The investigative report by the Pennsylvania grand jury released last month that was highly critical of the Department of Environmental Protection (DEP) and the Department of Health (DOH) for their oversight of the hydraulic fracturing industry has drawn a second major rebuttal, this one from Michael L. Krancer, who was Department of Environmental Resources secretary from January 2011 to April 2013.

"For several years I had the privilege to serve the citizens of the Commonwealth of Pennsylvania as the Secretary of the Department of Environmental Resources. During that time, I made it my business to get to know and spend time with as many DEP personnel as I could. In my view, every single one of the more than 3,000 people, many of whom devoted their entire career to environmental protection are dedicated, honest and took their work at the DEP very seriously," Krancer's response begins.

"Those people left an indelible impression with me and it is because of them that I feel compelled to speak out forcefully against the Grand Jury Report. It would be inappropriate for me, as their former Secretary, to sit idly while 3,000 DEP personnel are attacked with broad brush. I know that the people at DEP never wavered from the law, never turned a blind eye to wrongdoing and always kept the safety of Pennsylvania's citizens paramount."

DEP's actions reflected the wishes of the administration and legislatures, he added. "DEP was not the body that decided that natural gas drilling was permitted by law. DEP never took a position on hydraulic fracturing. The General Assembly and Governors from both parties deemed it to be the policy of the Commonwealth to provide for the extraction of natural gas. We addressed every situation as it arose. We remained focused on environmental impacts of each project and permit application. I stand by the record we established and reject the assertions of the Report," he wrote.

The report

The report was released on June 25 by Attorney General Dan Shapiro, who held a press conference to talk about the report's findings and to note that the same grand jury had returned criminal charges against Cabot Oil & Gas and Range Resources. Range has settled the claims against it.

"The grand jury took all of this evidence in from all sides," said Shapiro when the report, two years in the making, was released. "This was unprecedented access. And they came to this conclusion: Giant oil companies were given a free pass by unprepared agencies."

The report recommended a range of new laws and regulations, such as much larger drilling setbacks, complete disclosure of fracking chemicals and comprehensive regulations of gas gathering lines. It also said that the state attorney general should have the ability to file criminal charges against violators of environmental laws.

The rebuttals

DEP published a 56-page response that accompanied the release of the report, indicating both where it disagreed with the report's findings and where reforms already had been enacted. Then, the Marcellus Shale Coalition, a trade group, released a response that challenged some of the conclusions in the report.

Now, Krancer has weighed in. He raised a few of the key themes in the report and answered.

Poor oversight.

• "This is untrue. We innovated in regulatory practices and were diligent in our oversight of an industry, natural gas, which DEP had a long history of regulating. We consistently implemented the laws passed by the General Assembly and did more via regulation, policy, guidance and 'boots on the ground."
• An assessment by the independent, multi-stakeholder group State Review of Oil and Natural Gas Environmental Regulations concluded, "the Pennsylvania program is, overall, well-managed, professional and meeting its program objectives."

Taking a passive, wait-and-see approach to protecting the public.

• During Krancer's tenure, DEP took proactive steps, such as coming up with a 'call to drillers' to limit the use of certain municipal water treatment facilities accepting produced water that contained chemicals (bromide) that those plants were incapable of managing. The voluntary program worked much faster than enacting a regulation.
• In those same years, DEP initiated a comprehensive study on radioactivity in drilling wastewater.

Failure to balance public health and economic interests.

• As noted earlier, the state set the policy, and DEP carried it out. During Krancer's term, the state enacted Act 13 of 2012, "which set stronger environmental standards, authorized local governments to adopt an impact fee and built upon the state's ongoing efforts to move towards energy independence as unconventional gas development continues." These include increased setback requirements for unconventional gas development; enhanced disclosure of fracking chemicals; enhanced protection of water supplies; and strong, uniform, consistent statewide environmental standards.

Lack of enforcement.

• Consent decrees dating back to the early 2010s resulted in millions of dollars in fines, moratoriums on fracking activity and new reviews of processes.

Slow-walking new regulations.

• "DEP put into effect a more protective air general permit for drill sites that was one of the first in the nation to control methane emissions, we implemented a new general waste management permit for drill sites and we started the formal regulatory process for development of an entire new comprehensive set of regulations governing surface activities at well sites that become final law as new Chapter 78a under the current administration."

Managerial incompetence.

• "This is demonstrably false and is flatly contradicted by the unbiased STRONGER Report of 2011," he wrote. "And, in fact, we did a comprehensive reorganization of DEP in order to improve managerial and organizational effectiveness. Part of that reorganization focused specifically on the experienced and projected growth of the natural gas sector and was a reflection of the administration's emphasis on proper oversight of that activity."
• "We took the important step of elevating the Bureau of Oil and Gas Management to becoming the Oil and Gas Deputate which was headed by a Deputy Secretary of DEP. This moved shale gas regulation from a 'back bench' operation to front line and provided a centrally based organization within DEP to unify oversight of that industry. This is more regulation, not less."

Reprinted from PointLogic News. For more, visit the PointLogic website.

Kevin Adler is an Editorial Director at IHS Markit.

Posted 9 July 2020

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.