Applying some lessons from the Gulf Oil Spill to hydraulic fracturing.

• Author: Robertson, Heidi Gorovitz
• Position: Introduction to I. Internal Conflict of Interest Within an Agency C. Enforcement 2. Enforcement in Ohio, p. 1279-1305 - The Law and Policy of Hydraulic Fracturing: Addressing the Issues of the Natural Gas Boom

"If the ... oil boom is a classic Greek drama, the second act is starting now, and the prairie chorus is once again issuing a warning." *

CONTENTS INTRODUCTION I. INTERNAL CONFLICT OF INTEREST WITHIN AN AGENCY A. Leasing 1. Leasing of Drilling Rights in Federal Waters 2. Leasing in Ohio. B. Revenue Generation 1. Revenue Generation by the Federal Agency 2. Revenue Generation in Ohio C. Enforcement 1. Federal Enforcement in the Gulf 2. Enforcement in Ohio D. Conclusion Regarding Conflicts of Interest II. RESEARCH AND FOLLOW-THROUGH A. Some Examples of Insufficient Research or Follow-Through in the Gulf.. 1. Kick detection 2. Drilling Techniques B. Some Areas for Additional Research or Follow-Through in Ohio III. EMERGENCY PLANNING AND PREPAREDNESS A. Emergency Planning and Preparedness in the Gulf 1. Safety Training on the Deepwater Horizon 2. Lack of Clarity in Chain of Command 3. Untested Cleanup Methods 4. Insufficient Resources to Implement the Emergency Cleanup Plan. 5. Lack of Regionally Unified Spill Response B. Emergency Preparedness, Planning, and Risk Management in Ohio CONCLUSION INTRODUCTION

Hydraulic fracturing of shale is huge these days in Ohio--or at least it promises to be huge. News accounts, politicians, environmentalists, and business interests either laud it or revile it. Some say it will save Ohio's economy. Those with business interests in the hydraulic fracturing industry say it will usher in a new economy based on oil and gas exploration and production. They say an economic boom will trail them as they work to locate oil and gas entrapped in shale rock and entice it to the surface. They will tempt it to the surface using a controversial technology that, although not entirely new, is newly combined with another technology--horizontal drilling. Some insist that hydraulic fracturing will ruin Ohio's environment and endanger its citizens. They argue that the wells drilled for hydraulic fracturing are not sufficiently secure to protect the groundwater resources through which they will pass, and that shocks to the earth allegedly caused by high pressure underground injection of chemical laced waste water can cause earthquakes and other terrestrial disturbances.

Ohio is rushing towards hydraulic fracturing of horizontal wells at lightning speed, and some argue it has insufficiently considered and managed that rush in light of the potentially disastrous, albeit unlikely, consequences of groundwater contamination, explosion at wells or drilling sites, depletion of freshwater supply as high volumes are used in fracturing, and disposal of contaminated flowback water. Similarly, although drilling for oil from deepwater rigs was neither a new idea nor a new technology when the Deepwater Horizon blew out on April 20, 2010--killing 11 people, spewing tons of oil in the Gulf of Mexico, and sinking a $50 million drilling rig--most deepwater wells that preceded it had not been drilled quite so deeply into the seafloor. Many of the technologies employed there were untested at such great depths, and regulation and enforcement had not kept pace with the advances in technology. This Article will consider just a few of the lessons identified through government and other studies that followed the Deepwater Horizon oil spill. It will consider how those lessons might be applied to Ohio's regulation of hydraulic fracturing in the hope that Ohio can avoid some of the same mistakes that arguably paved the way for the blowout in the Gulf.

There are many lessons to be learned from the Gulf Coast spill. Quite understandably, several government task forces have filled whole books with those lessons. This Article focuses on only a few of the lessons exposed in those reports. It will address some of the lessons that might apply as Ohio moves quickly to support and to regulate the developing shale oil and gas industry. In particular, this Article discusses three areas of potential concern: agency structure and responsibility, inadequacies in research or follow though, and emergency planning and preparedness for disaster. (1)

This Article begins by exploring conflicts of interest within the federal regulatory agency charged with oversight of off-shore drilling, the Minerals Management Service (MMS)--conflicts that made it virtually impossible for the agency to function rationally to prevent the disaster. For example, immediately following the blowout, it was abundantly clear that untenable internal conflicts of interest were present. (2) Broadly speaking, it was necessary to eliminate or reduce internal conflicts of interest wherein a single organization handled tasks that presented conflicting interests---such as, in the case of the former MMS, simultaneous responsibility over the leasing program, collection of royalties, and the creation and enforcement of drilling and operations regulations. (3) Further within the broader subject area of agencies, this Article will briefly touch on inadequacies in agency funding that led to insufficient inspections, as well as the agency's disproportionate focus on revenue generation that likely led it astray from safety concerns. The Article will also explore these issues on a state level.

