Contributing Author: Sylvia E. Simson
Hydraulic fracturing currently faces a highly fluid legal environment, creating uncertainty in a variety of contexts. Indeed, the natural gas well stimulation technique is garnering a significant amount of public scrutiny and media coverage, there is continuous regulatory activity at the federal, state, and local levels, a scattering of tort actions have been filed across the country, Attorneys General and the U.S. Securities and Exchange Commission have expressed their interest in this area, issues related to insurance coverage are evolving, and research is being conducted by a variety of sources to determine whether the process can be linked to any adverse environmental and/or public health effects. New York’s ongoing debate over whether to permit hydraulic fracturing in the State serves as a good example of this fluidity, and clearly illustrates how many of the issues affecting the hydraulic fracturing arena, including regulation development and ongoing research efforts, intersect with one another. Further, as will be discussed in more detail below, New York’s decision-making process has pushed ongoing research efforts into the spotlight, and serves as yet another example of the need to think about risk avoidance in the hydraulic fracturing context.
New York’s Department of Environmental Conservation (“DEC”) has been studying the potential adverse effects of hydraulic fracturing since 2008. A “moratorium” on the practice, by way of an Executive Order, has been in place since December 2010, pending DEC’s studies and various obligatory regulatory revisions. Since then, New York has been involved in a variety of projects aimed at assessing the potential risk to the environment and public health, involving both DEC and the Department of Health (“DOH”), in order to determine whether hydraulic fracturing should be permitted in several counties in the Southern Tier of the State. In November, Governor Andrew Cuomo selected a panel of nationally-recognized public health experts to assist DOH in its evaluation of DEC’s environmental and health work to date. In December, DEC quietly published a new set of proposed hydraulic fracturing regulations. Over the past few months, Governor Cuomo has reiterated that his administration is still assessing the potential risk of adverse environmental and/or public health effects, and DEC has indicated its desire to regulate and permit hydraulic fracturing, assuming DOH gives it the sign-off that the practice can be “done safely” in New York. The draft regulations put forth by DEC in December expired on February 27, 2013. DOH’s public health review is ongoing.
On March 2, 2013, media outlets began to report that Governor Cuomo had been discussing hydraulic fracturing with former brother-in-law Robert F. Kennedy, Jr., a known environmentalist. Kennedy was quoted as stating that Cuomo was persuaded to wait until preliminary results are released from an ongoing health study in Pennsylvania, and Cuomo has since confirmed that he had spoken with Kennedy about the issue and that his “general position” is that his administration has to ensure “there is no health risk.” The project cited by Kennedy in his discussions with Cuomo is an epidemiological study being conducted by the Weis Center for Research at Geisinger Health System (“Geisinger”), a healthcare provider located in rural Pennsylvania, known as the heart of the Marcellus Shale formation. The Marcellus Shale also covers New York’s Southern Tier counties. The Independent Democratic Conference of New York’s Senate has also cited the Geisinger study, among others, as reasoning to delay a final decision regarding hydraulic fracturing in the State.
The lead researcher for Geisinger’s proposed study, Dr. David Carey, has said that while “[t]here is a lot of fear and concern” promulgated in the media with respect to hydraulic fracturing, there is “almost no reliable data on which to base scientifically sound conclusions.” Consequently, Geisinger, which asserts to have no ideological bent or biased motive, plans to analyze a decade’s worth of health data obtained from the electronic health records of regional healthcare providers (from both pre-and post-hydraulic fracturing timeframes), as well as data obtained directly from study participants and from sample collections obtained for genomic analysis. Carey and his team plan to unfold their study in a series of phases. The first phase will focus on short-term latency outcomes, such as any links to air quality and the impact on asthma, whereas later phases hope to investigate whether hydraulic fracturing can be linked to even more serious conditions. Carey and his team have conceded that an examination of potential health effects “will require decades of research,” but preliminary results of the study’s first phase may be released within the next year or so. The study’s methodologies and potential scientific value are unclear at present.
In that same vein, and as noted above, a host of other research studies are being undertaken by government agencies (including the U.S. Environmental Protection Agency), universities and their institutes and working groups (including the University of Pennsylvania’s Center of Excellence in Environmental Toxicology’s Working Group studies), and independent companies (like Geisinger) to identify potential environmental and health risks posed from hydraulic fracturing, ranging from impacts on drinking water resources and air quality to the potential for seismic activity. Many of these efforts have been the subject of criticism, with industry, regulators, and environmentalists alike questioning the independence of the researchers. And as conceded by Geisinger’s Dr. Carey, the studies and reports released thus far have been mixed and have not yielded any conclusive results.
During this period of uncertainty—with respect to the prospects of hydraulic fracturing in New York State, the future scientific landscape in this area, and a host of other open issues and looming developments—one thing remains clear. Namely, companies engaged in hydraulic fracturing activities have a window of opportunity to assess their operations and potential areas of risk and develop their own risk mitigation and preparedness strategies, such that they are poised to handle anything that comes their way. Such strategies can include an evaluation of the company’s “record” to date, internal sensitization to the controversial nature of the hydraulic fracturing process and the need to “think litigation,” preparation for the “worst case scenario,” a commitment to early “under fire” strategy development, and an assessment of lessons learned from other mass tort matters, among others. As can be seen from the mass tort disasters of late, this type of proactivity will prove beneficial if faced with high stakes litigation or government inquiries/investigations.