Wednesday, January 9, 2013

NY League of Women Voters' comments on the new proposed Fracking Regulations.

This is an OCR'd version of a scanned document. Errors can be induced in this process. Please see the original if you have doubts:

The League of Women Voters of New York State 62 Grand Street, Albany, New York 12207 Phone: 518-465-4162 Fax: 518-465-0812 E-Mail:
of New York State

Change of Ownership and Financial Security

In connection with any change in identity of a well owner or operator, whether from an outright transfer of the gas lease or a transfer of an interest in the entity which either holds the lease or operates the drill site, Section 750-3.11 (i)-(j) should be amended to require a reassessment by DEC at the time of transfer of the financial security originally posted with respect to the original permit to evaluate the credit worthiness of the transferee and whether conditions shall have changed in the interim. In addition, DEC should require in the Proposed Regulations that the transferee of a controlling interest of a drilling permit (whether such transfer is accomplished in increments or in a single transfer) replace the requisite financial security as a condition to the acceptance by DEC of such new party as the replacement party on the drilling permit; provided, however, if the creditworthiness of the transferee is not sufficient to cover the costs of operation (using a prudent coverage ratio), the financial security posted by the original party on the permit should remain in place to the extent required to supplement the financial security posted by the replacement drilling permittee. This financial worth threshold should apply for all financial security measures recommended in these comments.
Posting security to plug a well is necessary; yet, the Proposed Regulations do not go far enough to address risk allocation. Aside from this single requirement, the Proposed Regulations are silent regarding the role of the drill site owner or operator to assume liability for all of its operations and the potential impacts of the drilling operations. The DEC's role is to regulate gas drilling. Addressing management of the risk is central to that role, not only with respect to how the drilling process is carried out, but also with respect to who assumes the financial responsibility for the operations and their impacts and how DEC ensures such financial responsibility can be enforced, without delay. To fulfill its stated mission, the League recommends that DEC define a plan to manage the financial risk.
The League supports Regulations which ensure that the cost of doing business and the liability associated with the impacts of every phase of the operations is paid for exclusively by the well owner or operator, not, in contrast, the private property owners living in proximity to the gas drilling operations; or New York taxpayers. Accordingly, the League recommends that DEC establish a remediation fund for municipalities, as referred to in our letter dated July 18, 2011, and require, for every spacing unit, the well owner and operator (on its or their behalf and on behalf of all subcontractors who perform work at, or in connection with, the subject drill site), as a condition to the issuance, and renewal, of each drilling permit to establish (and update, as needed by increased activity or risk factors) an insurance and indemnification plan for each spacing unit which (i) names each owner of the fee estate (by name; and section, block and lot) within the spacing unit, including a split estate and any current or future lender, as an additional named insured, under their respective policies of insurance. Such policies would include comprehensive general liability insurance under all-risk coverage, pollution liability insurance, and control of well coverage, on a well-specific basis and such other coverage as is prudent to protect agriculture and natural resources from the risk of harm caused by the HVHF lifecycle. In addition, since homeowners5 insurance companies reserve the right not to renew homeowners' policies on properties with gas drilling activity (See, Nationwide statement regarding concerns about hydraulic fracturing, dated July 13, 2012, available at
indemnification obligation should include 100% replacement cost of the improvements on the property and other coverage typical of a homeowners' policy so as to ensure that a homeowner on whose property gas drilling takes place will not lose its mortgage or interfere with the property owner's ability to finance the property in the fixture if they do not currently have a mortgage, or interfere with their ability to sell the property to a purchaser who wishes to obtain mortgage financing. To avoid such an untenable outcome, the League recommends that the aforesaid plan contain a liquid cash component to the extent that the well owner and operator are not fully insured for that specific site, including for elimination of mechanics liens and long-term remediation which is not otherwise accounted for in the financial security section for plugging a well.
Recent news reports reflect that Chesapeake Energy, which entered into a substantial percentage of gas leases in New York State, has failed to pay certain of its contractors in other states, such as Pennsylvania. This has resulted in liens being filed in the public records thereby creating an encumbrance on title of certain of the private property owners with whom Chesapeake entered into a gas lease. The presence of liens on private property in New York, as elsewhere, could result in a default under a mortgage and the inability of a property owner to clear title when the property owner wants to sell to a third party, (See, SPECIAL REPORT: Chesapeake, McCiendon endure rocky year; more uncertainty ahead, dated December 27,2012, Reuters, available at idUKLlE8NQ2H720121227).
