable to an improperly constructed well.  Earlier this year, some of the larger gas producers, notably Chesapeake, Chevron and BP, announced that they would voluntarily begin to publicize the chemicals they use online at FracFocus.org. This website is a joint project of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.

Eileen Millett is Counsel to the law firm of Epstein Becker & Green, P.C. where she represents clients on environmental matters, including solid and hazardous waste and the Clean Water Act,  and counsels clients on general regulatory compliance questions, including issues related to toxic waste and water quality, permitting, emerging obligations under impending climate regulations and other federal, state, and local environmental statutes and regulations.  Ms. Millett previously served as Assistant Counsel with the Hazardous Waste Task Force at NYDEC and as General Counsel to the Interstate Environmental Commission, a tri-state water and air quality enforcement authority, where she conducted and managed litigation to control and abate water pollution and ensure adequate water and sewer infrastructure.  She teaches environmental law at the Syracuse University College of Law. 

Marcellus Shale is shale formation that extends deeply underground from Ohio and West Virginia, northeast into Pennsylvania, and into New York’s southern tier. Although the shale is exposed in some locations in New York, it descends to a depth of as much as 7,000 feet or more below the ground surface along New York’s Pennsylvania border.  Estimates project that this shale formation contains enough natural gas to fuel New York State’s energy needs for decades to come. Some geologists have estimated that the entire Marcellus Shale formation could contain between 168 trillion to over 500 trillion cubic feet of natural gas throughout its entire extent. New York uses approximately 1.1 trillion cubic feet of natural gas a year. How much gas will be recoverable from the shale is not yet known. Nonetheless, natural gas has emerged as an energy source capable of contributing to alleviating some of the United States’ dependence on foreign oil. Thus, the ability to effectively capture natural gas in the Marcellus shale efficiently and in an environmentally sound manner is of the utmost importance.

It is the process associated with the recovery of natural gas from the shale and the attendant interstate environmental impacts that have become the subject of much debate. The natural gas is both very deeply and very tightly embedded in the shale. However, of late, new technological developments with extraction, notably hydraulic fracturing, have demonstrated promising results.   Interest has naturally advanced because of the shale’s proximity to high demand markets and the development of the Millennium Pipeline. This interest, however, has not been without question about the effects on the surrounding communities and the environment. The concerns raised have been with the technology, horizontal drilling and hydraulic fracturing.

Horizontal drilling is one of the techniques used in the process of reaching the natural gas. One drills down vertically first and then special tools are used to turn the well horizontally. This type of drilling has two advantages, one, is the production of more gas from a single well, since perpendicular penetration of the vertical rock fractures allow engineers to drill more area in the zone of gas producing rock, and, two, many more horizontal wells may be drilled from the same surface location, thus, disturbing less ground surface as compared to using vertically wells. Both, horizontal drilling and hydraulic fracturing technologies have enhanced the cost-efficient recovery of natural gas contained within Marcellus shale. The NYDEC website provides a description of the drilling technology.

Hydraulic fracturing is the high pressure pumping of fluid with a material adept at propping, such as sand, to both expand or fracture the rock to facilitate recovery of the gas, and at the same time, allow the space that’s been expanded to stay open long enough to allow the maximum amount of gas to flow into the well. Unlike of types of drilling, no blasting is used. The hydraulic fracturing process is especially helpful for the type of “tight” rock formation found in rocks like shale. Water and fine sand are pumped through the rock with pressure, fracturing the shale and leaving the grains propping up the rock so that gas escapes. Extracting gas from shale is not as simple as this process may sound. Each shale rock formation is different, thus, to achieve the optimal gas production, could require one to change the amount and mix of fluid and sand. The results cannot be guaranteed and experience and experimentation is the normal way of operating.  

Concerns have been raised that the fracking technique could contaminate groundwater, and that its use should be closely regulated. Most fractured wells are thousands of feet below any potable water zone, thus concerns about groundwater while understandable may be misplaced.  Notable among the concerns is the volume of water required for the process, the chemical composition of the fluid used and the challenges posed by the proper disposal of those fluids. First, Hydraulic fracturing requires the use of large volumes of water to fracture the rocks and produce gas, with each well using up to a million gallons of water. Secondly, the fracturing fluid contains compounds added to it to make the process more effective.   These fluids could include chemicals to reduce friction, inhibit the growth of bacteria, assist in carrying the propping agents into fractured rock, substances to ensure that the propping agent stays in the fracture and agents to prevent or retard corrosion of pipes in the wells. Thirdly, fluid removed from the wells is required to be handled, transported and disposed of properly.

