John Hanger, who led Pennsylvania's Department of Environmental Protection until January, recently talked with ProPublica about the challenges of trying to regulate the expanding drilling industry. Hanger joined the DEP in 2008, when gas drilling in the state's Marcellus Shale formation was ramping up. During his tenure, the department tightened drilling regulations by limiting the discharge of certain pollutants into rivers and streams, strengthening standards for new wells, banning development within 150 feet of certain waterways and requiring drillers to include water-use and waste-disposal plans with their well permit applications. Before he joined the department, Hanger was president and CEO of PennFuture, an environmental organization. He left the DEP when Tom Corbett took over as governor.
When you joined the department in 2008, drilling in the Marcellus Shale was just starting to take off. What did you expect at the time?
When I was asked by Governor Rendell to take the job, before I gave him an answer I asked him what did he want me to do. ... He rattled off five items, and the third one on the list was to protect the waters and produce the gas. ... Obviously we had a lot of work to do. The regulations needed a complete rewrite, there needed to be funds and revenues raised to pay for increased staff.
I think there's a sense among some who have followed drilling in Pennsylvania that regulators have been playing catch-up to the industry.
The industry is growing rapidly, and our goal was to grow with the industry. To some that may look like playing catch-up. To others it may look like exactly what I said it was, trying to pace growth with the industry. The one area of rules that I think were behind the times were the drilling standards. As I've said, I think those rules should have been updated a decade ago. ... Pennsylvania has had gas migration issues for a long time, and the [well] casing and cementing rules and other criteria were not where they needed to be. I moved to get those changed within months of coming through the door.
The water plan rule I think went into effect when it should have gone into effect. There were a couple cases where a drilling company had, I'm speaking metaphorically, put a big straw in a small glass, and it impacted two streams. Then we put in place the water plan requirement, and to our knowledge we haven't had a problem since.
We announced the waste disposal rule [which set limits for discharging certain pollutants found in drilling wastewater] in 2009. ... Unless this rule changed, the industry wouldn't recycle, they wouldn't look for deep well injection. ... I think basically that rule went into place as it should have. It changed as the industry ramped up.
One of the recurring issues around the growth of gas drilling is that, even if laws are in place, they need to be enforced. Does Pennsylvania have enough inspectors to oversee the industry as it continues to grow?
It does as of this moment, but I've been saying for two years that's a question that has to be asked and answered every year. As the industry grows, the answer I think will be no, if we stay with the current staffing. We hired in 2009. We hired in 2010. And if we were still in charge of the department, we would probably end up hiring again in 2011, depending on what's going on with the industry.
Can that realistically be done?
Of course it can be done. If needed, and I'm not prepared to say today that it's needed, the state or a governor needs to make this a top priority and then it can happen. That's what we did. We raised the fee. ...You could raise the fee, you could restructure the fee, you could tax the industry, how about that idea?
[Former Governor Ed Rendell and Hanger tried unsuccessfully to persuade the state legislature to levy a tax on natural gas extraction.] It's absolutely vital that this industry pay a reasonable drilling tax. That's why every other state has assessed a drilling tax. It's because there are actually winners and losers.
Do you think gas drilling with high-volume hydraulic fracturing, as it's being practiced now in Pennsylvania, is safe?
Yes, it's safe in this respect. Is the risk zero? No. But is it as safe as mining and producing and burning coal? It's actually much safer... Is it as safe or safer than drilling, producing and burning oil? It is actually much safer... None of our risks in energy production are zero.
What could drilling companies do to make it safer?
What is desperately needed is the creation of a culture of safety within the industry. And it's possible to do. I'm very proud of the fact that Pennsylvania, in 2010, had its first year without a mining fatality. ... In Pennsylvania there are coal companies that have a culture of safety and have created for the first time in the history of the state, no mining deaths. It's a phenomenal thing.
The government, federal and state, played an important role in creating incentives for the industry to develop that culture of safety. I have no doubt, if there was no regulation of coal mining in Pennsylvania, there would have been many more deaths, and the environmental damage would have been much greater. These industries can't self-regulate to that culture of safety.
Does Pennsylvania have the laws it needs to make sure the drilling industry takes that path?