Best management practices and regulatory oversight are necessary in the process; yet, they cannot eliminate accidents^ human error, or the unknown potential consequences of HVHF in proximity to aquifers, storage caverns, underground gas storage and aging gas infrastructure. An insurance, indemnification and cash fund as described above will enable DEC to regulate the inherently risky lifecycle of this heavy industrial activity by allocating full responsibility to the well owners and operators in lieu of the current circumstances which expose private property owners to restore their property following a casualty caused by drilling or accept what they are given by the well owner or operator in exchange for signing a non-disclosure agreement. This approach will likewise eliminate or at least significantly reduce the risk of the home's lost value, the homeowner's inability to pay taxes and the potential degradation of the municipal tax base. (See, Homeowners and Gas Drilling Leases: Boon or Bust, by Elisabeth N. Radow, New York State Bar Journal, Nov/Dec 2011; and NYS Senate Testimony of Elisabeth N. Radow, July 18, 2012.
Allocation of Risk Resulting from On-Site Waste Management,
The Proposed Regulations will not prevent spills and contamination from surface operations. For example, while the Proposed Regulations require at Section 560.6(c)(7) [a] closed-loop tank system must be used instead of a reserve pit to manage drilling fluids and cuttings for any of the following: (i) horizontal drilling in the Marcellus Shale unless an acid rock drainage mitigation plan for on-site burial of such cuttings is approved by the department; and (ii) any drilling requiring cuttings to be disposed of off-site," the Proposed Regulations nevertheless still allow the owner and operator to seek DEC approval for digging an open pit and burying drill cuttings right next to the well pad; drill cuttings from the Marcellus Shale region can be expected to contain radioactive material, (as discussed more fully in the section below on waste management). Further, this rule applies to HVHF drilling, not vertical drilling or a process using volumes of water less than 300,000 gallons. The liquid in pits can overflow during storms, leach, spill, or seep through cracks in the liner, resulting in contamination of groundwater and surface water. Consider, for example, weather events such as Tropical Storm Irene and Hurricane Lee. Examples of this have occurred in neighboring states (See, In the Shadow of the Marcellus Boom: How Shale Gas Extraction Puts Vulnerable Pennsylvanians at Risk by Travis Madsen and Jordan Schneider, Frontier Group and Erika Staff, Penn Environment Research & Policy Center.)
Similarly, transfer of flowback, on-site, from containment facilities to tanker trucks can result in accidents. New York state law characterizes the flowback and other waste from the HVHF lifecycle as "industrial" although the constituents in the waste warrant classification as "hazardous" and should be stored, transported and disposed of according to laws governing hazardous waste. Also, NYCRR Part 560, Operations Associated with High-Volume Hydraulic Fracturing, in Section 560.7 entitled, Waste Management and Reclamation, states at subparagraph "(i) Flowback water recovered after high-volume hydraulic fracturing operations must be tested for naturally occurring radioactive material prior to removal from the site. Fluids recovered during the production phase (i.e., production brine) must also be tested for naturally occurring radioactive material prior to removal. Radiological analyses of flowback water and production brine must include analysis for combined radium (Ra-226 and Ra-228) and other analyses as directed by the department. The soils adjacent to the flowback water and production brine tanks must be measured for radioactivity upon removal of the tanks, and at such other times as the department may require." The provision also requires soil testing for naturally occurring gamma emitters, such as Ra-226 and Ra-228. Subparagraph (k) further requires radiation surveys of the well head, pipes, flowback water and production brine tanks.
Testing for radioactivity in HVHF waste is a start, but no further parameters or protocols are given. According to Ivan White, staff scientist for the National Council on Radiation Protection,
HVHF in the Marcellus Shale in New York State has the potential to result in the production of large amounts of waste material containing Radium-226 and Radium-228. And yet, "under the proposal for horizontal hydrofracking in New York State, there are insufficient precautions for monitoring potential pathways or to even know what is being released into the environment." White further observes, "Neither New York State nor the Nuclear Regulatory Commission would permit a nuclear power plant to handle radioactive material in this manner. (It is important to note that tracking of radioactive materials cannot be accomplished retrospectively; accurate accounting must be incorporated from the very beginning to ensure public safety.)" (See, Consideration of Radiation in Hazardous Waste Produced from Horizontal Hydrofracking. Report of E. Ivan White, Staff Scientist for the National Council on Radiation Protection).