ANALYSIS OF THE WATER QUALITY ISSUE

Among the many issues of concern for the environment in the water quality context are water usage, effluent content, and disposal. Among the most pressing of these issues are the following: the amount of water usage, the need to withdraw surface water, what authority controls and regulates the withdrawal of public drinking water, what authority regulates the withdrawal of surface water for commercial and industrial use, the management of the water withdrawals outside of the authority of water quality commissions (the Delaware River Basin Commission (DRBC), the Susquehanna River Basin Commission (SRBC) and the Great Lakes Commission (GLC)), what approved pretreatment programs exist, and the adequacy, the capacity and the ability of treatment facilities to properly treat and dispose of water. The challenge for attorneys and for courts will arise as communities grapple with:

● Managing the use of water, water withdrawals, what authority controls and who regulates;

● Impacts if any on waterbodies and aquatic life in affected water bodies accepting chemical fluids of varying composition;

● Adequacy and availability of treatment and pre treatment facilities.

On February 26, 2010, the New York League of Conservation Voters (“NYLCV”) hosted an Eco-Partners Breakfast with New York City Department of Environmental Protection (“DEP”) Commissioner Cas Holloway, DEP's energetic new commissioner.  Mayor Bloomberg appointed Mr. Holloway to head DEP in November 2009 after a year long nation-wide search. Prior to his appointment, Mr. Holloway served as a Senior Advisor and Chief of Staff to Ed Skyler, New York's Deputy Mayor for Operations. Mr. Holloway, a former Cravath associate who earned an undergraduate degree at Harvard and a law degree from the University of Chicago, brings to the position a rare combination of political savvy and operational know how that should serve DEP well.  Although DEP has a $1,000,000 budget and a staff of over six thousand, it often flies below the radar screen. DEP performs four basic functions. (1) First and foremost, it is a water utility. It is responsible for the supply, distribution and treatment of New York City’s drinking water. Unlike California, which delegates the supply and treatment functions to different agencies, both functions fall within DEP's  aegis in New York; (2) DEP is a customer service agency. It more or less determines the price of water; (3) DEP is a capital projects agency. For example, it is building at a cost of $6,000,000,000 the third underground tunnel that will carry drinking water from upstate to millions of New Yorkers; and (4) DEP is an environmental regulator on, among other things, air and water issues.   Based upon his first few months on the job, Cas Holloway appreciates the importance of working with various stakeholders and interest groups. On February 25, 2010, Mayor Bloomberg, Mr. Holloway's agency,  NYS Department of Environmental Conservation and several environmental groups announced an agreement-in-principle to significantly improve the health of Jamaica Bay through sewage treatment plant upgrades and investments in marsh restoration. As a result of the agreement-in-principle, DEP headed off a potentially costly Clean Water Act litigation arising from the alleged failure of its four sewage treatment plants to prevent nitrogen discharges to the bay. Mr. Holloway described the resolution of the Jamaica Bay dispute as a "paradigm shift" and a case study for how he hopes DEP will resolve future disputes. Up next for Mr. Holloway is the threat to water quality in the New York City Watershed posed by natural gas companies  seeking permits to exploit valuable natural gas deposits in the Marcellus Shale through the extensive use horizontal drilling and hydrofracking.  All New Yorkers should wish Mr. Holloway well in addressing this new Watershed concern.

