Regulating the natural gas boom

>>> it's transforming economics in the country and transforming many local landscapes places that are farms or little league fields now sporting wells. there's a rush of capital into natural gas . i think in 2011 i want to say five of the top ten performing stocks were associated with natural gas extraction. it's true. look it up.

>> not the ones that i own.

>> there's lots of fears about what its environmental effects will be, what the health effects will be. we're trying to tease through some of that. we're talking about water contamination and my sense of the literature here is that the ground water contamination through the fracking process itself has been documented in extremely rare cases. but contamination of water because you have all this wastewater, right? i won't call it toxic. you have a wastewater that is a slurry he of things you don't want to opt to put into your body, and you have millions of gallons of it. you have to do something with it. you have to truck it out or let it sit there and essentially off-cycle i guess. what you do with that. also, you come back to this -- we're talking in the broad sense about a risk profile and about regulation, right? deep water drilling is safe, right, when done correctly. it's fine until it's not done correctly. we've all seen what it looks like. there's a question. let me give you a stall stick here. active oil and gas inspectors per well in 2010 by state . this is the amount of active wells there are per inspector, okay? the percentage of wells inspected. in colorado 53% were inspected and there were 3,000 wells per inspector. in a state like pennsylvania, 91% and 1400 were inspectors. even in the best states, new york actually is in the top there in terms of the number of wells per inspector. there is this broad question about whether we believe. it gets down to this trust issue, right? if you say theoretically this can be done safely under the right conditions, there's this basic trust question about do you trust our political system to bring about those conditions?

>> yeah. you know, the story of what happens when a resource is found in a rural, remote areas among politically powerless people has played itself out many, many times over the past and eventually you have to learn from history. there's always complaints and experts from industry saying there's nothing to worry about. there's a flood of out of state capital and workers, the economic boom that is inevitably temporary. once everything has moved on, you find out that these towns end up being wastelands and some of the health concerns prove out and some don't. right now, they're just motoring through it before the science and before the regulation can catch up even close.

>> one of the issues about trust and our government regulating this. you talk about deep water drilling. now, that's federal, because that's federal water and you need federal permission and follow federal regulations . but the fracking debate is difficult because its state -run for the most part. every state environmental agency has control over each state which is why you see a lot of discussion about the marcellus in new york where a lot are up in arms and really care about the environment to a certain degree, and you don't see that much in texas in the eagle ford and in the hainesville and other areas in texas because texas is a more happy kind of fracking state which has a lot easier --

>> intense pressure on state governments to grab what economic boom they can when they can, which is a lot more difficult to resist.

>> it adds to the difficulty of getting a unified sort of trust going in terms of the technology itself, because each state looks at it differently.

>> my sense is your position is this can be done safely and largely is done safely now. obviously there are exceptions to that. are there standardized rules you would like to see as someone who sees it done safely, you would like to see put in place to ensure that always happens?

>> have you reviewed the new york supplemental gis? 2,000 pages worth of regulations. just to kind of backtrack, there's a lot of discussion around the table, i wanted to bring up the wastewater issue since we keep alluding to it. the wastewater as we know, obviously, is regulated under the clean water act . there's been a lot of talk about this dick cheney and the halliburton loophole.

>> let me say there's an exemption put in in 2005 exempting from the drilling process from a particular kind of scrutiny required by federal law in the safe drinking water act .

>> there are six other federal aktss that it is exempted from.

>> yes. that's a federal.

>> that's a federal exemption, yes.

>> he alluded to the fact that this issue is actually regulated aat the state level. so the state is the one that manages the clean water act . if you go through the sgis and look at --

>> explain what it is.

>> it's a supplemental environmental impact statement that new york state requires for the industry to get its permits. a part of that clean water act at the state level is a program called npds program, which is where a wastewater discharger gets a permit. so whatever they put out in the wastewater is monitored. if the industry supplies them with wastewater, the treatment plant is expected to clean it up to the level that meets their permit regulation. so that permit is under the clean water act . for people to go around and say that the industry is not regulated by the clean water act is kind of twisting words, because their wastewater is at the wastewater outfall.

>> there are trace chemicals and others that are not under the clean water act that happen to come up nginside when fracking fluids are up in the ground and they come back up as wastewater. some are not covered in terms of the route that they have to go in order to be cleaned up and then released into rivers and so forth here. most of them are. most of them are. some are not.

>> the permit is the one that determines what that wastewater plant is supposed to put out.

>> right. yes. the collection of the information is highly nonstandardized, right? you're talking about new york state , and new york state has had -- the background to new york state , which has a relatively high level of regulatory scrutiny is precisely the presence of fracking activists, right? it wasn't just that they magically thought let's have tough standards on this. no. people showed up at meetings and yelled and protested, right? my point is often the industry will point to regulatory bars that they have to clear and say, look, we have to clear these bars. those regulatory bars don't come around and sprout out of the ground. they come back about political mobilization.

>> and there's states like new york .

>> tanya fields and huny blake of director of environmental affairs for hometown energy group. that was a great discussion. i want to continue it in the future. david, you mentioned something about the pay that fossil fuel extraction can change the political, economic facts on a place. the u.s. is on tract to become energy independent. why that's bad news after this. comes! bring it