The Proposed Regulations should be amended to apply to all gas drilling operations, whether vertical or horizontal, and regardless of the volume of water measured at the well site. Further, the Proposed Regulations should be amended to prohibit any on-site open pit use, regardless of its location. In addition, the Proposed Regulations should be amended to address how the radioactive waste will be tracked and disposed of. The potential for surface and groundwater contamination requires nothing less.
Well Spacing The Proposed Regulations, at 6 NYCRR, Section 553.4, entitled, Variances, should require the well owner/operator applying for the variance, as a condition to granting a variance, to provide verifiable, fifteen (15) days' prior written notice of the hearing to all property owners who would be impacted by the variance, most specifically, the property owners on or under whose property any phase of the gas extraction lifecycle is intended.
Drilling Practices and Reports.
Part 554, Drilling Practices and Reports at Section 554.7 (e) has been amended to provide (with superseded provisions in brackets): "If so requested by the owner or operator, the information contained in the [completion report and] Well Drilling and Completion Report, a follow-up report to a Sundry Well Notice and Report form, a well log A and [the] drill cutting samples shall be only for the confidential use of the department and the Geological Survey of the State Museum and Science Service of the New York State Department of Education until [one year] six months after the date of commencement of operations for the well so involved. Upon receipt of successive petitions from the owner or operator, [and the demonstration of continued sufficient good cause,] the confidential period may be extended for one or more additional periods [of one year in length] up to a maximum total confidential period of [five] two years." There appears to be no basis for confidentiality in this context; it should be eliminated. By way of example and not in limitation of any other Proposed Regulation which provides for confidential use by DEC, the League supports transparency and full disclosure in all instances throughout the Regulations where the failure to disclose information deemed confidential or trade secret could have the effect of shielding the well owner or operator from liability for practices over which it, or its chemical supplier, has exclusive control. In keeping with its mission to protect public health, medical professionals and the public-at-large should be entitled to access to this information without the need to sign a non-disclosure agreement.
6 NYCRR Part 560-Operations Associated with High Volume Hydraulic Fracturing.
Section 560.4 Setbacks. The underlying geology of the Marcellus is comprised of a network of faults and fissures which, along with abandoned wells, allow the migration of methane gas and all the produced gas and fluids from the hydraulic fracturing process. As naturally occurring methane gas can travel, so can methane gas, chemicals and radionuclides from the drilling process. The migration distance depends on the linkage of the faults and fissures, the amount of gas, liquids and solids present, and the pressure exerted by the extraction. Because of the dynamic nature of geology, the most current geological maps should be used to establish setbacks and to form the basis for granting drilling permits. Setbacks should be the same for drinking water supplies and water infrastructure, should be gauged from the end of the horizontal well bore and based on the most current, respected independent scientific study.
Hazen & Sawyer Final Assessment Report for NYC DEP, dated Dec. 23, 2009, is the recognized Report, to date. "Mitigation of risks to drinking water quality and infrastructure integrity will require revision of current setback provisions to reflect the occurrence of laterally extensive subsurface faults, fractures and brittle structures.. .it is recommended that natural gas well construction be precluded within a buffer zone of seven miles from NYCDEP subsurface infrastructure... .the buffer zone should be measured from the furthest extent of the lateral (or spacing unit boundary) and not the well pad or wellhead" (D-3; P.99). Based on known hydrogeology, the League strongly recommends what protects water infrastructure should be applied to water supplies as well so that there is no drilling underneath. This would take into account the geology of New York State. Therefore, all setbacks should be stipulated to provide that no drill sites should be established "within and including" a specific distance from water supplies as measured from the end of the well bore.
In addition, the Hazen and Sawyer report recommends a 7 mile setback from subsurface water infrastructure (such as aqueducts, tunnels, pipes and dams) to protect the aging and fragile infrastructure from the potential impact of explosions from opening up the rock to release the gas.
Setbacks from all unfiltered drinking water supplies for man, animals and crops, including principal and primary aquifers should be the same as for the watersheds, i.e., "Within 4,000 ft. of, and including"(not 2,000 ft.) from any public (municipal or otherwise) drinking water supply well, reservoir, natural lake, man-made impoundment, or spring, with no exception. There can be no guarantee that well casings will not leak, that fluids injected will not migrate and that spills will not occur. All of these would put water supplies at risk.
