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February 8, 2013

Beyond the Fracking Wars: Lawyers Learn the Basics of Unconventional Oil and Gas Exploration

Panelists of "Beyond the Fracking Wars:" Terrence S. Welch, Brown & Hofmeister, LLP; Suedeen G. Kelly, Akin Gump, Strauss Hauer & Feld LLP; Sorell P. Negro, Robinson & Cole LLP; Kinnan Golemon, KG Strategies, LLC; and Erica Levine Powers, University of Albany

Panelists of "Beyond the Fracking Wars:" Terrence S. Welch, Brown & Hofmeister, LLP; Suedeen G. Kelly, Akin Gump, Strauss Hauer & Feld LLP; Sorell P. Negro, Robinson & Cole LLP; Kinnan Golemon, KG Strategies, LLC; and Erica Levine Powers, University of Albany

On the same day the Dallas city council debated for the third time in three months whether to allow gas drilling within its city limits, a panel of experts at the _ Midyear Meeting explained why “fracking” is both exciting yet controversial and how lawyers can navigate the impact of this growing technology.

“Good luck. Strap yourself in. Get ready for the ride,” said Terence Welch of Brown & Hofmeister, LLP as he described what a lawyer can expect if he needs to go before a city council to explain why drilling should or should not be allowed.  “I think I have heard every argument in favor of gas drilling and every argument against it.”

Welch described how city councils like the one in Dallas face intense lobbying efforts on both sides about fracking or fracturing, which is a shorthand term for domestic shale oil and gas production and its environmental, community and economic effects.  The process itself is defined as high volume, long lateral, slick water hydraulic fracturing, and this technology allows companies to fracture shale deposits deep in the ground by pumping high-pressurized water into a well to release natural gas, liquids or oil.  Shale deposits are located all over the country.

“Most of the public pressure has been to deny drilling permits,” Welch said.  He explained that “there is very little law on the books for cities” despite more than 100 years of drilling in Texas. Welch added that he prefers the administrative process to zoning battles, which can go on for months or years as communities fight over environmental impacts, setback distances, or drilling in flood plains or public parks. “I get paid to avoid putting city councils in untenable positions.”

“It’s not if but when, because it’s coming to your community,” said Erica Levine Powers, a land use and environmental lawyer and adjunct professor at the University at Albany—SUNY.  “And it’s a very complex industry.”

Fracturing is complex in part because it involves many specialized companies: from construction crews and drilling specialists, to water suppliers and truck drivers. “You have to subcontract everything out,” said Kinnan Golemon, founder and President, KG Strategies, LLC.  Golemon touted the economic benefits of fracturing, which according to a 2011 report by the U.S. Department of Energy, has created 200,000 new jobs through the domestic production of shale gas.  But he added that communities are often not ready for the boom and bust cycle.  “If you think you’re prepared for it, it doesn’t happen.”

Sorell Negro, an attorney with Robinson & Cole LLP who practices land use, real estate and environmental law, agreed.  The sudden increase in job opportunities and income, as well as the surge in demand for housing and public services, catches many communities off guard.

“We see billboards where a gas station attendant job has a $3,000 bonus because there aren’t enough people there to hire,” Negro said, citing a specific example in North Dakota.  One county in Wyoming experienced a 28 percent increase in housing prices in four years.

Companies have sometimes responded to the shortage in affordable housing by creating “man camps,” temporary employee housing that ranges from a cluster of mobile homes to a series of stacked pre-fabricated units to small tent cities.  “Some man camps are larger than some cities in North Dakota,” Negro added.

Communities can effectively plan for these “boom and bust” cycles, Negro said.  They should take stock of current housing, update land use ordinances, allow permitting for temporary housing and define key terms such as man camps.  Noise and light ordinances should also be addressed.   And local governments should review their school and law enforcement strategies.

Once the bust occurs after drilling has ended, communities will often see tax revenues decline, and jobs are relocated or lost.  By utilizing temporary housing, finding adaptive uses for facilities used during the boom and by saving revenues that poured in, governments can minimize the impact, Negro said.  One Colorado county used its profits from drilling to invest in solar energy.

All of the panelists are authors of the book, “Beyond the Fracking Wars: A Guide for Lawyers, Public Officials, Planners and Citizens,” set for release in April.

The program was sponsored by the Section of State and Local Government Law and the Section of Public Utility, Communications and Transportation Law.

Learn More About:  Environmental LawMidyear Meeting 2013