This story was written by ProPublica reporter Abrahm Lustgarten.

Federal environment officials investigating drinking water contamination near the ranching town of Pavillion, Wyo., have found that at least three water wells contain a chemical used in the natural gas drilling process of hydraulic fracturing. Scientists also found traces of other contaminants, including oil, gas or metals, in 11 of 39 wells tested there since March.

The study, which is being conducted under the Environmental Protection Agency’s Superfund program, is the first time the EPA has undertaken its own water analysis in response to complaints of contamination in drilling areas, and it could be pivotal in the national debate over the role of natural gas in America’s energy policy.

Abundant gas reserves are being aggressively developed in 31 states, including New York and Pennsylvania. Congress is mulling a bill that aims to protect those water resources from hydraulic fracturing, the process in which fluids and sand are injected under high pressure to break up rock and release gas. But the industry says environmental regulation is unnecessary because it is impossible for fracturing fluids to reach underground water supplies and no such case has ever been proven.

Scientists in Wyoming will continue testing this fall to determine the level of chemicals in the water and exactly where they came from. If they find that the contamination did result from drilling, the placid plains arching up to the Wind River Range would become the first site where fracturing fluids have been scientifically linked to groundwater contamination.

In interviews with ProPublica and at a public meeting this month in Pavillion’s community hall officials spoke cautiously about their preliminary findings. They were careful to say they’re investigating a broad array of sources for the contamination, including agricultural activity. They said the contaminant causing the most concern — a compound called 2-butoxyethanol, known as 2-BE  — can be found in some common household cleaners, not just in fracturing fluids.

But those same EPA officials also said they had found no pesticides — a signature of agricultural contamination — and no indication that any industry or activity besides drilling could be to blame. Other than farming, there is no industry in the immediate area.

In Pavillion, a town of about 160 people in the heart of the Wind River Indian Reservation, the gas wells are crowded close together in an ecologically vivid area packed with large wetlands and home to 10 threatened or endangered species. Beneath the ground, according to the U.S. Geological Survey, the earth is a complex system of folded crusts containing at least 30 water-bearing aquifer layers.

EPA officials told residents that some of the substances found in their water may have been poured down a sink drain. But according to EPA investigation documents, most of the water wells were flushed three times before they were tested in order to rid them of anything that wasn’t flowing through the aquifer itself. That means the contaminants found in Pavillion would have had to work their way from a sink not only into the well but deep into the aquifer at significant concentrations in order to be detected. An independent drinking water expert with decades of experience in central Wyoming, Doyle Ward, dismissed such an explanations as “less than a one in a million” chance.

Some of the EPA’s most cautious scientists are beginning to agree.

“It starts to finger point stronger and stronger to the source being somehow related to the gas development, including, but not necessarily conclusively, hydraulic fracturing itself,” said Nathan Wiser, an EPA scientist and hydraulic fracturing expert who oversees enforcement for the underground injection control program under the Safe Drinking Water Act in the Rocky Mountain region. The investigation “could certainly have a focusing effect on a lot of folks in the Pavillion area as a nexus between hydraulic fracturing and water contamination.”

The Superfund investigation follows a series of complaints by residents in the Pavillion area, some stemming back 15 years, that their water wells turned sour and reeked of fuel vapors shortly after drilling took place nearby. Several of those residents shared their stories with ProPublica, while other information was found through court and local records. Several years ago a one resident’s animals went blind and died after drinking from a well. In two current cases, a resident’s well water shows small pooling oil slicks on the surface, and a woman is coping with a mysterious nervous system disorder: Her family blames arsenic and metals found in her water. In two of those cases the Canadian drilling company Encana, which bought most of the area’s wells after they were drilled and assumed liability for them, is either supplying fresh drinking water to the residents or has purchased the land. In the third case a drilling company bought by Encana, Tom Brown Inc, had previously reached an out-of-court settlement to provide water filtering.

Though the drilling companies have repeatedly compensated residents with the worst cases of contamination, they have not acknowledged any fault in causing the pollution. An Encana spokesman, Doug Hock, told ProPublica the company wants “to better understand the science and the source of the compounds” found in the water near Pavillion before he would speculate on whether the company was responsible.

Precise details about the nature and cause of the contamination, as well as the extent of the plume running in the aquifer beneath this region 150 miles east of Jackson Hole, have been difficult for scientists to collect. That’s in part because the identity of the chemicals used by the gas industry for drilling and fracturing are protected as trade secrets, and because the EPA, based on an exemption passed under the 2005 Energy Policy Act, does not have authority to investigate the fracturing process under the Safe Drinking Water Act. Using the Superfund program gave the agency extra authority to investigate the Pavillion reports, including the right to subpoena the secret information if it needs to. It also unlocked funding to pay for the research.

EPA officials have repeatedly said that disclosure of the fluids used in fracking — something that would be required if the bill being debated in Congress were passed — would enable them to investigate contamination incidents faster, more conclusively and for less money. The current study, which is expected to end next spring, has already cost $130,000.

About 65 people, many in jeans, boots and 10-gallon hats, filled Pavillion’s community hall on Aug. 11 to hear the EPA’s findings. They were told that a range of contaminants, including arsenic, copper, vanadium and methane gas were found in the water. Many of these substances are found in various fluids used at drilling sites.

Of particular concern were compounds called adamantanes, a natural hydrocarbon found in gas that can be used to fingerprint its origin, and 2-BE, listed as a common fracturing fluid in the EPA’s 2004 research report on hydraulic fracturing. That compound, which EPA scientists in Wyoming said they identified with 97 percent certainty, was suspected by some environmental groups in a 2004 drilling-related contamination case in Colorado, also involving Encana.

EPA investigators explained that because they had no idea what to test for, they were relegated to an exhaustive process of scanning water samples for spikes in unidentified compounds and then running those compounds like fingerprints through a criminal database for matches against a vast library of unregulated and understudied substances. That is how they found the adamantanes and 2-BE.

An Encana representative told the crowd the company was as concerned as they were about the contamination and pledged to help the EPA in its investigation.

Some people seemed confounded by what they were hearing.

“How in god’s name can the oil industry dump sh*t in our drinking water and not tell us what it is?” shouted Alan Hofer, who lives near the center of the sites being investigated by the EPA.

“If they’d tell us what they were using then you could go out and test for things and it would make it a lot easier right?” asked Jim Van Dorn, who represents Wyoming Rural Water, a non-profit that advises utilities and private well owners on water management.

“Exactly,” said Luke Chavez, the EPA’s chief Superfund investigator on the project. “That’s our idea too.”

Now that the EPA has found a chemical used in fracturing fluids in Pavillion’s drinking water, Chavez said the next step in the research is to ask Encana for a list of the chemicals it uses and then do more sampling using that list. (An Encana spokesman told ProPublica the company will supply any information that the EPA requires.) The EPA is also working with area health departments, a toxicologist and a representative from the Centers for Disease Control’s Agency for Toxic Substances and Disease Registry to assess health risks, he said.

Depending on what they find, the investigation in Wyoming could have broad implications. Before hydraulic fracturing was exempted from the Safe Drinking Water Act in 2005, the EPA assessed the process and concluded it did not pose a threat to drinking water. That study, however, did not involve field research or water testing and has been criticized as incomplete. This spring, EPA administrator Lisa Jackson called some of the contamination reports “startling” and told members of Congress that it is time to take another look. The Pavillion investigation, according to Chavez, is just that.