(i) The 4,000 ft. setback should include private wells. Many New York residents depend on individual wells for their water supply and cannot connect to municipal water supplies. Residents of rural New York have the right to expect their water supplies to be as fully protected as those for New York City, (ii) This 4,000 ft, setback should also include springs and streams for raising both livestock and crops. No setbacks are given for streams, ponds, bams, or feeding pens. In addition, the setbacks do not apply to property lines, so a farmer who has not signed a lease could still have a well pad right at his or her property line. Fluids from spills could easily leak across the property boundary. The 500 ft. setback from domestic supply spring or water well or spring used as a water supply for livestock or crops needs to be replaced.
There is no scientific study supporting the notion that a 500 foot setback is adequate, as is required by New York state law. The League recommends clarification in the Proposed Regulations to expressly provide that all setbacks relate both to the vertical plane and to the horizontal plane. The Proposed Regulations appear to pre-suppose the well owner/operator has identified the location of all fresh water supplies in proximity to its proposed drilling operations. Inasmuch as the drilling will occur on an angular and horizontal plane a mile or more below the surface, it is recommended that the party applying for the permit demonstrate with GIS mapping the pathway of its proposed pipelines and the nearby locations of the fresh water supplies and gas storage (See, 6 NYCRR, Section 554.5). These maps should be accessible, as of right, by people who own property within the spacing unit and to the public-at-large, absent verifiable concerns for national security.
The setbacks fail to take into account that surface activity pertaining to the drilling lifecycle occurs within the setback (For example, the transfer of on-site flowback, consisting of hazardous waste storage to the tankers which remove it from the subject property and the required on-site testing of waste and soil for the presence of radioactive material).The setbacks also omit to take into account distances between the wellpad and the built improvements or agricultural or timber use on the surface of the property, other than the residence. The League recommends that all such structures and land uses as well as all phases of the multi-step HVHF lifecycle be taken into consideration for purposes of establishing setbacks since all of these factors have a direct impact on the value of the property and the health of the people who live there.
Gas Storage; Use of Underground in the Drilling Lifecycle. In addition to addressing setbacks between drilling operations and waterways, it is in the best financial interest of private property owners, the municipality, and indeed all taxpayers, that the Proposed Regulations be amended, after scientific study, to address setback requirements between and among the proposed wellpad, abandoned well operations and gas storage, including the expansive upstate shallow gas fields and underground caverns and domes which companies increasingly use to store excess gas until it is marketed for consumption. Consideration for the use and location of deep well injection sites used for HVHF waste should be assessed as well. The Proposed Regulations are silent with respect to each of these phases individually and in relation to one another. Locating the proximity of these potentially volatile storage sites to proposed new well sites and proposed waste injection wells will help to avoid opening up pathways of contamination to water sources and water supplies and the potential for explosions from fractures and fissures and impacts to fault lines created in the HVHF drilling and extraction lifecycle. According to public disclosure documents for gas storage operations, risks can include: "subsidence of the geological structures where we store natural gas; pipeline or vessel ruptures or corrosion, explosions and other incidents; leaks, migrations or losses of natural gas; and collapse of storage cavern, operator error; environmental hazards, such as pipeline and tank ruptures, drinking water contamination associated with our raw water or water disposal wells, and discharges of toxic gases, fluids or other pollutants into the surface and subsurface environment; failure to comply with environmental or pipeline safety regulatory requirements; and other industry hazards that could result in the suspension of operations." (See, Inergy LP 2012 Annual Report). Accordingly, the League recommends that DEC address and determine safe setbacks for each of these phases of the drilling lifecycle involving use of the underground, as they relate to one another and to surface use by property owners.
With respect to Section 560.4 of the Proposed Regulations, it should be noted that FEMA is in the process of revising its flood plain maps which will include revisions of regions located within the 100 year flood plain. This has the potential to limit or exclude altogether regions in which gas drilling is currently contemplated. To avoid any inadvertent issuance of a drilling permit for property located within the 100 year flood plain, the League recommends implementation of on line mapping which designates where the new 100 year flood plain exists. In addition, until such time as the revised flood maps are completed and released to the public, no drilling permits for vertical or horizontal wells should be issued by DEC.
Waste Treatment.
