Shots Fired: PA Auditor General Releases Oil and Gas Audit

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On Tuesday, the Pennsylvania Auditor General’s Office released a report criticizing the Department of Environmental Protection (DEP) for failing to adequately track and respond to public complaints concerning water quality related to natural gas development. Auditors cited deficiencies in eight key areas, including record-keeping, oversight of drilling waste and gas well inspections, and communication with citizens who complain of water contamination. The report is the product of a campaign promise by Auditor General Eugene DePasquale to investigate how the DEP handles water complaints related to oil and gas drilling. DePasquale calls the DEP “underfunded, understaffed and inconsistent in how it approaches shale gas development. It’s like firefighters trying to put out a five-alarm fire with a 20 foot garden hose.”

The DEP disputes the Auditor General’s findings. It explains that the report only covers operations from January 2009 through December of 2012, when the department utilized different, outdated procedures. “Most of this audit reflects how our Oil and Gas program formerly operated, not how the program currently functions,” said DEP Secretary Chris Abruzzo in a statement. However, the DEP conceded that many of the audit’s 29 specific recommendations for improvement, mostly geared towards transparency and responsiveness to public requests, were helpful.

In light of growing public interest and increased judicial pressure, the DEP recently released their official determinations of state water supplies adversely impacted (defined as pollution or flow diminution) by oil and gas operations. According to the DEP, oil and gas operations have damaged Pennsylvania water supplies 209 times since the end of 2007. By comparison, operators drilled nearly 20,000 new oil and gas wells over that same span. Environmental groups view this information release as the first step in the right direction. Still, they demand more detailed water impact information, including the specific impacts oil and gas operations have caused, the companies involved, how the companies addressed the problems, and any fines imposed. Former DEP Secretary John Hanger views this as a structural issue: “Quite a lot of the audit findings have to do with handling the complaints. You’re not going to fix those problems without creating a new office.”

Conversely, the Marcellus Shale Coalition (MSC) cites the DEP’s figures as overwhelming evidence that drilling activity is not harmful to local water supplies, as 99% of wells caused no damage. In contrast to DePasquale, the MSC believes “Pennsylvania’s regulatory regime is effectively meeting its objectives of protecting our environment and making certain that shale’s broad benefits are fully realized.” Though the MSC applauds Pennsylvania regulators’ efforts to exercise oversight of the fracking boom, its members are willing to pay higher well permit fees, which the DEP raised by $1,800 in June, to enable the department to hire more oil and gas inspectors.

It will be interesting to see how the DEP incorporates the audit’s findings as the focus on shale drilling and its environmental effects intensifies in the coming months. Pennsylvania’s response could serve as a template for regulators throughout the country.

More information regarding the audit is located here.

This post was coauthored by R. Kevin Saunders (2014 BakerHostetler Summer Associate).

 

Topics:  Auditors, Audits, Contamination, Marcellus Shale, Natural Gas, Oil & Gas, Underground Injection Wells, Waste Disposal, Water, Well Drilling

Published In: Energy & Utilities Updates, Environmental Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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