According to a report issued by Cornell Law School, the State of New York’s blueprint for Marcellus Shale development proposes 187 new regulatory activities necessary for the oversight of natural gas drilling, but the blueprint does not explain how DEC will carry out these activities.  Cornell’s report concludes that DEC does not have the manpower to appropriately regulate economic development in the Marcellus Shale Formation. According to Adjunct Professor Keith Porter at Cornell Law School, “There is no way they [DEC’s Division of Mineral Resources] have enough people to visit the sites to make sure conditions are met.”  The Cornell study notes that DEC’s proposals require firsthand inspections and the development of detailed spill prevention plans on a site-by-site basis. The proposals also involve assessing and monitoring water resources to ensure they are not damaged by the gas industry’s need for huge volumes of fresh water to stimulate gas production in the fracking process. This process involves shooting millions of gallons of chemical solutions into each well, which then regurgitate brine and wastewater with chemicals, heavy metals and naturally occurring radioactivity. For their part, industry proponents point to New York’s strict regulations and a strong track record by industry. Environmental advocates challenge industry claims, pointing to hundreds of incidents and complaints involving natural gas and oil drilling buried in the DEC’s hazardous spills database. However,  it was reported on January 11, 1010 that DEC Commissioner Pete Grannis had asserted in a letter to Assemblyman William Parment, a member of the legislature's Environmental Conservation Committee, that reports of accidents relating to natural gas drilling in New York have been overblown and taken out of context.  Without additional DEC inspectors, says Professor Porter, Marcellus Development “will rely on self-compliance.” Environmental advocates point to the water contamination and regulatory violations that plagued the operations of Cabot Oil & Gas in Dimock, Pennsylvania as an object lesson. The Cornell study summarizes the proposed regulatory obligations DEC sets forth in the draft Supplemental Generic which include, among other things,  protecting water resources such as New York’s portion of the Great Lakes Basin;  reviewing permits for equipment and structures that might disturb surface water bodies such as rivers and streams or potentially impact aquatic wetland and terrestrial habitats and water quality;  impacts to wetlands; aquifer depletion arising from proposed groundwater withdrawals for high-volume hydraulic fracturing; reviewing major water withdrawals and approved diversions in the Great Lakes-St. Lawrence River Basin under the Great Lakes-St. Lawrence River Water Resources Compact; comprehensive storm water pollution prevention plans and review of permits to address storm water runoff and storm water discharges; industrial activities, including addressing potential sources of pollution and determining when drilling and hydraulic fracturing operations are completed; surface spills and releases at the Well Pad; drilling rig, fuel and tank refueling activities; groundwater impacts associated with well drilling and construction;  private water well testing;  infrastructure control from waste transport to road spreading; and, not least, protecting New York City’s subsurface water supply infrastructure. The import  of the Cornell Law School study is that New York can build an elaborate regulatory scheme designed to protect the environment, but unless there are enough of the right people to enforce the regulations and ensure that they are being rigorously adhered to, the regulations do not amount to much. 

Environmental groups and proponents of economic development and natural gas exploration are on a collision course of competing economic and environmental interests involving an enormous untapped reservoir of natural gas in the Marcellus Shale Formation. That the Marcellus Shale Formation lies in part across economically depressed regions in upstate New York and Pennsylvania, in urgent need of  an economic boost,  only adds fuel to the dispute. At the heart of the controversy lies the New York City watershed, pristine waters in upstate New York  counties that provide the drinking water for millions of people in New York City. The Marcellus Shale Formation sits underground and stretches southwest from New York through Pennsylvania, and into West Virginia and Ohio. According to experts at Penn State University, the Marcellus Shale Formation is the largest known shale deposit in the world. Recently developed extraction techniques in horizontal drilling and hydraulic fracturing are expected to provide an additional boost to the productivity of Marcellus gas wells. Terry Englander, a geoscience professor at Penn State University, estimates that recoverable reserves in Marcellus Shale could be as high as 489 trillion cubic feet! The Draft 2009 New York State Energy Plan recognizes the great potential benefit to New York from development of the Marcellus Shale natural gas resource. But what environmental safeguards should accompany this monumental enterprise?

On December 23, 2009, the New York City Department of Environmental Protection (“DEP”) (not to be confused with theNew York State Department of Environmental Conservation or "DEC"),  called for a prohibition on natural gas drilling in the New York City watershed, urging that, “[N]natural gas drilling and exploration are incompatible with the operation of New York State’s unfiltered water supply system and pose unacceptable risks for more than nine million New Yorkers in this City and State.” According to DEP’s Final Impact Assessment Report, drilling in the watershed requires invasive industrialization and would create a substantial risk of chemical contamination and infrastructure damage. In particular, the DEP’s report singled out the high-volume hydrofracking and horizontal drilling as posing significant environmental risks. Clearly, measures will be taken to protect the watershed, but the devil will be in the details.  A Congressional Research Service report, released on September 9, 2009, examines gas drilling in the Marcellus Shale region.  The report acknowledges that groundwater contamination from improper drilling and casing is a risk.  Water sources in New York listed as "primary" or "principal" aquifers may be at risk, according to the report, due to the permeable "unconsolidated sand and gravel deposits" in northern Pennsylvania and southern New York because of short distances from the land surface to the water table.