I think there are a couple of areas where further work needs to be done, at a minimum. One is the bonding law [which requires that drillers post bonds to cover the cost of plugging and reclaiming wells that are no longer producing]. The bonding rate in Pennsylvania is scandalously low: It's ridiculous.
[Also], it would make good environmental and economic sense to have a spacing and pooling rule on the books. The details need to get worked out, but essentially, what it would do is say that wells cannot be closer than X. I've thrown out somewhere between one and two miles apart... And that gas can in fact be pooled as long as any gas used from an unwilling mineral owner is compensated for it at certainly the fair market value. [Because a single well can often drain gas from several properties, “pooling” laws sometimes allow drillers to extract that gas over the objection of some of the landowners.] Most other states have some provision like that.
Should the federal government regulate fracking?
I laugh when people ask that question because, basically, if the BP oil spill showed anything, it's that you can't rely on the federal government to regulate the oil and gas industry. The Minerals Management Service was completely captured by the industry. There's no guarantee that doesn't happen at the state level either, but I think local people have much more ability to impact their governor. They pick their governor, they elect their state legislature. I think generally it's better to have these questions decided close to home. It's Pennsylvania's water, it's Pennsylvania's air, it's Pennsylvania's land.
Do you think the criticism of the way drilling has been handled in Pennsylvania has been fair?
If you get to these jobs you better be ready for criticism. I think some of the criticism has been useful, and I think some of it is uninformed, and some of it deliberately uniformed. There are some folks who want to shut down the industry and are willing to say anything to accomplish that goal.
What was your greatest achievement at the department?
There are a number of accomplishments I would highlight. One is building 1,200 megawatts of new renewable energy from 2003 to 2011. ... The state has done extraordinarily well in developing green jobs. There's a lot of talk of jobs in the Marcellus, and that talk is true. The Marcellus has created direct jobs and more through the additional revenue that then creates indirect jobs. But the state has also developed, according to the most recent survey of the Pennsylvania Department of Labor and Industry, 41,000 renewable energy jobs.
The other thing I would point to is that hazardous air pollutants have been cut by 40 percent in Pennsylvania since 2003, with most of that improvement occurring since 2007.
Anything you would have done differently?
If I were king, I would have left office with the bonding amounts raised and with the maximum fines raised [for rule violations]. Both are important pieces of business not taken care of. I think the regulation of air emissions from natural gas production facilities is a matter that is not fully resolved. I think that's a significant issue that needs to be resolved.
What are some of the challenges you foresee for your successor?
There's a daily challenge, which is most important, which is to make sure that the process of regulation remains independent and professional and the laws are being enforced. There's the continuing need to review regulations to make sure they're adequate to the task.
With your experience working in a state that saw tremendous growth in shale gas drilling over just a few years, do you have any advice for regulators in other states who are in a similar situation?
First, you've got to have adequate staff. I find it remarkable that Pennsylvania is really the only state that's hired significant numbers of people—maybe the only state that's hired new staff—to oversee the industry. Colorado is a much bigger state geographically, with a much bigger area to cover, and it's got a third of the regulatory staff. I mean, that's impossible.
The second thing I think you need is the will, the will to enforce. If you're not willing to really enforce the rules and the regulations it doesn't matter how many people you have on the regulatory staff.
Without that, nothing else matters. If you've got leadership in the governor's chair, or in the presidency, or in the secretary's office saying “don't really regulate, treat the industry as a partner, treat the industry as a client,” then it doesn't matter how many regulators you have, it doesn't matter what the words on the page say.
Are you concerned that any of what you've accomplished might be rolled back or undone by the new administration?
We're going to have to wait and see what folks do. I'm open-minded about what's going to occur here. I think the public, however, wants this done the right way. The public, I think, by and large wants the gas produced and the environment protected.
I think most Pennsylvanians also understand that our energy choices are not perfect, that today if we are not using more natural gas, we are going to be using more coal and oil, both of which cause many more environmental problems during the production of those fuels and during the combustion of those fuels than natural gas does.
What's next for you?
I've formed a consulting company, and I'm going to be doing some work there. I'll probably affiliate with a law firm as well. I'm in the process of working that out. My affiliation with the law firm will be to develop a clean energy practice. I'm very interested in pursuing the development of renewable energy and energy efficiency. There's a huge growing need for those projects, the public is strongly supportive, and I want to play a role in pushing forward clean energy projects.