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Who Pays the Cost of Fracking?

Energy

Environment America

Raising new concerns about a little-examined dimension of the fracking debate, Environment America Research & Policy Center today released a report analyzing state and federal financial assurance requirements for oil and gas drilling operations. As fracking expands at a frenzied pace in several states and federal officials consider allowing fracking near national parks and forests and key drinking water sources, Who Pays the Costs of Fracking? reveals current bonding requirements are inadequate to cover the costs of damage from gas drilling.

Just reclaiming a fracking site can cost hundreds of thousands of dollars, and the damage done by fracking—from contaminated groundwater to ruined roads—can cost millions of dollars. But today’s report shows that:

  • The Bureau of Land Management (BLM) generally requires drillers to post bonds of only $10,000 per lease or a blanket bond of only $25,000 for all wells in any one state;
  • All but eight states require bonds of less than $50,000; and
  • In most cases, these bonds only cover the cost of site reclamation and well plugging, providing little or no up-front financial assurance for the broader damage done by fracking.

“This appalling lack of financial assurance dramatically increases the risks that our communities, our drinking water and our natural heritage face from fracking,” observed John Rumpler, senior attorney with Environment America Research & Policy Center and a co-author of the report.

Today’s report comes as the oil and gas industry is seeking to frack in several national forests and other sources of drinking water for millions of Americans—including George Washington National Forest in Virginia, White River National Forest in Colorado, Otero Mesa in New Mexico, Wayne National Forest in Ohio and the Delaware River Basin.

“It’s bad enough to think that fracking could pollute major sources of drinking water,” said Rumpler. “The fact that we could wind up paying the clean-up bill as well just adds insult to injury.”

Environment America is urging the BLM to implement a key recommendation of the administration’s advisory panel on fracking, which is the “preservation of unique and/or sensitive areas as off limits to drilling ...”

The report shows that financial assurance requirements at the state-level are also quite weak in areas at the center of the current fracking boom—including in Colorado, New Mexico, Ohio and Pennsylvania.

Of particular concern for financial accountability are the long-term costs of fracking. According to the report, across the nation by 2006 there were already 59,000 abandoned oil and gas wells and at least another 90,000 whose status is unknown. The potential cost for just plugging these wells exceeds $780 billion.

“From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with,” observed Rumpler. “Weak financial assurance requirements virtually guarantee the same fate wherever fracking is allowed.”

Visit EcoWatch’s FRACKING page for more related news on this topic.

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Protesters gathered outside US Bank and Wells Fargo locations around the U.S. to protest investment in the Dakota Access Pipeline on Dec. 1, 2016. This photo is from a protest outside US Bank in south Minneapolis, Minnesota. Fibonacci Blue / CC BY 2.0

By Jake Johnson

As a growing number of states move to pass laws that would criminalize pipeline protests and hit demonstrators with years in prison, an audio recording obtained by The Intercept showed a representative of a powerful oil and gas lobbying group bragging about the industry's success in crafting anti-protest legislation behind closed doors.


Speaking during a conference in Washington, DC in June, Derrick Morgan, senior vice president for federal and regulatory affairs at the American Fuel & Petrochemical Manufacturers (AFPM), touted "model legislation" that states across the nation have passed in recent months.

AFPM represents a number of major fossil fuel giants, including Chevron, Koch Industries and ExxonMobil.

"We've seen a lot of success at the state level, particularly starting with Oklahoma in 2017," said Morgan, citing Dakota Access Pipeline protests as the motivation behind the aggressive lobbying effort. "We're up to nine states that have passed laws that are substantially close to the model policy that you have in your packet."


The audio recording comes just months after Texas Gov. Greg Abbott signed into law legislation that would punish anti-pipeline demonstrators with up to 10 years in prison, a move environmentalists condemned as a flagrant attack on free expression.

"Big Oil is hijacking our legislative system," Dallas Goldtooth of the Indigenous Environmental Network said after the Texas Senate passed the bill in May.

As The Intercept's Lee Fang reported Monday, the model legislation Morgan cited in his remarks "has been introduced in various forms in 22 states and passed in ... Texas, Louisiana, Oklahoma, Tennessee, Missouri, Indiana, Iowa, South Dakota, and North Dakota."

"The AFPM lobbyist also boasted that the template legislation has enjoyed bipartisan support," according to Fang. "In Louisiana, Democratic Gov. John Bel Edwards signed the version of the bill there, which is being challenged by the Center for Constitutional Rights. Even in Illinois, Morgan noted, 'We almost got that across the finish line in a very Democratic-dominated legislature.' The bill did not pass as it got pushed aside over time constraints at the end of the legislative session."

Reposted with permission from our media associate Common Dreams.

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