“If there is a problem, maybe we don’t have the tools, or the laws, to deal with it,” Chavez said. “That’s one of the things that could come out of this process.”

Reprint courtesy ProPublica.org.

To supporters, the “cash for clunkers” program miraculously jolted the moribund car market back to life, engendering hopes that it might help revive the broader U.S. economy.

Skeptics saw it differently: The automotive industry had hijacked an environmental bill and turned it into a bailout for itself with the help of the Obama administration and a Congress besotted with wishful thinking and a hair-trigger for stimulus spending.

Both views may turn out to be correct. But one thing is certain. The sight of car buyers back in showrooms these past two weeks has raised hopes that U.S. consumers are ready, primed by government stimulus, to spend again. Those hopes gained momentum by the release Friday (8/7) of employment data showing a reduced pace of job losses in the overall economy.

The idea, in concept, anyway, was simple: Bring in a clunker – a used car with lousy mileage – and collect up to $4,500 in government money against the purchase of a new car with a government-approved mileage level. The clunker, or more properly, its engine, is destroyed. Pollution and oil imports go down by at least some amount, not just this year but by many years into the future – because many of the clunkers otherwise would have remained on the road. And inventories of new cars are cleared from dealers’ lots, allowing dormant factories to restart. Some dealers are even saying  that potential buyers whose used cars don’t turn out to qualify for the program are ending up taking a more normal trade-in and buying a new car anyway.

Questions, of course, remain. Having been broadly revamped at the behest of the powerful National Automobile Dealers Association (NADA), will the program deliver, along with economic stimulus, a meaningful increase in the fuel efficiency of America’s automotive fleet? How necessary was the $2 billion expansion of the original $1 billion program that Congress passed with stunning speed last week? And what about the increasingly frustrating paucity of believable, well-sourced data about the program?

“I am completely infuriated by the lack of information,” said Therese Langer, director of the transportation program at the American Council for an Energy-Efficient Economy, a nonprofit research organization promoting energy security and environmental protection. “We asked for the transaction-by-transaction data, but (the Transportation Department) refused to give it.”

By knowing the mileage rating of the turned-in clunkers and the mileage rating of the new cars bought to replace them, analysts can get a better idea of the actual gas savings likely to be realized. The Transportation Department is releasing those numbers in summary form, but not the raw data that analysts like Langer seek.

“All of this information is being gathered and will be made public as soon as it’s available,” said Eric Bolton, a press officer for the National Highway Traffic Safety Administration (NHTSA), which is managing the clunkers program.

The problem, added NHTSA spokesman Rae Tyson, is that the rebate vouchers the agency had received as of last Friday contain personal information that must be redacted before the data can made public.

“It will happen, we just don’t know when,” Tyson said.

A brief timeline underscores the rapid pace of developments.

In January, Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, joined by Democratic Sen. Chuck Schumer of New York, introduced a bill to fund a national program to stimulate the economy and get gas-guzzling vehicles off the roads. Similar programs had been successful in several states and countries.

The auto industry opposed the bill’s tight fuel-efficiency standards. But instead of simply resisting the measure, NADA, a key lobbying group, seized the idea and converted it to its own purposes. In June, the House approved an industry-backed bill with looser fuel-efficiency standards. A similar industry-backed bill was introduced in the Senate.

Under the Feinstein bill, consumers would receive $4,500 only if they purchased a passenger car with a fuel efficiency rating of at least 13 miles per gallon higher than the clunker they were dropping off. In the bill passed by the House, the rating difference was lowered to 10 miles per gallon or more.

That NADA could bring off this change is no surprise. Its enormous clout begins with its universality – there are car dealers in nearly every House district. The association made more than $7.5 million in campaign contributions to House members in the past six years and $773,000 to senators, according to data compiled by the Center for Responsive Politics. Separately, it spent almost $3.2 million on lobbying in 2008 alone, according to a database maintained by the U.S. Senate.

At first, the environmental proponents behind the original version were outraged. “The truth is, the House bill and its Senate counterpart are another big bailout,” Feinstein and Collins wrote in an opinion piece called “Handouts for Hummers,” published by the Wall Street Journal. “These bills are expertly designed to provide Detroit one last windfall in selling off gas guzzlers currently sitting on dealer lots because they’re not a smart buy.”

The bottom line, they argued, “is that fuel-efficient vehicles should be the main focus of any ‘cash for clunkers’ bill.”

But the competing legislation never went before the Senate for a vote. Instead, the industry-backed version was slipped into a completely unrelated war-spending bill that Congress approved on June 18.

Moreover, even Feinstein and Collins acquiesced after getting an oral commitment from Senate Majority Leader Harry Reid, D-Nev., that the Senate would consider increasing the bill’s fuel efficiency standards if more money was needed for the program, according to Senate sources.

Thirteen days later, on July 1, the industry-backed version of the legislation became law with the formal name of the Car Allowance Rebate System, or CARS, and the weaker fuel efficiency standards. The $1 billion program was expected to provide rebates of up to $4,500 each for 250,000 auto sales.

For the next 24 days, the Department of Transportation hammered out the program’s rules as sales-starved dealers around the country began lining up deals.

The Transportation Department completed the rules and waved the green flag to start the program on July 24. Dealers across the country immediately began promoting the program and making deals.

Six days later, on July 30, trade publications reported that the money was running out. Unattributed reports said Transportation Secretary Ray LaHood would suspend the program at midnight for lack of funds.

The LaHood reports proved erroneous, but the media that evening began a brief shift in attention away from the health care debate to the delicious story of cash for clunkers, a government program that was so successful it had burned through $1 billion in stimulus funds within days.

The news reports were based on NADA’s spot survey of dealers, which estimated that 250,000 clunker sales already had been completed or were in the pipeline less than a week after the program began. Nobody, including the NADA and its dealers, was prepared for the popularity of the program.

Just 24 hours after the first press reports that the program was running out of money, the House hastily approved a $2 billion extension designed to underwrite 500,000 more sales. The money was taken from a renewable energy loan program.

Last Monday, after a briefing by the Transportation Department, Feinstein and Collins reversed themselves and agreed to support the $2 billion extension of the program, even with its lower industry-favored fuel-efficiency standards.

“The original intent of the clunkers program was to encourage people to buy more fuel-efficient vehicles, and the data so far tells us that’s exactly what’s happening,” Feinstein said. “So, I believe the right decision at this time is that the program should be extended.”

Environmental groups such as the American Council for an Energy-Efficient Economy also ended up backing the additional money for the program.

The Obama administration, waging a full-court press, clearly was gaining support for the costly extension of the rebate program through the week, despite some Republican opposition. On Thursday, the Senate approved the $2 billion extension. A week after the media frenzy about the program had erupted, the Senate forwarded the legislation to a president eager to sign it into law.

Calling it a “proven success,” President Obama responded to the news with a statement claiming that the program is “getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good,” and “businesses across the country—from small auto dealerships and suppliers to large auto manufacturers – are getting people back to work as a result of this program.”

Ultimately, the nation will have to wait months or even years to find out whether government got it right this time.

Has the program actually revived the traditional “animal spirits” among American car buyers, and jump-started an economy that needed a jolt, or has it simply borrowed sales that would have been made by this fall anyway? How truly clunky are the clunkers destroyed by the program, and how much better are the mileage ratings of their replacements. How much will gasoline use be reduced after a year, five years, 10 years?

Meanwhile, the nation’s new-car showrooms, for the first time in a long time, are buoyant and busy, despite some severe computer glitches during the first week of the program that delayed rebates and soured some dealers.

Sales employees at Shottenkirk Chevrolet in Quincy, Ill., appear pleased overall with the cash for clunkers program, even though it took them as long as 10 hours to log one deal on the government computer system at one point.

“Everyone is running out of cars,” Rich Poe, the dealership’s general manager, told the Quincy Herald-Whig. “Ultimately, the program has done what it was designed to do—sell more cars and get better gas-mileage cars on the road.”

The incident is the latest in a string of more than 50 similar cases related to gas drilling in the state, and comes as ProPublica published an article last week reporting that such events were more frequent than officials said.

According to the Department of Environmental Protection, at least four homes in the rural north-central part of Lycoming County are now being supplied with drinking water and 18 are having their water tested or their homes monitored for gas while the investigation continues. At least one woman was temporarily evacuated from her home last week as a precaution, according to Robert Yowell, north-central regional director for the DEP’s oil and gas bureau.

Officials suspect that a well casing on one of three natural gas wells drilled by East Resources failed, allowing the gas to migrate into the ground and the streams, according to Yowell and a statement e-mailed to ProPublica from DEP headquarters. The wells were drilled into the Oriskany geologic formation, not the Marcellus shale, where much of the state’s new development is targeted. The department is analyzing water and gas samples and has promised to post the results on the DEP Web site by the end of the week.

The well casing consists of several layers of steel pipe and concrete that surround a well structure and is intended to protect groundwater supplies from the gas and drilling fluids inside of the well. Unlike many other gas drilling states, Pennsylvania doesn’t have regulations that require this concrete and casing be tested to confirm its strength.

East Resources referred questions to its general counsel who was not immediately available for comment.

According to Yowell, the company has temporarily shut down the suspected problem well by filling it with drilling mud, a slurry of the waste produced from the drilling of the well hole, and has been working to reduce pent-up pressure inside its wells that could be forcing stray gas out of cracks in the casing. To release that pressure, East Resources flared — or burned off gas — from two of the suspected wells.

“It looked like the sky was on fire,” said Margaret Yaggie, a Roaring Branch resident who can sit on her porch and see the East Resources wells a few miles away. Yaggie said the flames stretched hundreds of feet and carried fumes and smoke. “It’s above the trees, on the side of a mountain. It looks like hell.”

It appears the measures have been effective in slowing the gas leak.

“One well that was suspect has been plugged and killed,” Yowell said, adding that the plugging dramatically reduced pressure. “The readings (of methane) around the stream have gone down. We believe things are getting under control but [they're] certainly not abated yet.”

Though Pennsylvania has more gas wells than any state other than Texas, Lycoming County hasn’t seen such development until recently. According to Yowell, who only began to oversee oil and gas operations in April when the state established a regional headquarters to handle the rush to drill, the Roaring Branch contamination is the first of its kind in the area.

In a weekend article in the Wayne Independent, a local newspaper, East Resources spokesperson Douglas Mehan — who later referred ProPublica’s questions to the company’s attorney — was quoted as saying “the gut feeling of everybody is that this is very, very rare — a unique incident.”

ProPublica has documented a series of cases in seven other Pennsylvania counties and across the nation in which methane has leaked from natural gas drilling operations. On Friday ProPublica published an article challenging Pennsylvania officials’ claims that such cases were “an anomaly,” noting that the state has hired a full-time inspector dedicated to stray gas problems and has recorded at least 52 cases similar to the one in Lycoming County. In several instances houses exploded as a result of the gas leaks. In one case, three people were killed.

Asked whether these cases constituted a pattern, the Department of Environmental Protection official who first described methane contamination as an anomaly, Craig Lobins, told ProPublica that the number of safely drilled wells in Pennsylvania far outweigh those that cause problems. “We are just dealing with a very small percentage,” he said.

When methane began bubbling out of kitchen taps near a gas drilling site in Pennsylvania last winter, a state regulator described the problem as “an anomaly.” But at the time he made that statement to ProPublica, that same official was investigating a similar case affecting more than a dozen homes near gas wells halfway across the state.

In fact, methane related to the natural gas industry has contaminated water wells in at least seven Pennsylvania counties since 2004 and is common enough that the state hired a full-time inspector dedicated to the issue in 2006. In one case, methane was detected in water sampled over 15 square miles. In another, a methane leak led to an explosion that killed a couple and their 17-month-old grandson.

Methane is the largest component of natural gas. Since it evaporates out of drinking water, it is not considered toxic, but in the air it can lead to explosions. When methane is found in water supplies, it can also signal that deeply drilled gas wells are linked with drinking water systems.

In many cases the methane seepage comes from thousands of old abandoned gas wells that riddle Pennsylvania’s geology, state inspectors say. But other cases, including several this year and the 2004 disaster that left three people dead, were linked to problems with newly drilled, active natural gas wells.

The issue came to the forefront in January when methane was found in the water at 16 homes in the small town of Dimock, in northeastern Pennsylvania. State officials cited Cabot Oil & Gas for several violations they say allowed the gas to seep out of the well structures and into water supplies there. The Department of Environmental Protection asked the company to encase its lower well pipes completely in concrete — a process known in the industry as “cementing” — and assured the public that the contamination in Dimock was rare.

But according to a department spokeswoman, there have been at least 52 separate cases of what the state calls “methane migration” in the past five years. In two of the 2009 cases, regulators responded to complaints from more than 32 households and asked gas companies to supply clean water to at least a dozen homes with contaminated wells.

An undated report from the Pittsburgh Geological Society posted to the DEP’s Web site makes it clear that old wells and new drilling can lead to stray gas problems. “Although it rarely makes headlines,” the report reads, “damage or threats caused by gas migration is a common problem in Western Pennsylvania.”

Craig Lobins, the DEP regional oil and gas manager who initially described the Dimock case as an anomaly in interviews with ProPublica, said he still believes the frequency of contamination incidents is statistically insignificant.

Records show there are roughly 58,000 active gas wells in Pennsylvania. “We are just dealing with a very small percentage,” he said in a follow-up interview.

The case Lobins was investigating at the same time as the Dimock case concerned a string of problems in Bradford, a rural town 200 miles west of Dimock along the state’s northern border. Shortly after a contractor for Schreiner Oil and Gas drilled several dozen wells in the area last spring, residents began complaining of murky and foul-smelling tap water. When the DEP investigated, it found methane in three water wells and metals in six others. It asked Schreiner to supply water to eight homes, and the company has begun installing water treatment systems at each house. While no new gas wells have been drilled in the Bradford area, according to the DEP, the existing ones continue to operate.

Michael Schreiner, Schreiner’s president, declined to comment for this article.

Lobins said the problems in Bradford — as in many of the contamination cases across the state — stem from a bad cementing job around the core of the well. In most gas drilling, the well pipe is encased in layers of concrete to keep it isolated from surrounding groundwater. The concrete also contains the enormous pressure exerted on the system during the process of hydraulic fracturing, which pumps water, sand and chemicals to the well bottom to break up rock.

In Bradford, Lobins said, concrete was poured into the space around the wells but never filled the space — a sign of a possible leak. Because Pennsylvania does not have regulations that require inspections or testing of the concrete casing, the state didn’t notice the problem until methane began showing up in water wells. By then, the suspected concrete error had been repeated in as many as 27 different places, Lobins said.

Controlling the quality of cementing and well casing is widely viewed as the most important factor in protecting water supplies and ensuring the integrity of a well. A recent federally funded study of state regulations across the country (PDF), published by the Ground Water Protection Council, a consortium of state oil and gas regulators, industry representatives, and some environmental consultants, said that proper concrete casing is critical to environmental protection. While 96 percent of states, including Pennsylvania, have standards specifying that concrete be used to protect aquifers, the report found that one in five, also including Pennsylvania, do not require testing to confirm that the concrete used is strong enough for the job. That means that until water problems arose as a result of the casing problems in Bradford, the state had little recourse.

“What they are doing is not a violation until the gas is leaving the borehole,” Lobins said. “We don’t know that until it manifests itself somewhere else.”

Lobins said the state is reviewing its regulations and that changes are planned to address both well casing and methane migration issues. But when asked what specific changes were being discussed, Lobins said he did not know. Similar questions went unanswered by Ron Gilius, the DEP’s oil and gas director, after they were submitted by ProPublica both in interviews and in writing.

For their part, Bradford residents were surprised to learn that their problems were not unique.

“They didn’t say that there were other problems similar to this,” said Lori Trumbull, who complained about her water but later found that it was OK. “They said that the odds of having water contamination from drilling operations is very rare.”

Fred Baldassare, the state’s dedicated methane migration investigator, said he has investigated water contaminated with drilling-related methane in numerous places across the state in recent years. In Bridgeville, two homes exploded when a well casing failed and methane seeped into their basements, he said. In Dayton, he said, residents were evacuated after a well casing failed and methane migrated into an adjacent abandoned well, blowing out its casing and travelling a third of a mile underground.

In Vandergrift, drillers stumbled across an old gas well that no one knew was there. Baldassare said that when the new well was hydraulically fractured, the intense pressure forced gas into the adjacent wells. It then percolated up through water and mud until it surfaced just feet from homes in a heavily populated neighborhood.

The most tragic Pennsylvania methane case began on March 5, 2004, in Jefferson County, about 80 miles northeast of Pittsburgh. According to Baldassare, gas seeped into the home of 64-year-old Charles Harper and his 53-year-old wife, Dorothy, from one of several adjacent wells being drilled by Snyder Brothers. The gas collected until it exploded and, according to court records and news reports at the time, reduced the home to “a pile of rubble.” Debris was found across the road, and insulation hung from trees 30 feet in the air. The bodies of the Harpers and their grandson, Baelee, were found buried in the debris.

Executives from Snyder Brothers did not return calls for comment. The company was sued in state court in Jefferson County and reached an undisclosed settlement with the Harper family.

State officials traced the methane’s geochemical fingerprint and determined it had come from one of three Snyder wells nearby. The investigation, however, remains open in part because Snyder has yet to comply with state orders to conduct pressure tests on the wells — orders delivered in 2005, according to Baldassare. But that doesn’t mean state officials aren’t sure about what happened.

According to Baldassare, the Snyder methane caused the explosion.

“In my view,” he said, “there was no uncertainty.”

Timothy Wirth.They were tough words for the natural gas industry to hear. In a blunt speech before the Colorado Oil and Gas Association last week, Timothy Wirth, a former Colorado Democratic senator and Under Secretary of State for global affairs in the Clinton administration, warned industry leaders that they need to pay attention to the environmental and climate concerns that are shaping national policy, or risk being left behind.

Wirth took the industry to task for not engaging in the climate legislation being debated in Congress — a bill he said every other energy industry was deeply involved in — and for fighting the changes taking place in energy policy rather than participating and seeking fresh opportunities.

Wirth, who today is president of Ted Turner’s United Nations Foundation, is no enemy of the oil and gas industry. He described clean-burning natural gas as the single most important component of a new energy supply chain that can help cut greenhouse gas emissions, and he said the use of the nation’s bountiful natural gas reserves is essential to curbing climate change. But he also said the industry is preoccupied with the wrong priorities and is off message.

“The time has come for the natural gas industry to get organized, take the gloves off, and get thoroughly engaged in helping our country advance rapidly toward a low-carbon economy,” Wirth said.

In his speech he offered some advice: The industry should identify its key priorities, work to get its regulatory house in order and recognize the big picture rather than complain about details in legislation like the climate bill.

“What are the options?” he asked the industry executives in a question and answer session after his speech. “You can stay where you are today. … Your industry is going to continue to wallow. That’s your own choice.”

Read the text of the speech [PDF], or watch it.

Reprinted courtesy of ProPublica.

This story was written by ProPublica’s Adam Lustgarten.

The two key arguments that the oil and gas industry is using to fight federal regulation of the natural gas drilling process called hydraulic fracturing — that the costs would cripple their business and that state regulations are already strong — are challenged by the same data and reports the industry is using to bolster its position.

One widely-referenced study (PDF) estimated that complying with regulations would cost the oil and gas industry more than $100,000 per gas well. But the figures are based on 10-year-old estimates and list expensive procedures that aren’t mentioned in the proposed regulations.

Another report (PDF) concluded that state regulations for drilling, including fracturing, “are adequately designed to directly protect water.” But the report reveals that only four states require regulatory approval before hydraulic fracturing begins. It also outlines how requirements for encasing wells in cement — a practice the author has said is critical to containing hydraulic fracturing fluids and protecting water — varies from state to state.

One recommendation in that report flies in face of industry’s assertion that its processes are safe: hydraulic fracturing needs more study and should be banned in certain cases near sensitive water supplies.

Hydraulic fracturing — where water and sand laced with chemicals is injected underground to break up rock — is considered essential to harvesting deeply buried gas reserves that some predict could meet U.S. demand for 116 years.

In 2005 hydraulic fracturing was exempted from the Safe Drinking Water Act, based on assurances that the process was safe. But a series of ProPublica reports has identified a number of cases in which water has been contaminated in drilling areas across the country, and EPA scientists say they can’t fully investigate them because of the exemption.

Now, Congress is considering legislation to restore the Environmental Protection Agency’s oversight of the process. And industry — leveraging its money and political connections — is using the recent reports to fight back.

Since January at least five studies have been published making the case that state laws (PDF) are adequate and that new regulations could hamper exploration (PDF), raise fuel prices and eliminate jobs. Three of the studies were paid for by the Department of Energy and produced by consulting firms that also work with the industry. One of the DOE reports (PDF) was written by the same person who authored a study for the Independent Petroleum Association of America (PDF)

The industry argues (PDF) that federal oversight would amount to a redundant layer of bureaucracy that is not needed because states already require the same environmental safeguards that might be required by the EPA, and that those safeguards are effective.

“We don’t think the system is broke, so we question the value of trying to fix it with a federal solution,” Richard Ranger, a senior policy analyst at the American Petroleum Institute, told ProPublica in May. “So proceed with caution if you are going to proceed with regulating this business because it could make a very significant difference in delivering a fuel that is fundamental to economic health.”

How Many Natural Gas Wells Does Your State Have?ProPublicaIndustry reports say that if federal regulations are applied to hydraulic fracturing, more than a third of onshore gas wells would be closed and oil and gas companies would spend $10 billion complying with the law in its first year. The federal government would lose some $1.2 billion in revenue.

But advocates for the federal legislation say the industry is misleading the public into a false choice between the economy and the environment.

“We are all for using science-based information,” said Amy Mall, a senior policy analyst for the Natural Resources Defense Council. “But the underlying information doesn’t really tell the story they claim it does.”

Nonetheless, the arguments have gained traction in Congress and have eroded support for new regulation.

Rep. Dan Boren, D-Okla., told his fellow members in a recent hearing that “these folks are laying people off — people are hurting in my district.” Rep. John Salazar, D-Colo., who sponsored legislation to regulate fracturing in 2008, but declined to add his name to this year’s bill, told ProPublica that “developers may have legitimate concerns about the impact that removing the exemption may have on their ability to find and extract oil and gas.”

To keep the legislation alive, Diana DeGette, D-Colo., its main sponsor, has shifted gears to seek environmental studies and hearings rather than a quick passage into law.

“The opposition has been throwing out scare tactics and mischaracterizations of what she is trying to do,” said DeGette’s spokesman, Kristofer Eisenla. “Unfortunately the oil and gas guys came out of the barn storming.”

Fuzzy Numbers

The study that has received the most publicity (PDF) is also among the most misleading.

The report, which evaluates the costs of regulations for the oil and gas industry, was written for the Department of Energy by a consulting company also used by the energy industry, Advanced Resources International, or ARI. It contains a table (PDF) listing seven specific processes it says would be mandated under the proposed federal regulations, and what those processes would cost — a total of $100,505 per well. Among the listed items is “state of the art” fracture imaging, at a per-well average cost of $37,500, and three-dimensional fracture simulation, at a cost of $7,500.

But a footnote reveals that these figures are based on memo sent to a DOE official by another consulting firm in 1999. The report’s author said they haven’t been updated to reflect technological advances or substantial shifts in the drilling business over the last decade.

Furthermore, none of the tests listed in the table are mentioned in the text of Safe Drinking Water Act, the federal law that would apply to hydraulic fracturing, according to an EPA spokesperson in Washington. And they aren’t mentioned in the bill being floated in Congress either.

“It’s a sense of magnitude of the impacts, not a sense of absolute accuracy,” said Michael Godec, Vice President of ARI and author of the report. The regulatory requirements were interpolated on a “bad-case” scenario, he explained, because the federal laws are not specific. “We took some liberties. You have to make some assumptions about what might be required.”

One of the industry reports raises serious questions about the construction of the pits used to store toxic drilling waste and what happens when dangerous fluids are spilled.ProPublicaGodec believes that many of the processes listed in the report are already being practiced to a greater degree than they were in 1999, meaning that even if they were required they may not be additional burdens at all. But he said that anecdotal conversations with drilling companies confirm that the report’s conclusions are still “about right.”

Godec said he did not obtain recent cost figures from drilling companies, which are closely guarded. Halliburton — one of the largest hydraulic fracturing service providers — did not return calls from ProPublica for comment about the expense of the procedures listed.

Asked whether the age of the data was a concern, Godec said it had been discussed with Nancy Johnson, the DOE official who commissioned the report. He said he was instructed that the report was needed quickly, that the budget was limited and that he should move forward because “this is a hot topic and people are testifying.”

Nancy Johnson did not return calls for comment and the Department of Energy’s office of fossil energy did not make its officials available for an interview after repeated requests. It said, through a spokesperson, that the Department did not author the report.

Godec also produced a similar report on costs and state gas regulations for the Independent Petroleum Association of America that was published in late April. Titled “Bringing Real Information on Energy Forward,” (PDF) that report also makes the case that state regulations of drilling practices are effective. Godec says his company’s work is impartial and his conclusions would have been the same whether he was contracted by the oil and gas industry, or the federal government.

Even if the costs Godec laid out in the DOE report were up-to-date and accurate, it’s doubtful they would have the devastating financial impact the industry claims.

The estimated expense of regulating hydraulic fracturing amounts to between one and three percent of the total cost of drilling a new well when factored into operating costs estimated by financial analysts at Deutsche Bank. If all the testing that Godec includes is factored out, the regulations would cost the industry just $4,500 per well, according to his report, or just six hundredths of a percent of the cost of establishing a typical new well.

“I think at the end of the day it’s unlikely to have a real huge impact,”says John Freeman, a senior vice president for energy equity research at the investment bank Raymond James. “It’s a lot of fuzzy stuff that I can’t get my hands around. This just seems to be more of a soft number that I frankly have more of a hard time connecting the dots on.”

State Regulations Leave Gaps

In May the Ground Water Protection Council, a group made up mostly of industry representatives and state oil and gas regulators, released the first comprehensive review (PDF) of oil and gas regulations across 27 of 31 drilling states it surveyed. The report, paid for by the DOE, concluded that most states have requirements to encase wells in cement and protect groundwater, and that a majority also require they be notified after hydraulic fracturing takes place.

“The study confirms what the industry has been saying (PDF): that regulation of oil and gas field activities, including hydraulic fracturing, is best accomplished at the state level,” the American Petroleum Institute said a press release about the study.

But the GWPC report — which focuses on what regulations are in place, rather than what may be missing — raises important points that are downplayed in its summary. It reveals that regulatory oversight is inconsistent from state to state and has substantial gaps. It also says hydraulic fracturing requires “comprehensive” further study “to determine the relative risk” and to determine best practices.

In fact, the report calls for some of same measures found in the congressional bill the industry is so hotly contesting.

See Where States Fall on Oil and Gas RegulationProPublicaRegarding fracturing in areas close to the surface or near shallow aquifers, the report reads: “States should consider requiring companies to submit a list of additives used in formation fracturing and their concentration.” It also says that shallow fracturing very close to certain drinking water aquifers “should either be stopped, or restricted to the use of materials that do not pose a risk of endangering ground water and do not have the potential to cause human health effects.”

A close examination of the appendices (PDF) attached to the research also showed that 21 of the 31 states listed do not have any specific regulation addressing hydraulic fracturing; 17 states do not require companies to list the chemicals they put in the ground; and no state requires companies to track how much drilling fluid they pump into or remove from the earth — crucial data for determining what portion of chemicals has been discarded underground.

“The tone is that in general states do an adequate job of protecting water,” said Michael Nickolaus, the report’s author, special projects director for the GWPC and former director of Indiana’s state Oil and Gas Division. “There are certain gaps in certain states … it’s not a hundred percent world.”

The GWPC report does not name the states that lack more stringent regulations, a detail that is important because one or two states can account for a large proportion of the drilling in the United States. To extract that information from the report would require analyzing all the state regulations included in the appendices (PDF) and repeating much of the GWPC’s original research. Nickolaus also declined to name the states in an interview with ProPublica, saying that the GWPC was obliged to protect its members.

Nickolaus says well construction — especially the cementing process that keeps drilling fluids and gas from seeping into groundwater — is more important than the fracturing issue. But according to the report, state regulations about cementing are sometimes vague and often don’t specify standards that makes the protection fool-proof.

While most states have regulations that protect drinking water near the surface, a third don’t require that the cement casing extends far enough to completely isolate wells from geologic layers and the deepest aquifers, according to the report. Twenty-two percent don’t require the cement to harden before the well is used for fracturing, and don’t test cement quality and consistency — one of the surest ways to protect against contamination.

Reprinted courtesy ProPublica.org.

The Obama administration’s nomination of Ignacia Moreno to head the environment division of the Department of Justice is moving quietly through the confirmation process, with hearings expected to begin in the next few weeks. Moreno has worked for the environment division before, during the Clinton administration. But her most recent job — as environmental counsel for General Electric — has raised eyebrows among Environmental Protection Agency attorneys. Before Moreno worked for GE, she spent five years defending other companies in pollution-related lawsuits.

Six EPA attorneys interviewed by ProPublica criticized the nomination, but asked that their names not be used in this story because they fear retribution. They said they doubt that anyone who has recently defended GE would be effective in the role.

For decades, the EPA has clashed with GE over the many toxic waste sites the company has been linked to through the Superfund program. For the past two years, Moreno has defended GE in some of these cases. Now, if her nomination is confirmed, she will be one of the government’s top enforcement lawyers for the Superfund program and other environmental laws.

In 1994, President Bill Clinton appointed Moreno to be special assistant to Lois Schiffer, who then held the position that Moreno has been nominated for. In 1996, Moreno became principal counsel to Schiffer, who supports her nomination and told ProPublica that Moreno played an important role in dozens of environmental enforcement cases.

The EPA attorneys, however, argue that the job should not be filled by a lawyer who was comfortable defending the polluters that she would now have to prosecute.

In an e-mail to ProPublica, Moreno said she is not doing press interviews.

In a response to a questionnaire she recently filled out for the Senate Judiciary Committee (PDF), which will hold her nomination hearings, Moreno said she would  recuse herself from any case involving GE for the first two years of her tenure. The questionnaire also provides details about what she considers to be her most significant legal activities. She mentioned some of the cases she worked on at the Justice Department, including her assistance in mitigating cross-border pollution between Mexico and the United States. Only one of the legal activities listed in that section actually involved prosecuting polluters.

The questionnaire also lists civil rights cases Moreno worked on, including one in which she represented Mexican immigrants who sued their employer for unfair labor practices, and another in which she represented African-American female employees in a discrimination case against the National Archives.

Several attorneys outside of the EPA who are familiar with Moreno’s career say her work on behalf of polluters doesn’t mean that she won’t make a strong enforcement lawyer. In fact, some argued that it might make her a better prosecutor.

Michael Steinberg, an attorney for Morgan, Lewis & Bockius, represents alleged polluters in Superfund cases and once worked for the Justice Department’s environment division.

“I think if you ask people that I worked with then, they will tell you I was extremely effective in litigating against the industry,” Steinberg said. “I expect nothing less from Ignacia. She’s a professional, and that’s what professionals do.”

When Moreno’s nomination was announced in mid-May, she was actively defending GE against charges brought by the very division of the Justice Department that she has been appointed to lead.

In court documents filed in that case, the EPA said that GE owes the federal government nearly $10 million for the government’s cleanup of 800 barrels of toxic waste that GE improperly disposed of at a Superfund site in New Hampshire.

GE, with the help of Moreno (PDF), argued that it was not responsible for the Superfund site because it thought it had sold the waste to a company that was going to reuse it to make paint. GE said it didn’t know that the waste was instead being dumped, according to court filings (PDF).

“Nothing is ever cut and dried with a GE site,” said RuthAnn Sherman, an EPA enforcement attorney working on that case. “They aggressively pursue every possible avenue and appeal everything.”

A federal judge ruled against GE, but the company is now challenging the costs of the cleanup, Sherman said. Moreno withdrew (PDF) from the case a week after her nomination was announced.

For the past nine years, GE has been locked in an even bigger court battle with the EPA and the Justice Department. GE argues that the part of the Superfund law that gives the EPA authority to force polluters to clean up their toxic waste is unconstitutional because it violates alleged polluters’ right to due process. In legal filings, GE also argued that cleanup orders have an automatically negative impact on the company’s brand name and financial status.

The company has been linked to 116 Superfund sites, according to a report by the Center for Public Integrity, an investigative journalism organization based in Washington, D.C. The only company in the report that was linked to more sites was Honeywell, with 128. Forbes magazine ranks GE as one of the largest companies in the world.

In a recent ruling in the case, a federal judge affirmed the constitutionality of the Superfund program. GE appealed (PDF) that ruling in March.

It’s unclear how close Moreno was to the constitutionality case, or if she worked on it at all, because her name doesn’t appear in any of the legal filings. Peter O’Toole, a GE spokesman, would not comment on Moreno’s involvement in that case or on the status of any of GE’s other ongoing cases.

“The absence of her name [from court filings] doesn’t mean she did not work on the case,” said Stephen Gillers, a legal ethics professor at New York University’s law school. If she did work on it, Gillers said, strict conflict-of-interest rules for attorneys would prevent her from ever taking any position against her former client on the case, or on any other case that she was directly involved in.

Gillers added that if she was involved in the constitutionality case, it would not affect her ability to enforce Superfund law and she would have no obligation to recuse herself from Superfund cases pursued by the Justice Department. Superfund enforcement cases represent about a quarter of the caseload of the Justice Department’s environmental enforcement section, according to an EPA attorney’s analysis.

National environmental and public interest groups haven’t taken a position for or against Moreno’s nomination. But smaller groups, especially those specifically concerned about pollution attributed to General Electric, worry that her ties to industry make her the wrong pick for the job. Alex Matthiessen, president of Riverkeeper, a nonprofit that focuses on the health of the Hudson River in New York, is concerned about what Moreno’s nomination will mean for the future of GE’s 197-mile Superfund site that runs along the bottom of the river from Hudson Falls, N.Y., to Manhattan. More than 30 years ago, GE dumped over a million pounds of polychlorinated biphenyls into the river from two General Electric factories. PCBs are a probable human carcinogen, according to the Centers for Disease Control and Prevention.

Last month, General Electric began dredging up 1.8 million cubic yards of contaminated soil from the river after negotiating a two-phase cleanup plan with the EPA. In the first phase, the company agreed to clean up 265,000 cubic yards of the sediment, about 15 percent of the total. This phase is expected to end in October, at which point a panel of experts will review the progress of the cleanup and determine whether changes are necessary.

The Justice Department would not comment on this story or provide details about how it would handle cases that Moreno had to recuse herself from.

Before Moreno was hired by GE, she worked for Spriggs & Hollingsworth, a law firm that provided outside counsel to GE on its constitutionality case.

At Spriggs & Hollingsworth, Moreno was part of a team of lawyers that helped defend DynCorp against charges from an Ecuadorean community that claims the defense contractor sprayed residents with a dangerous herbicide used to control the growth of coca along the Colombian border.

Brian Leinbach, one of the lawyers representing the Ecuadoreans, also faced Moreno in court in 2004, when she defended General Motors in a Superfund-related lawsuit. Court filings in that case show that a group of Indiana residents living near a GM facility said their health and property suffered from pollution allegedly created by the company. The residents were represented in part by Leinbach’s firm, Engstrom, Lipscomb & Lack.

“She has been one of the big players in defending large corporations against Superfund lawsuits,” Leinbach said. “She is going to have to change her focus 180 degrees,” he said, “but there is no reason to believe she is not capable of doing that.”

Reprinted courtesy ProPublica.org.

In a widely expected move that is sure to draw the ire of the oil and gas industry, Democratic members of Congress today introduced twin bills to amend the Safe Drinking Water Act and give the Environmental Protection Agency authority over the controversial drilling process called hydraulic fracturing.

The stand-alone bills in both the House (PDF) and the Senate (PDF) for the Fracturing Responsibility and Awareness of Chemicals Act — dubbed the FRAC Act (PDF) — would also require the energy industry to disclose the chemicals it mixes with the water and sand it pumps underground in the fracturing process, information that has largely been protected as trade secrets.

The House bill was introduced by Diana DeGette, D-Colo., Maurice Hinchey, D-N.Y., and Jared Polis, D-Colo., and will now be debated inside the House Natural Resources Committee. According to DeGette, the bill may proceed alone, or she could attach it to a larger piece of legislation.

