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State and Local Issue: Hydraulic Fracturing

Hydraulic fracturing (aka “fracking”/fracing) has taken center stage both in Ohio and in the nation recently. Federal efforts include President Obama’s Executive Order to support “safe and responsible” fracking and more recent, if more mundane, federal administrative rules governing air pollution from fracking sites. These rules will govern air pollution at fracking sites, at an EPA-estimated cost savings of $11-19 million when the regulations at fully in force in 2015. The EPA also seems taking steps to address any possible water pollution or Clean Water Act violations, as well. Josh Fox, in his movie Gasland, claimed that frackers had been given a waiver of any possible Clean Water Act violations that might arise from their activities. The Ohio Department of Natural Resources (DNR) has stated that Ohio’s water table is not in jeopardy, because the drilling occurs deep below the bedrock. DNR is concerned, however, about the more recent potential of fracking causing earthquakes, and the agency is promulgating pertinent regulations. Hydraulic fracturing has been in use in Ohio for forty years; even twenty years earlier it was used in Oklahoma.

Notwithstanding its historical usage, fracking has gained prominence in recent years for a variety of reasons. Natural gas is the cleanest burning of the traditional fossil fuels, and it is well suited for peak demand general of electricity. North Dakota’s unemployment rate in January, 2012 was 3.2%, compared to a national rate of 8.3%. Skilled jobs fracking the Bakken Formation pay $70,000-$120,0000 per year. Thus, fracking can supply much needed cash to state via income tax, royalty payments, and permit fees. Natural gas is seen by some environmentalists (and others) as a “bridge fuel” from dirty sources of energy, such as crude oil and coal to renewable energy, once scalability (renewables account for a small percentage of all energy used currently) and other issues (such as the production of much less energy than produced by burning traditional fossil fuels) are worked out. Proponents of energy independence for the United States, and those concerned with the corallary of reducing the amount that United States citizens pay to foreign countries for crude oil, also are usually fond of maximizing domestic natural gas production. (A more nuanced “Drill, baby, drill” strategy, as it were.)

As the maps below show, part of the shale regions overlap with the Great Lakes Water Basin, making said overlapping regions subject to the Great Lakes Basin Compact, an international agreement among several states and Canadian provinces,  with Congressional consent via Public Law 90-419. More recently, eight states, through  Public Law 110-342 created the Great Lakes–St. Lawrence River Basin Water Resources Compact. Such cooperative agreements seek to manage the water resources in a sustainable and efficient method, with a keen interest in activities that require the use or diversion of large amounts of water from the Great Lakes.

Also interesting is the attempt of Ohio Governor John Kasich, often portrayed as “pro business,” to extract (pun intended) additional revenues from the burgeoning (at least after the earthquake issue gets resolved) Ohio fracking industry. The governor proposes to tax the drillers up to 4% of the market value of the oil and natural gas extracted, up from the current tax of 20 cents per barrel of oil and $3 per 1000 cubic feet of natural gas. Not surprisingly, the debate over whether to use any additional revenue for income tax relief or for schools or other social programs has begun, also. In a similar manner, Governor Kasich negotiated additional payments from companies that will begin to operate Ohio casinos in 2012.

Federal, Ohio, and Regional

Maps

Books

  • Tom Wilber. Under the Surface: Fracking, Fortunes, and the State of the Marcellus Shale. Ithaca, NY:  Cornell University Press, 2012.  OhioLINK
  • Aarik Schultz. Hydraulic Fracturing and Natural Gas Drilling: Questions and Concerns. New York: Nova Science Publishers, 2012. OhioLINK
  • Ching H. Yew. Mechanics of Hydraulic Fracturing. Houston, TX: Gulf Publishing, 1997. OhioLINK  (also available as an ebook to ScienceDirect subscribers)
  • Peter Valko and Michael J. Economides. Hydraulic Fracture Mechanics. Chichester; New York: Wiley, 1995. OhioLINK

Links provided are either via HeinOnline or Lexis, but the articles are probably available via Lexis, Westlaw, HeinOnline, and (possibly) LexisNexis Academic for those who have access.

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