The second set of lessons this essay addresses concerns the unnecessary risks that arise in the face of known research inadequacies or insufficient follow-through on known risks. In the Gulf, for example, information was readily available to indicate a potentially dangerous pressure problem in the well, yet no one stopped the relentless forward march toward production to determine the root causes of the anomalous pressure "kicks" before it was too late. (4) In addition, rapidly evolving technologies enabled drillers to reach deeper and deeper into the earth beneath the water, though there was not, in hindsight, sufficient understanding of the risks this presented in the given environmental circumstances.

Finally, in the third lesson, this Article addresses emergency preparedness. For example, despite some emergency response planning, there was insufficient research completed regarding how a major disaster cleanup plan would work in the environmental conditions present in the Gulf. There had been little attention paid to planning for worst-case scenarios. Although there appeared to be a serious safety culture on the rig, safety drills did not account for improbable but perilous circumstances and worst-case scenarios, such as total darkness and lack of reliable communication channels. Little was understood about the resources available in the area, the training of those local resources, or how certain cleanup technologies, like booms and dispersants, would function in the Gulf. The Article addresses the retrospectively apparent lack of clarity within and among the chains of command, and the insufficiency of resources to implement even the inadequate cleanup contingencies that were in place. As Ohio moves quickly towards the development of its shale oil and gas industry, it must learn from these lessons so that when disaster strikes, Ohio is clear on the answers to some important questions: What are the necessary safety protocols for a given emergency? Who is responsible for that emergency? And who is properly trained and prepared to manage that emergency?

These three lessons from the Gulf may inform Ohio and other states, and perhaps eventually the federal government, which will, either individually or collectively, be responsible for safely developing abundant resources in shale oil and gas. In Forbes Magazine, George P. Mitchell, who is widely credited with pioneering the use of hydraulic fracturing to break natural gas free from seemingly impermeable shale, suggested that hydraulic fracturing needs to be regulated by the Department of Energy, not just by individual states. (5) His rationale was that "if they don't do it right[,] there could be trouble.... There's no excuse not to get it right." (6) To date, the bulk of regulation applicable to hydraulic fracturing of shale comes from the states, not the federal government. As Mitchell suggested, this makes it even more important that the states do it right. As Ohio races headlong into the development of its shale oil and gas resources, it must be mindful both of this warning and of the vital lessons learned from the Gulf disaster.

The blowout in the Gulf presents countless lessons, many not directly applicable to the regulation of hydraulic fracturing in Ohio. The lessons are far too numerous to recount here, and several government reports have analyzed them over thousands of detailed pages in numerous studies. (7) This Article focuses on only three immediate lessons that might help Ohio and other states as they endeavor both to encourage and to regulate the burgeoning shale oil and gas industry. In particular, the three lessons concern agency internal conflicts of interest, issues of research investigation and follow--through, and emergency planning and preparedness.

1. INTERNAL CONFLICT OF INTEREST WITHIN AN AGENCY

The Outer Continental Shelf Lands Act (OCSLA) authorizes the Secretary of the Department of the Interior to handle the regulation of resource development in the Outer Continental Shelf--in particular, the oil located deep beneath the Gulf of Mexico. (8) The OCSLA dictates that the Secretary's regulatory authority includes the regulation of leasing, exploration, development, and production of resources in the covered area--including the Gulf of Mexico. (9) Prior to the 2010 disaster, the Secretary of the Interior delegated that regulatory responsibility to the Department of the Interior's MMS. (l0) As such, MMS bore responsibility for regulating drilling, and it set forth the applicable regulations in 30 C.F.R. part 250, In particular, subpart 250 regulates most imaginable aspects of drilling operations, and MMS was responsible for promulgation and implementation of the regulations. (11)

The United States Coast Guard is...