In describing its statutory authority for promulgating the Proposed Regulations, DEC cites on its website to "The Environmental Conservation Law (ECL) as providing it with the statutory authority for (ECL Section 3-0301(1) (h)), providing for prevention and abatement of water, land and air pollution including, but not limited to, that related to hazardous substances, particulates, gases, dust, vapors, noise, radiation, odor, nutrients and heated liquids," Yet, as alluded to earlier, notwithstanding the statutory reference in the ECL to "hazardous substances," a loophole in federal and state law exempts the waste from being treated as "hazardous." Instead the "flowback water" and "produced brine" is classified as "industrial" leaving it up to municipalities to decide if they wish to process the waste in their privately owned treatment works (POTWs) "if the operators meet certain requirements." Next, if POTWs decide to accept this wastewater, they must perform a 'headworks analysis' in order to ensure the POTW can handle the wastewater without upsetting their system or causing a problem in the receiving water." (See, DEC website under "Revised Regulatory Impact Statement"). The Proposed Regulations grant to DEC the discretion to approve an acceptable waste disposal plan; yet, they do not define specific recommendations or prohibitions or what "certain requirements" the operator must meet.
The Proposed Regulations simultaneously grant to well owners and operators the right to withhold the identity of chemicals used in HVHF if the company claims trade secret protection for proprietary reasons (See, 6 NCRR, Section 560.5(h)(2)). The potential effect of this trade secret loophole is to render impossible for any municipality or POTW to determine if it can safely accept HVHF waste, whether for treatment in a facility, road spreading to de-ice and control dust, or deep well injection. Even assuming we have full disclosure of all chemicals used in the HVHF drilling and extraction lifecycle, it bears repeating that all of this waste has the potential to include high levels of radioactive material. Indeed, the EPA publishes a Map of Radon Zones, showing the Marcellus Shale in Zone 1, the highest level. The New York State Department of Health also publishes a state and county maps, also showing Marcellus Shale in Zone 1, the highest level. In July 2009, the Department of Health sent a letter to DEC concerned that samples of wastewater from drilling in the Marcellus Shale contained too high levels of radon to be discharged into the environment. Further, DEC in the rdSGEIS of September 2011 included naturally occurring radioactive material as a potential concern needing "to come under regulatory oversight to ensure adequate protection of workers, the general public and the environment." Yet, this approach to waste management in the Proposed Regulations has the effect of passing the buck, leaving taxpayers throughout New York vulnerable to the adverse health and property effects of the waste, after treatment, resulting from contamination to air, soil and waterways.
The general, non-specific approach toward waste treatment in the Proposed Regulations presupposes that current technology exists to effectively handle the flowback, produced water, mud clippings and other effluent resulting from the drilling lifecycle. Yet, a comprehensive
report released by the N.R.D.C. in May 2012 "finds that the currently available options are inadequate to protect human health and the environment, [such options as sending it to waste treatment facilities, deep well injection and road spreading,] but that stronger safeguards at the state and federal levels could better protect against the risks associated with this waste." (See, In Fracking's Wake: New Rules Are Needed to Protect Our Health and Environment from Contaminated Wastewater by Rebecca Hammer, NRDC and Jeanne Van Briesen, Ph.D., Carnegie Mellon University, available at http://www.m', see also Injection Wells: The Poison Beneath Us, June 21, 2012; and The Trillion-Gallon Loophole: Lax Rules for Drillers that Inject Pollutants Into the Earth Pro Pitblica, September 20, 2012 by Abram Lustgarten, available at the-poison-beneath-us and for-drillers-that-inject-pollutants
Based upon the foregoing, the League recommends suspending the issuance of drilling permits until such time as the proposed treatment of the HVHF waste is consistent with, and enforceable by, legal measures required for hazardous and radioactive waste; and DEC affirmatively identifies scientifically determined waste treatment alternatives which do not potentially pass costs onto New York taxpayers.
In closing, the League recommends that DEC ensure that the Proposed Regulations take into consideration the intersection of pipelines and compressor stations as integral to the gas drilling and extraction lifecycle, even though oversight for these aspects of the operations are controlled predominantly by other governmental agencies; the goal being to promote continuity in an inherently risky process so as to achieve DEC's mission relative to the preservation of natural resources and the health, safety and welfare of the people of the Empire State.
The League extends it thanks DEC for its consideration of these comments in its revisions to the Proposed Regulations.

No comments: