December 19, 2012 Articles

Fracking and NEPA's Categorical Exclusions

Should CEs apply to federal loans on rural homes with hydraulic-fracturing leases?

By Shell J. Bleiweiss and Jamie Davidson – December 19, 2012

Have you ever lit your kitchen tap water on fire? In the documentary Gasland, (HBO Documentary Films 2010), director Josh Fox displays landscapes riddled with earth-drilling equipment, millions of trucks chugging along millions of miles, and homeowners with mysterious illnesses and flammable tap water. The movie attributes these environmental maladies to hydraulic fracturing, or “fracking,” a method of extracting natural gas conducted by the booming domestic energy industry.

In Gasland, Fox explains how a natural-gas company offered him money for a lease to drill on his property. People across the United States are offered similar leases on their property, and they accept them, agreeing to natural-gas extraction from their land. What Gasland fails to discuss, however, are the economic pressures on these homeowners—particularly those who are located in rural areas and seeking financial assistance. The U.S. Department of Agriculture’s (USDA) Rural Housing Service (RHS) program provides financing to low-income homeowners in rural areas of the country, where much of the fracking occurs, to spur economic development. Many homes financed by RHS are encumbered by fracking leases.

Traditionally, most of the loans financed by RHS have not been subjected to the National Environmental Policy Act’s (NEPA) review requirements. Under NEPA, agencies may determine that certain categories of actions do not significantly affect the environment and, therefore, are exempt from review. The USDA has previously included RHS homeowner assistance under a categorical exclusion (CE). The CE applies whether or not homes are encumbered by fracking leases. But rising environmental concerns related to fracking are causing some people within the agency to consider changing this policy. Although the USDA recently reaffirmed that the CE still applies to these loans, the debate will continue as scientific uncertainties become resolved and other federal lending agencies make similar policy determinations.

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