“Frankly we are leaving all the options on the table for moving this bill forward,” DeGette said after hearings on the issue last week.

A matching Senate version was offered by Sen. Bob Casey, D-Pa., and Sen. Chuck Schumer, D-N.Y.

Hydraulic fracturing has attracted scrutiny in the past year after a series of reports by ProPublica found water contamination in areas across the country where drilling takes place. Because the fracturing process was exempted from federal water laws by the 2005 Energy Policy Act, scientists at the Environmental Protection Agency have said they can’t adequately investigate cases of pollution or determine whether fracturing might be to blame.

“Families, communities, and local governments are upset that the safety of their water has been compromised by a special interest exemption, and we join them in that frustration,” Polis said in an e-mail this morning. “The problem is not natural gas or even hydraulic fracturing itself. The problem is that dangerous chemicals are being injected into the earth, polluting our water sources, without any oversight whatsoever.”

The energy industry contends that the FRAC Act, which removes the Safe Drinking Water Act exemption, amounts to an additional layer of regulation that is unneeded and cumbersome. States do an adequate job of regulating hydraulic fracturing already, according to the Independent Petroleum Association of America, and industry research estimates that complying with federal oversight would add approximately $100,000 to the cost of each new natural gas well in the United States.

“Such action runs counter to the nation’s energy goals — increasing the supply of American oil and natural gas — by making it too costly to produce,” said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, in an e-mail. “Statements that hydraulic fracturing is unregulated are simply not true. It’s been regulated assiduously by the states for more than 50 years.”

It is unclear exactly how federal oversight would lead to mounting costs. EPA officials in Washington say the section of the Safe Drinking Water Act that governs the oil and gas industry allows for flexibility and already defers oversight of drilling to the states. According to the industry and a recent industry-affiliated study, most state programs already have regulations in place. In such cases, restoring the EPA’s authority could mean that the EPA approves ongoing state oversight and that little else would change.

Read the Bills: House | Senate.

Abrahm Lustgarten / ProPublica

ProPublica’s Abrahm Lustgarten reports:

In a packed and sometimes contentious hearing on Capitol Hill Thursday, representatives of the oil and gas industry and their state regulators vigorously defended the practice of injecting toxic fluids underground without federal regulatory oversight.

The House Energy and Minerals subcommittee called the hearing to explore the economic and environmental risks associated with the practice, called hydraulic fracturing, after a string of reports of water contamination related to drilling across the country were reported by ProPublica. Hydraulic fracturing is currently exempted from the Safe Drinking Water Act, but both the House and Senate are drawing up legislation that would close the Bush-era loophole and reinstate the Environmental Protection Agency’s authority over the fracturing process.

The House version of the bill, which would also require drilling companies to disclose the names and amounts of the chemicals they inject underground, is expected to be introduced Tuesday.

In the hearing, industry-affiliated groups and an executive of Chesapeake Energy told the committee (PDF) that state regulations of hydraulic fracturing are sufficient and effective and insisted that the fracturing process and the chemicals it uses are safe. They said regulating the process under the Safe Drinking Water Act would add a needless layer of regulation that would cost billions of dollars and thousands of jobs.

But a close reading of the law shows that the Safe Drinking Water Act already defers regulatory authority over oil and gas drilling to the states and that reversing the exemption in question would mainly provide a baseline for best practices and give the federal government authority to investigate contamination cases or disastrous accidents.

“I frankly think the oil and gas companies have been running a scare campaign,” Colo. Representative Diana DeGette, a co-sponsor of the bill along with Maurice Hinchey (D-NY) and Jared Polis (D-Co) , said after the hearing. “I don’t know if the oil and gas industry doesn’t understand the bill or if they are intentionally misrepresenting the bill.”

Much of the debate centered on issues unearthed in a series of articles by ProPublica, which has been investigating natural gas drilling for the past year. The articles focused on numerous cases of drilling-related water contamination that have been documented across the country. In most of those cases, scientists at the Environmental Protection Agency have said that their investigations were hampered because the drilling fluids are largely kept secret and because the agency does not have authority to investigate whether hydraulic fracturing was indeed the cause. In one case, in Ohio, hydraulic fracturing was listed as one of the main causes leading to contamination and an explosion that ruined a house.

Among those who testified at the hearing was Scott Kell (PDF), the oil and gas regulator for the state Ohio and president of the Ground Water Protection Council, whose members include both industry officials and state regulators.

Kell personally conducted the Ohio investigation that named hydraulic fracturing as a contributing factor in water contamination there, yet Kell repeated the industry position that there has never been a single case of contamination in which hydraulic fracturing was proven to be the cause. Kell also introduced letters from state regulators in Ohio, Pennsylvania, New Mexico, Alabama and Texas refuting ProPublica’s findings.

“The states have become aware of press reports and websites alleging that six states have documented over one thousand incidents of ground water contamination resulting from the practice of hydraulic fracturing,” Kell said. “Such reports are not accurate.”

In fact, ProPublica’s stories documented more than 1000 cases in which water was contaminated in the same places where fracturing takes place. In most of those cases the EPA said it was impossible to prove a link to fracturing because researchers don’t have access to the complete list of chemicals industry uses – without that list they say they can’t trace the contaminants to their source with certainty.

Officials in Colorado, where ProPublica reported that much of the contamination has occurred, did not issue such a statement refuting the articles.

When New Mexico Congressman Martin Heinrich spoke in the hearing, he sought to clarify New Mexico’s position and keep the hearing on course.

“We are trying to get at this from a standpoint of more science and less ideology; I know that’s difficult sometimes,” he said. “I would mention that while we had zero cases of usable ground water contaminated, we have a number of cases of surface water contaminated from products.”

When asked about the record of Chesapeake Energy, the nation’s largest independent gas producer, Mike John, a vice president of government relations for Chesapeake, told the committee that “I would emphasize that in my experience we have not seen any problems with hydraulic fracturing in my career.” John did not mention the recent Louisiana case in which 16 cattle died after allegedly drinking spilled fracturing fluids at a Chesapeake well site – a case that is still under investigation.

The hearing descended to rancor at several points, with proponents of regulation berating the industry for fighting regulation even as it insists that clean water is a priority, and with opponents expressing frustration over what more federal oversight might mean for their state’s economy, a signal that even in a Democrat-controlled Congress, legislation to regulate hydraulic fracturing may face a tough road.

“I am proud that I am supported by the oil and gas industry because they employ a lot of people in my state and I am going to stick up for them,” said Rep. Dan Boren (D-OK). “I am sick and tired of a lot of folks in my own caucus coming after the largest employer in my state.”

From left, former Vice President Dick Cheney, Rep. John Salazar, Rep. Dianna DeGette and Sen. Bob Casey are all trying to leave their mark on how natural gas is drilled in the U.S. Abrahm Lustgarten / ProPublicaFour years after Vice President Dick Cheney spearheaded a massive energy bill that exempted natural gas drilling from federal clean water laws, Congress is having second thoughts about the environmental dangers posed by the burgeoning industry.

With growing evidence that the drilling can damage water supplies, Democratic leaders in Congress are circulating legislation that would repeal the extraordinary exemption and for the first time require companies to disclose all chemicals used in the key drilling process, called hydraulic fracturing.

The proposed legislation has already stirred sharp debate.

The energy industry has launched a broad effort in Washington to fend off this proposed tightening of federal oversight, lobbying members of Congress and publishing studies that highlight what it says are the dangers of regulation. In mid-May, the industry released a detailed report asserting that the changes in current law would cost jobs and slash tax revenues. A key advocate of past efforts to regulate gas drilling, Rep. John Salazar (D-CO), has declined to support the legislation, expressing concern about how it would affect the energy companies.

However, with a strengthened Democratic majority in Congress and the party’s capture of the White House in last year’s election, the fracturing legislation is viewed as having its best chance at passage in years. Its House sponsor, Rep. Diana DeGette (D-CO), aims to attach a bill to a larger piece of legislation with broad support — possibly a bill on climate change or a new energy policy measure – where it would be shielded from industry resistance. On the Senate side, according to congressional staff close to the effort, Sen. Bob Casey (D-PA) has a companion bill ready to follow.

The drilling process involves injecting millions of gallons of water and sand mixed with tens of thousands of gallons of chemicals — some that are known to cause cancer — deep into the ground, where as much as a third of those fluids typically remain after the gas is removed.

Global companies including Halliburton and Schlumberger have fought hard to shield from public view the chemical recipes they use to drill, saying that the formulas are valuable trade secrets. Scientists say that is precisely the information they need to determine if drilling caused the water pollution that has been reported in Colorado and elsewhere.

“The regulatory loophole for hydraulic fracturing puts public health at risk and isn’t justified,” said Henry Waxman (D-CA), chair of the House Energy and Commerce Committee that will offer the bill, in an e-mail. “The current exemption for the oil and gas industry means that we can’t even get the information necessary to evaluate the health threats from these practices.”

The industry argues that state laws and regulators are doing an adequate job of regulating the hydraulic fracturing process, and that more layers of regulation would be burdensome and expensive.

“We don’t think the system is broke, so we question the value of trying to fix it with a federal solution,” said Richard Ranger, a senior policy analyst at the American Petroleum Institute. “So proceed with caution if you are going to proceed with regulating this business because it could make a very significant difference in delivering a fuel that is fundamental to economic health.”

Proponents of regulation, including DeGette, the author of the bill, say protecting water resources is worth the slightly higher gas costs that might come with regulation, but that the industry’s assessment of those costs is dubious. The exemption, they say, has artificially lowered drilling costs because it means the companies don’t always have to follow the safest practices.

“I find it kind of a novel argument that it will be burdensome to comply with one federal law when they could potentially have to comply with 50 state laws,” she said. “I just think that they don’t want to have to do it.”

A key question for proponents and opponents alike is how strong a stance President Barack Obama’s administration will strike on this legislation. A White House spokesman said that the administration hasn’t yet taken a position.

The Safe Drinking Water Act, enacted in 1974, governs what chemicals can be injected underground and applies to essentially every industrial activity in the United States. It limits what levels of pollution are allowed, but then permits states to create more detailed regulations if they choose. The law also sets minimum standards for well design and other protections of health and safety.

“We are not aware of any other industries that have an exemption,” said Stephen Heare, director of the Drinking Water Protection Division at the Environmental Protection Agency.

As the law currently stands, the EPA is not allowed to set conditions for hydraulic fracturing or even require states to have regulations of their own.

States often look to the federal agencies for guidance on how to craft environmental rules. And hydraulic fracturing is an especially complicated process that scientists say warrants more study. The current regime leaves state agencies — which are often understaffed and underfunded — to do their own research and develop their own best practices, according to EPA scientists.

Natural gas, used for heating, electricity and manufacturing, supplies a fifth of the energy used in the United States and is an increasingly valued resource. According to the Energy Information Administration, domestic gas reserves, including those held in vast shale deposits that underlie the Appalachian states, could meet the country’s natural gas needs for more than 100 years. Without hydraulic fracturing, which is now used in almost all new gas wells, much of this supply would remain beyond reach, according to the American Petroleum Institute.

Natural gas is also widely viewed as an important transitional fuel in American climate and energy policy — emitting 23 percent less carbon dioxide per unit of energy than oil. Its development has spurred jobs and economic activity in some of the poorest and most rural parts of the U.S.

But as gas drilling has expanded, a wave of reports have emerged that the drilling is affecting water. In Colorado and Wyoming, state and federal officials have concluded that benzene and other contaminants have made their way into aquifers, streams and well water as a result of drilling accidents or spills of drilling fluids. Officials have linked methane gas in groundwater to drilling in Colorado (PDF), Ohio (PDF) and Pennsylvania. Fracturing may or may not be to blame, EPA officials say; it’s hard to tell because they don’t oversee the process and can’t trace chemicals that are unidentified.

“We’re not talking about banning fracking here. What we’re for is regulating it,” said Rep. Jared Polis (D-CO), a co-sponsor of the House bill, emphasizing that his hope is to give scientists the tools to measure, and to control, its impact on the environment. “Other than oil and gas companies, I am not aware of anyone that supports allowing that to continue in an unregulated way.”

Even so, DeGette will need to gather support from some representatives in states that stand to reap substantial economic benefits from drilling. The retreat of Salazar, a prominent moderate whose co-sponsorship helped draw support for a similar measure in the House last year, is a warning sign that the passage is not preordained.

“I think Salazar is a very strategic target on all of this,” said Sarah Tucker, an analyst for Trout Unlimited, a sportsman’s group that is lobbying for more oversight of drilling. “He is from an oil and gas district … that gives him a lot more credibility when working on these issues … Those moderate Democrats are always the sticking point as to whether or not a bill actually moves.”

In an e-mailed response, Salazar said he would still consider voting for the bill, but that he may pursue an alternative compromise.

“I believe that developers may have legitimate concerns about the impact that removing the exemption may have on their ability to find and extract oil and gas,” he said. “But … the current regulatory approach is probably not sustainable and will probably need to be revised in some way.”

Passing such legislation has proved difficult in the past. This year’s efforts to reverse the exemptions will constitute at least the fourth effort by Democrats to shore up protections against hydraulic fracturing since it became a focus of the White House’s Energy Task Force in 2001. According to records of committee debates from 2003, the exemptions were forced through against objections, without hearings by a Republican majority and eventually tucked into the 2005 Energy Policy Act (PDF). Ever since, in the face of intense lobbying, any efforts to address the topic have stalled in committee.

Last year the bill’s authors, including Salazar, received a flurry of letters and phone calls urging them not to pursue the legislation. One, addressed to DeGette from Jerry McHugh, president of Denver-based San Juan Resources, said “Now is not the time to impede development of any domestic resources. Please pull your sponsorship.”

The industry has spent millions of dollars lobbying Congress on issues including fracturing since 2008, according to disclosure forms filed with Congress. Now, it’s circulating new research to bolster its arguments.

The industry — which has long argued that fracturing has never been proven to have contaminated water — points to a study published in April by the Department of Energy, which asserts that state laws adequately regulate hydraulic fracturing. But that report, titled “Modern Shale Gas Development in the United States: A Primer” (PDF), and written by the Ground Water Protection Council, a broad consortium that includes industry groups, contains several questionable statements. One passage notes that “the Safe Drinking Water Act regulates the injection of fluids from shale gas activities,” without mentioning that the exemptions have created significant exceptions, and that on the whole the act does not regulate all injections.

“You have very substantial economic elements that are concerned about their abilities to do whatever they want to for their own economic advantages,” said Rep. Maurice Hinchey (D-NY), who is also sponsoring the bill. “They are going to do whatever they can to ensure that there is not a majority of the members here voting for something like this bill.”